Elife Holdings Limited — Proxy Solicitation & Information Statement 2017

Jul 18, 2017

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Elife Holdings Limited , you should at once hand this circular and the accompanying form of proxy to the purchaser(s) or the transferee(s), or to the bank, licensed securities dealer or other agent through whom the sale or the transfer was effected for transmission to the purchaser(s) or the transferee(s).

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, 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 circular.

This circular is for information purpose only and does not constitute an invitation or offer to acquire, purchase, or subscribe for securities.

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(Incorporated in the Cayman Islands with limited liability) (Stock Code: 223)

(1) ADOPTION OF THE SHARE AWARD SCHEME INVOLVING SEEKING THE SCHEME MANDATE;

(2) CONNECTED NEW SHARES GRANT UNDER THE SHARE AWARD SCHEME;

(3) PROPOSED AMENDMENTS TO THE SHARE OPTION SCHEME; (4) PROPOSED GRANT OF GENERAL MANDATES TO REPURCHASE SHARES AND ISSUES SHARES; (5) RE-ELECTION OF DIRECTORS; AND

(6) NOTICE OF ANNUAL GENERAL MEETING

Independent Financial Adviser to the Independent Shareholders

A letter from the Board is set out on pages 6 to 24 of this circular and a letter from Gram Capital containing its recommendation to the Independent Shareholders is set out on pages 25 to 34 of this circular.

A notice convening the annual general meeting of Elife Holdings Limited for the year ended 31 March 2017 to be held at Room 2502, 25/F., 9 Queen’s Road Central, Central, Hong Kong, on Thursday, 17 August 2017 at 3:00 p.m. is set out on pages 60 to 65 of this circular.

A form of proxy for use at the annual general meeting is enclosed with this circular and is also published on the website of The Stock Exchange of Hong Kong Limited. Whether or not you are able to attend the annual general meeting, please complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as practicable to the Company’s share registrar in Hong Kong, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong and in any event no later than 48 hours before the time appointed for holding the annual general meeting or any adjourned meeting. Completion and delivery of a form of proxy will not preclude you from attending and voting at the relevant annual general meeting or any adjourned meeting thereof should you so wish.

19 July 2017

CONTENTS

	Page
Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Adoption of the Share Award Scheme Involving Seeking the Scheme Mandate . . . . . . . . . .	7
Connected New Shares Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Reasons for and Benefits of the Connected New Shares Grant . . . . . . . . . . . . . . . . . . . . . . .	19
Proposed Amendments to the Terms of the Share Option Scheme . . . . . . . . . . . . . . . . . . . . .	20
General Mandate to Repurchase Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
General Mandate to Issue Shares and Extension of the General Mandate . . . . . . . . . . . . . . .	22
Re-election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22
AGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23
Responsibility Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24
General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24
Letter from Gram Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25
Appendix I – Summary of the Share Award Scheme. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	35
Appendix II – Proposed Amendments to the Share Option Scheme. . . . . . . . . . . . . . . . . . . .	40
Appendix III – Explanatory Statement on Repurchase Mandate. . . . . . . . . . . . . . . . . . . . . . .	46
Appendix IV – Details of the Directors to be Re-elected. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	50
Appendix V – General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	54
Notice of AGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	60

DEFINITIONS

In this circular, unless the context otherwise requires, the following expressions shall have the following meanings:

“2016 AGM”	the annual general meeting of the Company for the year ended 31
	March 2016 held on 15 September 2016;
“2017 EGM”	the extraordinary general meeting of the Company held on 15
	March 2017;
“Adoption Date”	the date of adoption of the Share Award Scheme by the Board;
“AGM”	the annual general meeting of the Company to be convened to
	approve, among other things, the granting of the Issue Mandate
	and the Repurchase Mandate to the Directors, the re-election of
	Directors, the Scheme Mandate, the Connected New Shares Grant
	and the proposed amendments to the Share Option Scheme;
“AGM Notice”	the notice of the AGM which is set out on pages 60 to 65 of this
	circular;
“Announcement”	the announcement of the Company dated 27 June 2017;
“Articles of Association”	the articles of association of the Company;
“Award”	an award of Shares (together with any related income) by the
	Board to a Selected Participant pursuant to the Share Award
	Scheme;
“Awarded Amount”	in respect of a Selected Participant, the closing price of the Shares
	as quoted by the Stock Exchange as at the Reference Date
	multiplied by the number of Awarded Shares comprised in the
	Award;
“Awarded Shares”	in respect of a Selected Participant, such number of Shares
	determined by the Board and (i) issued as new Shares by the
	Company to the Trustee on trust for the Selected Participant or to
	the Selected Participant directly or (ii) purchased by the Trustee
	on the market pursuant to the Share Award Scheme;
“Board”	the board of Directors;

“Company” Elife Holdings Limited, the shares of which are listed on the Main Board of the Stock Exchange (Stock code: 223);

1

DEFINITIONS

• “Connected Awarded Shares”

• an aggregate of 234,140,000 Awarded Shares which are proposed to be awarded to the Connected Selected Participants;

• “Connected New Shares Grant” grant of new Shares as Awarded Shares to the Connected Selected Participants;

• “connected person(s)”

has the meaning ascribed to it under the Listing Rules;

• “Connected Selected Participants”

• Selected Participants who are Directors and directors of certain subsidiaries of the Company, being the connected persons of the Company;

• “Director(s)” the director(s) of the Company;

• “Eligible Participant”

• any individual or corporate entity being a director (including executive and non-executive director), employee, officer, agent, advisor, consultant or business partner of the Company or any of its subsidiaries and other persons who/which in the opinion of the Board has contributed or will contribute to the growth and development of the Group;

• “Excluded Participant” any Eligible Participant who is resident in a place where the award of the Awarded Shares and/or the vesting and transfer of the Awarded Shares pursuant to the terms of the Share Award Scheme is not permitted under the laws and regulations of such place or where in the view of the Board or the Trustee (as the case may be), compliance with applicable laws and regulations in such place makes it necessary or expedient to exclude such Eligible Participant;

• “Further Shares” Shares purchased by the Trustee out of cash income or net proceeds of sale of non-cash and non-scrip distributions declared and distributed by the Company in respect of the Awarded Shares held upon the Trust;

• “Group”

• the Company and its subsidiaries;

• “HK$”

• Hong Kong dollar(s), the lawful currency of Hong Kong;

• “Hong Kong”

• the Hong Kong Special Administrative Region of the PRC;

2

DEFINITIONS

• “Huimin”

中商惠民（北京）電子商務有限公司 (Zhongshang Huimin (Beijing) E-Commerce Co. Ltd.), a company established and existing under the laws of the PRC;

• “Independent Financial Adviser” Gram Capital Limited, a corporation licensed to carry out Type 6 or “Gram Capital” (advising on corporate finance) regulated activity under the SFO, being the independent financial adviser to advise the Independent Shareholders as to the Connected New Shares Grant;

• “Independent Shareholders” Shareholders who are not required to abstain from voting on the resolutions in respect of the making of the Connected New Shares Grant;

• “Issue Mandate” a general mandate proposed to be granted to the Directors to allot, issue and otherwise deal with additional Shares with a nominal amount not exceeding 20% of the total number of issued Shares as at the date of the AGM, as described in the ordinary resolution no. 7(a) in the AGM Notice;

• “Lastest Practicable Date” 17 July 2017, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein;

• “Listing Committee” the Listing Committee of the Stock Exchange;

• “Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange;

• “Model Code” the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules;

• “New Shares Grant” the conditional Awards with new Shares to certain Selected Participants made by the Board on 27 June 2017;

• “Other Awarded Shares” an aggregate of 15,230,000 Awarded Shares which are proposed to be awarded to the Other Selected Participants;

• “Other Selected Participants” Selected Participants who are not connected persons of the Company and are employees of the Company;

• “PRC” the People’s Republic of China; “Reference Amount” the sum of (i) the Awarded Amount and (ii) the related purchase expenses (including for the time being, the brokerage fee, stamp duty, Securities and Futures Commission transaction levy, Stock Exchange trading fee) and such other necessary expenses required for the completion of the purchase of all the Awarded Shares;

3

DEFINITIONS

• “Reference Date” in respect of a Selected Participant, the date of final approval by the Board of the total number of Shares to be awarded to the relevant Selected Participant in a single occasion pursuant to the Share Award Scheme;

• “Repurchase Mandate” a general mandate proposed to be granted to the Directors to empower the Directors to exercise the powers of the Company to repurchase the Shares with a nominal amount not exceeding 10% of the total number of issued Shares as at the date of the AGM, as described in the ordinary resolution no. 7(b) in the AGM Notice;

• “Residual Cash” in respect of a Selected Participant, being cash remaining in the trust fund set up by the Trustee in respect of an Awarded Share (including interest income derived from deposits maintained with licensed banks in Hong Kong, cash income and sale proceeds which have not been applied in the acquisition of further Shares);

• “Returned Shares” such Awarded Shares and related income which are not vested and/or forfeited in accordance with the Scheme Rules (whether as a result of a Total Lapse or a Partial Lapse or otherwise as referred to in the Scheme Rules), or was forfeited in accordance with the Scheme Rules, or such Shares being deemed to be Returned Shares;

• “Scheme Mandate” a mandate to be granted to the Directors at the AGM to allot and issue up to 10% of the total number of issued Shares as at the date of passing such resolution, in connection with the Share Award Scheme;

• “Scheme Rules” the rules relating to the Share Award Scheme as amended from time to time;

• “Selected Participant” any Eligible Participant approved by the Board for participation in the Share Award Scheme and who has been granted an Award pursuant to the Share Award Scheme;

• “SFO”

• the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong);

• “Share(s)” ordinary shares of HK$0.01 par value each in the share capital of the Company;

• “Share Award Scheme” the share award scheme to be adopted by the Board on the Adoption Date, as amended from time to time;

4

DEFINITIONS

• “Shareholder(s)” holders of the Shares; “Share Options” share option(s) to subscribe for Share(s) to be granted under the Share Option Scheme;

• “Share Option Scheme” share option scheme of the Company adopted on 8 October 2010; “Stock Exchange” The Stock Exchange of Hong Kong Limited; “Takeovers Code” the Codes on Takeovers and Mergers and Share Repurchases, as amended, supplemented or otherwise modified from time to time;

• “Terminated Share Award Scheme” the share award scheme of the Company adopted by the Board on 11 February 2011 and terminated by the Board on 27 June 2017;

• “Trust” the relevant trust(s) constituted by the Trust Deed to serve the Share Award Scheme;

• “Trust Deed” the trust deed between the Company and the Trustee (as may be restated, supplemented and amended from time to time) in relation to the Share Award Scheme;

• “Trustee” Bank of East Asia (Trustees) Limited, being the trustee engaged by the Company for the purpose of the Terminated Share Award Scheme and proposed to be retained by the Company as the trustee for the Share Award Scheme following the approval of the same by the Shareholders at the AGM;

• “Vesting Date” in respect of a Selected Participant, the date on which his entitlement to the Awarded Shares accrues in accordance with the conditions as imposed by the Board or is deemed to have accrued pursuant to the terms of the Share Award Scheme; and

• “%” per cent.

5

LETTER FROM THE BOARD

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(Incorporated in the Cayman Islands with limited liability) (Stock Code: 223)

Executive Directors:

Mr. Zhang Xiaobin (Chairman) Mr. Gao Feng (Vice Chairman) Mr. Chiu Sui Keung (Chief Executive Officer)

Non-executive Directors:

Mr. Zhang Yichun (Vice Chairman) Mr. Shao Zili Ms. Xu Ying

Independent non-executive Directors:

Mr. Cheng Wing Keung, Raymond Mr. Lam Williamson Mr. Wong Hoi Kuen Dr. Lam Lee G

Registered office: Cricket Square Hutchins Drive P.O. Box 2681 Grand Cayman KY1-1111 Cayman Islands

Principal place of business in Hong Kong: Room 2502, 25/F. 9 Queen’s Road Central, Central Hong Kong

19 July 2017

To the Shareholders

Dear Sir or Madam,

(1) ADOPTION OF THE SHARE AWARD SCHEME INVOLVING SEEKING THE SCHEME MANDATE;

• (2) CONNECTED NEW SHARES GRANT UNDER THE SHARE AWARD SCHEME;

(3) PROPOSED AMENDMENTS TO THE SHARE OPTION SCHEME;

(4) PROPOSED GRANT OF GENERAL MANDATES TO REPURCHASE SHARES AND ISSUES SHARES;

(5) RE-ELECTION OF DIRECTORS;

AND

(6) NOTICE OF ANNUAL GENERAL MEETING

INTRODUCTION

The purpose of this circular is to provide the Shareholders with information reasonably necessary to enable the Shareholders to consider, and if thought fit, approve, among other things, the following resolutions to be proposed at the AGM:

• (1) the granting of the Scheme Mandate;

• (2) the making of the Connected New Shares Grant to the Connected Selected Participants;

6

LETTER FROM THE BOARD

• (3) the proposed amendments to the Share Option Scheme;

• (4) the granting of the Repurchase Mandate to the Directors for repurchase of the Shares by the Company;

• (5) the granting of the Issue Mandate to the Directors to allot, issue and otherwise deal with additional Shares;

• (6) the granting of an extension to the Issue Mandate to include the Shares repurchased under the Repurchase Mandate, if any; and

• (7) the re-election of the retiring Directors.

ADOPTION OF THE SHARE AWARD SCHEME INVOLVING SEEKING THE SCHEME MANDATE

Reference is made to the Announcement with respect to, among other things, adoption of the Share Award Scheme. A summary of the principal terms and conditions of the Share Award Scheme is set out in Appendix I to this circular.

Further information about the Share Award Scheme

Independence of Trustee

No Director has any interest in the Trustee and the Trustee is a party independent from the Company and its connected persons.

Conditions for allotment and issue of new Shares as Awarded Shares

Any allotment and issue of new Shares as Awarded Shares pursuant to the Share Award Scheme shall be subject to:

• (a) the passing of a resolution by the Shareholders to approve the Scheme Mandate; and

• (b) the Listing Committee granting the approval for the listing of, and permission to deal in, up to 10% of the total number of issued Shares as at the Adoption Date which may be granted pursuant to the Share Award Scheme.

Vesting conditions

The grant of the Awarded Shares is not subject to any vesting condition, given the fact that all Selected Participants have already made considerable amount of efforts on the Group’s business developments which led to today’s success.

7

LETTER FROM THE BOARD

Chapter 17 of the Listing Rules

The Share Award Scheme does not constitute a share option scheme pursuant to Chapter 17 of the Listing Rules and is a discretionary scheme of the Company.

Compliance with the Listing Rules

In the course of the administration of the Share Award Scheme, the Company shall comply with the Listing Rules, the Company’s articles of association and other applicable laws and regulations including but not limited to all applicable disclosure regulations including without limitation those imposed by the Listing Rules from time to time.

It is noted that the grant of any Awarded Shares to Directors falls within the meaning of “dealing” of securities under the Model Code. Accordingly, no Award shall be made by the Board pursuant to the Share Award Scheme and no instructions to acquire Shares shall be given to the Trustee and no new Shares shall be allotted and issued under the Share Award Scheme where any Director is in possession of unpublished inside information in relation to the Group or where dealings by Directors are prohibited under any code or requirement of the Listing Rules and all applicable laws from time to time.

To implement the aforesaid provisions and to avoid any non-compliance with the Model Code, the Board will not make any Award during the blackout periods (i.e. the period during which the Directors are prohibited to deal in any securities of the Company prior to the publication of the quarterly (if any), interim and annual financial results of the Company as prescribed under rule A.3 of the Model Code. Further, before making any grant of Awarded Shares, the Company will ascertain whether any Director is in possession of any unpublished inside information in relation to the Group.

Scheme Mandate

As the new Shares may be allotted and issued for making of Awards under the Share Award Scheme, the Company will seek the Shareholders’ approval at the AGM for the Scheme Mandate for the Awarded Shares being new Shares to be allotted and issued pursuant to the Share Award Scheme. The Scheme Mandate will be subject to the following limits/restrictions:

• (i) the total number of the Awarded Shares together with the Shares which may be allotted and issued upon exercise of all outstanding share options granted but not yet exercised under the Share Option Scheme or other share option or award scheme(s) of the Company shall not exceed 30% of the Shares in issue;

• (ii) the maximum number of Awarded Shares which may be awarded to a Selected Participant under the Share Award Scheme in any 12-month period shall not exceed 1% of the issued share capital of the Company as at the Adoption Date or the latest date of refreshment of the Scheme Mandate (as the case may be);

8

LETTER FROM THE BOARD

• (iii) the aggregate number of new Shares to be granted as Awarded Shares in each financial year of the Company shall not exceed 3% of the total number of issued Shares as at the Approval Date or the latest date of refreshment of the Scheme Limit (as the case may be) (new Shares granted to connected persons of the Company as Awarded Shares which are specifically approved by the Shareholders shall not be counted in determining the number of Awarded Shares under the said annual limit);

• (iv) no Award will be made if it will result in the aggregate number of the Shares held by public Shareholders falls below the minimum percentage as prescribed under the Listing Rules;

• (v) no Award will be made where any Director is in possession of unpublished inside information in relation to the Group or where dealings by Directors are prohibited under any code or requirement of the Listing Rules and all applicable laws from time to time; and

• (vi) no Award will be made if it will result in an obligation on the Selected Participant or any Shareholder to make a mandatory offer under Rule 26 of the Takeovers Code being triggered.

As at the Latest Practicable Date, the total number of issued Shares was 4,892,138,400. On the basis that no further Shares will be allotted and issued or repurchased from the Latest Practicable Date up to the date of the AGM, and subject to the passing of the resolutions approving the granting of the Scheme Mandate, 489,213,840 new Shares (including 249,370,000 Shares to be awarded pursuant to the New Shares Grant) may be allotted and issued as Awarded Shares under the Share Award Scheme.

The issue of the new Shares under the New Shares Grant will also be included in the Scheme Mandate to be sought in the AGM. Therefore, for the avoidance of doubt, if all the relevant resolutions relating to the Scheme Mandate and the Connected New Shares Grant proposed to be considered by the Shareholders in the AGM are approved and assuming no further Shares will be allotted and issued or repurchased from the Latest Practicable Date and up to the date of the AGM, the available limit for future grants under the Share Award Scheme will only be 239,843,840 Shares (being 10% of 4,892,138,400 Shares, i.e. 489,213,840 Shares, less 249,370,000 Shares to be awarded pursuant to the New Shares Grant).

9

LETTER FROM THE BOARD

Potential dilution to shareholdings of the Shareholders

The following table sets out the shareholding structure of the Company (i) as at the Latest Practicable Date; and (ii) immediately upon full utilisation of the Scheme Mandate assuming no other Shares are issued or repurchased by the Company before full utilisation of the Scheme Mandate:

Substantial Shareholder Liu Qiuhua Directors/ex-directors/directors of the subsidiaries of the Company Zhang Xiaobin Gao Feng Chiu Sui Keung Zhang Yichun Shao Zili Xu Ying Cheng Wing Keung Raymond Lam Williamson Wong Hoi Kuen Lam Lee G Sun Hao Liu Gang Chow Chi Fai Lau Yat Ning Li Du (ex-Director) Other Selected Participants Other public Shareholders Total	As at the Latest Practicable Date Number of Shares Approximate percentage (%) 717,634,000 14.66 36,000,000 0.74 178,000,000 3.64 7,622,000 0.16 – – – – – – 2,362,000 0.05 2,362,000 0.05 2,362,000 0.05 – – – – – – 1,410,000 0.03 – – 20,000,000 0.41 1,362,000 0.03 3,923,024,400 80.18 4,892,138,400 100.00	Immediately upon full utilisation of the Scheme Mandate (assuming no other Shares are issued or repurchased by the Company before full utilisation of the Scheme Mandate) Number of Shares Approximate percentage (%) 717,634,000 13.34 84,920,000 1.58 226,920,000 4.22 56,542,000 1.05 2,000,000 0.04 2,000,000 0.04 2,000,000 0.04 4,362,000 0.08 4,362,000 0.08 4,362,000 0.08 2,000,000 0.04 24,460,000 0.45 24,460,000 0.45 13,640,000 0.25 12,230,000 0.23 20,000,000 0.37 16,592,000 0.31 4,162,868,240 77.35 5,381,352,240 100.00	Immediately upon full utilisation of the Scheme Mandate (assuming no other Shares are issued or repurchased by the Company before full utilisation of the Scheme Mandate) Number of Shares Approximate percentage (%) 717,634,000 13.34 84,920,000 1.58 226,920,000 4.22 56,542,000 1.05 2,000,000 0.04 2,000,000 0.04 2,000,000 0.04 4,362,000 0.08 4,362,000 0.08 4,362,000 0.08 2,000,000 0.04 24,460,000 0.45 24,460,000 0.45 13,640,000 0.25 12,230,000 0.23 20,000,000 0.37 16,592,000 0.31 4,162,868,240 77.35 5,381,352,240 100.00
			1.58 4.22 1.05 0.04 0.04 0.04 0.08 0.08 0.08 0.04 0.45 0.45 0.25 0.23 0.37
			0.31 77.35
			100.00

10

LETTER FROM THE BOARD

Assuming that (i) the grant of the Scheme Mandate is approved at the AGM; and (ii) no Shares are repurchased and no new Shares are issued from the Latest Practicable Date up to the date of the AGM (both dates inclusive), 489,213,840 Shares, which represent approximately 9.09% of the issued share capital of the Company as enlarged by the issue of such Shares, are to be allotted and issued upon full utilisation of the Scheme Mandate. The aggregate shareholding of the existing public Shareholders will be diluted from approximately 72.89% to approximately 70.49% upon full utilisation of the Scheme Mandate.

Having considered (i) the benefit of the Award in motivating the Selected Participants (being the key management of the Group) to promote and enhance the Group’s prospects and value; (ii) the number of the new Awarded Shares to be granted to the Selected Participants under the Scheme Mandate were determined based on their past contributions to the Group’s historical business developments, their potential contributions to the Group’s future developments, their positions and duration of services in the Group as well as their qualifications and experiences; (iii) the important roles of the Selected Participants in the daily operations of the Group; and (iv) the new Awarded Shares would provide incentives for the Selected Participants to retain them for the continual operations and development of the Group, the Board considers that the dilution effects on the shareholding of the existing public Shareholders upon allotment and issue of the new Awarded Shares under the Scheme Mandate is acceptable, and fair and reasonable.

CONNECTED NEW SHARES GRANT

Among the 18 Selected Participants under the New Shares Grant, as the 14 Connected Selected Participants are connected persons of the Company, the allotment and issue of the Connected Awarded Shares to the Connected Selected Participants under the Share Award Scheme shall constitute connected transactions of the Company under Chapter 14A of the Listing Rules. The allotment and issue of the Connected Awarded Shares shall be subject to, among others, the approval by the Independent Shareholders at the AGM.

11

LETTER FROM THE BOARD

Details of the 14 Connected Selected Participants and the number of Awarded Shares being new Shares to be granted to them are set out as follows:

Name of Connected Selected Participants Relationship with the Group Number of Shares held as at the Latest Practicable Date Zhang Xiaobin Executive Director and a director of certain subsidiaries of the Company 36,000,000 Gao Feng Executive Director and a director of certain subsidiaries of the Company 178,000,000 Chiu Sui Keung Executive Director and a director of a subsidiary of the Company 7,622,000 Zhang Yichun Non-executive Director – Shao Zili Non-executive Director – Xu Ying Non-executive Director – Cheng Wing Keung Raymond Independent non-executive Director 2,362,000 Lam Williamson Independent non-executive Director 2,362,000 Wong Hoi Kuen Independent non-executive Director 2,362,000 Lam Lee G Independent non-executive Director – Sun Hao Director of certain subsidiaries of the Company – Liu Gang Director of certain subsidiaries of the Company – Chow Chi Fai Director of certain subsidiaries of the Company 1,410,000 Lau Yat Ning Director of certain subsidiaries of the Company – Total	Number of Connected Awarded Shares to be granted 48,920,000 48,920,000 48,920,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 24,460,000 24,460,000 12,230,000 12,230,000 234,140,000	Approximate percentage of the total issued Shares as at the Latest Practicable Date (%) 1.00 1.00 1.00 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.50 0.50 0.25 0.25
		4.78

The 234,140,000 Connected Awarded Shares represent approximately 4.78% of the total issued Shares as at the Latest Practicable Date and approximately 4.55% of the total issued Shares as enlarged by the issue of 249,370,000 Awarded Shares under the New Shares Grant.

The Directors are of the view that the terms of the Connected New Shares Grant are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

The Directors who are the Connected Selected Participants have abstained from voting on the relevant board resolutions to approve the grant of the Connected Awarded Shares to himself/herself.

The Connected New Shares Grant is subject to (i) the approval of the Scheme Mandate by the Shareholder at the AGM; (ii) the approval of the allotment and issue of the Connected Awarded Shares by the Independent Shareholders; and (iii) the grant of the listing approval by the Listing Committee in respect of the Scheme Mandate.

12

LETTER FROM THE BOARD

The remaining 15,230,000 Other Awarded Shares are proposed to be granted to 4 Other Selected Participants who are responsible for managing the daily operations of the Group and hold positions in the Investment, Finance and Administration departments of the Company for at least 6 years.

Further information in relation to the allotment and issue of the 234,140,000 Connected Awarded Shares to the Connected Selected Participants and the 15,230,000 Other Awarded Shares to the Other Selected Participants is set out below:

• Market value of the Awarded Shares:

• Based on the closing price of HK$0.181 per Share as quoted on the Stock Exchange as at the Latest Practicable Date, the market values of 234,140,000 Connected Awarded Shares and 15,230,000 Other Awarded Shares are HK$42,379,340 and HK$2,756,630, respectively.

• Status of the Awarded Shares:

• Both the Other Awarded Shares and the Connected Awarded Shares, when issued and fully paid, shall rank pari passu among themselves and with those Shares in issue, with the right to receive all dividends and other distributions declared, made or paid on or after the date of allotment.

Funds to be raised:

• The Selected Participants are not required to pay any consideration for the grant of both the Other Awarded Shares and the Connected Awarded Shares. No fund will be raised by the Company as a result of the allotment and issue of the Other Awarded Shares and the Connected Awarded Shares.

• Identity of the allottee(s):

• The Other Awarded Shares and the Connected Awarded Shares will be allotted and issued directly to the relevant Other Selected Participants and the Connected Selected Participants, respectively.

• Market price of the Shares:

• The closing price of the Shares on the Latest Practicable Date as quoted on the Stock Exchange is HK$0.181 per Share.

The average closing price of the Shares for the five consecutive trading days immediately preceding the Latest Practicable Date as quoted on the Stock Exchange was HK$0.1842 per Share.

Contributions made by the Selected Participants

A number of Connected Selected Participants, namely Mr. Zhang Xiaobin, Mr. Zhang Yichun, Mr. Shao Zili, Ms. Xu Ying and Dr. Lam Lee G (previously served the Company and re-joined the Company in late 2015), who were appointed into the Board between 2015 and 2016, have made remarkable contributions to the Group’s business transformation implemented in 2016 together with other members of the management team and staff. The Group’s transformation into the daily consumer goods and related value-added services market is essential to the Group’s future sustainability, given the gloomy performance of the Group’s shrinking energy, resources and trading businesses. As such, the contributions made by the new management have not just enhanced the short-term profitability and

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LETTER FROM THE BOARD

growth potentials but have also re-engineered the Group in a broader and long-term context by introducing a more competitive strategic focus and positioning of the Group’s businesses. Leveraging their professional expertise, solid experience and business network, the new management has significantly contributed to a series of major developments in connection with the Group’s business transformation, which include (i) the letter of intent in relation to the strategic cooperation with Huimin announced in September 2016; (ii) the exclusive overseas procurement agency business with Huimin for daily consumer goods announced in November 2016; (iii) the exclusive procurement, processing and supply agency business in the PRC for Huimin announced in March 2017; and (iv) the entry into the online-to-offline (O2O) and smart terminal businesses through further cooperation with Huimin announced in June 2017. The Board is of the view that the grant of the Awarded Shares to the new management is justifiable having considered their contributions to the Group’s long-term competitiveness and growth potentials.

The rest of the Connected Selected Participants, under the leadership of Mr. Gao Feng (Vice Chairman and Executive Director) and Mr. Chiu Sui Keung (Executive Director and Chief Executive Officer) who have joined the Company since 2009, hold directorships and/or senior managerial positions in the Group for 6 to 10 years. In addition, all of the 4 Other Selected Participants have also served the Company in the Investment, Finance and Administration departments for 6 to 9 years, and are responsible for managing the daily operations of the Group in their respective areas of expertise. The Group’s major development milestones throughout the years, to which the aforementioned Selected Participants have actively involved in and successfully achieved, include the successful turnaround of the Group’s businesses and resumption of trading in 2011, settlement of litigations between 2015 and 2016 as well as the recent business transformation of the Group since 2016. In particular, these Selected Participants have made appreciable efforts to overcome the tough times in prior years attributable to the trading suspension between July 2009 and February 2011 and several litigations, their endeavours to complete the 2011 turnaround and 2015-2016 litigations settlement have inevitably paved the way for today’s success in the Group’s transformation into the daily consumer goods market. In light of their contributions to the Group’s key developments in recent years, the Board considers it appropriate to reward these Selected Participants for their continuous supports to the Group by way of granting the Awarded Shares.

The responsibilities of the Connected Selected Participants in the Group are set out as follows:

Name of Connected
Selected Participant	Position	Year of service	Responsibilities
Mr. Zhang Xiaobin	Chairman and	1 year 10 months	Oversee the overall management
	Executive Director		and operation of the Group,
			participate in the Group’s
Mr. Gao Feng	Vice-Chairman and	8 years 1 month	decision-making process and
	Executive Director		strategies formulation, identify
			and assess suitable investment
Mr. Chiu Sui Keung	Chief Executive	8 years 3 months	opportunities, monitor the
	Officer and		Group’s continuous
	Executive Director		sustainability and profitability.

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LETTER FROM THE BOARD

Name of Connected
Selected Participant	Position	Year of service	Responsibilities
Mr. Zhang Yichun	Vice-Chairman and	9 months	Participate in Board’s
	Non-executive		decision-making process,
	Director		provide insights and opinions on
			the Group’s business
Mr. Shao Zili	Non-executive	1 year 10 months	developments and strategies
	Director		formulation, provide supports to
			the Board by their professional
Ms. Xu Ying	Non-executive	7 months	knowledges and business
	Director		networks.
Mr. Cheng Wing	Independent	9 years 11	Participate in the Board’s
Keung Raymond	Non-executive	months	decision-making process and
	Director		provide independent opinions,
			ensure proper functioning of the
Mr. Lam Williamson	Independent	6 years 6 months	Company’s audit, remuneration
	Non-executive		and nomination committees,
	Director		monitor appropriate corporate
			governance and internal control
Mr. Wong Hoi Kuen	Independent	6 years 2 months	of the Group.
	Non-executive
	Director
Dr. Lam Lee G	Independent	1 year 8 months
	Non-executive
	Director
Mr. Sun Hao	Director of certain	5 years	Responsible for the business
	subsidiaries of the		development of the Group’s
	Company		trading and procurement
			businesses in the PRC, identify
			and assess suitable business
			opportunities, perform
			commercial negotiations with
			business partners, supervise the
			business operations of certain
			subsidiaries of the Group.

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LETTER FROM THE BOARD

Name of Connected Selected Participant

Name of Connected
Selected Participant	Position	Year of service	Responsibilities
Mr. Liu Gang	President of the China	3 years 2 months	Oversee the Group’s operational
	region of the		and administrative functions in
	Company and		the PRC, monitor business
	director of certain		development and strategic
	subsidiaries of the		management of the Group’s PRC
	Company		operations, perform commercial
			negotiations and align business
			cooperation in the PRC region.
Mr. Chow Chi Fai	Financial controller	8 years 7 months	Oversee the Group’s financial and
	and company		accounting operations as well as
	secretary of the		company secretary matters,
	Company and a		secure proper accounting process
	director of certain		and financial reporting system of
	subsidiaries of the		the Group, supervise internal
	Company		control and cash management
			functions, manage corporate
			governance and regulatory
			compliance.
Ms. Lau Yat Ning	Operation director of	8 years 1 month	Oversee the Group’s daily
	the Company and a		operations and administrative
	director of certain		functions, control resources
	subsidiaries of the		allocations and operational risks,
	Company		supervise the business operations
			of certain subsidiaries of the
			Group, monitor the Group’s
			overall human resources
			management.

Remuneration policy

The Company’s remuneration policy consists of three parts. Firstly, employees are paid a monthly base salary which is set with reference to market standards and subject to annual review. Secondly, employees are also awarded a discretionary bonus each year (provided that the Company has made a profit in the year) as a short-term incentive on the basis of their performance in the year. Thirdly, the Company had adopted the Share Option Scheme and the Terminated Share Award Scheme as a long-term incentive on the basis of their performance in the year.

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LETTER FROM THE BOARD

Due to the Group’s recent business transformation and the Company’s business expansion plan to conduct the online-to-offline (O2O) business as disclosed in the announcement of the Company dated 8 June 2017, which is dependent on having a stable core management team with sufficient market experience and to encourage and retain key employees including senior management and executive Directors to commit in the long-term to the Company’s growth and development and achieving the objectives of increasing the value of the Company, the Company has adopted the Share Award Scheme. The Board considered other remuneration package structure as compared to the Share Award Scheme and considered that it is a preferred option as there will not be any actual cash outflow by the Group under the Award(s) and the Group can better utilise the cashflow for the development of its daily consumer goods trading business.

The Award(s) serve(s) as an important incentive to the Selected Participants to achieve higher return to the Company, which in turn achieves the objectives of increasing the value of the Company and creating higher value to the Shareholders as a whole. The amount of the Awarded Shares granted to each Selected Participant reflects the value and benefits that he or she has brought or will bring to the Group through his or her qualifications, professional expertise, solid experience and business network. In light of the aforesaid and as disclosed in the paragraph headed “Contributions made by the Selected Participants” above, the Board considers that (i) the Awards to the Selected Participants are justifiable and in line with the Company’s remuneration policy; and (ii) the benefits to the Group shall offset the dilution impact of the Awards.

In addition, the Board notes that it is not exceptional for listed companies in Hong Kong to adopt share-based compensation (including share option scheme and/or share award scheme) for their core management team and employees. Recently, there is an increasing trend for Hong Kong listed companies adopting both share option scheme and share award scheme (with structure and terms thereof similar to the Share Award Scheme) to provide flexibility in rewarding and providing incentives to their key personnel. Some of such companies include China Display Optoelectronics Technology Holdings Limited (formerly known as TCL Display Technology Holdings Limited) (Stock code: 334), TCL Multimedia Technology Holdings Limited (Stock code: 1070), China HKBridge Holdings Limited (formerly known as Topsearch International (Holdings) Limited) (Stock code: 2323), Haier Electronics Group Co., Ltd. (Stock code: 1169), TSC Group Holdings Limited (Stock code: 206) and Global Brands Group Holding Limited (Stock code: 787). As such, the Board considers that the grant of the Awarded Shares to the Selected Participants as part of their remuneration package is in line with the market practice.

The Board made reference to the individual limit of a participant under the Share Award Scheme in any 12-month period (1% of the issued share capital of the Company as at the Adoption Date or the subsequent date of refreshment of the scheme limit), which is the same as the maximum entitlement of each participant under the scheme rules of the Share Option Scheme and as required in Chapter 17 of the Listing Rules, and treated it as the starting point when determining the number of Awarded Shares to be granted to each of the Selected Participants. Considering the key roles of the three executive Directors in the overall strategic, operational planning and management of the Group and/or their past significant contribution to the development of the Group, their executive functions in the Company and its subsidiaries, Awarded Shares representing 1% of the number of issued Shares as at the Adoption Date were granted to each of the three executive Directors. For the rest of the Selected Participants, the number of Awarded Shares granted to each of them was determined with reference to the his/her roles and responsibilities, year of service and their performance and/or contribution to the Group.

Based on the closing price of the Shares on the date of grant of the Awards (27 June 2017) of HK$0.194 per Share, the total cost of the Awarded Shares was HK$48,377,780 which is lower than the share-based payment of approximately HK$52 million to the Directors and senior management of the Group for the year ended 31 March 2017. The Board considers that the cost of granting the Awarded Shares as part of the remuneration package of the respective Directors and key personnel is justifiable

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LETTER FROM THE BOARD

and in line with the remuneration policy taking into account the following factors: (i) while not yet reflected in the annual results of the Group for the year ended 31 March 2017, it is presently expected that the Group’s overall financial performance in the current financial year will be improved, based on the existing circumstances and business environment, and contributed by the Group’s transformed businesses in the daily consumer goods market and ancillary services; and (ii) the amount of the Awarded Shares granted to each Selected Participant reflects the value and benefits to the Group considering his/ her role and contribution to the strategic and sustainable development of the Group.

Fund raising activities in the past twelve months

Apart from the fund raising activities mentioned below, the Company had not raised any other funds in the past 12 months immediately preceding the Latest Practicable Date by way of equity issue:

				Actual use of proceeds
Date of	Description of fund	Net proceeds	Intended use of	as at the Latest
announcement	raising activity	raised	net proceeds	Practicable Date
20 October 2016 and	Subscription for new	HK$123,500,000	As the start-up capital for	For general working
18 November 2016	Shares under		the strategic	capital purpose of
	general mandate		cooperation with	HK$1.5 million, and
			Humin, for financing	the rest of HK$120
			any potential	million has not yet
			investment or	been utilised
			acquisition and/or
			general working capital
			purposes
1 November 2016	Completion of the	HK$6,650,000	For general working	For general working
	second tranche of		capital purposes and/or	capital purpose of
	the placement of		financing any potential	HK$6.65 million
	151,052,000 Shares		investment or
			acquisition
1 November 2016	Completion of the	HK$30,150,000	For general working	For general working
	placement of		capital purposes and/or	capital purpose of
	138,568,000 Shares		financing any potential	HK$30.15 million
			investment or
			acquisition
26 August 2016	Completion of the	HK$15,600,000	For general working	For general working
	first tranche of the		capital purposes and/or	capital purpose of
	placement of		financing any potential	HK$15.6 million
	151,052,000 Shares		investment

Application will be made by the Company to the Stock Exchange for the granting of the listing of, and permission to deal in, the 234,140,000 Connected Awarded Shares, being part of the Scheme Mandate.

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LETTER FROM THE BOARD

Financial effect of the Connected New Shares Grant

The Board expects that there will be no material impact to the net asset value of the Company following the allotment and issue of the Connected Awarded Shares and the earnings of the Company will be decreased by the amount as determined by multiplying the prospective closing price of the Shares on the date of issue of the Awarded Shares and the total number of the Awarded Shares.

The effect of the allotment and issue of the Connected Awarded Shares to the Group’s gearing (the Group has no outstanding debt at present) and working capital is considered immaterial.

REASONS FOR AND BENEFITS OF THE CONNECTED NEW SHARES GRANT

The Group is principally engaged in trading businesses across Asia and investment in unconventional gas business in the PRC.

The Share Award Scheme forms part of the incentive schemes of the Group. The Share Award Scheme, when adopted, would operate alongside the Share Option Scheme, and provide an additional means for the Company to incentivise the Eligible Participants. The Board considers that the Share Award Scheme would also recognise the continual support of the relevant employees to the Group and their effort in promoting the Group’s long-term growth and development.

The Board has considered several other methods, including cash bonuses, grant of awarded Shares by purchasing Shares in the market and grant of Share Options. As (i) cash bonuses and purchasing Shares in the market would require cash outflows which may impose a negative impact on the Group’s cash flow position; (ii) granting of Share Options requires the payment of considerable amount of exercise monies by the grantees, which is a less attractive vehicle to serve the purpose of providing immediate incentives and rewards to the grantees; and (iii) all of the Selected Participants have already made significant contributions to the Group’s historical developments and the recent success of the Group’s transformation, the Board considers it appropriate to issue the Awarded Shares to the Selected Participants. The Board considers the issue of new Shares is more cost-effective without imposing additional pressure on the Group’s cash flow position, this is crucial to the Group since it is at a stage of rapid expansion towards the online-to-offline (O2O) business, in which cost management is of essential to the Company.

The Directors consider that the award of the Connected Awarded Shares to the Connected Selected Participants is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Listing Rules implications

• (1) Share Award Scheme involving seeking the Scheme Mandate

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LETTER FROM THE BOARD

As new Shares may be allotted and issued for making of Awards under the Share Award Scheme, Shareholders’ approval is required pursuant to Rule 13.36(1) of the Listing Rules prior to allotting, issuing or granting of new Shares as Awarded Shares under the Share Award Scheme. The Company will seek its Shareholders’ approval at the AGM for the Scheme Mandate for the Awarded Shares being new Shares to be allotted and issued pursuant to the Share Award Scheme.

So far as the Company is aware, none of the Shareholders, other than (i) the Connected Selected Participants who are Shareholders; (ii) two out of the four Other Selected Participants who hold an aggregate of 1,362,000 Shares as at the Latest Practicable Date and (iii) (in the event that the Board makes further grant of Award(s) prior to the AGM) such Selected Participant(s) who is/are Shareholder(s) are materially interested in the grant of the Scheme Mandate, no other Shareholder is required to abstain from voting on the resolution in respect of the grant of the Scheme Mandate to be proposed at the AGM.

(2) Connected New Shares Grant

Since each of the Connected Selected Participants under the Connected New Shares Grant is connected person of the Company by virtue of being a director and/or a chief executive of member(s) of the Group, the proposed Awards to them constitute connected transactions of the Company which are subject to the reporting, announcement and the Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules. In the event that the Board makes further grant of Award(s) under the Share Award Scheme to connected persons of the Company which constitute connected transactions for the Company under Chapter 14A in the future, the Company will comply with applicable announcement and/or Shareholders' approval requirements in respect of such transactions.

So far as the Company is aware, none of the Shareholders, other than the Connected Selected Participants who are Shareholders and are required to abstain from voting on the resolution approving the grant of the Connected Awarded Shares to himself/herself at the AGM, no other Shareholders are required to abstain from voting on the resolution in respect of the Connected New Shares Grant to be proposed at the AGM.

Gram Capital has been appointed by the Company to advise the Independent Shareholders in this regard.

PROPOSED AMENDMENTS TO THE TERMS OF THE SHARE OPTION SCHEME

The purpose of the Share Option Scheme is to provide selected participants with the opportunity to acquire proprietary interests in the Company and to encourage selected participants to work towards enhancing the value of the Company and its stock for the benefit of the Company and its shareholders as a whole. The Share Option Scheme will provide the Company with a flexible means of retaining, incentivising, rewarding, remunerating and compensating and/or providing benefits to selected participants.

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LETTER FROM THE BOARD

Due to the adoption of the Share Award Scheme and in order to maintain a good corporate governance of the Group and to incorporate the amendments to the Listing Rules (in particular, Chapter 17 thereof) after the Share Option Scheme has been adopted on 8 October 2010, the Board proposed certain amendments to the Share Option Scheme, the details of which are set out in Appendix II to this circular.

Pursuant to note (2) to Rule 17.03(18) of the Listing Rules, any alterations to the terms and conditions of the Share Option Scheme which are of a material nature or any change to the terms of Share Options granted must be approved by the Shareholders, unless where the alterations take effect automatically under the existing terms of the Scheme. As the proposed amendments will not take effect automatically under the existing terms of the Share Option Scheme, the proposed amendments to the terms of the Share Option Scheme will be subject to approval by the Shareholders at the AGM and shall become effective on the date the Shareholders passing the resolution at the AGM.

GENERAL MANDATE TO REPURCHASE SHARES

Pursuant to the ordinary resolution passed by the Shareholders at the 2016 AGM, a general mandate was granted to the Directors to exercise the powers of the Company to repurchase the Shares. Such mandate will lapse at the conclusion of the AGM. Therefore, an ordinary resolution will be proposed at the AGM for the Shareholders to consider and, if thought fit, grant the Repurchase Mandate to the Directors to exercise the powers of the Company to repurchase the Shares up to a maximum of 10% of the total number of issued Shares as at the date of passing of such resolution. Details of the Repurchase Mandate are set out in the ordinary resolution no. 7(b) in the AGM Notice.

As at the Latest Practicable Date, the Company had 4,892,138,400 issued Shares. Assuming that there is no change in the number of issued Shares during the period between the Latest Practicable Date and the date of passing of the resolution approving the Repurchase Mandate, the maximum number of Shares which may be repurchased pursuant to the Repurchase Mandate as at the date of passing of the resolution approving the Repurchase Mandate will be 489,213,840 Shares.

An explanatory statement, as required under the Listing Rules to provide the requisite information in connection with the Repurchase Mandate, is set out in Appendix III to this circular. The Repurchase Mandate will continue in force until the earlier of (i) the conclusion of the next annual general meeting of the Company; or (ii) the expiration of the period within which the next annual general meeting of the

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LETTER FROM THE BOARD

Company is required to be convened under the Articles of Association or any applicable law(s); or (iii) the date on which the authority given under the ordinary resolution approving the Repurchase Mandate is revoked or varied by an ordinary resolution of the Shareholders.

GENERAL MANDATE TO ISSUE SHARES AND EXTENSION OF THE GENERAL MANDATE

Pursuant to the ordinary resolution passed by the Shareholders at the 2017 EGM, a general mandate was granted to the Directors to allot, issue and deal with up to 978,427,680 Shares, being 20% of the total number of issued Shares as at the date of the 2017 EGM. Such mandate will lapse at the conclusion of the AGM. Therefore, two ordinary resolutions will be proposed at the AGM for the Shareholders to consider and, if thought fit, grant the Issue Mandate to the Directors to exercise the powers of the Company to allot, issue and deal with additional Shares not exceeding 20% of the total number of issued Shares as at the date of passing of such resolution at the AGM, and an extension of the Issue Mandate by adding to it the number of Shares repurchased by the Company under the Repurchase Mandate. Details of the Issue Mandate and its extension are set out in the ordinary resolution nos. 7(a) and 7(c), respectively, in the AGM Notice.

As at the Latest Practicable Date, the Company had 4,892,138,400 issued Shares. Assuming that there is no change in the number of issued Shares during the period between the Latest Practicable Date and the date of passing of the resolution approving the Issue Mandate, the maximum number of Shares which may be allotted and issued pursuant to the Issue Mandate as at the date of passing of the resolution approving the Issue Mandate will be 978,427,680 Shares. As at the Latest Practicable Date, the Company did not have any plan for fund raising and to utilise the Issue Mandate immediately after the approval of the granting of the Issue Mandate at the AGM.

The Issue Mandate and its extension will continue in force until the earlier of (i) the conclusion of the next annual general meeting of the Company; or (ii) the expiration of the period within which the next annual general meeting of the Company is required to be convened under the Articles of Association or any applicable law(s); or (iii) the date on which the authority given under the ordinary resolution approving the Issue Mandate and its extension is revoked or varied by an ordinary resolution of the Shareholders.

RE-ELECTION OF DIRECTORS

As at the Latest Practicable Date, the Board comprised ten Directors, of which Mr. Zhang Xiaobin, Mr. Gao Feng and Mr. Chiu Sui Keung are executive Directors, Mr. Zhang Yichun, Mr. Shao Zili and Ms. Xu Ying are non-executive Directors and Mr. Cheng Wing Keung Raymond, Mr. Lam Williamson, Mr. Wong Hoi Kuen and Dr. Lam Lee G. are independent non-executive Directors.

In accordance with Article 86(3) of the Articles of Association, any Director appointed by the Board to fill a casual vacancy should be subject to re-election by the Shareholders at the first general meeting of the Company after his or her appointment. Pursuant to Article 87(1) of the Articles of Association, at every annual general meeting of the Company, one-third of the Directors for the time being (or, if their number is not a multiple of three (3), the number nearest to but not less than one-third) shall retire from office by rotation provided that every Director shall be subject to retirement by rotation

22

LETTER FROM THE BOARD

at least once every three years. In addition, any Director appointed by the Board pursuant to Article 86(2) or Article 86(3) of the Article of Association shall not be taken into account in determining the number of Directors who are to retire by rotation.

In accordance with Article 86(3) of the Articles of Association, each of Mr. Zhang Yichun and Ms. Xu Ying will retire from office at the AGM by rotation and being eligible, offer himself for re-election at the AGM. In accordance with Article 87(1) and (2) of the Articles of Association, Mr. Gao Feng, Mr. Lam Williamson and Mr. Wong Hoi Kuen will also retire from office at the AGM by rotation and being eligible, offer themselves for re-election at the AGM.

Each of Mr. Lam Williamson and Mr. Wong Hoi Kuen has provided an annual confirmation of independence to the Company pursuant to Rule 3.13 of the Listing Rules. The Board considers that both Mr. Lam Williamson and Mr. Wong Hoi Kuen satisfy the independence guidelines set out in the said rule.

Particulars of the Directors proposed to be re-elected at the AGM are set out in Appendix IV to this circular.

At the AGM, resolution nos. 5(a) to 5(f) will be proposed for the Company to approve the re-election of Directors.

AGM

The notice convening the AGM is set out on pages 60 to 65 of this circular.

A form of proxy for use at the AGM is enclosed with this circular and is also published on the websites of the Stock Exchange and the Company. Whether or not you intend to attend the AGM, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return the same to the Company’s share registrar in Hong Kong, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong as soon as possible and in any event not later than 48 hours before the time appointed for holding the AGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the AGM or any adjournment thereof should you so wish.

Pursuant to Rule 13.39(4) of the Listing Rules, any vote of the Shareholders at a general meeting of the Company must be taken by way of poll. Accordingly, the resolutions to be considered and, if thought fit, approved at the AGM will be voted by way of a poll by the Shareholders.

RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors, having made all reasonable enquiries, confirm that to the best of

23

LETTER FROM THE BOARD

their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

RECOMMENDATIONS

The Directors consider that the (i) proposed granting of the Scheme Mandate; (ii) the proposed amendments to the Share Option Scheme; (iii) the proposed granting of the Repurchase Mandate and the Issue Mandate (and the extension thereto); and (iv) the proposed re-election of the retiring Directors are all in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend that all Shareholders vote in favour of all the relevant resolutions to be proposed at the AGM.

The Directors also consider that the terms of the Connected New Shares Grant are on normal commercial terms, and are fair and reasonable and in the interests of the Company and the Shareholders as a whole. Hence, the Board considers that the resolutions proposed in the AGM Notice in relation to the Connected New Shares Grant are in the best interests of the Company and the Independent Shareholders and therefore recommend you to vote in favour of the relevant resolution to be proposed at the AGM.

Your attention is drawn to (a) the letter from Gram Capital set out on pages 25 to 34 of this circular which contains its advice to the Independent Shareholders in respect of the terms of the Connected New Shares Grant; and (b) additional information set out in the appendices to this circular.

GENERAL INFORMATION

Your attention is drawn to the additional information set out in the appendices to this circular.

By Order of the Board Elife Holdings Limited Chow Chi Fai Company Secretary

24

LETTER FROM GRAM CAPITAL

Set out below is the text of a letter received from Gram Capital, the Independent Financial Adviser to the Independent Shareholders in respect of the Connected New Shares Grant for the purpose of inclusion in this circular.

==> picture [210 x 41] intentionally omitted <==

Room 1209, 12/F. Nan Fung Tower 88 Connaught Road Central/ 173 Des Voeux Road Central Hong Kong

19 July 2017

To: The independent shareholders of Elife Holdings Limited

Dear Sir/Madam,

CONNECTED NEW SHARES GRANT UNDER THE SHARE AWARD SCHEME

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Shareholders in respect of the Connected New Shares Grant, details of which are set out in the letter from the Board (the “ Board Letter ”) contained in the circular dated 19 July 2017 issued by the Company to the Shareholders (the “ Circular ”), of which this letter forms part. Terms used in this letter shall have the same meanings as defined in the Circular unless the context requires otherwise.

On 27 June 2017, the Board conditionally resolved to terminate the Terminated Share Award Scheme; and adopt the Share Award Scheme. On the even date, after the adoption of the Share Award Scheme, the Board resolved to award 249,370,000 Awarded Shares to 18 Selected Participants by way of allotment and issue of new Shares pursuant to the Scheme Mandate.

Among the 18 Selected Participants pursuant to the New Shares Grant, as the 14 Connected Selected Participants are connected persons of the Company, the allotment and issue of the Connected Awarded Shares to the Connected Selected Participants under the Share Award Scheme shall constitute connected transactions of the Company under Chapter 14A of the Listing Rules. The allotment and issue of the Connected Awarded Shares shall be subject to, among others, the approval by the Independent Shareholders at the AGM.

We, Gram Capital Limited, have been appointed as the Independent Financial Adviser to advise Independent Shareholders on (i) whether the terms of the Connected New Shares Grant are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; (ii) whether the Connected New Shares Grant is in the interests of the Company and the Shareholders as a whole; and (iii) how the Independent Shareholders should vote in respect of the resolution(s) to approve the Connected New Shares Grant and the transactions contemplated thereunder at the AGM.

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LETTER FROM GRAM CAPITAL

BASIS OF OUR OPINION

In formulating our opinion to the Independent Shareholders, we have relied on the statements, information, opinions and representations contained or referred to in the Circular and the information and representations as provided to us by the Directors. We have assumed that all information and representations that have been provided by the Directors, for which they are solely and wholly responsible, are true and accurate at the time when they were made and continue to be so as at the Latest Practicable Date. We have also assumed that all statements of belief, opinion, expectation and intention made by the Directors in the Circular were reasonably made after due enquiry and careful consideration. We have no reason to suspect that any material facts or information have been withheld or to doubt the truth, accuracy and completeness of the information and facts contained in the Circular, or the reasonableness of the opinions expressed by the Company, its advisers and/or the Directors, which have been provided to us. Our opinion is based on the Directors’ representation and confirmation that there are no undisclosed private agreements/arrangements or implied understanding with anyone concerning the Connected New Shares Grant. We consider that we have taken sufficient and necessary steps on which to form a reasonable basis and an informed view for our opinion in compliance with Rule 13.80 of the Listing Rules.

This Circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in the Circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or the Circular misleading. We, as the Independent Financial Adviser, take no responsibility for the contents of any part of the Circular, save and except for this letter of advice.

We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. We have not, however, conducted any independent in-depth investigation into the business and affairs of the Company, the Connected Selected Participants or their respective subsidiaries or associates, nor have we considered the taxation implication on the Group or the Shareholders as a result of the Connected New Shares Grant. Our opinion is necessarily based on the financial, economic, market and other conditions in effect and the information made available to us as at the Latest Practicable Date. Shareholders should note that subsequent developments (including any material change in market and economic conditions) may affect and/or change our opinion and we have no obligation to update this opinion to take into account events occurring after the Latest Practicable Date or to update, revise or reaffirm our opinion. In addition, nothing contained in this letter should be construed as a recommendation to hold, sell or buy any Shares or any other securities of the Company.

Lastly, where information in this letter has been extracted from published or otherwise publicly available sources, it is the responsibility of Gram Capital to ensure that such information has been correctly extracted from the relevant sources while we are not obligated to conduct any independent in-depth investigation into the accuracy and completeness of those information.

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PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion in respect of the Connected New Shares Grant, we have taken into consideration the following principal factors and reasons:

1. Background of and reasons for the Connected New Shares Grant

Principal business of the Group

With reference to the Board Letter, the Group is principally engaged in trading businesses across Asia and investment in unconventional gas business in the PRC.

Information on the Connected Selected Participants

Details of the 14 Connected Selected Participants are set out as follows:

Name Relationship with the Group

Mr. Zhang Xiaobin Chairman and executive Director Mr. Gao Feng Vice-chairman and executive Director Mr. Chiu Sui Keung Chief executive officer and executive Director Mr. Zhang Yichun Vice-chairman and non-executive Director Mr. Shao Zili Non-executive Director Ms. Xu Ying Non-executive Director Mr. Cheng Wing Keung Independent non-executive Director Raymond Mr. Lam Williamson Independent non-executive Director Mr. Wong Hoi Kuen Independent non-executive Director Dr. Lam Lee G Independent non-executive Director Mr. Sun Hao Director of certain subsidiaries of the Company Mr. Liu Gang President of the China region of the Company and director of certain subsidiaries of the Company Mr. Chow Chi Fai Company secretary of the Company and director of certain subsidiaries of the Company Ms. Lau Yat Ning Operation director of the Company and director of certain subsidiaries of the Company

The profiles of the Directors, Mr. Liu Gang and Mr. Chow Chi Fai are set out under the section headed “Directors & Senior Management Profile” in the annual report of the Company for the year ended 31 March 2017 (the “ 2017 Annual Report ”).

As advised by the Directors, Mr. Sun Hao is the director of certain subsidiaries of the Company. Mr. Sun Hao joined the Group in 2012 and has over 20 years of experience in sourcing, procurement and business development in the PRC.

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As advised by the Directors, Ms. Lau Yat Ning is the director of certain subsidiaries of the Company. Ms. Lau Yat Ning joined the Group in 2009 as an assistant to the chairman of the Board and is currently an operation director of the Group.

Details of responsibilities and years of service of the Connected Selected Participants are set out under the sub-section headed “Contributions made by the Selected Participants” of the Board Letter.

Reasons for and benefits of the Connected New Shares Grant

With reference to the Board Letter, the Share Award Scheme forms part of the incentive schemes of the Group. The Share Award Scheme, when adopted, would operate alongside the Share Option Scheme, and provide an additional means for the Company to incentivise the Eligible Participants. The Board considers that the Share Award Scheme would also recognise the continual support of the relevant employees to the Group and their effort in promoting the Group’s long-term growth and development.

We have enquired into the Directors regarding the alternative remuneration methods other than the Connected New Shares Grant and were advised by the Directors that the Board has considered several other methods, including cash bonuses, grant of awarded Shares by purchasing Shares in the market and grant of Share options. As (i) cash bonuses and purchasing Shares in the market would require cash outflows which may impose a negative impact on the Group’s cash flow position; (ii) granting of Share options requires the payment of considerable amount of exercise monies by the grantees, which is a less attractive vehicle to serve the purpose of providing immediate incentives and rewards to the grantees; and (iii) all of the Selected Participants have already made significant contributions to the Group’s historical developments and the recent success of the Group’s transformation, the Board considers it appropriate to issue the Awarded Shares to the Selected Participants. The Board considers the issue of new Shares is more cost-effective without imposing additional pressure on the Group’s cash flow position, this is crucial to the Group since it is at a stage of rapid expansion towards the online-to-offline (O2O) business, in which cost management is of essential to the Company. The Board also considers that the benefits to the Group shall offset the dilution impact of the Awards.

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For our due diligence purpose, we have searched over the website of the Stock Exchange and to the best of our knowledge and as far as we are aware of, we found the following grant of award shares by Hong Kong listed companies pursuant to their respective share award schemes announced from 1 May 2017 to 27 June 2017, (i.e. the date of announcement of the Connected New Shares Grant, the “ Announcement Date ”):

Company name	Announcement
(Stock code)	Date
Fosun International Limited (656)	4 May 2017
Hengdeli Holdings Limited (3389)	5 May 2017
Xiabuxiabu Catering Management (China) Holdings Co., Ltd. (520)(Note)	8 May 2017
AGTech Holdings Limited (8279)	15 May 2017
Clear Media Limited (100)	31 May 2017
Kaisun Energy Group Limited (8203)	2 June 2017
First Pacific Company Limited (142)	7 June 2017
Alibaba Health Information Technology Limited (241)(Note)	14 June 2017
PuraPharm Corporation Limited (1498)	16 June 2017
Ju Teng International Holdings Limited (3336)	16 June 2017
IGG Inc (799)	27 June 2017

Note: This is a grant of restricted share units in respect of the share of the subject company.

We noted from above that it is not exceptional for listed companies in Hong Kong to adopt share award scheme and grant award shares to their key personnel and employees. Accordingly, we consider that the Connected New Shares Grant under the Share Award Scheme is in line with the market practice.

With reference to the Board Letter, the Company’s remuneration policy consists of three parts:

• (i) employees are paid a monthly base salary which is set with reference to market standards and subject to annual review;

• (ii) employees are also awarded a discretionary bonus each year (provided that the Company has made a profit in the year) as a short-term incentive on the basis of their performance in the year; and

• (iii) the Company had adopted the Share Option Scheme and the Terminated Share Award Scheme as a long-term incentive on the basis of their performance in the year.

The Group first adopted share option scheme in 2002 and share award scheme in 2011. After discussion with the Directors, we concur with their view that the Connected New Shares Grant under the Share Award Scheme is in line with the remuneration policy of the Group as set out under the sub-section headed “Remuneration policy” of the Board Letter.

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Having considered that (i) the Connected Selected Participants are all senior management of the Group who has contributed or will contribute to the growth and development of the Group; (ii) the benefits of the Connected New Shares Grant as mentioned above, (iii) it is not exception for listed companies in Hong Kong to adopt share award scheme and grant award shares to their key personnel and employees, and (iv) the Connected New Shares Grant is in line with the remuneration policy of the Group and the market practice, we concur with the Directors that the Connected New Shares Grant is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

2. Principal terms of the Connected New Shares Grant

On 27 June 2017, after the adoption of the Share Award Scheme, the Board has resolved to award 234,140,000 Awarded Shares to 14 Connected Selected Participants by way of allotment and issue of new Shares. The number of Awarded Shares granted to each Connected Selected Participant is set out under the section headed “Connected New Shares Grant” of the Board Letter. Further information of the Connected Awarded Shares is set out below:

Market value of

the Awarded Shares:

Based on the closing price of HK$0.181 per Share as quoted on the Stock Exchange as at the Latest Practicable Date, the market values of 234,140,000 Connected Awarded Shares amounted to approximately HK$42,379,340.

• Status of the Awarded Shares: The Connected Awarded Shares, when issued and fully paid, shall rank pari passu among themselves and with those Shares in issue, with the right to receive all dividends and other distributions declared, made or paid on or after the date of allotment.

Funds to be raised:

The Selected Participants are not required to pay any consideration for the grant of the Connected Awarded Shares. No fund will be raised by the Company as a result of the issue and allotment of the Connected Awarded Shares.

Identity of the allottee(s): The Connected Awarded Shares will be allotted and issued directly to the relevant Connected Selected Participants.

Vesting conditions:

The grant of the Connected Awarded Shares is not subject to any vesting condition, given the fact that all Connected Selected Participants have already made considerable amount of efforts on the Group’s business developments which led to today’s success.

The 234,140,000 Connected Awarded Shares represent approximately 4.78% of the total issue Shares as at the Latest Practicable Date and approximately 4.55% of the total issued Shares as enlarged by the issue of 249,370,000 Awarded Shares issued pursuant to the New Shares Grant.

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With reference to the Board Letter, a number of Connected Selected Participants, namely Mr. Zhang Xiaobin, Mr. Zhang Yichun, Mr. Shao Zili, Ms. Xu Ying and Dr. Lam Lee G (previously served the Company and re-joined the Company in late 2015), who were appointed into the Board between 2015 and 2016, have made remarkable contributions to the Group’s business transformation implemented in 2016 together with other members of the management team and staff. The Group’s transformation into the daily consumer goods and related value-added services market is essential to the Group’s future sustainability, given the gloomy performance of the Group’s shrinking energy, resources and trading businesses. As such, the contributions made by the new management have not just enhanced the short-term profitability and growth potentials but have also re-engineered the Group in a broader and long-term context by introducing a more competitive strategic focus and positioning of the Group’s businesses. Leveraging their professional expertise, solid experience and business network, the new management has significantly contributed to a series of major developments in connection with the Group’s business transformation, which include (i) the letter of intent in relation to the strategic cooperation with Huimin announced in September 2016; (ii) the exclusive overseas procurement agency business with Huimin for daily consumer goods announced in November 2016; (iii) the exclusive procurement, processing and supply agency business in the PRC for Huimin announced in March 2017; and (iv) the entry into the online-to-offline (O2O) and smart terminal businesses through further cooperation with Huimin announced in June 2017 (collectively, the “ Huimin Cooperation ”). The Board is of the view that the grant of the Awarded Shares to the new management is justifiable having considered their contributions to the Group’s long-term competitiveness and growth potentials.

We noted from announcements of the Company that Mr. Zhang Xiaobin, Mr. Zhang Yichun, Mr. Shao Zili, Ms. Xu Ying and Dr. Lam Lee G (the “ New Management ”) were appointed as Directors with effect from 22 September 2015, 17 October 2016, 22 September 2015, 16 December 2016 and 18 November 2015 respectively. With reference to the 2017 Annual Report, the Group intends to allocate resources for developing into the benefits of people related commodities goods market, in particular daily consumer products, by expanding its trading business to this areas and broaden its income sources. We also noted the announcement of the Company dated 20 September 2016, 22 November 2016, 8 March 2017 and 8 June 2017 regarding the Huimin Cooperation (the “ Announcements ”). With reference to the Announcements, Huimin is a company established under the laws of the PRC with its core business focusing on community e-commerce operation. With the basis of around 450,000 community supermarkets and convenience stores and relying on the internet to integrate the community physical stores resources, Huimin provides online-to-offline (O2O) community services platform covering the whole nation for the distribution and supply chain logistics among the suppliers, the convenience stores and the consumers in the PRC. As the Directors believe Huimin is one of the largest community O2O network service platforms in the PRC, the Board anticipates that consumer products trading business will be the new key performance driver for the Group. Taking into account the above, we concur with the Directors as in New Management contribution to the Huimin Cooperation.

With reference to the Board Letter, the rest of the Connected Selected Participants (the “ Old Management ”), under the leadership of Mr. Gao Feng (vice chairman and executive Director) and Mr. Chiu Sui Keung (executive Director and chief executive officer) who have joined the Company since 2009, hold directorships and/or senior managerial positions in the Group for 6 to 10 years. The Group’s major development milestones throughout the years, which the aforementioned Selected Participants have actively involved in and successfully achieved, include (i) the successful turnaround of the Group’s businesses and resumption of trading in 2011, (ii) settlement of litigations between 2015 and 2016 as well

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as (iii) the recent business transformation of the Group since 2016 (i.e. the Huimin Cooperation). In particular, these Selected Participants have made appreciable efforts to overcome the tough times in prior years attributable to the trading suspension between July 2009 and February 2011 and several litigations, their endeavours to complete the 2011 turnaround and 2015-2016 litigations settlement have inevitably paved the way for today’s success in the Group’s transformation into the daily consumer goods market. We also understand from the Directors that (i) Mr. Sun Hao has been responsible for the business development of the Group’s trading and procurement businesses in the PRC, identifying and assessing suitable business opportunities, performing commercial negotiations with business partners, supervising the business operations of certain subsidiaries of the Group; and (ii) Mr. Liu Gang has been responsible for overseeing the Group’s operational and administrative functions in the PRC, monitoring business development and strategic management of the Group’s PRC operations, performing commercial negotiations and aligning business cooperation in the PRC region. Mr. Sun Hao and Mr. Liu Gang have been playing important roles in the Group’s business operations. In light of the Selected Participants’ contributions to the Group’s key developments in recent years, the Board considers it appropriate to reward these Selected Participants for their continuous supports to the Group by way of granting the Awarded Shares.

We noted that the trading in Shares was suspend from 28 July 2009 to 1 February 2011 (both days inclusive). The Company delayed the despatch of the annual results/report for the year ended 31 March 2009 and interim results/report for the six months ended 30 September 2009. We also noted from the announcement of the Company dated 1 February 2011 regarding the resumption of trading in Shares that (i) the Company had scaled down its then exhibition management business by outsourcing and transfer of administrative and customer service functions and the disposal of subsidiaries, and (ii) the Company intended to engage in the unconventional gas business through the subscription in Sino Giants Group Limited.

With reference to the annual reports of the Company of the recent financial years, Company was involved in certain litigations during the period from 2009 to 2016, including the prolonged proceedings with Mr. Hung Chen Richael, former Director and substantial Shareholder. With reference to the annual report of the Company for the year ended 31 March 2016 and as advised by the Directors, the prolonged proceedings with Mr. Hung Chen Richael were ended in 2016. Having considered that the Old Management has joined the Group for 6 to 10 years, we concur with the Directors as in the Old Management’s contribution to the Group such as working for the resumption, resolving the delay in dispatch of financial results and settlement of the litigations. In addition, taking into account that the Old Management has also involved in the recent transformation of the Group, in particular the said Huimin Cooperation, we consider it appropriate to reward the Old Management for their continuous supports to the Group.

Upon our enquiry, we were advised by the Directors that the remuneration committee of the Company considered the contributions, roles and responsibilities of the Connected Selected Participants when determining the number of Award Shares to be granted under the Connected New Shares Grant (for example, more Award Shares are granted to the executive Directors who are considered to play more important roles in the daily management and operation of the Group and hence shall have more significant contribution to the Group’s businesses than the non-executive Directors/independent non-executive Directors). In addition, based on the closing price of the Shares on the Announcement Date (i.e. 27 June 2017) of HK$0.194 per Share, the total cost of the Awarded Shares was approximately

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HK$48 million which is lower than the share-based payment of approximately HK$52 million to the Directors and senior management of the Group for the year ended 31 March 2017. The Board considers that the cost of granting the Awarded Shares as part of the remuneration package of the respective Directors and key personnel is justifiable and in line with the remuneration policy taking into account the following factors: (i) while not yet reflected in the annual results of the Group for the year ended 31 March 2017, it is presently expected that the Group’s overall financial performance in the current financial year will be improved, based on the existing circumstances and business environment, and contributed by the Group’s transformed businesses in the daily consumer goods market and ancillary services; and (ii) the amount of the Awarded Shares granted to each Selected Participant reflects the value and benefits to the Group considering his/her role and contribution to the strategic and sustainable development of the Group.

For our due diligence, we have also obtained and reviewed the Scheme Rules from the Company. We noted that the terms of the Connected New Shares Grant have complied with the Scheme Rules, in particular the scheme limit and individual limit. The total number of Connected Awarded Shares and Other Awarded Shares amounted to 249,370,000, representing approximately 5.10% of total issued Shares as at the Adoption Date which is less than the 10% scheme limit. In addition, none of the Connected Selected Participants (i) was awarded with any Awarded Shares in the 12-month period before the Connected New Shares Grant and (ii) was awarded with more than 48,921,384 Shares, being 1% of the total issued Shares as at the Adoption Date. For further details of the Scheme Rules, please refer to appendix I to the Circular.

Having considered the principal terms of the Connected New Shares Grant as highlighted above, we are of the opinion that the terms of the Connected New Shares Grant are fair and reasonable so far as the Independent Shareholders are concerned.

3. Potential dilution of the shareholding interests of the existing public Shareholders

With reference to the shareholding table of the Company under the sub-section headed “Potential dilution to shareholdings of the Shareholders” of the Circular, the shareholding interests of the existing public Shareholders (including the Other Selected Participants) would be diluted from approximately 80.21% to approximately 77.66% while the shareholding interests of the existing public Shareholders (excluding the Other Selected Participants) would be diluted from approximately 80.18% to approximately 77.35% as a result of the Connected New Shares Grant.

Taking into account (i) the aforementioned reasons for and possible benefits of the Connected New Shares Grant; and (ii) the terms of the Connected New Shares Grant being fair and reasonable, we are of the view that the said dilution is acceptable.

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LETTER FROM GRAM CAPITAL

RECOMMENDATION

Having taken into consideration the factors and reasons as stated above, we are of the opinion that (i) the terms of the Connected New Shares Grant are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) the Connected New Shares Grant is conducted under the ordinary and usual course of business of the Company and in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the resolution(s) to be proposed at the AGM to approve the Connected New Shares Grant and the transactions contemplated thereunder.

Yours faithfully, For and on behalf of Gram Capital Limited Graham Lam Managing Director

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SUMMARY OF THE SHARE AWARD SCHEME

APPENDIX I

THE SHARE AWARD SCHEME

The material terms of the Share Award Scheme are summarised as follows:

Purposes and objectives

The purposes and objectives of the Share Award Scheme are to recognise the contributions by certain employees and persons to the Group and to provide them with incentives in order to retain them for the continual operation and development of the Group and to attract suitable personnel for further development of the Group.

Duration

Subject to any early termination as may be determined by the Board in accordance with the Scheme Rules, the Share Award Scheme shall be valid and effective for 10 years from the Adoption Date.

Administration

The Board has the power to administer the Share Award Scheme, including but not limited to the power to construe and interpret the rules of the Share Award Scheme, the terms of the Awards granted under the Share Award Scheme, and where applicable, the Trust Deed.

Operation of the Share Award Scheme

The Board may select any Eligible Participant (other than Excluded Participant) for participation in the Share Award Scheme and determine the number of the Awarded Shares to be awarded to the Selected Participants.

The Board shall offer the Awarded Shares to the Selected Participant(s) by any of the following ways as the Board deems fit:

• (a) subject to (i) the passing of an ordinary resolution by the Shareholders in general meeting approving the Scheme Mandate and the transactions contemplated thereunder; and (ii) the Listing Committee granting approval of the listing of, and permission to deal in, any new Shares as Awarded Shares, pay such sum to the Trustee for the purpose of subscribing for the new Shares to be allotted and issued to the Trustee for the benefit of the Selected Participant(s) or allot and issue the new Shares as Awarded Shares to the Selected Participant(s) directly; and/or

• (b) pay the Reference Amount to the Trustee (or as it shall direct) and direct the Trustee to purchase existing Awarded Shares. The Board is entitled to impose any conditions as it deems appropriate with respect to the entitlement of the Selected Participant to the Awarded Shares.

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SUMMARY OF THE SHARE AWARD SCHEME

APPENDIX I

Purchase of Awarded Shares by the Trustee

As soon as practicable after the Reference Date, the Board shall cause the Reference Amount to be paid from the Company’s resources to the Trustee to be held on trust for the relevant Selected Participant for the purchase of and/or the subscription for the Awarded Shares.

The Trustee shall, as soon as practicable after receiving the Reference Amount, apply the Reference Amount towards the purchase of the Awarded Shares at the prevailing market price.

If the Reference Amount paid to the Trustee is not sufficient to purchase all the Awarded Shares at the prevailing market price, the Trustee shall acquire the maximum number of board lots of Shares that can be acquired with that amount and seek further funds from the Board until all the Awarded Shares are purchased.

The Trustee shall purchase further Shares for the Selected Participants with the cash income or net proceeds of sale of non-cash and non-scrip distributions declared and distributed by the Company in respect of Awarded Shares held upon the trust for the relevant Selected Participant. When the Selected Participant has satisfied all vesting conditions specified by the Board at the time of making the Award and become entitled to the Awarded Shares, the Trustee shall transfer the relevant Award Shares to that Selected Participant.

Scheme limit, individual limit and annual limit

Pursuant to the Scheme Rules, the total number of Shares, whether they are new Shares or existing Shares purchased on-market by the Trustee, underlying all grants made pursuant to the Share Award Scheme shall not exceed 10% of the total number of issued Shares as at the Adoption Date (subject to adjustment in the event of sub-division or consolidation of Shares in accordance with the Scheme Rules). Such scheme limit may however be refreshed from time to time subject to the certain conditions set out in the Share Award Scheme. The Company shall not make any further grant of Awarded Share(s) which would result in the total number of the Awarded Shares together with the Shares which may be allotted and issued upon exercise of all outstanding share options granted but yet to be exercised under the other share option or award scheme(s) of the Company representing an aggregate over thirty per cent (30%) of the Shares in issue as at the date of such grant. In addition, no Award will be made if it will be result in (i) the aggregate number of Shares held by public Shareholders falls below the minimum percentage as prescribed under the Listing Rules; or (ii) an obligation on the Selected Participant or any Shareholder to make a mandatory offer under Rule 26 of the Takeovers Code being triggered.

Unless otherwise approved by the Shareholders and subject to the adjustment in the event of consolidation or subdivision of Shares, the aggregate number of new Shares to be granted as Awarded Shares in each financial year of the Company shall not exceed 3% of the total number of issued Shares as at the Adoption Date or the latest date of refreshment of the Scheme Limit (as the case may be). New Shares granted to connected persons of the Company as Awarded Shares which are specifically approved by the Shareholders shall not be counted in determining the number of Awarded Shares under the said annual limit.

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SUMMARY OF THE SHARE AWARD SCHEME

APPENDIX I

Unless otherwise approved by the Shareholders and subject to the adjustment in the event of consolidation or subdivision of Shares, the maximum number of Shares which may be awarded to a Selected Participant under the Share Awarded Scheme in any 12-month period shall not exceed 1 per cent (1%) of the issued share capital of the Company as at the Adoption Date or the date of refreshment of the scheme limit (as the case may be), excluding all the Shares awarded under the Share Awarded Scheme up to the Adoption Date or the latest date of refreshment of the Scheme Limit (as the case may be).

Award to connected person

Any grant of the Awarded Shares to the Directors or senior management of the Company must first be approved by the remuneration committee of the Company and any grant of the Awarded Shares to any connected person shall comply with all applicable rules and regulations, including the Listing Rules. Any member of the Board who himself or herself has interest in a proposed Award shall abstain from voting on any resolution by which the Award is proposed.

In the event that the Board has decided to grant any Awarded Shares to a Selected Participant who is connected person of the Company,

• (i) if the Awarded Share(s) is/are Shares purchased by the Trustee under the Scheme, the Trustee shall transfer such Restricted Shares to such connected persons in accordance with the written instructions of the Board to the Trustee and

• (ii) if the Awarded Shares are new Share(s) to be issued by the Company, the Company shall cause such Awarded Shares be allotted and issued to the Trustee (in the circumstance where vesting condition(s) is/are imposed, after all such vesting conditions are fulfilled) or to the connected person directly (in the circumstance where no vesting condition is imposed), both as soon as possible and if Shareholders’ approval or independent Shareholders’ approval is required for such grant, as soon as possible after such Shareholders’ approval or independent Shareholders’ approval (as the case may be) has been obtained.

Where a Selected Participant who is not a connected person of the Company on the date of grant of the Award subsequently becomes a connected person of the Company prior to vesting of the Awarded Share(s) granted or conditionally granted to him/her, vesting of such Awarded Share(s) shall be subject to compliance by the Company of requirements under Chapter 14A of the Listing Rules and other provisions of the Scheme Rules applicable to the granting of Awarded Shares to a connected person of the Company, and where applicable, the remuneration committee of the Company shall have the absolute discretion to alter the vesting of or terminate the Award(s) of such Awarded Share(s) where such requirements would, in the opinion of the remuneration committee of the Company, be burdensome on the Company.

Vesting and lapse

Any Awarded Shares and the related income thereof held by the Trustee and which are referable to a Selected Participant shall vest in that Selected Participant in accordance with the timetable and conditions as imposed by the Board at its absolute discretion, provided that the Selected Participant remains at all times after the Reference Date and on the relevant Vesting Date(s) an Eligible Participant of the Group.

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SUMMARY OF THE SHARE AWARD SCHEME

APPENDIX I

In respect of a Selected Participant who died or retired at his normal retirement date or earlier by agreement with the Group at any time prior to a Vesting Date, all the Awarded Shares and the related income of a Selected Participant shall be deemed to be vested on the date immediately prior to his death or retirement at his normal retirement date or earlier by agreement with the Group.

In the event (i) a Selected Participant ceases to be an Eligible Participant, or (ii) the subsidiary by which a Selected Participant is employed ceases to be a subsidiary of the Company, or (iii) an order for the winding-up of the Company or (iv) a Selected Participant is found to be an Excluded Participant or (v) a Selected Participant fails to return duly executed transfer documents prescribed by the Trustee for the relevant Awarded Shares within the stipulated period, the relevant part of an Award made to such Selected Participant shall automatically lapse forthwith and the relevant Awarded Shares and related income thereof shall not vest in that Eligible Participant on the relevant Vesting Date but shall be held by the Trustee for the benefit of all or one or more of the Eligible Participants (excluding any Excluded Participant) as the Board in its absolute discretion shall at any time determine.

If there occurs an event of change of control of the Company, whether by way of offer, merger, scheme of arrangement or otherwise, all the Awarded Shares shall immediately vest in the respective Selected Participant on the date when such change of control event becomes or is declared unconditional and such date shall be deemed to be the Vesting Date.

Rights and restrictions

Any Award made under the Share Award Scheme shall be personal to the Selected Person to whom it is made and shall not be assignable and no Selected Participant shall in any way sell, transfer, charge, mortgage, encumber or create any interest in favour of any other person over or in relation to either the Reference Amount or the Awarded Shares referable to him or her pursuant to such Award or the related income or any of the returned Shares under the Share Award Scheme.

A Selected Participant shall only have a contingent interest in the Awarded Shares and the related income thereof which are referable to him subject to the vesting of such Shares on the Vesting Date. A Selected Participant shall have no rights in the Residual Cash.

The Trustee shall not exercise the voting rights in respect of any Shares held on trust by the Trustee for the Selected Participants before vesting (including but not limited to the Awarded Shares, any bonus Shares and scrip Shares).

Taxes and expenses

The Company shall bear the costs of establishing and administering the Share Award Scheme, including, for the avoidance of doubt, costs arising from communication, expenses incurred in the purchase of Shares by the Trustee and stamp duty and normal registration fee (i.e. not being fee chargeable by the share registrar of any express service of registration) in respect of the vesting and transfer of the Awarded Shares to the Selected Participants as well as all tax, levy and expenses arising from the allotment and issue of the new Shares as Awarded Shares. For the avoidance of doubt, the Company shall not be liable for any tax or expenses of such other nature payable on the part of any Participant or the Trustee in respect of any sale, purchase, vesting or transfer of the Awarded Shares including but not limited to salaries tax and capital gain tax.

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SUMMARY OF THE SHARE AWARD SCHEME

APPENDIX I

Returned Shares and Further Shares

The Trustee shall hold the Returned Shares and Further Shares (if any) exclusively for the benefit of all or one or more of the Participants (excluding any Excluded Participants), whether the he/she is a Selected Participant at the time of Award. Such Returned Shares and Further Shares may be awarded as Awarded Shares pursuant to the Share Award Scheme.

The beneficial interests of the Returned Shares and the Further Shares are with the Participants as a whole prior to the grant of such Award and will only go to a particular Selected Participant after the making of the relevant Awards.

Termination

The Share Award Scheme shall terminate on the earlier of (i) the date falling on the 10th anniversary date of the Adoption Date and (ii) such date of early termination as determined by the Board provided that such termination shall not materially and adversely affect any subsisting rights of any Selected Participant thereunder.

Upon all the Awarded Shares of the Selected Participants granted under the Share Award Scheme having been vested, the Residual Cash for the Selected Participants and such other funds remaining in the trust fund shall be remitted to the Company forthwith.

39

PROPOSED AMENDMENTS TO THE SHARE OPTION SCHEME

APPENDIX II

The proposed amendments to the Share Option Scheme upon Shareholders’ approval, showing insertion underlined (where applicable), are as follows:

• (a) the following be inserted into the sub-paragraph 1.1 of the Share Option Scheme, being the “definition” section of the Share Option Scheme:

“ close associate(s) ” shall have the meaning ascribed to it in the Listing Rules;

• (b) the definition of “Companies Law” in sub-paragraph 1.1 of the Share Option Scheme be amended as underlined below:

“ Companies Law ” means the Companies Law (2016 Revision) of the Cayman Islands, Cap.

22 (Law 3 of 1961), as amended or supplemented or otherwise modified from time to time;

• (c) the definition of “Grantee” in sub-paragraph 1.1 of the Share Option Scheme be amended as underlined below:

“ Grantee ” means any Eligible Participant who accepts the offer of the grant of an Option in accordance with the provisions of this Scheme or (where the context so permits) a person entitled to any such Option in consequence of the death of the original Grantee or the legal personal representative(s) of such person;

• (d) the definition of “Shareholder(s)” in sub-paragraph 1.1 of the Share Option Scheme be amended as underlined below:

“ Shareholder(s) ” means holder(s) of the Share(s) from time to time;

• (e) Sub-paragraph 5.5 of the Share Option Scheme be amended as underlined below:

An Option shall be personal to the Grantee and shall not be transferable or assignable and no Grantee shall in any way sell, transfer, charge, mortgage, encumber or create any interest (legal or beneficial) in favour of any third party over or in relation to any Option or attempt to do so (save that the Grantee may nominate a nominee in whose name the Shares issued pursuant to this Scheme may be registered). Any breach of the foregoing shall entitle the Company to cancel any outstanding Options or any part thereof granted to such Grantee without compensation.

• (f) Sub-paragraph 6.1 of the Share Option Scheme be amended as underlined below:

The Company may not grant any Options after inside information has come to its knowledge until it has announced the information. In particular, it may not grant any Option during the period of one month immediately before the earlier of:–

40

PROPOSED AMENDMENTS TO THE SHARE OPTION SCHEME

APPENDIX II

• (a) the date of the Board meeting (as such date is first notified to the Stock Exchange under the Listing Rules) for approving the Company’s results for any year, half-year, quarterly, or any other interim period (whether or not required under the Listing Rules); and

• (b) the deadline for the Company to announce its results for any year or half-year under the Listing Rules, or quarterly or any other interim period (whether or not required under the Listing Rules),

and ending on the date of the results announcement. No Option may be granted during period of delay in publishing a results announcement.

• (g) Sub-paragraph 10.1 of the Share Option Scheme be amended as underlined below:

The maximum number of Shares which may be allotted and issued upon the exercise of all outstanding options granted but yet to be exercised under this Scheme and any other share option scheme(s) of the Company and any Shares which may be awarded under the share award scheme or other incentive schemes of the Company must not, in aggregate, exceed 30% of the Shares in issue from time to time. No options may be granted under this Scheme if any grant of Option will result in such 30% limit being exceeded.

• (h) Sub-paragraph 10.2 of the Share Option Scheme be amended as underlined below:

Subject to clauses 10.3 and 10.4, the total number of Shares which may be allotted and issued upon the exercise of all options (excluding, for this purpose, options which have lapsed in accordance with the terms of this Scheme and any other share option scheme(s) of the Company) to be granted under this Scheme and any other share option scheme(s) of the Company must not in aggregate exceed 10% of the Shares in issue as at the date of approval of this Scheme (the “ Scheme Mandate Limit ”).

• (i) Sub-paragraph 10.3 of the Share Option Scheme be amended as underlined below:

Subject to clause 10.1 hereof and without prejudice to clause 10.4 hereof, the Company may seek approval by its Shareholders in general meeting for “refreshing” this Scheme Mandate Limit (a circular containing the information required by the Listing Rules must be despatched to Shareholders of the Company for that purpose) provided that the total number of Shares which may be allotted and issued upon the exercise of all options to be granted under this Scheme and any other share option scheme(s) of the Company must not exceed 10% of the Shares in issue as at the date of approval of the refreshed limit and, for the purpose of calculating the limit, options previously granted under this Scheme and any other share option scheme(s) of the Company (including those outstanding, cancelled, lapsed or exercised) will not be counted.

41

PROPOSED AMENDMENTS TO THE SHARE OPTION SCHEME

APPENDIX II

• (j) Sub-paragraph 10.4 of the Share Option Scheme be amended as underlined below:

Subject to clause 10.1 hereof and without prejudice to clause 10.3 hereof, the Company may also seek separate approval of the Shareholders in general meeting for granting Options beyond the Scheme Mandate Limit or the refreshed limit under clause 10.3 to the Eligible Participant specifically identified by the Company before such approval is sought. In such event, the Company must send a circular to its Shareholders containing a generic description of the specified Eligible Participants, the number and terms of Options to be granted, the purpose of granting Options to the specified Eligible Participant with an explanation as to how the terms of these Options serve such purpose and all other information as required under the Listing Rules.

• (k) The following be inserted as sub-paragraph 10.5 of the Share Option Scheme:

The maximum number of Shares referred to in this clause will be adjusted, in such manner as the Auditors shall certify in writing or the approved independent financial adviser shall confirm in writing (as the case may be) to the Board to be fair and reasonable in accordance with clause 13 (no such certification or confirmation is required in case of adjustment made on a capitalisation issue), in the event of any alteration in the capital structure of the Company by way of capitalisation issue, rights issue, open offer, consolidation, subdivision or reduction of the share capital of the Company.

• (l) Paragraph 11 of the Share Option Scheme be amended as underlined below:

Unless approved by the Shareholders in the manner set out in this clause 11, the total number of Shares issued and to be issued upon the exercise of the Options granted under this Scheme and options granted any other share option scheme(s) of the Company (including both exercised and outstanding Options/options) to each Eligible Participant in any 12-month period shall not exceed 1% of the Shares in issue (the “ Individual Limit ”). Any further grant of options to an Eligible Participant in excess of the Individual Limit in any 12-month period up to and including the date of such further grant representing in aggregate over 1% of the Shares in issue, such further grant shall be subject to the approval of the Shareholders in general meeting with such Eligible Participant and his close associates (or his associates if the Eligible Participant is a connected person) abstaining from voting. In such event, the Company must send a circular to its Shareholders containing the identity of such Eligible Participant, the number and terms of Options to be granted (and Options previously granted to such Eligible Participant) and all other information as required under the Listing Rules. The number and terms (including the Exercise Price) of Options to be granted (and Options previously granted to such Eligible Participant) must be fixed before approval of the Shareholders and the date of the Board meeting proposing such further grant should be taken as the Acceptance Date for the purpose of calculating the Exercise Price under clause 7 hereof.

The maximum number of Shares referred to in this clause will be adjusted, in such manner

as the Auditors shall certify in writing or the approved independent financial adviser shall confirm in writing (as the case may be) to the Board to be fair and reasonable in accordance with clause 13 (no such certification or confirmation is required in case of adjustment made

42

APPENDIX II PROPOSED AMENDMENTS TO THE SHARE OPTION SCHEME

on a capitalisation issue), in the event of any alteration in the capital structure of the

Company by way of capitalisation issue, rights issue, open offer, consolidation, subdivision or reduction of the share capital of the Company.

• (m) Sub-paragraph 12.1 of the Share Option Scheme be amended as underlined below:

Any grant of Options to a director, chief executive or substantial shareholder of the Company, or any of their respective associates must be approved by all the independent non-executive directors of the Company (excluding any independent non-executive director who is the Grantee).

• (n) Sub-paragraph 12.2 of the Share Option Scheme be amended as underlined below:

Where Options are proposed to be granted to a substantial shareholder or an independent non-executive director of the Company, or any of their respective associates, and if such grant would result in the total number of Shares issued and to be issued upon exercise of all Options granted and to be granted (including Options exercised, cancelled and outstanding) in any 12-month period up to and including the date of such grant to such person:–

• (a) representing in aggregate over 0.1% of all the Shares in issue for the time being; and

• (b) having an aggregate value, based on the closing price of the Shares on the date of each grant, in excess of HK$5 million;

then proposed grant must be subject to approval of the Shareholders in general meeting taken on a poll. The Company must send a circular to its Shareholders and comply with the relevant requirements in respect of shareholders’ meeting in the Listing Rules. The grantee, his associates and all core connected persons of the Company must abstain from voting in favour at such general meeting. Any vote taken at the meeting to approve the grant of such options must be taken on a poll.

• (o) Sub-paragraph 13.1 of the Share Option Scheme be amended as underlined below:

In the event of any capitalisation issue, rights issue, open offer, sub-division, consolidation of shares, or reduction of capital of the Company, such corresponding alterations (if any) shall be made (except on an issue of securities of the Company as consideration in a transaction which shall not be regarded as a circumstance requiring alteration or adjustment) in:–

• (a) the number or nominal amount of Shares subject to any outstanding Options; and/or

• (b) the Exercise Price,

as the Auditors or the approved independent financial adviser shall at the request of the Company or any Grantee, certify in writing either generally or as regards any particular Grantee, to be in their opinion fair and reasonable and in compliance with the relevant

43

PROPOSED AMENDMENTS TO THE SHARE OPTION SCHEME

APPENDIX II

provisions of the Listing Rules and supplementary guidance on the interpretation of the

Listing Rules issued by the Stock Exchange from time to time (no such certification or confirmation is required in case of adjustment made on a capitalisation issue), provided that any such alteration shall be made on the basis that a Grantee shall have the same proportion of the equity capital of the Company as that to which he was entitled to subscribe had he exercised all the Options held by him immediately before such adjustments and the aggregate Exercise Price payable by a Grantee on the full exercise of any Option shall remain as nearly as possible the same as (but shall not be greater than) it was before such event and that no such alterations shall be made if the effect of such alterations would be to enable a Share to be issued at less than its nominal value. Any adjustment to be made in accordance with this clause shall comply with the Listing Rules and supplementary guidance on the interpretation of the Listing Rules issued by the Stock Exchange from time to time.

• (p) Sub-paragraph 13.2 of the Share Option Scheme be replaced by the following:

The capacity of the Auditors or the approved independent financial adviser (as the case may be) in this clause 13 is that of experts and not of arbitrators and their certification or confirmation shall, in the absence of manifest error, be final, conclusive and binding on the Company and the Grantees. The costs of the Auditors or the approved independent financial adviser (as the case may be) shall be borne by the Company.

• (q) The following be inserted as sub-paragraph 13.3 of the Share Option Scheme:

Upon any adjustment pursuant to clause 13.1, the Company shall notify the Grantees in writing the adjustments that have been made. If there has been any alteration in the capital structure of the Company, and if the Company has not yet informed the Grantees of any necessary adjustments to be made to their Options in accordance with the certificate of the Auditors or the confirmation of the approved independent financial adviser (as the case may be), the Company shall, upon receipt of a notice from a Grantee in accordance with clause 8.1, inform the Grantee of such alteration and shall either inform the Grantee of the adjustment to be made in accordance with the aforesaid certificate or confirmation obtained by the Company for such purpose or, if no such certificate or confirmation has yet been obtained, inform the Grantee of such fact and instruct the Auditors or the approved independent financial adviser as soon as practicable thereafter to issue a certificate or provide a written confirmation in that regard in accordance with clause 13.1.

• (r) Sub-paragraph 16.1 of the Share Option Scheme be amended as underlined below:

The terms and conditions of this Scheme may be altered in any respect by resolution of the Board except that the provisions of this Scheme as to:–

• (a) the definitions of “Eligible Participant”, “Expiry Date”, “Grantee” and “Option Period” in clause 1.1 hereof; and

• (b) the provisions in clauses 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 16, 17 and 18 hereof,

44

PROPOSED AMENDMENTS TO THE SHARE OPTION SCHEME

APPENDIX II

shall not altered to the advantage of Grantees or prospective Grantees except with the

prior sanction of the Shareholders by a resolution in general meeting, provided that no such alteration shall operate to affect adversely the terms of issue of any Option granted or agreed to be granted prior to such alteration except with the consent or sanction such majority of the Grantees as would be required of the Shareholders under the Articles of Association for a variation of the rights attached to the Shares.

• (s) Sub-paragraph 16.2 of the Share Option Scheme be amended as underlined below:

Any alterations to the terms and conditions of the Scheme, which are of a material nature, or any change to the terms of Option granted, or any change to the authority of the Board in respect of alteration of this Scheme, must be made with the prior approval of the Shareholders in general meeting at which any persons to whom or for whose benefit the Shares may be issued under this Scheme and their respective associates shall abstain from voting in accordance with the requirements of the Listing Rules, if applicable, except where the alterations take effect automatically under the existing terms of this Scheme.

• (t) The following be inserted as sub-paragraph 16.3 of the Share Option Scheme:

Notwithstanding anything to the contrary contained in clauses 16.1 and 16.2, the Board may at any time alter or modify the Scheme in any way to the extent necessary to cause the Scheme to comply with any statutory provisions or the regulations of any regulatory or other relevant authority. Any amendment to any terms of the Scheme or the Options granted shall comply with the relevant requirements of Chapter 17 of the Listing Rules.

• (u) Sub-paragraph 18.2 of the Share Option Scheme be amended as underlined below:

Where the Company cancels Options, the grant of new options to the same Grantee may only be made under this Scheme with available unissued options (excluding the cancelled Options) within the limit and in compliance with the terms of this Scheme, in particular, the requirements set out in clause 10 hereof.

A copy of the revised Share Option Scheme is available for inspection, as referred to in this circular.

45

EXPLANATORY STATEMENT ON REPURCHASE MANDATE

APPENDIX III

This Appendix III serves as an explanatory statement, as required by Rule 10.06(1)(b) of the Listing Rules, to provide the requisite information to you to enable you to make an informed decision as to whether to vote for or against the ordinary resolution to be proposed at the AGM in relation to the proposed granting of the Repurchase Mandate.

PROVISIONS OF THE LISTING RULES

The Listing Rules permit companies whose primary listing is on the Stock Exchange to repurchase their securities on the Stock Exchange subject to certain restrictions, the most important of which are summarised below.

SHARE CAPITAL

As at the Latest Practicable Date, the Company issued 4,892,138,400 Shares. Subject to the passing of the resolution approving the granting of the proposed Repurchase Mandate at the AGM and on the basis that no further Shares are issued or repurchased during the period between the Latest Practicable Date and the date of passing of the resolution approving the Repurchase Mandate at the AGM, the Directors will be authorised to repurchase a maximum of 489,213,840 Shares pursuant to the Repurchase Mandate, representing 10% of the total number of issued Shares as at the date of passing of such resolution.

REASONS FOR REPURCHASES

The Directors believe that it is in the best interests of the Company and the Shareholders to seek the Repurchase Mandate from the Shareholders to enable the Company to repurchase its Shares on the Stock Exchange. Such repurchases may, depending on market conditions and funding arrangements at the time, lead to an enhancement of the net asset value per Share and/or its earnings per Share and will only be made when the Directors believe that such a repurchase will benefit the Company and the Shareholders. The timing of such repurchases, the number of Shares to be repurchased, the repurchase price and other terms upon which the Shares are repurchased will be decided by the Directors at the relevant time having regard to the prevailing circumstances.

FUNDING OF REPURCHASES

Repurchases of Shares will be financed out of funds legally available for the purpose and in accordance with the Articles of Association, the applicable laws of the Cayman Islands and the Listing Rules. The Company may not repurchase the Shares for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Stock Exchange from time to time.

46

EXPLANATORY STATEMENT ON REPURCHASE MANDATE

APPENDIX III

IMPACT OF REPURCHASES

The Directors have no present intention to repurchase any Shares and they would only exercise the power to repurchase in circumstances where they consider that the repurchase would be in the best interests of the Company. The Directors consider that if the Repurchase Mandate were to be exercised in full at the current prevailing market value, it might have a material adverse impact on the working capital and the gearing position of the Company, as compared with the positions disclosed in the audited consolidated financial statements of the Company as at 31 March 2017, being the date to which the latest published audited consolidated financial statements of the Company were made up. However, the Directors do not propose to exercise the Repurchase Mandate to repurchase Shares to such an extent as would, in the circumstances, result in a material adverse effect on the working capital requirements of the Company or the gearing levels which in the opinion of the Directors are from time to time appropriate for the Company.

UNDERTAKING

The Directors have undertaken to the Stock Exchange that, so far as the same may be applicable, they will exercise the Repurchase Mandate in accordance with the Listing Rules, the memorandum of association of the Company, the Articles of Association and the applicable laws of the Cayman Islands.

None of the Directors nor, to the best of their knowledge having made all reasonable enquiries, any of their close associates (as defined in the Listing Rules) currently intends to sell the Shares to the Company or its subsidiaries in the event that the Repurchase Mandate is approved by the Shareholders.

No core connected person (as defined in the Listing Rules) of the Company has notified the Company that he or she or it has a present intention to sell his or her or its Shares to the Company, nor has he or she or it undertaken not to do so, in the event that the Company is authorised to make purchases of the Shares.

47

EXPLANATORY STATEMENT ON REPURCHASE MANDATE

APPENDIX III

SHARE PRICES

The highest and lowest prices at which the Shares have been traded on the Stock Exchange in each of the previous twelve months prior to the Latest Practicable Date were as follows:

	Share Prices (per Share)	Share Prices (per Share)
Month	Highest	Lowest
	HK$	HK$
2016
August	0.16	0.13
September	0.18	0.12
October	0.34	0.173
November	0.31	0.23
December	0.295	0.27
2017
January	0.285	0.245
February	0.275	0.245
March	0.28	0.275
April	0.27	0.242
May	0.245	0.2
June	0.226	0.17
July_(up to the Latest Practicable Date)_	0.2	0.179

EFFECTS OF TAKEOVERS CODE

If, as a result of a repurchase of Shares, a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of the Takeovers Code. Accordingly, a Shareholder, or a group of Shareholders acting in concert (within the meaning under the Takeovers Code), depending on the level of increase in the interest of the Shareholder(s), could obtain or consolidate control of the Company and become(s) obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code.

As at the Latest Practicable Date, to the best of the knowledge and belief of the Directors, the Shareholders who were interested in 5% or more of the total number of issued Shares, according to the register of interests required to be kept by the Company under Section 336 of the SFO, were as follows:

			Shareholding in the
		Shareholding	event the Repurchase
	Number of Shares	as at the Latest	Mandate is exercised
Name of Shareholder	beneficially held	Practicable Date	in full
Liu Qiuhua	717,634,000	14.67%	16.30%
Gao Feng	295,542,000	6.04%	6.71%

48

EXPLANATORY STATEMENT ON REPURCHASE MANDATE

APPENDIX III

As at the Latest Practicable Date, no Shareholder or Director holds 30% or more of the issued Shares of the Company, and the Directors are not aware of the consequences of such increases or as a result of repurchase of Shares that would result in any Shareholder or group of Shareholders acting in concert, Director, or other person holding 30% or more of the issued Shares of the Company and becoming obliged to make a mandatory offer under the Takeovers Code.

The Directors have no present intention to exercise the Repurchase Mandate to such extent which would otherwise result in takeover obligations or the number of Shares being held by the public falling below the minimum requirement as prescribed by the Stock Exchange, which is currently 25% of the total number of issued Shares.

SHARE REPURCHASES MADE BY THE COMPANY

Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company’s shares during the six months preceding the Latest Practicable Date.

49

DETAILS OF THE DIRECTORS TO BE RE-ELECTED

APPENDIX IV

The following sets out the details of the Directors who will retire and, being eligible, offer themselves for re-election at the AGM pursuant to the Articles of Association:

BIOGRAPHICAL INFORMATION

Executive Director

Mr. Gao Feng , aged 47, was appointed as the vice chairman and an executive Director on 18 June 2009. He has extensive management experience in particular for PRC businesses for over 15 years, and has served various important roles in a couple of listed companies and sizable financial institutions. Mr. Gao was the former president of North America for I.N.C. Financial Organization Ltd. and the former president of Asia-Pacific for Morgan Funding Organization. Mr. Gao holds a master’s degree in business administration from Keuka College in New York.

A service contract has been renewed for a term of three years commencing from 20 April 2015 between the Company and Mr. Gao. He is entitled to a Director’s emolument of HK$3,120,000 per annum which was determined with reference to his experience and responsibilities and is subject to the review of the remuneration committee of the Company from time to time.

Mr. Gao did not hold any directorship in listed public companies in the last three years, and he is not related to any Director, senior management or substantial or controlling Shareholder of the Company.

As at the Latest Practicable Date, Mr. Gao was beneficially interested in 178,000,000 Shares, 68,622,000 Share Options and 48,920,000 Awarded Shares, representing approximately 3.64%, 1.40% and 1.00%, respectively, of the issued share capital of the Company. Save for the aforesaid, Mr. Gao did not have any interests or short positions in any Shares, underlying Shares or debentures of the Company and its associated corporations within the meaning of Part XV of the SFO as at the Latest Practicable Date.

Non-executive Directors

Mr. Zhang Yichun , aged 43, was appointed as the vice chairman and a non-executive Director on 17 October 2016. Mr. Zhang is the founder and chairman of Zhongshang Huimin (Beijing) E-Commerce Co. Ltd. (中商惠民(北京)電子商務有限公司) (“ Huimin ”). He has over 20 years of experience in telecommunications and IT sectors and has strong technical background, business resources and network. He holds a Master Degree in Project Management from Université du Québec à Chicoutimi.

Before founding Huimin in May 2013, Mr. Zhang served as engineer, department head, secretary-general, general manager, chairman and other positions of various companies in telecommunications and IT sectors.

50

DETAILS OF THE DIRECTORS TO BE RE-ELECTED

APPENDIX IV

Mr. Zhang founded Huimin in May 2013. Huimin provides O2O community services platform covering the whole nation for the distribution and supply chain logistics among the suppliers, the convenience stores and the customers in the PRC. Its website, www.huimin.cn (惠民網), is the largest community O2O network service platform in the PRC.

As at the Latest Practicable Date, there is no service agreement between the Company and Mr. Zhang in respect of his appointment.

As at the Latest Practicable Date, Mr. Zhang did not hold any position with the Company or any other member of Group, nor any directorships in listed public companies in the last three years. Mr. Zhang is not related to any Director, senior management or substantial or controlling shareholder of the Company. As at the Latest Practicable Date, Mr. Zhang was beneficially interested in 45,000,000 Share Options and 2,000,000 Awarded Shares, representing 0.92% and 0.04%, respectively, of the issued share capital of the Company. Save as disclosed above, Mr. Zhang did not have any interests or short positions in any Shares, underlying Shares or debentures of the Company and its associated corporations within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) as at the Latest Practicable Date.

Ms. Xu Ying , aged 63, was appointed as a non-executive Director on 16 December 2016. Ms. Xu has over 30 years’ experience in the securities industry. She was the general manager and then the chairperson of the board of directors of Great Wall Securities Company Limited (長城證券有限責任公 司) between 1995 and 2003. Ms. Xu was the chairperson of the board of directors of Invesco Great Wall Fund Management Co. Ltd. (景順長城基金管理有限公司) and a director of the Securities Association of China (中國證券業協會) from 2003 to December 2009. She was the vice chairperson and an executive director of New China Asset Management Corporation Limited (新華資產管理股份有限公司) from 2010 to December 2016.

Ms. Xu graduated from Beijing College of Finance and Commerce (北京財貿學院) (now known as Capital University of Economics and Business (首都經濟貿易大學)) in 1982 and received her bachelor degree in economics. She was a lecturer of the same college where she graduated during the period between 1982 and 1989.

There is no service contract entered into between the Company and Ms. Xu, Ms. Xu is entitled to a director’s fee of HK$960,000 per annum which is determined with reference to her experience and responsibilities with the Company.

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DETAILS OF THE DIRECTORS TO BE RE-ELECTED

APPENDIX IV

Save as disclosed, as at the Latest Practicable Date, Ms. Xu did not hold any position with the Company or any of its subsidiaries, nor any directorships in listed public companies in the last three years. Ms. Xu is not related to any Director, senior management or substantial or controlling shareholder of the Company. As at the Latest Practicable Date, Ms. Xu was beneficially interested in 45,000,000 Share Options and 2,000,000 Awarded Shares, representing 0.92% and 0.04%, respectively, of the issued share capital of the Company. Save as disclosed above, Ms. Xu did not have any interests or short positions in any Shares, underlying Shares or debentures of the Company and its associated corporations within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) as at the Latest Practicable Date.

Independent non-executive Directors

Mr. LAM Williamson , aged 43, was appointed as an independent non-executive Director on 1 January 2011. Mr. Lam is a fellow member of The Hong Kong Institute of Certified Public Accountants and a member of the CPA (Australia). He holds a Bachelor of Business Degree from Monash University, Australia and a Master of Professional Accounting Degree from the Hong Kong Polytechnic University. Mr. Lam had held directorships and senior finance positions in various listed companies in Hong Kong.

Save as disclosed above, Mr. Lam did not hold any directorship in listed public companies in the last three years, and he is not related to any Director, senior management or substantial or controlling Shareholder of the Company.

There is no service contract entered into between the Company and Mr. Lam. Mr. Lam is entitled to an emolument of HK$15,000 per month, which was determined based on the remuneration policy of the Company with reference to his experience and responsibilities.

As at the Latest Practicable Date, Mr. Lam was beneficially interested in 2,362,000 Shares, 2,000,000 Share Options and 2,000,000 Awarded Shares, representing approximately 0.053%. 0.04% and 0.04%, respectively, of the issued Share capital of the Company. Save for the aforesaid, Mr. Lam did not have any interests or short positions in any Shares, underlying Shares or debentures of the Company and its associated corporations within the meaning of Part XV of SFO as at the Latest Practicable Date.

52

DETAILS OF THE DIRECTORS TO BE RE-ELECTED

APPENDIX IV

Mr. Wong Hoi Kuen , aged 56, was appointed as an independent non-executive Director on 9 May 2011. Mr. Wong is a practising certified public accountant in Hong Kong and a chartered accountant in the United Kingdom. Mr. Wong is a fellow member of both the Hong Kong Institute of Certified Public Accountants and the Association of Certified Public Accountants and an associate member of the Institute of Chartered Accountants in England and Wales. Mr. Wong has been an independent non-executive director, a member of the audit committee and nomination committee of China Gamma Group Limited (Stock code: 164) since 13 February 2006.

Save as disclosed above, Mr. Wong did not hold any directorship in listed public companies in the last three years, and he is not related to any Director, senior management or substantial or controlling Shareholder of the Company.

There is no service contract entered into between the Company and Mr. Wong. Mr. Wong is entitled to an emolument of HK$10,000 per month, which was determined based on the remuneration policy of the Company with reference to his experience and responsibilities.

As at the Latest Practicable Date, Mr. Wong was beneficially interested in 2,362,000 Shares, 2,000,000 Share Options and 2,000,000 Awarded Shares, representing approximately 0.020%, 0.04% and 0.04%, respectively, of the issued Share capital of the Company. Save for the aforesaid, Mr. Wong did not have any interests or short positions in any Shares, underlying Shares or debentures of the Company and its associated corporations within the meaning of Part XV of SFO as at the Latest Practicable Date.

There is no other matter that needs to be brought to the attention of the Shareholders in respect of the re-election of the above Directors and there is no information relating to the above Directors which is required to be disclosed pursuant to any of the requirements under Rule 13.51(2)(h) to (v) of the Listing Rules.

53

GENERAL INFORMATION

APPENDIX V

1. RESPONSIBILITY OF THE DIRECTORS

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The directors having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

(a) Directors and Chief Executive

As at the Latest Practicable Date, the interests and short positions, if any, of each Director and chief executive of the Company in the Shares, underlying Shares and debentures of the Company and any of its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which the Directors and chief executive were deemed or taken to have under provisions of the SFO), or which were required to be and are recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or as otherwise required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies adopted by the Company were as follows:

			Approximate
			percentage of
Name of Directors	Nature of interest	Number of Shares	shareholding
		(Note 1)
Zhang Xiaobin	Beneficial owner	129,920,000 (L)	2.66%
		(Note 2)
Gao Feng	Beneficial owner	295,542,000 (L)	6.04%
		(Note 3)
Chiu Sui Keung	Beneficial owner	117,542,000(L)	2.40%
		(Note 4)
Zhang Yichun	Beneficial owner	47,000,000 (L)	0.96%
		(Note 5)
Shao Zili	Beneficial owner	62,000,000 (L)	1.27%
		(Note 6)
Xu Ying	Beneficial owner	47,000,000 (L)	0.96%
		(Note 7)
Cheng Wing Keung, Raymond	Beneficial owner	6,362,000 (L)	0.13%
		(Note 8)
Lam Williamson	Beneficial owner	6,362,000 (L)	0.13%
		(Note 9)
Wong Hoi Kuen	Beneficial owner	6,362,000 (L)	0.13%
		(Note 10)
Lam Lee G	Beneficial owner	6,362,000 (L)	0.13%
		(Note 11)

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APPENDIX V

Notes:

1. “L” stands for a long position in the Shares.

2. 36,000,000 Shares out of the 129,920,000 Shares are beneficially held by Mr. Zhang Xiaobin in his own capacity, 45,000,000 Shares are held by Mr. Zhang Xiaobin pursuant to share options granted under the Share Option Scheme while the remaining 48,920,000 Shares are held by Mr. Zhang Xiaobin pursuant to the Awards granted under the Share Award Scheme.

3. 178,000,000 Shares out of the 295,542,000 Shares are beneficially held by Mr. Gao Feng in his own capacity, 68,622,000 Shares are held pursuant to share options granted under the Share Option Scheme while the remaining 48,920,000 Shares are held by Mr. Gao Feng pursuant to the Awards granted under the Share Award Scheme.

4. 7,622,000 Shares out of the 117,542,622,000 Shares are beneficially held by Mr. Chiu Sui Keung in his own capacity, 61,000,000 Shares are held pursuant to share options granted under the Share Option Scheme while the remaining 48,920,000 Shares are held by Mr. Chiu Sui Keung pursuant to the Awards granted under the Share Award Scheme.

5. 45,000,000 Shares out of the 47,000,000 Shares are held by Mr. Zhang Yichun pursuant to share options granted under the Share Option Scheme while the remaining 2,000,000 Shares are held by Mr. Zhang Yichun pursuant to the Awards granted under the Share Award Scheme.

6. 60,000,000 Shares out of the 62,000,000 Shares are held by Mr. Shao Zili pursuant to share options granted under the Share Option Scheme while the remaining 2,000,000 Shares are held by Mr. Shao Zili pursuant to the Awards granted under the Share Award Scheme.

7. 45,000,000 Shares out of the 47,000,000 Shares are held by Ms. Xu Ying pursuant to share options granted under the Share Option Scheme while the remaining 2,000,000 Shares are held by Ms. Xu Ying pursuant to the Awards granted under the Share Award Scheme.

8. 2,362,000 Shares out of the 6,362,000 Shares are beneficially held by Mr. Cheng Wing Keung, Raymond in his own capacity, 2,000,000 Shares are held pursuant to share options granted under the Share Option Scheme while the remaining 2,000,000 Shares are held by Mr. Cheng Wing Keung, Raymond pursuant to the Awards granted under the Share Award Scheme.

9. 2,362,000 Shares out of the 6,362,000 Shares are beneficially held by Mr. Lam Williamson in his own capacity, 2,000,000 Shares are held pursuant to share options granted under the Share Option Scheme while the remaining 2,000,000 Shares are held by Mr. Lam Williamson pursuant to the Awards granted under the Share Award Scheme.

10. 2,362,000 Shares out of the 6,362,000 Shares are beneficially held by Mr. Wong Hoi Kuen in his own capacity, 2,000,000 Shares are held pursuant to share options granted under the Share Option Scheme while the remaining 2,000,000 Shares are held by Mr. Wong Hoi Kuen pursuant to the Awards granted under the Share Award Scheme.

11. 4,362,000 Shares out of the 6,360,000 Shares are held by Dr. Lam Lee G pursuant to share options granted under the Share Option Scheme while the remaining 2,000,000 Shares are held by Dr. Lam Lee G pursuant to the Awards granted under the Share Award Scheme.

(b) Substantial Shareholders

So far as is known to any Director or the chief executive of the Company, as at the Latest Practicable Date, Shareholders who had interests or short positions in the Shares and underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO were as follows:

			Approximate
Name of			percentage
Shareholder	Nature of interest	Number of Shares	of shareholding
		(Note)
Liu Qiuhua	Beneficial owner	717,634,000 (L)	14.67%
Note:

“L” stands for a long position in the Shares.

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GENERAL INFORMATION

APPENDIX V

Save as disclosed above, so far as is known to the Directors and the chief executive of the Company, as at the Latest Practicable Date, no other person (other than a Director or chief executive of the Company) had, or was deemed or taken to have, an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group or held any option in respect of such capital.

As at the Latest Practicable Date, none of the Directors is a director or employee of a company which has an interest or short position in the Shares or underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

3. MATERIAL ADVERSE CHANGES

The Directors confirm that, as at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since the date to which the latest published audited accounts for the eighteen months ended 31 March 2017 of the Group were made up.

4. DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contract with the Company or any of its subsidiaries which will not expire or is not determinable by the employer within one year without payment of compensation (other than statutory compensation).

5. DIRECTORS’ INTEREST IN THE GROUP’S ASSETS

As at the Latest Practicable Date, none of the Directors had any interest in any assets which have been, since 31 March 2017 (being the date to which the latest published audited accounts of the Company were made up), acquired or disposed of by or leased to member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

As at the Latest Practicable Date, none of the Directors had any material interest in any contract or arrangement which was subsisting and significant in relation to the business of the Group.

6. COMPETING INTERESTS

As at the Latest Practicable Date, the Directors were not aware that any of them had interests in any business which competes or was likely to compete, either directly or indirectly, with the business of the Group which would fall to be discloseable under the Listing Rules.

7. LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation, arbitration or claim of material importance and, so far as the Directors are aware, no litigation, arbitration or claim of material importance was pending or threatened against any member of the Group.

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GENERAL INFORMATION

APPENDIX V

8. EXPERT AND CONSENT

The following is the qualifications of the expert who has given opinion or advice, which is contained or referred to in this circular:

Name Qualification Gram Capital Limited A licensed corporation to carry out Type 6 (advising on corporate finance) regulated activity under the SFO

Gram Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter dated 19 July 2017 and references to its name, in the form and context in which it appears.

As at the Latest Practicable Date, Gram Capital did not have (i) any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group and (ii) any direct or indirect interest in any assets which have, since 31 March 2017 (being the date to which the latest published audited consolidated financial statements of the Company were made up), been acquired or disposed of by, of leased to any member of the Group, or are proposed to be acquired or disposed of by, or leased to any member of the Group.

9. MATERIAL CONTRACTS

In the two years immediately preceding the date of this circular and up to the Latest Practicable Date, the following contracts, not being contracts entered into in the ordinary course of business, were entered into by the Company or any of its Subsidiaries which are or may be material:

• (a) the second supplemental agreement dated 31 August 2015 entered into between the Company, Fortune Map Investments Limited (運圖投資有限公司) (“ Fortune Map ”) and the guarantor of Fortune Map, pursuant to which the parties agree to amend the terms of the sale and purchase agreement dated 17 September 2014 entered into by the aforesaid parties in relation to the acquisition of 40% issued share capital of Wisdom Orchid Limited (智蘭有 限公司) (the “ Wisdom Orchid Agreement ”);

• (b) the subscription agreement dated 23 October 2015 entered into between the Company and a PRC resident, being the subscriber, pursuant to which the subscriber conditionally agreed to subscribe for and the Company conditionally agreed to allot and issue a total of 30,000,000 subscription Shares at the subscription price of HK$5,070,000;

• (c) the supplemental agreement dated 24 December 2015 entered into between Sino Rich Energy Holdings Limited (“ Sino Rich ”), a wholly-owned subsidiary of the Company, Jetgo Group Limited and Prominence Financials Limited, pursuant to which the parties agree to amend the terms of the tri-party agreement dated 18 June 2015 entered into by the aforesaid parties in relation to the placing of 138,568,000 Shares to independent placees (the “ 2015 Tri-party Agreement ”);

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APPENDIX V

• (d) the subscription agreement dated 18 January 2016 entered into between the Company and Hong Kong King Region Property Limited (香港金力置業有限公司) (“ HK King Region ”), pursuant to which HK King Region conditionally agreed to subscribe for and the Company conditionally agreed to allot and issue a total of 33,000,000 subscription Shares at the subscription price of HK$ 5,049,000;

• (e) the third supplemental agreement dated 24 March 2016 entered into between the Company, Fortune Map and the guarantor of Fortune Map, pursuant to which the parties agree to amend the terms of the Wisdom Orchid Agreement;

• (f) the subscription agreement dated 6 May 2016 entered into between the Company and Mr. Liang Yin Jin (梁銀金) (“ Mr. Liang ”), pursuant to which Mr. Liang conditionally agreed to subscribe for and the Company conditionally agreed to allot and issue a total of 60,000,000 subscription Shares at the subscription price of HK$ 9,840,000;

• (g) the second supplemental agreement dated 17 June 2016 entered into between Sino Rich, Jetgo Group Limited and Prominence Financials Limited, pursuant to which the parties agree to amend the terms of the 2015 Tri-party Agreement;

• (h) the tri-party agreement dated 28 June 2016 entered into between the Company, Sino Wealth Securities Limited and trustees of Mr. Hung Chen, Richael in relation to the placement of 151,052,000 Shares at HK$0.131 per Share (the “ 2016 Tri-Party Agreement ”);

• (i) the supplemental agreement dated 18 October 2016 entered into between the Company and Sino Wealth Securities Limited, pursuant to which the parties agree to amend the terms of the 2016 Tri-party Agreement;

• (j) the subscription agreement dated 18 October 2016 entered into between the Company and Ms. Hu Hui Qun (胡慧群) (“ Ms. Hu ”), pursuant to which Ms. Hu conditionally agreed to subscribe for and the Company conditionally agreed to allot and issue a total of 225,760,000 subscription Shares at the subscription price of HK$0.225 per subscription Share;

• (k) the subscription agreement dated 18 October 2016 entered into between the Company and Ms. Liu Qiuhua (劉秋華) (“ Ms. Liu ”), pursuant to which Ms. Liu conditionally agreed to subscribe for and the Company conditionally agreed to allot and issue a total of 549,066,000 subscription Shares at the subscription price of HK$0.225 per subscription Share;

• (l) the subscription agreement dated 22 November 2016 entered into between the Company, Mr. Chen Kang (陳康) and National Gain Holdings Limited (惠民控股有限公司) (“ National Gain ”) in relation to the subscription of new shares of National Gain;

• (m) the supply agreement dated 8 March 2017 entered into between Zhongnongxin Supply Chain Management Company Limited (中農信供應鏈管理有限公司), an indirect wholly-owned subsidiary of the Company, Huimin and Mr. Zhang Yichun in relation to the supply of the products as specified by, and under Huimin’s brand or other brands as designated by, Huimin;

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GENERAL INFORMATION

APPENDIX V

• (n) the share purchase agreement dated 8 June 2017 entered into between, among others, the Company and Mr. Gao Feng in relation to the acquisition of 51.2% of the issued share capital of Admiral Glory Global Limited; and

• (o) the strategic cooperation framework agreement dated 8 June 2017 entered into between the Company and Huimin, pursuant to which the Company and Huimin have agreed to further cooperate strategically in respect of developing new retail platforms, intelligentisation of retail shops and innovation in big-data usage.

10. MISCELLANEOUS

• (a) The registered office of the Company is situated at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands and the principal place of business in Hong Kong at Room 2502, 25/F, 9 Queen’s Road Central, Central, Hong Kong.

• (b) The Company’s Hong Kong branch share registrar is Tricor Tengis Limited at Level 22, Hopewell Centre 183 Queen’s Road East, Hong Kong.

• (c) The company secretary of the Company is Mr. Chow Chi Fai. Mr. Chow holds a bachelor’s degree in Accountancy from the University of South Australia and is a member of the Hong Kong Institute of Certified Public Accountants.

• (d) This circular is prepared in both English and Chinese. In the event of inconsistency, the English text shall prevail.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at the principal place of business of the Company in Hong Kong at Room 2502, 25/F, 9 Queen’s Road Central, Central, Hong Kong for a period of 14 days from the date of this circular:

• (a) the memorandum and articles of association of the Company;

• (b) the Share Option Scheme and the revised Share Option Scheme;

• (c) the material contracts referred to in the section headed “MATERIAL CONTRACTS” in this appendix;

• (d) this circular;

• (e) the letter from Gram Capital, the text of which is set out in this circular; and

• (f) the written consent from Gram Capital referred to in the section headed “EXPERT AND CONSENT” in this appendix.

59

Notice of AGM

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(Incorporated in the Cayman Islands with limited liability) (Stock Code: 223)

NOTICE IS HEREBY GIVEN that the annual general meeting (the “ AGM ”) of the shareholders of Elife Holdings Limited (the “ Company ”) will be held at Room 2502, 25/F., 9 Queen’s Road Central, Central, Hong Kong, on Thursday, 17 August 2017, at 3:00 p.m. for the following purposes:

ORDINARY RESOLUTIONS

1. “ THAT

2. (a) subject to fulfilment of the conditions set out in the share award scheme of the Company constituted by the rules adopted by the board (the “ Board ”) of directors (the “ Director(s) ”) of the Company on 27 June 2017 (the “ Share Award Scheme ”, the terms of which are set out in the printed document produced to the AGM and marked “A” and initialed by the chairman of the AGM for identification purpose), the allotment and issuance of new shares of the Company up to the maximum number which may be required to be issued under the Share Award Scheme in accordance with all applicable laws and regulations be and is hereby approved; and

3. (b) any one or more of the Directors be and are hereby authorised to sign or execute such other documents or supplemental agreements or deeds on behalf of the Company and to do all such things and take all such actions as he or they may consider necessary or desirable for the purpose of giving effect to implementation of the Share Award Scheme.”

4. “ THAT

conditional upon the ordinary resolution no. 1 contained in this notice of the AGM of which this resolution forms part being approved and becoming unconditional and effective, the Connected New Shares Grant (as defined in the circular of the Company dated 19 July 2017, the “ Circular ”) be and are hereby approved, confirmed and ratified as separate resolutions and any Director be and is hereby authorised to take any step and execute such other documents as they consider necessary, desirable or expedient to carry out or give effect to or otherwise in connection with the Connected New Shares Grant or the transactions contemplated thereby and thereunder:

• (a) grant of 48,920,000 Connected Awarded Shares (as defined in the Circular) to Mr. Zhang Xiaobin;

• (b) grant of 48,920,000 Connected Awarded Shares (as defined in the Circular) to Mr. Gao Feng;

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Notice of AGM

• (c) grant of 48,920,000 Connected Awarded Shares (as defined in the Circular) to Mr. Chiu Sui Keung;

• (d) grant of 2,000,000 Connected Awarded Shares (as defined in the Circular) to Mr. Zhang Yichun;

• (e) grant of 2,000,000 Connected Awarded Shares (as defined in the Circular) to Mr. Shao Zili;

• (f) grant of 2,000,000 Connected Awarded Shares (as defined in the Circular) to Ms. Xu Ying;

• (g) grant of 2,000,000 Connected Awarded Shares (as defined in the Circular) to Mr. Cheng Wing Keung, Raymond;

• (h) grant of 2,000,000 Connected Awarded Shares (as defined in the Circular) to Mr. Lam Williamson;

• (i) grant of 2,000,000 Connected Awarded Shares (as defined in the Circular) to Mr. Wong Hoi Kuen;

• (j) grant of 2,000,000 Connected Awarded Shares (as defined in the Circular) to Dr. Lam Lee G;

• (k) grant of 24,460,000 Connected Awarded Shares (as defined in the Circular) to Mr. Sun Hao;

• (l) grant of 24,460,000 Connected Awarded Shares (as defined in the Circular) to Mr. Liu Gang;

• (m) grant of 12,230,000 Connected Awarded Shares (as defined in the Circular) to Mr. Chow Chi Fai; and

• (n) grant of 12,230,000 Connected Awarded Shares (as defined in the Circular) to Ms. Lau Yat Ning.”

• “ THAT the proposed amendments to the share option scheme of the Company adopted on 8 October 2010 (the “ Share Option Scheme ”), as set out in the appendix II to the Circular and contained in the revised Share Option Scheme, a copy of which is available for inspection as details in the Circular and produced to this meeting marked “B” and for the purposes of identification initialed by the chairman of this meeting be and are hereby approved, and that any one Director, or a Director and a company secretary of the Company or some other person appointed by the Board, if the affixation of the common seal is necessary, be and are hereby authorised to exercise all rights and powers available to him as he may in his sole discretion consider necessary or expedient to give full effect to the amendment to the Share Option Scheme.”

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Notice of AGM

1. To consider and approve the audited consolidated financial statements and the reports of the Directors and the auditor for the financial year ended 31 March 2017.

2. To re-elect the retiring Directors and authorise the Board to fix the respective remuneration of the Directors:

3. (a) to re-elect Mr. Gao Feng as an executive Director;

4. (b) to re-elect Mr. Zhang Yichun as a non-executive Director;

5. (c) to re-elect Ms. Xu Ying as a non-executive Director;

6. (d) to re-elect Mr. Lam Williamson as an independent non-executive Director;

7. (e) to re-elect Mr. Wong Hoi Kuen as an independent non-executive Director; and

8. (f) to authorise the Board to fix the Directors’ remuneration.

9. To re-appoint HLB Hodgson Impey Cheng Limited as the Company’s auditor and authorise the Board to fix their remuneration for the year ending 31 March 2018.

10. To consider and, if thought fit, pass with or without amendments, the following resolutions as ordinary resolutions:

11. (a) “ THAT :

    • (i) subject to paragraph (iii) below, the exercise by the Directors during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue and deal with additional shares in the capital of the Company and to make or grant offers, agreements, options (including bonds, warrants and debentures convertible into shares of the Company) and rights of exchange or conversion which might require the exercise of such powers, subject to and in accordance with all applicable laws and requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) (as amended from time to time) (the “ Listing Rules ”), be and is hereby generally and unconditionally approved;

    • (ii) the approval in paragraph (i) above shall authorise the Directors during the Relevant Period to make or grant offers, agreements, options (including bonds, warrants and debentures convertible into shares of the Company) and rights of exchange or conversion which might require the exercise of such powers after the end of the Relevant Period;

    • (iii) the total number of shares of the Company to be allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) by the Directors pursuant to the approval granted in paragraph (i)

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Notice of AGM

above, otherwise than pursuant to (a) a Rights Issue (as hereinafter defined), or (b) the exercise of options under any share option scheme or similar arrangement adopted by the Company for the grant or issue to the employees and Directors and/or any of its subsidiaries and/or other eligible participants specified thereunder of options to subscribe for or rights to acquire shares of the Company, or (c) an issue of shares upon the exercise of the subscription rights attaching to any warrants which may be issued by the Company; or (d) an issue of shares of the Company as scrip dividend or similar arrangement in accordance with the memorandum and articles of association of the Company, shall not exceed 20% of the total number of shares of the Company in issue as at the date of the passing of this resolution, and the said approval shall be limited accordingly; and

• (iv) for the purpose of this resolution: “ Relevant Period ” means the period from the date of passing of this resolution until whichever is the earliest of:

• (a) the conclusion of the next annual general meeting of the Company;

• (b) the expiration of the period within which the next annual general meeting of the Company is required by the articles of association of the Company or any applicable laws to be held; and

• (c) the date on which the authority sets out in this resolution is revoked or varied by an ordinary resolution of the Company in general meeting.

“ Rights Issue ” means an offer of shares of the Company open for a period fixed by the Directors to holders of shares on the register of members of the Company on a fixed record date in proportion to their then holdings of such shares (subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or having regard to any legal restrictions under the laws of any relevant jurisdiction, or the requirements of any recognized regulatory body or any stock exchange, in any territory outside Hong Kong).”

• (b) “ THAT :

• (i) subject to paragraph (ii) below, the exercise by the Directors during the Relevant Period (as hereinafter defined) of all powers of the Company to purchase or otherwise acquire shares in the capital of the Company on the Stock Exchange or on any other stock exchange on which the shares of the Company may be listed and recognised by the Stock Exchange and the Hong Kong Securities and Futures Commission (the “ SFC ”) for this purpose, subject to and in accordance with all applicable rules and regulations of the SFC, the Stock Exchange or of any other stock exchange as amended from time to time and are applicable laws in this regard be and is hereby generally and unconditionally approved;

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Notice of AGM

• (ii) the total number of shares of the Company which are authorised to be purchased pursuant to the approval granted in paragraph (i) above shall not exceed 10% of the total number of shares of the Company in issue as at the date of the passing of this resolution, and the said approval shall be limited accordingly; and

• (iii) for the purpose of this resolution: “ Relevant Period ” means the period from the date of passing of this resolution until whichever is the earliest of:

• (a) the conclusion of the next annual general meeting of the Company;

• (b) the expiration of the period within which the next annual general meeting of the Company is required by the articles of association of the Company or any applicable laws to be held; and

• (c) the date on which the authority sets out in this resolution is revoked or varied by an ordinary resolution of the Company in general meeting.”

(c) “ THAT

conditional upon the passing of the resolutions set out in paragraphs 7(a) and 7(b) of the notice convening the AGM, the general mandate granted to the Directors to exercise the powers of the Company to allot, issue and otherwise deal with shares of the Company pursuant to the resolution set out in paragraph 7(a) of the notice convening the AGM be and is hereby extended by the addition thereto the total number of issued shares of the Company purchased or otherwise acquired by the Company pursuant to the authority granted to the Directors under the resolution set out in paragraph 7(b) above, provided that such amount shall not exceed 10% of the total number of issued shares of the Company as at the date of passing this resolution.”

By Order of the Board Elife Holdings Limited Chow Chi Fai Company Secretary

Hong Kong, 19 July 2017

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Notice of AGM

Notes:

• (a) Any shareholder of the Company entitled to attend and vote at the AGM is entitled to appoint one or more proxies to attend and vote on his behalf. A proxy needs not be a shareholder of the Company. To be valid, a form of proxy in the prescribed form together with the power of attorney or other authority, if any, under which it is signed, or a notarially certified copy of such power or authority, must be deposited with the Company’s share registrar in Hong Kong, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time fixed for holding the AGM or any adjourned meeting thereof.

• (b) In relation to the proposed resolution numbered 5 above, Mr. Gao Feng, Mr. Zhang Yichun, Ms. Xu Ying, Mr. Lam Williamson and Mr. Wong Hoi Kuen will retire from their offices as Directors at the AGM and, being eligible, they will offer themselves for re-election. Particulars of the retiring Directors to be offered for re-election are set out in Appendix IV to the Circular.

• (c) In relation to the proposed resolutions numbered 7(a) to 7(c) above, the Directors wish to state that they have no immediate plans to issue any new shares or repurchase any existing shares of the Company.

• (d) In relation to the proposed resolution numbered 7(b) above, the Directors wish to state that they will exercise the powers conferred thereby to repurchase shares of the Company in circumstances which they deem appropriate for the benefit of the shareholders of the Company. An explanatory statement containing the information necessary to enable the shareholders of the Company to make an informed decision to vote on the proposed resolution as required by the Listing Rules are set out in Appendix III to the Circular.

• (e) Where there are joint registered holders of any Share, any one of such person may vote at the AGM, either personally or by proxy, in respect of such Share as if he were solely entitled thereto. However, if more than one of such joint holders be present at the AGM personally or by proxy, that one of the said persons so present being the most or, as the case may be, the more senior shall alone be entitled to vote in respect of the relevant joint holding. For this purpose, seniority shall be determined by reference to the order in which the names of the joint holders stand on the register in respect of the relevant joint holding.

• (f) The above resolutions put to the AGM will be decided by way of poll as required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

• (g) As at the date of this notice, the Board comprised ten Directors, of which Mr. Zhang Xiaobin, Mr. Gao Feng and Mr. Chiu Sui Keung are executive Directors, Mr. Zhang Yichun, Mr. Shao Zili and Ms. Xu Ying are non-executive Directors and Mr. Cheng Wing Keung, Raymond, Mr. Lam Williamson, Mr. Wong Hoi Kuen and Dr. Lam Lee G are independent non-executive Directors.

• (h) The register of members of the Company will be closed from Monday, 14 August 2017 to Thursday, 17 August 2017 (both days inclusive), during which period no transfer of Shares will be effected. In order to qualify for attending the Meeting, all transfers accompanied by the relevant share certificates and transfer forms must be lodged with the Company’s share registrar in Hong Kong, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong not later than 4:30 p.m. on Friday, 11 August 2017.

65