China Energy Storage Technology Development Limited — Annual Report 2020

Apr 12, 2021

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

Link-Asia International MedTech Group Limited 環亞國際醫療科技集團有限公司

(incorporated in the Cayman Islands with limited liability)

(Stock code: 1143)

ANNOUNCEMENT OF THE AUDITED ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2020

Reference is made to the announcement of Link-Asia International MedTech Group Limited (the “ Company ”, together with its subsidiaries, the “ Group ”) dated 31 March 2021 in relation to the unaudited annual results of the Group for the year ended 31 December 2020 (the “ Unaudited Annual Results Announcement ”).

As stated in the Unaudited Results Announcement, publication of the audited financial statements for the year ended 31 December 2020 (the “ 2020 Annual Financial Statements ”) was delayed as the outbreak of COVID-19 in various countries and the anti-pandemic measures for the prevention and control of COVID-19 implemented have caused difficulties on the auditing and reporting process of the Company’s operations, particularly those located in France, Thailand, the Philippines and part of China, which resulted in the auditor of the Company (the “ Auditor ”) being unable to obtain all necessary documents and/or information including but not limited to audit confirmation letters, audit verification information from Thailand and part of China on time to enable them to finish the audit verification procedures.

AUDITED ANNUAL RESULTS

The board (the “ Board ”) of directors (the “ Directors ”) of the Company is pleased to announce that the auditing process of the annual results of the Group for the year ended 31 December 2020 has been completed. As certain adjustments have been made to the Group as contained in the Unaudited Annual Results Announcement, the differences between the unaudited annual results and the audited annual results contained in this announcement are set out in the section headed “Material Differences between 2020 Unaudited and Audited Annual Results” in accordance with Rule 13.49(3)(ii)(b) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Listing Rules ”).

The audited consolidated financial results for the year ended 31 December 2020 together with the comparative figures for the year ended 31 December 2019, as follows:

– 1 –

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the year ended 31 December 2020

Note Continuing operations Revenue 4 Cost of sales Gross profit Other income 5 Other gains and losses 6 Selling and distribution expenses Administrative expenses Impairment losses for loans to other parties, net Impairment losses for trade receivables, net Impairment losses for other receivables Impairment losses for investments in associates Impairment losses for intangible assets Other expenses Loss from operations Share of losses of associates Finance costs 7 Loss before tax Income tax expense 8 Loss for the year from continuing operations Discontinued operation Loss for the year from discontinued operation 9 Loss for the year Attributable to: Owners of the Company Non-controlling interests	2020 HK$’000 595,023 (440,311) 154,712 12,332 (2,327) (56,317) (178,158) (23,471) (2,083) (18,165) (10,281) (14,130) (14,309) (152,197) (12,622) (4,928) (169,747) (3,323) (173,070) – (173,070) (173,052) (18) (173,070)	2019 HK$’000 629,948 (494,106) 135,842 12,391 3,936 (28,829) (179,414) (54,560) (1,550) (1,800) – – (42,495) (156,479) – (6,809) (163,288) (1,300) (164,588) (14,739) (179,327) (171,735) (7,592) (179,327)

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS (CONT’D)

For the year ended 31 December 2020

Note Loss per share 11 From continuing and discontinued operations Basic (HK cents per share) Diluted (HK cents per share) From continuing operations Basic (HK cents per share) Diluted (HK cents per share)	2020 2019 (re-presented) (46.119) (57.772) N/A N/A	2020 2019 (re-presented) (46.119) (57.772) N/A N/A
	(46.119)	(55.367)
	N/A	N/A

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the year ended 31 December 2020

Loss for the year Other comprehensive income: Items that will not be reclassified to profit or loss: Fair value changes of equity investments at fair value through other comprehensive income (FVTOCI) Items that may be reclassified to profit or loss: Exchange differences on translating foreign operations Other comprehensive income for the year, net of tax Total comprehensive income for the year Attributable to: Owners of the Company Non-controlling interests	2020 HK$’000 (173,070) (12,212) 1,200 (11,012) (184,082) (184,064) (18) (184,082)	2019 HK$’000 (179,327) 9,353 591 9,944 (169,383) (161,791) (7,592) (169,383)

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2020

Note ASSETS Non-current assets Property, plant and equipment Right-of-use assets Investment properties Investments in associates Intangible assets Rental deposits Loans to other parties Equity investments at FVTOCI Deferred tax assets Total non-current assets Current assets Inventories Trade receivables 12 Prepayments, deposits and other receivables Loans to other parties Amount due from a director Equity investments at FVTOCI Current tax assets Bank and cash balances Total current assets TOTAL ASSETS	2020 HK$’000 19,203 48,904 30,000 12,316 35,478 – – – – 145,901 92,651 165,413 46,556 38,695 450 – 82 167,657 511,504 657,405	2019 HK$’000 32,960 62,520 30,000 – – 8,659 26,209 9,608 1,938
		171,894
		79,927 131,052 81,113 25,115 – 3,789 586 241,364
		562,946
		734,840

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONT’D) As at 31 December 2020

Note EQUITY AND LIABILITIES Equity Equity attributable to owners of the Company Share capital Reserves Non-controlling interests Total equity LIABILITIES Non-current liabilities Lease liabilities Total non-current liabilities Current liabilities Trade payables 13 Accruals and other payables Lease liabilities Amount due to a director Borrowings License rights payable Product warranty provisions Current tax liabilities Total current liabilities TOTAL EQUITY AND LIABILITIES	2020 HK$’000 8,559 286,903 295,462 472 295,934 30,922 30,922 87,353 187,266 20,677 – 18,595 8,099 4,611 3,948 330,549 657,405	2019 HK$’000 5,945 405,068
		411,013 –
		411,013
		33,246
		33,246
		54,422 179,193 26,359 204 20,558 5,968 2,059 1,818
		290,581
		734,840

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2020

1. BASIS OF PREPARATION

These consolidated financial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (“ HKFRSs ”) issued by the Hong Kong Institute of Certified Public Accountants (the “ HKICPA ”). HKFRSs comprise Hong Kong Financial Reporting Standards (“ HKFRS ”); Hong Kong Accounting Standards (“ HKAS ”); and Interpretations. These consolidated financial statements also comply with the applicable disclosure provisions of the Rules Governing the Listing of Securities (the “ Listing Rules ”) on the Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) and with the disclosure requirements of the Hong Kong Companies Ordinance (Cap. 622).

The HKICPA has issued certain new and revised HKFRSs that are first effective or available for early adoption for the current accounting period of the Group. Note 2 provides information on any changes in accounting policies resulting from initial application of these developments to the extent that they are relevant to the Group for the current and prior accounting periods reflected in these consolidated financial statements.

2. ADOPTION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS

(a) Application of new and revised HKFRSs

The Group has applied the Amendments to Reference to the Conceptual Framework in HKFRS Standards and the following amendments to HKFRSs issued by the HKICPA for the first time, which are mandatorily effective for the annual period beginning on or after 1 January 2020 for the preparation of the consolidated financial statements:

Amendments to HKAS 1 and HKAS 8 Definition of Material Amendments to HKFRS 3 Definition of a Business Amendments to HKFRS 9, HKAS 39 and HKFRS 7 Interest Rate Benchmark Reform

In addition, the Group has early applied the Amendments to HKFRS 16, COVID-19 Related Rent Concessions.

Except as described below, the application of the Amendments to References to the Conceptual Framework in HKFRS Standards and the amendments to HKFRSs in the current year had no material impact on the Group’s financial positions and performance for the current and prior years and/or on the disclosures set out in these consolidated financial statements.

Amendments to HKAS 1 and HKAS 8 Definition of Material

The amendments provide a new definition of material that states “information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.” The amendments also clarify that materiality depends on the nature or magnitude of information, either individually or in combination with other information, in the context of the financial statements taken as a whole.

The application of the amendments had no impact on the consolidated financial statements.

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2. ADOPTION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (CONT’D)

(a) Application of new and revised HKFRSs (Continued)

Amendments to HKFRS 3 Definition of a Business

The amendments clarify the definition of a business and provide further guidance on how to determine whether a transaction represents a business combination. In addition, the amendments introduce an optional “concentration test” that permits a simplified assessment of whether an acquired set of activities and assets is an asset rather than business acquisition, when substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.

The Group has applied the amendments prospectively to transactions for which the acquisition date is on or after 1 January 2020. The application of the amendments had no impact on the consolidated financial statements as similar conclusion would have been reached without applying the optional concentration test.

Amendment to HKFRS 16, COVID-19-Related Rent Concessions

The amendment provides a practical expedient that allows a lessee to by-pass the need to evaluate whether certain qualifying rent concessions occurring as a direct consequence of the COVID-19 pandemic (“ COVID-19 Related Rent Concessions ”) are lease modifications and, instead, account for those rent concessions as if they were not lease modifications.

The Group has elected to early adopt the amendments and applies the practical expedient to all qualifying COVID-19 Related Rent Concessions granted to the Group during the year. Consequently, rent concessions received have been accounted for as negative variable lease payments recognised in profit or loss in the period in which the event or condition that triggers those payments occurred. There is no impact on the opening balance of equity at 1 January 2020.

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2. ADOPTION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (CONT’D)

(b) New and revised HKFRSs in issue but not yet effective

Other than the amendments to HKFRS 16, COVID-19 Related Rent Concessions, the Group has not applied any new and revised HKFRSs that have been issued but are not yet effective for the financial year beginning 1 January 2020. These new and revised HKFRSs include the following which may be relevant to the Group.

	Effective for
	accounting
	periods
	beginning
	on or after
Amendments to HKFRS 9, HKAS 39, HKFRS 7, HKFRS 4 and HKFRS 16	1 January 2021
Interest Rate Benchmark Reform — Phase 2
Amendments to HKFRS 3 Reference to the Conceptual Framework	1 January 2022
Amendments to HKAS 16 Property, plant and equipment: proceeds before	1 January 2022
intended use
Amendments to HKAS 37 Onerous contracts — cost of fulfilling a contract	1 January 2022
Annual Improvements to HKFRSs 2018–2020 Cycle	1 January 2022
Amendments to HKAS 1 Classification of liabilities as current or non-current	1 January 2023

The Group is in the process of making an assessment of what the impact of these amendments and new standards is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a significant impact on the consolidated financial statements.

3. SEGMENT INFORMATION

The Group has four (2019: three) operating segments as follows:

EMS	—	Electronic manufacturing services
Distribution of Communications Products	—	Marketing and distribution of communications products
Securities and Other Assets Investment	—	Equity investments, property agency service and other
		operations
Real Estate Supply Chain Services	—	Real estate advisory service and real estate purchase
		service

A new operating segment, Real Estate Supply Chain Services has been formed during the year.

Two operations from Securities and Other Assets Investment (Provision of Catering Services CGU and Sales of Medical Equipment) were disposed of in the year ended 31 December 2019. The segment information reported does not include any amounts from the operation of Sales of Medical Equipment that is classified as a discontinued operation, which is described in note 9.

The Group’s reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies.

– 9 –

3. SEGMENT INFORMATION (CONT’D)

Segment profits or losses do not include interest income on loans to other parties, gain on disposal of a subsidiary, interest on loans from independent third party/parties and unallocated expenses. Segment assets do not include unallocated bank and cash balances, unallocated prepayments, deposits and other receivables, loans to other parties and deferred tax assets. Segment liabilities do not include borrowings, unallocated accruals and other payables. Segment non-current assets do not include loans to other parties, equity investments at FVTOCI and deferred tax assets.

The Group accounts for intersegment sales and transfers as if the sales or transfers were to third parties, i.e. at current market prices.

(a) Information about reportable segment profit or loss, assets and liabilities from continuing operations:

		Distribution of	Securities and	Real Estate
		Communications	Other Assets	Supply Chain
	EMS	Products	Investment	Services	Total
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Year ended 31 December 2020
Revenue from external customers	544,275	35,939	654	14,155	595,023
Intersegment revenue	2,783	–	–	–	2,783
Segment profit/(loss)	33,661	(18,497)	(70,627)	(108,972)	(164,435)
Interest revenue	944	–	1,948	3,021	5,913
Interest expense	(2,033)	(32)	(2,863)	–	(4,928)
Depreciation	(18,965)	(368)	(26,414)	(156)	(45,903)
Amortisation	–	–	–	(2,392)	(2,392)
Other material non-cash items:
License right payments	–	(2,712)	–	–	(2,712)
Impairment losses for loans to other
parties	–	–	(3,063)	(20,408)	(23,471)
Impairment losses for
trade receivables, net	(2,083)	–	–	–	(2,083)
Impairment losses for investments
in associates	–	–	–	(10,281)	(10,281)
Impairment losses for
intangible assets	–	–	–	(14,130)	(14,130)
Additions to segment
non-current assets	2,417	57	59	52,779	55,312
As at 31 December 2020
Segment assets	493,261	9,726	75,598	93,543	672,128
Segment liabilities	276,524	51,464	33,914	8,976	370,878

– 10 –

3. SEGMENT INFORMATION (CONT’D)

• (a) Information about reportable segment profit or loss, assets and liabilities from continuing operations: (Continued)

		Distribution of	Securities and	Real Estate
		Communications	Other Assets	Supply Chain
	EMS	Products	Investment	Services	Total
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Year ended 31 December 2019
Revenue from external customers	582,502	36,476	10,970	–	629,948
Intersegment revenue	13,554	–	–	–	13,554
Segment profit/(loss)	29,289	(10,487)	(101,961)	–	(83,159)
Interest revenue	1,210	4	499	–	1,713
Interest expense	(1,581)	(45)	(2,766)	–	(4,392)
Depreciation	(25,515)	(354)	(25,991)	–	(51,860)
Other material non-cash items:
License right payments	–	(2,713)	–	–	(2,713)
Impairment losses for
trade receivables, net	(1,550)	–	–	–	(1,550)
Impairment losses of
other receivables	(1,800)	–	–	–	(1,800)
Additions to segment
non-current assets	8,146	–	1,058	–	9,204
As at 31 December 2019
Segment assets	411,877	20,487	236,408	–	668,772
Segment liabilities	237,663	32,015	41,599	–	311,277

(b) Reconciliations of segment revenue and profit or loss:

Revenue Total revenue of reportable segments Elimination of intersegment revenue Consolidated revenue from continuing operations Profit or loss Total loss of reportable segments Intersegment elimination Unallocated amounts: Interest income on loans to other parties Interest on loans from independent third parties Other unallocated head office and corporate expenses Consolidated loss before tax from continuing operations	2020 HK$’000 597,806 (2,783) 595,023 2020 HK$’000 (164,435) 905 708 – (6,925) (169,747)	2019 HK$’000 643,502 (13,554) 629,948 2019 HK$’000 (83,159) 707 6,631 (2,417) (85,050) (163,288)

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3. SEGMENT INFORMATION (CONT’D)

(c) Reconciliations of segment assets and liabilities:

Assets Total assets of reportable segments Elimination of intersegment assets Elimination of unrealised profits Unallocated amounts: Bank and cash balances Prepayments, deposits and other receivables Loans to other parties Deferred tax assets Consolidated total assets Liabilities Total liabilities of reportable segments Elimination of intersegment liabilities Unallocated amounts: Accruals and other payables Borrowings Consolidated total liabilities	2020 HK$’000 672,128 (18,591) – 51 3,817 – – 657,405 2020 HK$’000 370,878 (18,591) 9,184 – 361,471	2019 HK$’000 668,772 (21,435) (905) 33,568 26,693 26,209 1,938
		734,840
		2019 HK$’000 311,277 (21,435) 13,985 20,000
		323,827

(d) Geographical information:

The Group’s revenue from continuing operations from external customers by location of operations and information about its non-current assets by location are detailed below:

Revenue The People’s Republic of China (the “PRC”) (including Hong Kong) The United States of America (the “U.S.A.”) Switzerland France Poland United Kingdom Others Consolidated total	2020 HK$’000 87,597 40,601 229,847 72,292 2,259 25,709 136,718 595,023	2019 HK$’000 113,542 52,804 242,053 56,800 3,231 26,460 135,058
		629,948

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3. SEGMENT INFORMATION (CONT’D)

(d) Geographical information: (Continued)

Non-current assets The PRC (including Hong Kong) Consolidated total	2020 HK$’000 145,901 145,901	2019 HK$’000 134,139
		134,139

(e) Revenue from major customers:

An analysis of revenue from major customers which account for 10 percent or more of the Group’s revenue is as follows:

	2020	2019
	HK$’000	HK$’000
EMS segment
Customer A	216,633	257,649
Customer B	65,569	117,363
Customer C	88,606	24,572
Customer D	80,159	58,037

4. REVENUE

Disaggregation of revenue

Disaggregation of revenue from contracts with customers by major products or service line for the year from continuing operations is as follows:

Revenue from contracts with customers within the scope of HKFRS 15 Disaggregated by major products or service lines — Sales of goods — Provision of catering service — Provision of real estate supply chain service Revenue from other sources Rental income	2020 HK$’000 580,214 – 14,155 594,369 654 595,023	2019 HK$’000 618,978 10,916 –
		629,894
		54
		629,948

– 13 –

4. REVENUE (CONT’D)

The Group derives revenue from the transfer of goods and services and at a point in time in the following major product lines and geographical regions:

	Electronic	Electronic	Marketing and	distribution	Securities and	Securities and	Real Estate	Real Estate
	manufacturing		of communications		other assets		Supply Chain
	services		products		investment		Services		Total
	2020	2019	2020	2019	2020	2019	2020	2019	2020	2019
	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000	HK$’000
Primary geographical markets
— The People’s Republic of
China (the “PRC”)
(including Hong Kong)	72,735	102,487	53	85	654	10,970	14,155	–	87,597	113,542
— The United States of
America (the “U.S.A.”)	11,266	31,934	32,118	34,424	–	–	–	–	43,384	66,358
— Switzerland	229,847	242,053	–	–	–	–	–	–	229,847	242,053
— France	72,292	56,800	–	–	–	–	–	–	72,292	56,800
— Poland	2,259	3,231	–	–	–	–	–	–	2,259	3,231
— United Kingdom	25,709	26,460	–	–	–	–	–	–	25,709	26,460
— Others	132,950	133,091	3,768	1,967	–	–	–	–	136,718	135,058
Segment revenue	547,058	596,056	35,939	36,476	654	10,970	14,155	–	597,806	643,502
Intersegment revenue
— The U.S.A	(2,783)	(13,554)	–	–	–	–	–	–	(2,783)	(13,554)
Revenue from external customers	544,275	582,502	35,939	36,476	654	10,970	14,155	–	595,023	629,948
Timing of revenue recognition
Products transferred at
a point in time	544,275	582,502	35,939	36,476	–	10,970	14,155	–	594,369	629,948
Products and services
transferred over time	–	–	–	–	654	–	–	–	654	–
Total	544,275	582,502	35,939	36,476	654	10,970	14,155	–	595,023	629,948

– 14 –

5. OTHER INCOME

Continuing operations Interest income on: Bank deposits Bank fixed deposits Loans to other parties Total interest income Government subsidy Reimbursement from suppliers for testing defective products Sale of scrap materials Service fee income Written off of trade payables Other OTHER GAINS AND LOSSES Continuing operations Gain on bargain purchase of subsidiary Gain on derecognition of financial liabilities Gain on modification of tenancy agreement Net foreign exchange (losses)/gains FINANCE COSTS Continuing operations Interest expenses on lease liabilities Interest on loans from financial institutions Interest on loans from independent third parties Other interest expenses	2020 HK$’000 82 874 5,665 6,621 3,916 360 348 398 391 298 12,332 2020 HK$’000 69 873 – (3,269) (2,327) 2020 HK$’000 3,266 1,109 553 – 4,928	2019 HK$’000 122 1,117 7,105
		8,344 250 1,658 166 – 455 1,518
		12,391
		2019 HK$’000 – – 6 3,930
		3,936
		2019 HK$’000 4,390 – 2,417 2
		6,809

6. OTHER GAINS AND LOSSES

7. FINANCE COSTS

– 15 –

8. INCOME TAX EXPENSE

Income tax relating to continuing operations has been recognised in profit or loss as follows:

	2020	2019
	HK$’000	HK$’000
Current tax — Hong Kong Profits Tax
Provision for the year	1,192	2,225
Under/(over)-provision in prior years	191	(1,218)
	1,383	1,007
Current tax — Overseas
Provision for the year	–	292
Under-provision in prior years	2	1
	2	293
Deferred tax	1,938	–
	3,323	1,300

Under the two-tiered profits tax regime, profits tax rate for the first HK$2 million of assessable profits of qualifying corporations established in Hong Kong will be taxed at 8.25% (2019: 8.25%), and profits above HK$2 million will continue to be subject to the tax rate of 16.5% (2019: 16.5%). For the other Hong Kong established subsidiaries, Hong Kong Profits Tax has been provided at a rate of 16.5% (2019: 16.5%) on the estimated assessable profits.

PRC Enterprises Income Tax has been provided at a rate of 25% (2019: 25%).

Tax charge on profits assessable elsewhere have been calculated at the rates of tax prevailing in the countries in which the Group operates, based on existing legislation, interpretation and practices in respect thereof.

The reconciliation between the income tax expense and the product of loss before tax multiplied by the Hong Kong Profits Tax rate is as follows:

Loss before tax (from continuing operations) Tax at the Hong Kong Profits Tax rate of 16.5% (2019: 16.5%) Tax effect of income that is not taxable Tax effect of expenses that are not deductible Tax effect of temporary differences not recognised Tax effect of tax concession Under/(over)-provision in prior years Tax effect of utilisation of tax losses not previously recognised Tax effect of tax losses not recognised Effect of different tax rates of subsidiaries Others Income tax expense (relating to continuing operations)	2020 HK$’000 (169,747) (28,008) (966) 26,824 2,385 (2,978) 193 (1,540) 12,432 (5,281) 262 3,323	2019 HK$’000 (163,288) (27,107) (1,903) 24,668 586 (2,002) (1,218) (772) 12,936 (3,428) (460) 1,300

– 16 –

9. DISCONTINUED OPERATION

On 31 December 2019, the Company entered into a sale and purchase agreement to dispose of interests in Anhui Huayuan Guoyi Medical Investment Management Limited (安徽華源國怡醫療投資管理有限公司) which is significant in the Group’s securities and other assets investment segment operations.

Loss for the year from discontinued operation: Revenue Cost of sales Other income Selling expenses Administrative expenses Other operating expenses Finance cost Loss before tax Income tax credit Gain on disposal of operation Loss for the year from discontinued operation	2019 HK$’000 58,204 (53,114) 451 (1,529) (3,824) (14,684) (1,283) (15,779) 286 (15,493) 754 (14,739)

10. DIVIDENDS

No dividends have been paid or proposed during the year ended 31 December 2020, nor has any dividend been proposed since the end of the reporting period (2019: Nil).

– 17 –

11. LOSS PER SHARE

From continuing and discontinued operations

The calculation of the basic and diluted loss per share is based on the following:

Loss Loss attributable to owners of the Company, used in the basic loss per share calculation (a) Basic loss per share Number of shares — Basic Weighted average number of ordinary shares for the purpose of calculating basic loss per share	2020 HK$’000 (173,052) 2020 375,230,709	2019 HK$’000 (171,735) 2019 (re-presented) 297,265,570

The comparative figure have been re-presented to reflect the implementation of share consolidation on the basis that every 20 issued and unissued ordinary shares of HK$0.001 each to be consolidated into 1 consolidated share of HK$0.02 each on 29 May 2020.

(b) Diluted loss per share

No diluted loss per share was presented as the Company did not have any diluted potential ordinary shares for the years ended 31 December 2020 and 2019.

From continuing operations

The calculation of the basic loss per share from continuing operations is based on the following:

Loss Loss attributable to owners of the Company, used in the basic loss per share calculation Less: Loss for the year from discontinued operation Loss attributable to owners of the Company, used in the basic loss per share calculation from continuing operations	2020 HK$’000 (173,052) – (173,052)	2019 HK$’000 (171,735) (7,147) (164,588)

From discontinued operation

Basic and diluted earnings per share from discontinued operation are not applicable for the year ended 31 December 2020. Basic and diluted earnings per share from the discontinued operation for the year ended 31 December 2019 are 2.415 HK cents and 2.415 HK cents, respectively. Basic and diluted earnings per share calculation is based on loss for the year ended 31 December 2019 from discontinued operation attributable to the owners of the Company of approximately HK$7,147,000 and the denominators used are the same as those set out above.

– 18 –

12. TRADE RECEIVABLES

Trade receivables Allowance for trade receivables	2020 HK$’000 169,224 (3,811) 165,413	2019 HK$’000 132,912 (1,860) 131,052

The Group’s trading terms with customers are mainly on credit. The credit terms generally range from 30 to 120 days. Each customer has a maximum credit limit. For new customers, payment in advance is normally required. The Group seeks to maintain strict control over its outstanding receivables. Overdue balances are reviewed regularly by the directors.

The aging analysis of trade receivables, based on the invoice date, and net of allowance, is as follows:

0 to 90 days 91 to 180 days 181 to 365 days Over 365 days Reconciliation of allowance for trade receivables: At the beginning of year Impairment losses for the year Bad debts written off Reversal of allowance for bad debts Disposal of a subsidiary At 31 December	2020 HK$’000 136,286 27,616 672 839 165,413 2020 HK$’000 1,860 2,099 (132) (16) – 3,811	2019 HK$’000 108,667 22,142 133 110 131,052 2019 HK$’000 444 1,550 – – (134) 1,860

The individually impaired trade receivables relate to customers that were in financial difficulties or were in default in payments and the receivables are not expected to be recovered.

– 19 –

The carrying amounts of the Group’s trade receivables are denominated in the following currencies:

United States dollar (“USD”) Hong Kong dollar (“HKD”) Renminbi (“RMB”) Total	2020 HK$’000 160,051 – 5,362 165,413	2019 HK$’000 127,490 29 3,533
		131,052

13. TRADE PAYABLES

The aging analysis of trade payables, based on invoice date, is as follows:

0 to 90 days 91 to 180 days 181 to 365 days Over 365 days	2020 HK$’000 80,690 6,289 59 315 • 87,353	2019 HK$’000 46,675 6,601 234 912
		54,422

The carrying amounts of the Group’s trade payables are denominated in the following currencies:

USD HKD RMB Euro Total	2020 HK$’000 48,650 30,940 7,763 – 87,353	2019 HK$’000 22,986 25,500 5,827 109
		54,422

– 20 –

MATERIAL DIFFERENCES BETWEEN 2020 UNAUDITED AND AUDITED ANNUAL RESULTS

The auditing process for the annual results for the year ended 31 December 2020 had not been completed as at the date of publication of Unaudited Annual Results Announcement. Since subsequent adjustments have been made to the unaudited annual results of the Group contained in the Unaudited Annual Results Announcement upon the completion of audit, shareholders and potential investors of the Company are advised to pay attention to certain differences between the unaudited annual results of the Group contained in the Unaudited Annual Results Announcement and the audited annual results of the Group in this announcement. Set out as below are principal details and reasons for the differences in such financial information in accordance with Rule 13.49(3)(ii)(b) of the Listing Rules.

The main details and reasons for the significant differences in the financial information are set out below.

	Year ended 31 December	Year ended 31 December	2020
		Disclosure in
	Disclosure in	the Unaudited
	this	Annual Results
	announcement	Announcement	Difference
	HK$’000	HK$’000	HK$’000
CONSOLIDATED STATEMENT OF
PROFIT OR LOSS
Cost of sales	(440,311)	(441,911)	1,600
Gross profit	154,712	153,112	1,600
Other income	12,332	13,932	(1,600)
Selling and distribution expenses	(56,317)	(79,567)	23,250
Administrative expenses	(178,158)	(150,708)	(27,450)
Impairment loss for loans to other parties, net	(23,471)	(36,352)	12,881
Impairment losses for deposits	–	(17,900)	17,900
Impairment losses for other receivables	(18,165)	(265)	(17,900)
Impairment losses for intangible assets	(14,130)	(22,750)	8,620
Other expenses	(14,309)	(17,309)	3,000
Loss from operations	(152,197)	(172,498)	20,301
Loss before tax	(169,747)	(190,048)	20,301
Loss for the year from continuing operations	(173,070)	(193,371)	20,301
Loss for the year	(173,070)	(193,371)	20,301
Loss for the year attributable to owners
of the Company	(173,052)	(193,353)	20,301
Loss per share
— from continuing and discontinued operations
Basic (HK cents per share)	(46.119)	(51.529)	5.41
— from continuing operations
Basic (HK cents per share)	(46.119)	(51.529)	5.41

– 21 –

	Year ended 31 December	Year ended 31 December	2020
		Disclosure in
	Disclosure in	the Unaudited
	this	Annual Results
	announcement	Announcement	Difference
	HK$’000	HK$’000	HK$’000
Items that may be reclassified to profit or loss:
Exchange differences on translating foreign
operations	1,200	626	574
Other comprehensive income for the year,
net of tax	(11,012)	(11,586)	574
Total comprehensive income for the year	(184,082)	(204,957)	20,875
Total comprehensive income
attributable to owners of the Company	(184,064)	(204,939)	20,875
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
Current assets
Loans to other parties	38,695	25,814	12,881
Total current assets	511,504	498,623	12,881
TOTAL ASSETS	657,405	644,524	12,881
Equity
Reserves	286,903	275,222	11,681
Total equity	295,934	284,253	11,681
Accruals and other payable	187,266	186,066	1,200
Total current liabilities	330,549	329,349	1,200
TOTAL EQUITY AND LIABILITIES	657,405	644,524	12,881

These differences are mainly due to:

• the adjustments to the expected credit losses with respect to loans to other parties;

• the adjustments for provision of impairment in relation to the net carrying values of intangible assets;

• the adjustments to administrative expenses in relation to the accruals; and

• the adjustment for reclassification of certain amounts.

– 22 –

EXTRACTS OF THE INDEPENDENT AUDITOR’S REPORT

The Auditor has issued qualified opinion (“ Qualified Opinion ”) in the independent auditor’s report on the company’s consolidated financial statements for the year ended 31 December 2020:

Qualified Opinion

In our opinion, except for the possible effects of the matters described in the Basis for Qualified Opinion section of our report, the consolidated financial statements give a true and fair view of the consolidated financial position of the Group as at 31 December 2020, and of its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards (“ HKFRSs ”) issued by the Hong Kong Institute of Certified Public Accountants (the “ HKICPA ”) and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.

Basis for Qualified Opinion

• (1) Scope limitations on inability to obtain sufficient appropriate audit evidence for a loan to other party and the related interest income and impairment

In March 2020, the Company entered into a loan agreement with a company (“ Company B ”) pursuant to which the Company granted a short-term loan of HK$16,000,000 to Company B, bearing interest at 10% per annum, unsecured and repayable on 30 June 2020. As indicated in the loan agreement, the purpose of the loan was solely for financing of Company B’s operation and market expansion.

Company B failed to make repayment upon maturity. After negotiation, a repayment schedule with monthly instalments was agreed and the maturity date was extended to 31 December 2020 but no repayment was received before end of reporting period. As at 31 December 2020, the aggregate carrying amounts of the loan receivable and interest receivable (before impairment) amounted to approximately HK$17,944,000. Up to the date of this report, a total amount of HK$14,881,000 was recovered. Impairment loss of HK$3,063,000 was recognised for the year ended 31 December 2020.

Management of Company B represented that Company B has been engaging in investing in clinics offering medical cosmetology and reproductive technology services in Southeast Asia. However, Company B and the Company were not able to provide us with sufficient appropriate audit evidence in relation to the existence of Company B’s operations.

Due to the above scope limitations, we were unable to obtain satisfactory audit evidence regarding (i) the business rationale and commercial substance of the purported loan, and (ii) whether the purported loan, the related interest income and impairment had been properly accounted for in the consolidated financial statements of the Group.

– 23 –

Any adjustments found to be necessary in respect of the aforementioned purported loan, had we obtained sufficient appropriate audit evidence, might have a consequential effect on the net assets of the Group as at 31 December 2020, and its loss and cash flows for the year then ended, as well as the presentation and disclosure in the consolidated financial statements. Any adjustments found to be necessary might also have consequential effect on the net assets of the Company as at 31 December 2020 as disclosed in note 42 to the consolidated financial statements.

• (2) Scope limitations on inability to obtain sufficient appropriate audit evidence for certain prepayments

During April 2020, the Group has entered into two service contracts with a company (“ Company R ”) for Company R’s provision of services to assist the Group to obtain exclusive sales rights of certain properties in 2 Asian countries. The total prepaid service fees under these two service contracts were HK$9,500,000 as at end of reporting period.

We were provided with an assessment of the recoverability of the prepayment prepared by the Group’s management based on its value in use. The assessment involved significant management judgements and estimations in relation to the additional costs to be incurred to obtain the exclusive sales rights and the expected sales of the properties. We were not provided with sufficient appropriate audit evidence to support the reasonableness of the assumptions made by management in estimating the recoverable amount of the prepayment. Accordingly, we were unable to determine whether any impairment of the prepaid service fees should be recognised in the consolidated financial statements for the year ended 31 December 2020.

Any adjustments found to be necessary in respect of the possible impairment of the prepaid service fees, had we obtained sufficient appropriate audit evidence, might have a consequential effect on the net assets of the Group as at 31 December 2020 and its loss and cash flows for the year ended, as well as the presentation and disclosure in the consolidated financial statements.

We conducted our audit in accordance with Hong Kong Standards on Auditing (“ HKSAs ”) issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the HKICPA’s Code of Ethics for Professional Accountants (the “ Code ”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.

– 24 –

MANAGEMENT DISCUSSION AND ANALYSIS

BUSINESS OVERVIEW

The COVID-19 pandemic has sent the global economy into one of its worst recessions ever, forcing countries and cities into months of lockdowns in 2020 that markedly reduced economic activity. During the Year, China’s economy grew 2.3% at the slowest pace it had experienced in decades.

Given the grim operating environment, the Group saw its EMS and Distribution of Communication Products segment recording a declining performance with a decrease in revenue of approximately 6.3%.

The Group has embraced a dual approach to drive faster and steadier revenue growth in the future. As part of this strategy, the Group changed its name officially from “Link-Asia International Co. Ltd” to “Link-Asia International MedTech Group Limited” in early 2021 to pursue the vision of becoming a medical technology group to offer assisted reproductive technology, including both related products and services, to meet the fertility needs of highend customers in the region especially mainland China.

Concurrently, the Group has stepped into the lucrative real-estate market in South-east Asia with its enormous housing needs. To this end, the Group has leveraged on its business network to source high-quality real estate projects in the region since the second half of 2019. These efforts will intensify when the current pandemic, which restricts air travel and upends supply chains, shows signs of easing in 2021.

For the Year, the Group generated total revenue from continuing operations of approximately HK$595.0 million (2019: HK$629.9 million). Gross profit from continuing operations amounted to approximately HK$154.7 million (2019: HK$135.8 million), and loss attributable to owners of the Company amounted to approximately HK$173.1 million (2019: HK$171.7 million).

As at 31 December 2020, the Group had bank and cash balances totalling approximately HK$167.7 million (2019: HK$241.4 million) with efforts made to maintain a healthy financial position.

REVIEW OF OPERATIONS

The EMS and Distribution of Communications Products Businesses

The EMS and Distribution of Communication Products businesses contributed revenue of approximately HK$544.3 million (2019: HK$582.5 million) and HK$35.9 million (2019: HK$36.5 million), respectively, to the Group. This segment was hardest hit following the outbreak of the pandemic in the early part of 2020, when factories in mainland China were forced to close and market demand remained weak in the face of economic uncertainty.

Overall, the segment generated a relatively stable performance in turnover to register a mild decrease of approximately 6.3% in 2020.

– 25 –

Real Estate Supply Chain Services

Real Estate Supply Chain Services business started its contribution to the Group’s revenue in the Year. Revenue from the Real Estate Supply Chain Services operation provides two types of services, comprising the real estate advisory service and real estate purchase service related to investment opportunities in Southeast Asia and Pan Asia markets on behalf of customers. Revenue is recognised at a point in time upon completion of each service. This segment has contributed approximately HK$14.2 million (2019: Nil) for the Year.

Even though the Real Estate Supply Chain Services business has brought in a new revenue stream to the Group, it is heavily and adversely affected by the border control and quarantine measures due to COVID-19. Normal business travelling is suspended between the PRC and Southeast Asian and Pan Asian countries. The Board expected that this business sector will improve with the coming break-through in vaccine and medication of COVID-19.

Securities and Other Assets Investment

The losses accrued from this segment declined with the disposal of the Group’s catering business, which had been underperforming through the years, coupled with revenue generated from the rental property it owns. As a result, the Securities and Other Assets Investment business contributed revenue of approximately HK$0.7 million (2019: HK$11.0 million) to the Group during the Year.

Geographical Analysis

Revenue from the major European countries (the United Kingdom, Switzerland, Poland and France) totalled approximately HK$330.1 million (2019: HK$328.5 million), and accounted for approximately 55.5% (2019: 52.2%) of the Group’s revenue from continuing operations for the Year. The U.S.A. market contributed approximately HK$40.6 million (2019: HK$52.8 million) in revenue and accounted for approximately 6.8% (2019: 8.4%) of the Group’s revenue from continuing operations. The PRC (including Hong Kong) and other countries accounted for approximately HK$87.6 million (2019: HK$113.5 million) and HK$136.7 million (2019: HK$135.1 million), respectively, representing approximately 14.7% (2019: 18.0%) and 23.0% (2019: 21.4%) of the Group’s revenue from continuing operations.

FINANCIAL REVIEW

Revenue

For the Year, the Group recorded total revenue from continuing operations of approximately HK$595.0 million (2019: HK$629.9 million).

Cost of Sales

Cost of sales from continuing operations decreased by approximately 10.9% from approximately HK$494.1 million in 2019 to HK$440.3 million in 2020 in line with the decrease of the revenue.

– 26 –

Gross Profit

Gross profit from continuing operations increased by approximately 13.9% from approximately HK$135.8 million in 2019 to HK$154.7 million in 2020, as a result of a gross profit contribution from the new segment, the Real Estate Supply Chain Services business, with a higher gross profit margin.

Other income

Other income from continuing operations remained stable in 2020 of approximately HK$12.3 million (2019: HK$12.4 million).

Other gains and losses

Other net losses of approximately HK$2.3 million in 2020 (2019: net gain of approximately HK$3.9 million) were due to net foreign exchange losses during the Year while a net gain in 2019.

Impairment losses

The Group made overall impairment losses of approximately HK$68.1 million on certain assets for the Year, representing an increase by approximately HK$10.2 million (2019: HK$57.9 million). The increase was mainly due to the increase in impairment losses for other receivables of approximately HK$16.4 million, impairment losses on investments in associates by approximately HK$10.3 million and impairment losses on intangible assets by approximately HK$14.1 million, offsetting by a decrease in impairment losses for loans to other parties by approximately HK$31.1 million.

Selling and distribution expenses

Selling and distribution expenses from continuing operations of approximately HK$56.3 million (2019: HK$28.8 million) accounted for approximately 9.5% in 2020 and 4.6% in 2019 of the Group’s revenue from continuing operations, respectively. The increase was mainly due to the increase in expenses, including advertising and promotion, employment expenses, travelling expenses, business development and other expenses, for the Real Estate Supply Chain Services business of approximately HK$26.6 million for the Year.

Administrative expenses

Administrative expenses from continuing operations of approximately HK$178.2 million (2019: HK$179.4 million) accounted for approximately 29.9% in 2020 and approximately 28.5% in 2019 of the Group’s revenue from continuing operations, respectively. The administrative expenses remained stable as compared to last year.

– 27 –

Other expenses

Other operating expenses from continuing operations decreased by approximately HK$28.2 million from approximately HK$42.5 million in 2019 to approximately HK$14.3 million in 2020. The decrease in other operating expenses was mainly due to no bad debts written off and bad debts provision of approximately HK$5.4 million, no loss of disposal of subsidiary (2019: approximately HK$19.2 million) and no reinstatement provision (2019: approximately HK$1.5 million) during the Year.

Finance costs

The Group’s finance costs from continuing operations were approximately HK$4.9 million in 2020 and HK$6.8 million in 2019, represented approximately 0.8% and 1.1% of the Group’s revenue from continuing operations in 2020 and 2019, respectively. The decrease in finance costs during the Year was mainly due to the decrease in interest on lease liabilities by approximately HK$3.2 million.

Income tax expense

Income tax expense from continuing operations during the Year included approximately HK$1.4 million of current tax charge (2019: HK$1.3 million) and approximately HK$1.9 million of deferred tax charge (2019: HK$Nil). The tax charges mainly represented the income tax provision at the applicable tax rate in accordance with the relevant laws and regulations in Hong Kong, the PRC and the U.S.A..

Loss attributable to owners of the Company

The loss attributed to owners of the Company was approximately HK$173.1 million for the Year (2019: HK$171.7 million). The Group’s net loss margin attributable to owners of the Company for the Year was approximately –29.1% (2019: –27.3%).

Loss for the year attributable to non-controlling interests

Loss for the year attributable to non-controlling interests amounted to approximately HK$18,000 for the year ended 31 December 2020 (2019: HK$7.6 million). The decrease was mainly due to no loss attributable to the non-controlling interests mainly contributed by the sales of medical equipments in the PRC for the Year as it was disposed in 2019. For details of the Group’s discontinued operations in 2019, please refer to Note 9 to the consolidated financial statements.

LIQUIDITY AND CAPITAL RESOURCES

The Group generally finances its operations and capital expenditure by internally generated cashflows.

As at 31 December 2020, the bank and cash balances amounted to approximately HK$167.7 million (2019: HK$241.4 million), representing an decrease of approximately HK$73.7 million from 2019. Respective sum of approximately 7.9%, 48.7% and 43.2% of the bank and cash balances was denominated in RMB, USD and HKD, respectively.

– 28 –

The Group’s current ratio remains in a healthy position at 1.5 times (2019: 1.9 times).

As at 31 December 2020, the carrying amounts of the loan from bank and loan from an independent third party were approximately HK$18.0 million and HK$0.6 million, respectively. As at 31 December 2019, the borrowings represented the loan from a related company and loan from an independent third party of approximately HK$0.6 million and HK$20 million, respectively.

Cash flow

In 2020, approximately HK$16.0 million was used in the operating activities. Net cash used in investing activities was approximately HK$95.2 million and net cash generated from financing activities was approximately HK$35.2 million for the Year.

Exchange risk exposure

The Group has transactional currency exposures. Such exposures arise from the business operations in the PRC and Hong Kong denominated in RMB and USD, respectively. As at 31 December 2020, the Group had minimal exposure to foreign currency risk as most of its business transactions, assets and liabilities were principally denominated in the respective functional currencies, i.e. RMB and USD, used by the respective group entities, or in USD for the respective group entities with HKD being the functional currency. As HKD is pegged to USD, the Group considers the risk of movements in exchange rates between HKD and USD to be insignificant for transactions denominated in USD. The RMB is not freely convertible into other foreign currencies and conversion of the RMB into foreign currencies is subject to rules and regulations of foreign exchange control promulgated by the PRC government. As at 31 December 2020, the Group does not have a foreign currency hedging policy in respect of its foreign currency assets and liabilities. The Group had no investment in any financial derivatives, foreign exchange contracts, interest or currency swaps, hedging or other financial arrangements for hedging purposes to reduce any currency risk nor made any over-the-counter contingent forward transactions. The Group will closely monitor its foreign currency exposure and will consider using hedging instruments in respect of significant foreign currency exposure as and when appropriate.

Capital expenditure

Capital expenditure for 2020 amounted to approximately HK$63.9 million and capital commitments as at 31 December 2020 amounted to approximately HK$0.9 million. Both the capital expenditure and capital commitments were mainly related to the acquisition of plant and machinery to replace retired ones.

Pledge of assets

As at 31 December 2020, an investment property of approximately HK$30.0 million was pledged to an independent third party to secure a loan facility available to the Group.

– 29 –

Financial guarantee contract

As at 31 December 2019 and 2020, the Group had an outstanding guarantee (the “ Guarantee ”) to one of the suppliers of an overseas subsidiary (the “ Disposed Subsidiary ”), which was disposed on 7 October 2015, for payment in relation to a sum of US$2.6 million (equivalent to approximately HK$20.3 million), representing a trade balance under dispute between the Disposed Subsidiary and the supplier. The supplier subsequently sold the trade balance to a third party.

During 2017, the Disposed Subsidiary had agreed with the third party for a final settlement by instalment of US$650,000 (equivalent to approximately HK$5.1 million). In this regards, as at 31 December 2020, the Group had an outstanding guarantee of the sum limited to US$650,000, subject to the full payment of the final settlement effected by the Disposed Subsidiary.

The Disposed Subsidiary had issued counter guarantee to the Company to indemnify the Company for any loss in relation to the Guarantee.

Contingent liabilities

The Group and the Company did not have any significant contingent liabilities.

Significant investments

As at 31 December 2020, the Group did not hold any listed equity investments. As at 31 December 2019, the Group held at fair value of approximately HK$13.4 million, which were classified as equity investments at fair value through other comprehensive income (“ FVTOCI ”). The fair value change in respect of such investments of approximately HK$12.2 million (2019: upward movement of HK$9.4 million) was recorded in other comprehensive income. No dividend income was received during the year ended 31 December 2020 in respect of these investments.

Apart from the aforesaid transactions, there were no other material investment by the Group that should be notified to the Shareholders of the Company.

Human resources

As at 31 December 2020, the Group had approximately 1,050 employees in various operating units located in Hong Kong, U.S.A. and the PRC. In order to attract and retain high quality talents to ensure smooth operation and cater for the Group’s constant expansion, it offers competitive remuneration packages, with reference to market conditions, individual qualifications and experience.

There is no outstanding share option as at 31 December 2020 and 2019. In addition, no share option was granted, cancelled or lapsed during the year ended 31 December 2020.

– 30 –

SIGNIFICANT EVENTS DURING THE YEAR ENDED 31 DECEMBER 2020

Placing of new shares

On 19 February 2020, an aggregate of 1,189,060,000 shares of the Company with a nominal value of HK$0.001 each has been successfully placed at HK$0.035 per share. The net proceeds from the placing shares (after deduction of commission and other expenses of said placing of new shares) amounted to approximately HK$41.4 million. For details, please refer to the announcements of the Company dated 29 January 2020, 3 February 2020 and 19 February 2020.

Share Option Schemes

On 17 February 2020, the Company proposed to the shareholders of the Company at the extraordinary general meeting to be held on 10 March 2020 (the “ EGM ”) to terminate the share option scheme adopted by the Company on 31 December 2010 (the “ 2010 Share Option Scheme ”) and to approve and adopt a new share option scheme (the “ New Share Option Scheme ”). Details of the New Share Option Scheme are set out in the circular of the Company dated 17 February 2020.

On 10 March 2020, at the EGM, the proposed adoption of the New Share Option Scheme and the termination of the 2010 Share Option Scheme were duly passed by the Shareholders by way of poll.

Settlement of litigation and assignment of loans

On 21 October 2019, the Company was served a writ of summons issued by the Court of First Instance of the High Court of the Hong Kong Special Administrative Region by Bright Mark Enterprises Limited (the “ Assignee ”) as the plaintiff against the Company as the defendant (the “ Legal Proceedings ”) in relation to a sum of HK$20,000,000, being the loan principal under a facility agreement, plus interest (the “ Debt ”).

On 24 March 2020, the Company and the Assignee entered into a settlement agreement in respect of the Legal Proceedings, pursuant to which, amongst others, (i) Wise State Investment Limited, a wholly owned subsidiary of the Company (“ Wise State ”), agreed to assign all rights, titles and benefits in the Loans to the Assignee,(ii) the Assignee unconditionally and irrevocably agreed in writing to waive its right to claim against the Company and/or the Group under the Debt and be responsible for any cost or liability under the settlement for the Debt, and (iii) the Assignee agreed to release and discharge the charged securities pursuant to a deed of release, and release and wholly extinguish all rights and obligations arising or capable of arising out of a deed of charge. The Company has been released from any liabilities and obligations borne under the Debt as at 24 March 2020. For details, please refer to the announcements of the Company dated 23 October 2019 and 24 March 2020.

Share Consolidation

On 29 May 2020, the Company implemented a share consolidation on the basis that every 20 issued and unissued ordinary shares of HK$0.001 each to be consolidated into 1 consolidated share of HK$0.02 each. For details, please refer to the announcements of the Company dated 27 April 2020 and 27 May 2020 and the circular of the Company dated 8 May 2020.

– 31 –

Disclosable Transaction in Relation to Transfer of Exclusive Agency Rights Involving the Issue of Consideration Shares under General Mandate

On 28 July 2020, Natural Perseverance Limited (the “ Purchaser ”), a direct wholly-owned subsidiary of the Company, the Company and Ratchaphruek Global Group Co., Ltd (the “ Vendor ”) entered into a transfer of exclusive agency rights agreement (the “ Transfer Agreement ”), pursuant to which, the Purchaser has conditionally agreed to accept the transfer of and the Vendor has conditionally agreed to transfer certain rights to be the exclusive agent for the sale of target properties (the “ Exclusive Agency Rights ”) by way of novation at the consideration of HK$27 million (the “ Consideration ”), which will be satisfied by the issue and allotment of the new Shares to be issued to the Vendor (the “ Consideration Shares ”) at the issue price of HK$0.379 per Consideration Share by the Company upon completion of Transfer Agreement (the “ Completion ”).

The Completion took place on 18 August 2020. 71,240,000 Consideration Shares were allotted and issued at the issue price of HK$0.379 each by the Company to the Vendor to satisfy the Consideration. The Consideration Shares represent approximately 20.0% of the number of issued Shares immediately before the Completion and represent approximately 16.6% of the number of issued Shares as enlarged by the allotment and issue of the Consideration Shares.

For details, please refer to the announcements of the Company dated 28 July 2020, 12 August 2020 and 18 August 2020.

Change of Company Name

Pursuant to a special resolution passed at the extraordinary general meeting of the Company held on 2 December 2020, it is approved that the English name of the Company be changed from “Link-Asia International Co. Ltd.” to “Link-Asia International MedTech Group Limited” and its dual foreign name in Chinese be changed from “環亞國際實業有限公司” to “環亞國 際醫療科技集團有限公司”. For details, please refer to the announcement of the Company dated 2 November 2020 and the circular of the Company dated 10 November 2020.

The company name, stock short name and company logo have been subsequently changed. For details, please refer to the announcement of the Company dated 8 January 2021.

Saved as disclosed in this announcement, the Directors are not aware of any significant event requiring disclosure that has taken place during the year ended 31 December 2020.

PROSPECTS

The International Monetary Fund (IMF) recently expects that the global economy to grow by approximately of 5.5% in 2021, representing a slight increase of 0.3% from its earlier estimate in October 2020, citing expectations of a vaccine-driven uptick in the coming months. China’s economy is expected to expand by approximately 8.1% in 2021 and approximately 5.6% in 2022, according to the information from the IMF. In addition, the new Biden administration in the United States is likely to affect international trade and geopolitics with a return to a more multilateralist foreign policy.

– 32 –

However, analysts caution that it will be a long and uneven recovery, due to the pandemic’s lingering impact and uncertainties. Facing an uncertain future, the Group considers it is imperative to maintain a healthy financial position and ensure our business continuity. The current situation also gives us the opportunity to improve and invest in our business model. We will therefore focus on diversifying our revenue streams and proceed with plans to develop high-end medical and health services.

Meanwhile, we will consolidate our core EMS and the Distribution of Communication Products businesses. Based on our experience in the electronics sector and insights of the industry trends, both the segments will experience a strong market recovery from the pent-up demand of consumers when the pandemic begins to abate.

With the implementation of the vaccination programmes, most countries are expected to experience a relatively strong recovery in the second half of this year. In this best-case scenario, the Group will resume its plans of setting foot in the Real Estate Supply Chain Services business, in order to capture the strong housing demand of young homebuyers in Southeast Asia.

The prospects for the Group's proposed entry into the industry are equally bright. With a large and expanding stock of immediate demand in the assisted reproductive industry and a scarcity of quality medical services providers, the Group closely focused on this industry chain and our service preparations, in search of opportunities to provide us with the right entry points into the market. Following this, we will undertake strategic layout of the assisted reproduction industry chain in an in-depth manner. The Group aims to be the leading medium-and-high-end assisted reproductive technologies medical group in Asia Pacific, leveraging on its core medical technologies and proven capabilities to acquire customers and provide internationalised, integrated and professional assisted reproductive services to meet the medical needs of the reproduction, as well as provides customers with a comprehensive and systematic prenatal and postnatal care solutions to their fertility needs.

The Group will adopt a sound business strategy that combines a diversified approach to business to drive the growth in profits.

OTHER INFORMATION

Dividends

The Board does not recommend the payment of a dividend for the year ended 31 December 2020 (2019: nil).

Purchase, Sale or Redemption of Listed Securities of the Company

There was no purchase, sale or redemption of the Company’s listed securities by the Company or any of the subsidiaries during the year ended 31 December 2020.

– 33 –

Significant Events After the Year Ended 31 December 2020

• (i) Placing of new shares of the Company (the “ Placing ”)

On 30 December 2020, the Company and China Tonghai Securities Limited (the “ Sole Placing Agent ”) entered into a placing agreement (the “ Placing Agreement ”), pursuant to which the Company has conditionally agreed to place through the Sole Placing Agent, on a best endeavour basis, in aggregate of up to 85,580,000 new shares of the Company to be allotted and issued pursuant to the terms and conditions of the Placing Agreement (the “ Placing Shares ”). On 11 January 2021, the condition precedent set out in the Placing Agreement had been fulfilled, and completion of the Placing took place on 11 January 2021 in accordance with the terms and conditions of the Placing Agreement. An aggregate of 85,580,000 Placing Shares, which represents approximately 19.67% of the issued share capital of the Company immediately after completion of the Placing, has been successfully placed to not less than six Placees, at the placing price of HK$0.035 per Placing Share. The net proceeds from the Placing (after deduction of commission and other expenses of the Placing) are approximately HK$29.2 million.

Details of the Placing are set out in the announcements of the Company dated 30 December 2020 and 11 January 2021.

• (ii) Grant of share options

On 28 January 2021, 35,671,850 share options to subscribe for the ordinary shares of HK$0.02 each in the share capital of the Company were granted to certain Directors and employees of the Group (the “ Grantees ”), subject to acceptance of the Grantees, under the share option scheme adopted by the Company on 10 March 2020. The share options granted shall vest in the Grantees in accordance with their respective the timetable.

Details of the grant of share options are set out in the announcement of the Company dated 28 January 2021.

• (iii) Potential acquisition of controlling interest in the Target Company

On 4 March 2021, a wholly-owned subsidiary of the Group entered into a memorandum of understanding with I.Baby Technology Investments Limited (the “ Potential Vendor ”) and I.Baby Technology Holdings Limited (the “ Target Company ”), pursuant to which the Potential Vendor intends to dispose a certain number of issued shares of the Target Company that constitute a controlling interest of the Target Company, to the Company including its designated party(ies).

The Target Company is a company incorporated in the laws of Hong Kong with limited liability. Based on the information provided by the Target Company, the Target Company operates the brand “I. Baby ARS & Eugenics” and engages in the provision of prepregnancy care and assisted reproductive service in China.

For details of the potential acquisition of controlling interest in the Target Company, please refer to the Company’s announcement dated 4 March 2021.

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Code on Corporate Governance Practices

The corporate governance practices are based on the Corporate Governance Code and Corporate Governance Report (the “ Code ”) as set out in Appendix 14 to the Listing Rules. Throughout the year ended 31 December 2020, the Company has applied the principles and complied with all the applicable code provisions set out in the Code, except for the deviation from code provision A.2.1 of the Code as described below.

Code Provision A.2.1

Under code provision A.2.1 of the Code, the roles of chairman and chief executive officer should be separated and should not be performed by the same individual. The Company does not have any officer with the title of “chief executive officer” and this is deviated from the code provision A.2.1 of the Code.

Mr. Lin Dailian, who acts as the chairman and an executive Director of the Company, is also responsible for overseeing the general operations of the Group. The Board will meet regularly to consider major matters affecting the operations of the Group. The Board considers that this structure will not impair the balance of power and authority between the Board and the management of the Group. The roles of the respective executive Directors and senior management, who are in charge of different functions complement the role of the chairman and chief executive officer. The Board believes that this structure is conducive to strong and consistent leadership enabling the Group to operate efficiently.

The Company understands the importance to comply with the code provision A.2.1 and will continue to consider the feasibility to comply with the said code provision. If compliance with the said provision is determined, appropriate persons will be nominated to assume the different roles of chairman and chief executive officer.

On 3 April 2020, Mr. Wang Guozhen (the “ Mr. Wang ”) was re-designated from an independent non-executive Director to an executive Director, and was appointed as the president of the Company. He ceased to be a member of each of the remuneration committee, nomination committee and audit committee of the Company (the “ Audit Committee ”) with effective 3 April 2020.

Upon the re-designation of Mr. Wang, the number of independent non-executive Directors and members of the Audit Committee fell below the requirements under Rules 3.10(1) and 3.21 of the Listing Rules. According to Rule 3.11 and 3.23 of the Listing Rules, the Company is required to meet the requirements set out in Rule 3.10(1) and 3.21 of the Listing Rules within three months after failing to meet the requirements.

Following the appointment of Mr. Yang Weidong on 24 April 2020 as an independent nonexecutive Director and the member of the Audit Committee, the Company has complied with Rules 3.10(1) of the Listing Rules in relation to the composition of the Board and Rule 3.21 of the Listing Rules with regard to the composition of the Audit Committee.

On 19 October 2020, Mr. Bao Jinqiao (the “ Mr. Bao ”) resigned as an independent nonexecutive Director and ceased to be a member of Audit Committee, the chairman of each of the remuneration committee and the nomination committee of the Company.

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Upon the resignation of Mr. Bao, the number of independent non-executive Directors and members of the Audit Committee fell below the requirements under Rules 3.10(1) and 3.21 of the Listing Rules. According to Rule 3.11 and 3.23 of the Listing Rules, the Company is required to meet the requirements set out in Rule 3.10(1) and 3.21 of the Listing Rules within three months after failing to meet the requirements.

Following the appointment of Dr. Sun Xiaohu on 6 January 2021 as an independent nonexecutive Director and the member of the Audit Committee, the Company has complied with Rules 3.10(1) of the Listing Rules in relation to the composition of the Board and Rule 3.21 of the Listing Rules with regard to the composition of the Audit Committee.

Compliance with the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”)

The Company has adopted the Model Code as set out in Appendix 10 to the Listing Rules as the code of conduct for securities transactions carried out by the directors. All Directors, after specific enquiries by the Company, confirmed that they had complied with the required standard set out in the Model Code throughout the year.

Audit Committee

The Audit Committee currently has three members comprising Mr. Li Huiwu (chairman), Mr. Yang Weidong and Dr. Sun Xiaohu, all being independent non-executive Directors. The primary duties of the Audit Committee are mainly to review and supervise the financial reporting process and internal control system of the Group.

The Audit Committee has discussed with the management of the Company on the accounting principles and practices adopted by the Group, internal controls, risk management and financial reporting matters on 31 March 2021. The Audit Committee has also reviewed and discussed with the management about the announcement of audited annual financial results of the Group for the year ended 31 December 2020.

SCOPE OF WORK OF RSM HONG KONG

The figures in respect of the Group’s consolidated statement of financial position, consolidated statement of profit or loss and other comprehensive income, and the related notes thereto for the year ended 31 December 2020 as set out in this further announcement have been agreed by the Group’s auditor, RSM Hong Kong, to the amounts set out in the Group’s audited consolidated financial statements for the year. The work performed by RSM Hong Kong in this respect did not constitute an assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the Hong Kong Institute of Certified Public Accountants and consequently no assurance has been expressed by RSM Hong Kong on this further announcement.

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QUALIFIED OPINION OF THE AUDITOR ON THE 2020 AUDITED FINANCIAL STATEMENTS

View of the management and the Audit Committee on the Qualified Opinion

As stated in “Extracts of the independent auditor’s report — Basis for Qualified Opinion” above, the management of the Company (“ Management ”) has given careful considerations to the Qualified Opinion and would like to address as follows.

• (1) Scope limitations on inability to obtain sufficient appropriate audit evidence for a loan to other party and the related interest income and impairment

At the beginning of 2020, the outbreak of COVID-19 brought challenges to the Group’s business development. The Management planned to explore and diversify channel resources in Southeast Asia markets for the Real Estate Supply Chain segment, and sow seeds in new markets to improve profitability and acquire new customers for future business growth.

According to the understanding of the Management, Company B is principally engaged in the biotech product trading business and the family of its controlling shareholders also has resources and channels on medical products and technology in Southeast Asian countries and regions, which can help the Company to sell medical products and have the opportunity to bring potential customers for the Company’s real estate supply chain business in Southeast Asia. Hence, the Directors approved the proposal of the loan.

The Management believes that this loan has a reasonable commercial basis and commercial substance. Up to the date of this report, the Company received the repayment of loan principal of HK$12,000,000 and accrued interest including additional interest of approximately HK$2,881,000 in accordance with the terms of loan agreement.

• (2) Scope limitations on inability to obtain audit sufficient appropriate evidence for certain prepayments

Up to 31 December 2020, the Group has received information of 5 potential projects in each of Vietnam and Thailand. The information included project brochure, project status and price list. However, the outbreak of COVID-19 has brought upon unprecedented challenges and multiple obstacles for the Group to explore business opportunities in Southeast Asia markets, with the implementation of lockdown and closure of borders. The Group could not perform on-site visits and certain due diligence for potential projects in this preliminary stage. As at 31 December 2020, the Management performed cash flow forecast based on the available information for impairment assessment. However, the Auditor was unable to obtain sufficient appropriate evidence on part of the assumption of the cash flow forecast. Hence, the Group could not provide sufficient objective evidence regarding to the estimations used in estimating the recoverable amount of the prepaid service fee.

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The Board did not recognise any impairment as a result of the prepayment as at 31 December 2020 as the management of the Group is still positive in business exploration of Vietnam and Thailand after the relaxation of COVID-19. The management of the Group has been closely monitoring the market conditions and adjusted its business strategies according to the status of COVID-19.

The Audit Committee confirmed that it had independently reviewed and agreed with the Management’s position concerning the Qualified Opinion for reasons stated above.

Action plan of the Group to address the Qualified Opinion

To address the Qualified Opinion and with a view of removing audit qualifications for the audited consolidated financial statements of the Group for the coming year ending 31 December 2021, the Group has been active in chasing the full repayment of the remaining loan balance of the loan to Company B. For prepayments, the Group has been active in monitoring the situation of COVID-19 and perform due diligence on the potential projects after the relaxation of COVID-19 to obtain objective evidence regarding to the estimations used in estimating the recoverable amount of the prepaid service fee.

PUBLICATION OF ANNUAL RESULTS AND ANNUAL REPORT

The annual results announcement will be published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.link-asia.com.hk). The Company’s annual report for the year ended 31 December 2020 will be despatched to the shareholders of the Company and will be available on the above websites on or before 30 April 2021.

By Order of the Board Link-Asia International MedTech Group Limited Lin Dailian Chairman and Executive Director

Hong Kong, 12 April 2021

As at the date of this announcement, the Board comprises Mr. Lin Dailian (Chairman), Mr. Wang Guozhen, Mr. Duan Chuanhong and Mr. Xia Xiaobing as executive Directors; Mr. Li Huiwu, Mr. Yang Weidong and Dr. Sun Xiaohu as independent non-executive Directors.

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