ABD.L Regulatory News (ABD)

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO, THE UNITED STATES OF AMERICA (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA), AUSTRALIA, CANADA, JAPAN, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA, IN ANY MEMBER STATE OF THE EEA OR IN ANY OTHER JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL.

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22 September 2023

abrdn New Dawn Investment Trust plc

Legal Entity Identifier: 5493002K00AHWEME3J36

Proposals for the Voluntary Winding-up of the Company and combination with Asia Dragon Trust plc

The Board of abrdn New Dawn Investment Trust plc ("ABD" or the "Company") announces that it has today published a shareholder circular (the "Circular") setting out proposals for the voluntary winding-up of the Company and combination with Asia Dragon Trust plc ("Asia Dragon" or "DGN").

On 21 July 2023, the Board announced that it had agreed heads of terms with Asia Dragon in respect of a proposed combination of the Company with Asia Dragon to be effected by way of a scheme of reconstruction of the Company under Section 110 of the Insolvency Act 1986 (referred to as the "Proposals").

Asia Dragon is an investment trust which aims to achieve long-term capital growth principally through investment into companies in the Asia Pacific (ex-Japan) region which are believed by the investment manager to have above-average prospects for growth. abrdn Fund Managers Limited is the alternative investment fund manager of both Asia Dragon and the Company ("AIFM"). The AIFM delegates portfolio management of both the Company and Asia Dragon to abrdn Asia Limited.

The Proposals, which are unanimously recommended by the Board, comprise a members' voluntary liquidation (solvent liquidation) and a scheme of reconstruction of the Company pursuant to which Shareholders will be entitled, in respect of their shareholdings, to:

(a) receive New DGN Shares (the "Rollover Option"); and/or

(b) elect to receive cash (subject to an overall limit of 25 per cent. of the Ordinary Shares in issue) (the "Cash Option").

The Cash Option will be offered at a discount of 2 per cent. to the ABD FAV per Share, for the benefit of the Shareholders electing for the Cash Option (the "Cash Option Discount"). The Cash Option Discount will be for the benefit of the enlarged Asia Dragon.

Shareholders can make different Elections in respect of different parts of their holdings. The default option under the Scheme is for eligible Shareholders to receive New DGN Shares meaning that Shareholders who, in respect of all or part of their holding of Shares, do not make a valid Election or who do not make an Election at all will be deemed to have elected for New DGN Shares in respect of such holding.

The choice between the options available under the Proposals will be a matter for each Shareholder to decide and will be influenced by his or her investment objectives and by his or her personal, financial and tax circumstances. Accordingly, Shareholders should, before making any Election, read carefully all the information in the Circular and in the DGN Prospectus. The key features of Asia Dragon are set out below and in the Circular.

Implementation of the Proposals is subject to a number of conditions. Please refer to the section of this announcement headed "Conditions of the Proposals". In order to effect the Scheme and the proposed amendments to the Articles in relation to the Scheme, Shareholder approval is required at the First General Meeting. If the Scheme is approved at the First General Meeting, Shareholder approval is required at the Second General Meeting to wind up the Company voluntarily and to appoint and grant authority to the Liquidators to implement the Scheme and to apply for the cancellation of the listing of the Reclassified Shares on the Official List pursuant to the Listing Rules. The Scheme Resolutions are special resolutions and therefore require the approval of 75 per cent. of Shareholders who vote at the meeting.

The purpose of the Circular is to explain the Proposals and the actions required to be taken in order for them to be implemented and to convene the General Meetings and the Annual General Meeting, notices of which are set out at the end of the Circular. Further details of the Scheme Resolutions will be proposed at the General Meetings and the Resolutions will be proposed at the Annual General Meeting are set out below. The expected timetable associated with the Proposals is set out at the end of this announcement.

The Board considers the Proposals to be in the best interests of Shareholders as a whole and recommends that Shareholders vote in favour of the Scheme Resolutions required to implement the Proposals at the General Meetings as they will be doing with their own holdings.

Background to and Rationale for the Proposals

The Company and DGN both invest in the Asia Pacific (ex-Japan) region and both are managed by abrdn Fund Managers Limited with a high level of commonality across their shareholder bases. In light of these similarities, the Board and the DGN Board believe a combination of the companies will create an enlarged vehicle that offers similar investment exposure for each set of shareholders while offering shareholders in the enlarged DGN certain benefits.

The AIFM will, following implementation of the Scheme, continue to manage the enlarged DGN. The DGN Board are proposing certain amendments to DGN's investment policy to DGN shareholders which principally align DGN's investment policy with the current investment policy of the Company in order to permit investment into Australasia and provide the management team with equivalent geographic flexibility. DGN's existing benchmark comparative index (MSCI AC Asia (ex-Japan) Index) will be retained. The portfolio managers of the enlarged Asia Dragon will be Pruksa Iamthongthong and James Thom. Pruksa has been Co-Manager of Asia Dragon since 2017 and James Thom has been part of abrdn's Asia equity team since 2010.

Benefits and features of the Proposals

The Directors believe that the Proposals will have the following benefits for Shareholders who elect, or are deemed to elect, for the Rollover Option:

(a) Enhanced profile - The enlarged DGN is expected to have net assets in excess of £700 million (as at the Latest Practicable Date), creating a leading closed-ended vehicle for investment in the Asia Pacific (ex-Japan) region. On the basis of the current market capitalisations of the Company and DGN, the enlarged DGN is expected to qualify for inclusion in the FTSE 250 Index which is expected to raise the profile and enhancing the marketability of the enlarged DGN.

(b) Lower tiered management fee - AFML has agreed that, with effect from the admission to listing and trading of the New DGN Shares ("Admission"), the management fee payable by DGN to AFML will be reduced to 0.75 per cent. (currently 0.85 per cent.) on the initial £350 million of DGN's net assets and 0.5 per cent. on DGN's net assets in excess of £350 million. In addition, the enlarged DGN will benefit from lower costs following implementation of the Proposals as DGN's tiered fee structure will have the effect of reducing the weighted average fee given the increase in DGN's net assets.

(c) Lower ongoing charges - Existing and new shareholders in DGN are expected to benefit from a lower ongoing charges ratio with the enlarged DGN's fixed costs spread over a larger asset base.

(d) Enhanced Liquidity - The scale of the enlarged DGN is expected to improve the secondary market liquidity of DGN's shares.

(e) Contribution to costs - As described below, AFML has agreed to make a cost contribution in respect of the Proposals which, in addition to the contribution to the costs from the Cash Option Discount, is expected to offset the direct transaction costs for DGN shareholders, including Shareholders who rollover. 

(f) Shareholder register - The Proposals will allow a number of Shareholders to consolidate their holdings across the two companies while also creating a more diversified shareholder base through a combination of the balance of the two share registers.

(g) Conditional tender offer - DGN offers a five-yearly performance related conditional tender ("Conditional Tender") with the current performance period running from 1 September 2021 to 31 August 2026 ("2026 CTO"). It is proposed that, in the light of the Proposals and conditional on the Scheme being implemented, the 2026 CTO will be amended such that, in the event DGN underperforms the Benchmark over the performance period, DGN will offers shareholders the opportunity to tender up to a maximum of 15 per cent. of their shares; a reduction from the maximum of 25 per cent. previously proposed. This reflects the revised Conditional Tender being of broadly a similar size to that previously proposed for the 2026 CTO, given the greater scale of the enlarged DGN.

(h) Continuation vote - DGN shareholders will have the opportunity to vote on the continuation of DGN at every fifth annual general meeting ("Continuation Vote") with the next Continuation Vote to be put forward at the DGN annual general meeting in December 2026.

(i) Cash Option - Under the terms of the scheme an up to 25 per cent. cash exit opportunity is offered to the Company's Shareholders to realise part of their investment in the Company at a 2 per cent. discount to FAV (less the costs of realising the portfolio). The Cash Option Discount will be for the benefit of the enlarged Asia Dragon.

Conditions of the Proposals

Implementation of the Proposals is subject to a number of conditions, including:

(a) the recommendation of the boards of the Company and DGN to proceed with the Proposals which may be withdrawn at any time (including, without limit, for material adverse change reasons);

(b) the passing of the Scheme Resolutions to be proposed at the First General Meeting and the Scheme Resolution to be proposed at the Second General Meeting, or any adjournment of those meetings and upon any conditions of such Scheme Resolutions being fulfilled;

(c) the passing of the DGN Resolutions to be proposed at the DGN General Meeting, or any adjournment of that meeting and upon any conditions of such DGN Resolutions being fulfilled; and

(d) the FCA agreeing to admit the New DGN Shares to the Official List and the London Stock Exchange agreeing to admit the New DGN Shares to trading on the Main Market, subject only to allotment.

Any Scheme Condition may, subject to compliance with legal requirements, be waived with the mutual agreement of both the Company and DGN at any time up to completion of the Scheme.

If any Scheme Condition is not satisfied (or waived), the Proposals will not become effective and the Company will not proceed with the winding-up and instead will continue in existence. In these circumstances, the Company will bear its own abort costs. The Directors will reassess the options available to the Company at that time.

Summary of Information on DGN

Asia Dragon is a closed-ended investment company incorporated in Scotland on 12 August 1987 as a public limited company with registered number SC106049. It is an investment company as defined by section 833 of the Companies Act 2006 and operates as an investment trust within the meaning of Chapter 4 of Part 24 of the Corporation Tax Act 2010.

Asia Dragon's share capital comprises ordinary shares of 20 pence each. DGN is managed by abrdn Fund Managers, which is also the manager of the Company.

Asia Dragon's investment objective is to achieve long-term capital growth through investment in Asia, with the exception of Japan and Australasia. Investments are made primarily in stock markets in the region, principally in large companies. Where appropriate, Asia Dragon will utilise gearing to maximise long-term returns.

As noted above, Asia Dragon is proposing certain amendments to its investment policy at the DGN General Meeting. The proposed amendments to the Asia Dragon investment policy principally align Asia Dragon's policy with the Company's current investment policy in order to permit investment into Australasia and provide the management team with equivalent geographic flexibility.

As at the Latest Practicable Date, the net asset value of Asia Dragon was £481,999,707.

Further details on Asia Dragon are set out in the DGN Prospectus (which will be available on 22 September on the Asia Dragon website at www.asiadragontrust.co.uk).

It is expected that Donald Workman, Stephen Souchon and Nicole Yuen (the "Proposed DGN Directors") will join the DGN Board upon the Scheme becoming effective.

Please note that neither the Board (other than the Proposed DGN Directors) nor the Company takes any responsibility for the contents of the DGN Prospectus. The DGN Board takes no responsibility for the content of the Circular.

Upon the Scheme becoming effective, it is proposed that:

(a) DGN will continue to benchmark performance by reference to the MSCI AC Asia ex Japan index; and

(b) the enlarged DGN portfolio will be managed by AFML with the named investment managers being Pruksa Iamthongthong and James Thom.

Costs of implementing the scheme

The costs of the Scheme payable by the Company are expected to be approximately £655,000 inclusive of VAT which, for the purposes of this calculation, is assumed to be irrecoverable where applicable.

The estimate of the Company's costs excludes the Liquidators' retention to cover unknown liabilities (estimated at £100,000), and does not take account of any dealing costs which will be incurred by the Company in order to fund the Cash Option and the Liquidation Pool.

The Company will bear the costs of liquidation and realignment of its portfolio prior to the Calculation Date and any sale costs (including any commissions, taxes and market changes) associated with the transfer of the Company's portfolio to DGN. 

The Liquidators' retention is estimated at £100,000 and will be retained by the Liquidators to meet any unknown or unascertained liabilities of the Company. To the extent some or all of the Liquidators' retention remains when the Liquidators decide to close the liquidation, this will be returned to Shareholders that were on the Register as at the Record Date.

AFML has agreed to make a contribution to the costs of implementing the Scheme by means of a waiver of the management fee otherwise payable by DGN to AFML on the assets transferred by the Company to DGN for the first six months following the completion of the Scheme, which will be for the benefit of the shareholders of the enlarged DGN, including those Shareholders who elect or are deemed to elect for the Rollover Option. The AFML Contribution is subject to Asia Dragon not terminating the management agreement (other than for cause as provided under such agreement) for three years from the Effective Date of the Scheme, in which event the enlarged DGN will be obliged to repay all or part (depending on the point of termination and on a stepped basis annually) of the AFML Contribution. Please refer to the section headed "Management Fee" in Part 5 of the Circular.

In the event that the Scheme does not proceed then each party will bear their own costs in connection with the Proposals.

Entitlements under the scheme

Under the Scheme, each Shareholder on the Register on the Record Date may elect to receive:

(a) such number of New DGN Shares as have a value equal to the ABD FAV per Share multiplied by the number of Ordinary Shares so elected, or deemed elected, for the Rollover Option; or

(b) subject to an overall 25 per cent. cap on such Elections (in aggregate), an amount of cash equal to the Cash Pool NAV per Share multiplied by the number of Ordinary Shares so elected, being the Cash Option.

Shareholders can make different Elections in respect of different parts of their holdings.

The default option under the Scheme is to receive New DGN Shares, meaning that Shareholders who, in respect of all or part of their holding of Ordinary Shares, do not make a valid Election, or who do not make an Election, will be deemed to have elected for New DGN Shares in respect of such holding. If shareholders wish to receive New DGN Shares in respect of all of their Ordinary Shares, there is no need to complete and return a Form of Election (which they will receive if they hold their Ordinary Shares in certificated form), Form of Instruction (if they hold their Ordinary Shares through a Share Plan) or to submit a TTE Instruction (if they hold their Ordinary Shares in uncertificated form).

If a shareholder wishes to receive cash in respect of all or part of their holding of Shares (subject to the potential scaling back of Elections for the Cash Option), they must either complete and return a Form of Election, Form of Instruction or submit a TTE Instruction (depending on how their Shares are held) in respect of the number of Shares for which they wish to make an Election for the Cash Option. They will be deemed to have elected to receive New DGN Shares in respect of the remainder of their holding, as well as any scaled back Elections for the Cash Option.

After allocating cash and other assets to the Liquidation Pool to meet all known and unknown liabilities of the Company and other contingencies, including the retention and the entitlements of any Dissenting Shareholders, there shall be appropriated to the Cash Pool and the Rollover Pool the remaining assets of the Company in the manner described in paragraph 3.2 in Part 3 of the Circular. Such appropriation includes the application of a discount of 2 per cent. to the ABD FAV per Share, in relation to those Shares in respect of which Shareholders have elected to receive cash. The value arising from the application of the Cash Option Discount shall be allocated for the benefit of the enlarged DGN. In the week commencing 20 November 2023, it is expected that the Liquidators shall distribute to Shareholders who have elected for the Cash Option their Cash Entitlements, being rounded down to the nearest penny.

For illustrative purposes only, had the Calculation Date been 5.00 p.m. on the Latest Practicable Date and assuming that no Shareholders exercise their right to dissent from participation in the Scheme, and assuming that the maximum amount is elected for the Cash Option, the ABD FAV per Share would have been 285.674759 pence and the Cash Pool NAV per Share would have been 279.961264 pence. The ABD FAV per Share and the Cash Pool NAV per Share may be compared with the Company's share price and cum-income NAV per Share as at 19 September 2023 which were 254.00 pence and 286.39 pence, respectively.

For illustrative purposes only, the DGN FAV per Share would have been 424.292143 pence, which may be compared with the DGN share price and cum-income NAV per DGN share as at 19 September 2023 which were 355.00 pence and 424.95 pence, respectively. On the basis of the above, the Rollover Option would have produced a Conversion Ratio of 0.673297 and, in aggregate, 52,752,659 New DGN Shares would have been issued to Shareholders who elected for the Rollover Option under the Scheme, representing approximately 31.74 per cent. of the issued ordinary share capital of the enlarged DGN immediately following the completion of the Scheme. The enlarged DGN would also then pay listing fees in relation to the listing of the New DGN Shares and any acquisition costs and taxes on the transfer of the Rollover Pool.

The above figures are for illustrative purposes only and do not represent forecasts. The ABD FAV per Share and DGN FAV per Share and Shareholders' entitlements under the Proposals may materially change up to the Effective Date as a result of, inter alia, changes in the value of investments. For details of the Scheme, please refer to Part 3 of the Circular.

Excluded Shareholders should read the section headed "Excluded Shareholders" below.

Scaling back of Elections for the Cash Option

The maximum number of Ordinary Shares (in aggregate) that can be elected for the Cash Option is 25 per cent. of the total number of Ordinary Shares in issue (excluding Ordinary Shares held in treasury). Shareholders are entitled to elect for the Cash Option in respect of more than 25 per cent. of their individual holdings of Ordinary Shares (the "Basic Entitlement", such excess amount being an "Excess Application"). However, if aggregate Elections are made for the Cash Option which exceed 25 per cent. of the issued Ordinary Shares (excluding Ordinary Shares held in treasury), Shareholders who have made an Election for the Cash Option in excess of their Basic Entitlement shall have their Excess Applications scaled back in a manner which is, as near as practicable, pro rata to the number of Shares elected under such Excess Applications, resulting in such Shareholders (other than Excluded Shareholders) receiving New DGN Shares instead of cash in respect of part of their holding of Ordinary Shares.

Dividend

As an investment trust, the Company is not permitted to retain more than 15 per cent. of its income in any accounting period. In order to meet this requirement, the Company paid, on 8 September 2023, an interim dividend of 3.3 pence per Ordinary Share in respect of the financial year ended 30 April 2023, to Shareholders on the Register as at 11 August 2023.

It is not anticipated that there will be any further dividends paid by the Company in relation to the current financial period or for the period up to the liquidation of the Company.

For the avoidance of doubt, Shareholders receiving New DGN Shares under the Scheme will not, in respect of those New DGN Shares, be entitled to the dividend payable by DGN in respect of its financial year ended 31 August 2023.

Borrowings

The Company has a £20 million fixed rate facility which expires on 14 December 2023 and a £20 million revolving credit facility which expires on 28 June 2024, both with The Royal Bank of Scotland International Limited. It is proposed that these facilities will not transfer to DGN and will be cancelled and repaid prior to the liquidation of the Company.

Risk factors

Shareholders are strongly urged to read carefully the risk factors contained in Part 4 of the Circular which sets out the material risks known to the Directors at the date of the Circular in relation to the Proposals. Shareholders are also strongly urged to read the sections containing risk factors in the DGN Prospectus.

Taxation

Shareholders are advised to read carefully the section headed "Taxation" in paragraph 8 of Part 2 of the Circular which sets out a general guide to certain aspects of current UK tax law and HMRC published practice.

Shareholders who are in any doubt as to their tax position or who may be subject to tax in any jurisdiction other than the UK are strongly advised to consult their own professional advisers.

Shareholder meetings

The implementation of the Proposals will require two general meetings of the Company. The notices convening the First General Meeting (to be held at 2:00 p.m. on 23 October 2023) and the Second General Meeting (to be held at 10:00 a.m. on 8 November 2023) are set out at the end of this announcement.

The Scheme Resolutions to be proposed at the General Meetings, on which all Shareholders may vote, are as follows:

First General Meeting

The resolutions to be considered at the First General Meeting (which will be proposed as special resolutions) will, if passed, approve the terms of the Scheme and associated amendments to the Company's Articles set out in Part 3 of the Circular, authorise the Liquidators to enter into and give effect to the Transfer Agreement with DGN to renounce New DGN Shares in favour of Shareholders in accordance with the Scheme, purchase the interests of any dissentients to the Scheme and authorise the Liquidators to apply to cancel the listing of the Shares with effect from such date as the Liquidators may determine.

Each resolution will require at least 75 per cent. of the votes cast in respect of it to be voted in favour, whether in person or by proxy, in order for it to be passed. The Scheme will not become effective unless and until, inter alia, the resolution to be proposed at the Second General Meeting has also been passed.

Second General Meeting

At the Second General Meeting, a special resolution will be proposed which, if passed, will place the Company into liquidation, appoint the Liquidators, agree the basis of their remuneration, instruct the Company Secretary to hold the books to the Liquidators' order and provide the Liquidators with appropriate powers to carry into effect the amendments to the Articles made at the First General Meeting. The resolution to be proposed at the Second General Meeting is conditional upon the Scheme Conditions being satisfied.

The resolution will require at least 75 per cent. of the votes cast in respect of it to be voted in favour, whether in person or by proxy, in order for it to be passed.

If relevant, the Company will notify Shareholders of any changes to the proposed format for the General Meetings as soon as possible via a Regulatory Information Service and its website.

Annual general meeting

The Board did not propose to hold a formal AGM prior to the Scheme becoming effective. However, in light of the statutory deadline for holding an AGM and in order to deal with the various technical matters that are required to be dealt with at an AGM, the Company will convene an AGM at 2:15 p.m. on 23 October 2023 at Dentons UK and Middle East LLP, 1 Fleet Place, London EC4M 7WS. Due to the technical nature of the AGM, the Company is not providing 20 working days' notice of the AGM as recommended by the UK Corporate Governance Code and the Financial Reporting Council's Guidance on Board Effectiveness. In accordance with the requirements of the Companies Act, the Company is providing 21 clear days' notice of the AGM.

The Resolutions to be proposed at the AGM, on which all Shareholders may vote, are set out in the notice convening the AGM at the end of the Circular. Further details of each of the Resolutions are set out in the appendix to the notice of AGM. The Board recommends voting in favour of each of the Resolutions which they believe are for the benefit of the Shareholders as a whole.

Action to be taken by Shareholders

Before taking any action, Shareholders are recommended to read the further information set out in the Circular and in the DGN Prospectus.

Elections

Shareholders are requested to complete the Form of Election in accordance with the instructions printed thereon and return it to the Receiving Agent, Equiniti, using the enclosed reply-paid envelope (for use within the UK only) at Corporate Actions, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA as soon as possible, but in any event so as to be received no later than 1.00 p.m. on 1 November 2023 or in the event they hold their Shares in a Share Plan, they are requested to complete the Form of Instruction in accordance with the instructions printed thereon and return it to the Receiving Agent, Equiniti, using the enclosed reply-paid envelope (for use within the UK only) at Corporate Actions, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA as soon as possible, but in any event so as to be received no later than 1.00 p.m. on 1 November 2023.

Form of Proxy

All Shareholders are encouraged to vote in favour of the Scheme Resolutions to be proposed at the General Meetings and the Resolutions to be proposed at the Annual General Meeting, and, if the Shares are not held directly, to arrange for their nominee to vote on their behalf.

Shareholders are requested to complete and return proxy appointments to the Registrar by completing and signing the PINK Form of Proxy for use in relation to the First General Meeting; the WHITE Form of Proxy for use in relation to the Annual General Meeting; and the GREEN Form of Proxy for use in relation to the Second General Meeting, in accordance with the instructions printed thereon and returning by post; or in the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the procedures set out in the notes to the respective notices of the General Meetings and the Annual General Meeting.

If any of the Scheme Resolutions to be proposed at the General Meetings are not passed, the Proposals will not proceed and the Company will not be wound up. In these circumstances, the Board will reassess the options available to the Company at that time.

Letters of Direction

Shareholders holding Shares through a Share Plan will receive a PINK Letter of Direction for use in relation to the First General Meeting; a WHITE Letter of Direction for use in relation to the Annual General Meeting; and a GREEN Letter of Direction for use in relation to the Second General Meeting.

Excluded Shareholders

The attention of Excluded Shareholders is drawn to the paragraph titled "Excluded Shareholders" in Part 3 of the Circular.

Overseas Shareholders will not receive a copy of the DGN Prospectus unless they have satisfied the Directors and the DGN Directors that they are entitled to receive and hold New DGN Shares without breaching any relevant securities and without the need for compliance on the part of the Company or DGN with any overseas laws, regulations, filing requirements or the equivalent. Sanctions Restricted Persons will not be entitled to receive a copy of the DGN Prospectus in any circumstance.

Any US Shareholder (or any persons acting for the account or benefit of such US Shareholder) receiving the Circular where applicable is requested to execute the US Investor Representation Letter which can be requested from Equiniti Limited, Corporate Actions, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6JA.

Non-US Shareholders are deemed to represent to the Company and DGN that they are located outside of the United States and are not US Persons (and are not acting for the account or benefit of a US Person).

Subject to certain exceptions described herein, no action has been taken or will be taken in any jurisdiction other than the UK where action is required to be taken to permit the distribution of the Circular and/or the DGN Prospectus. Accordingly, such documents may not be used for the purpose of, and do not constitute, an offer or solicitation by anyone in any jurisdiction or in any circumstances in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation.

Overseas Shareholders and Sanctions Restricted Persons (together "Excluded Shareholders") will be deemed to have elected for their Basic Entitlement in respect of the Cash Option and to receive New DGN Shares for the remainder of their shareholding. Such New DGN Shares will be issued to the Liquidators as nominees for the relevant Excluded Shareholder and sold by the Liquidators as nominees for the relevant Excluded Shareholder in the market (which shall be done by the Liquidators without regard to the personal circumstances of the relevant Excluded Shareholder and the value of the Shares held by the relevant Excluded Shareholder) and the net proceeds of such sale (after deduction of any costs incurred in effecting such sale) will be paid (i) to the relevant Overseas Shareholder entitled to them as soon as reasonably practicable and in any event no later than 10 Business Days after the date of sale, save that entitlements of less than £5.00 per Overseas Shareholder will be retained in the Liquidation Pool; or (ii) in respect of Sanctions Restricted Persons at the sole and absolute discretion of the Liquidators and will be subject to applicable laws and regulations.

Recommendation

The Board considers the Proposals and the Scheme Resolutions to be proposed at the General Meetings to be in the best interests of Shareholders as a whole.

Accordingly, the Board unanimously recommends Shareholders to vote in favour of the Scheme Resolutions, as Directors who hold shares intend to do in respect of their own beneficial holdings (being all Directors bar Nicole Yuen), which total 166,320 Ordinary Shares (representing 0.16 per cent. of the Company's total voting rights) as at the Latest Practicable Date. The Directors who hold Ordinary Shares and will be joining the board of Asia Dragon (being Donald Workman and Stephen Souchon) intend to roll over their entire beneficial holdings of Shares into New DGN Shares.

The Board cannot, and does not, give any advice or recommendation to Shareholders as to whether, or as to what extent, they should elect for any of the options under the Proposals. The choice between the options available under the Proposals will be a matter for each Shareholder to decide and will be influenced by his or her individual investment objectives and by his or her personal, financial and tax circumstances. Accordingly, Shareholders should, before deciding what action to take, read carefully all the information in the Circular and in the DGN Prospectus.

Expected timetable

Note: All references to time in this document are to UK time. Each of the times and dates in the above expected timetable (other than in relation to the General Meetings) may be extended or brought forward. If any of the above times and/or dates change, the revised time(s) and/or date(s) will be notified to Shareholders by an announcement through a Regulatory Information Service.

Unless otherwise defined, all capitalised terms used but not defined in this announcement shall have the meaning as given to them in the Circular.

A copy of the Circular has been submitted to the National Storage Mechanism and will shortly be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism. The DGN Prospectus will also shortly be available on Asia Dragon's website at www.asiadragontrust.co.uk where further information on Asia Dragon can also be found.

For further information please contact:

General

The content of the Company's web-pages and the content of any website or pages which may be accessed through hyperlinks on the Company's web-pages, other than the content of the document referred to above, is neither incorporated into nor forms part of the above announcement.

This announcement is not for publication or distribution, directly or indirectly, in or into the United States of America. This announcement is not an offer of securities for sale into the United States. The securities referred to herein have not been and will not be registered under the US Securities Act of 1933, as amended, and may not be offered or sold in the United States, except pursuant to an applicable exemption from registration. No public offering of securities is being made in the United States.