Elife Holdings Limited

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 your licensed securities dealer, 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, together with the enclosed form of proxy, to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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.

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(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 223)

(1) CONNECTED TRANSACTION IN RELATION TO SUBSCRIPTIONS OF NEW SHARES BY THE DIRECTORS UNDER SPECIFIC MANDATE; (2) PROPOSED SHARE CONSOLIDATION; (3) PROPOSED CHANGE IN BOARD LOT SIZE

AND

(4) NOTICE OF EXTRAORDINARY GENERAL MEETING

Independent Financial Adviser to the Independent Board Committee And the Independent Shareholders

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A letter from the Board is set out on pages 7 to 23 of this circular. A letter from the Independent Board Committee is set out on page 24 of this circular. A letter from Gram Capital containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 25 to 38 of this circular.

A notice convening the EGM to be held at Unit 806, Level 8, Core D, Cyberport 3, 100 Cyberport Road, Hong Kong on Monday, 7 January 2019 at 2:30 p.m., is set out on pages 47 and 48 of this circular. Whether or not you are able to attend the EGM, please complete the form of proxy in accordance with the instructions printed thereon and return the same to the Hong Kong branch share registrar and transfer office, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not later than forty-eight (48) hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish.

18 December 2018

	Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
EXPECTED TIMETABLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
LETTER FROM THE BOARD
1. Subscriptions of New Shares under Specific Mandate . . . . . . . . . . . . . . . . . . . . . . . .	8
2. Proposed Share Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
3. Proposed Change in Board Lot Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
4. EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22
LETTER FROM THE INDEPENDENT BOARD COMMITTEE. . . . . . . . . . . . . . . . . . . . . . .	24
LETTER FROM GRAM CAPITAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25
APPENDIX – GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	39
NOTICE OF EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	47

DEFINITIONS

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

“Acquisition” the proposed acquisition of 51% of the issued share capital of Central Luxuriant Limited as disclosed in the announcements of the Company dated 15, 18 and 25 October 2018;

“Award(s)” the share share award(s) granted by the Board under the Share Award Scheme;
“Board” the board of Directors; “Business Day” a day (excluding Saturday) on which banks in Hong Kong are generally open for business throughout their normal business hours;
“CCASS” Central Clearing and Settlement System, a securities settlement system used within the Hong Kong Exchanges and Clearing Limited market system;
“CCASS Operational the Operational Procedures of HKSCC in relation to CCASS, Procedures” containing the practices, procedures and administrative requirements relating to operations and functions of CCASS, as amended from time to time;
“Change in Board the change in board lot size of the Shares for trading on the Stock Lot Size” Exchange from 2,000 Existing Shares to 20,000 Consolidated Shares;
“Company” Elife Holdings Limited, a company incorporated in the Cayman Islands with limited liability, the issued Shares of which are listed on the Main Board of the Stock Exchange (stock code: 223);
“Completion” completion of the Subscriptions pursuant to the Subscription Agreements;
“connected person(s)” has the meaning ascribed thereto under the Listing Rules;
“Conditions Precedent” the conditions precedent in respect of the Completion set out in the Subscription Agreements;
“Consolidated Share(s)” ordinary share(s) of HK$0.02 each in the share capital of the Company upon the Share Consolidation becoming effective;
“Director(s)” the director(s) of the Company;

DEFINITIONS

“EGM”	the extraordinary general meeting of the Company to be convened
	for the purpose of considering and if thought fit, approving (i) the
	Subscription Agreements and the transactions contemplated
	thereunder, including the grant of Specific Mandate to allot and
	issue the Subscription Shares; and (ii) the Share Consolidation;
“Encumbrance”	charge, pledge, lien or any other similar rights on the Shares;
“Existing Share(s)”	ordinary share(s) of HK$0.01 each in the share capital of the
	Company prior to the Share Consolidation becoming effective;
“General Rules of CCASS”	the terms and conditions regulating the use of CCASS, as may be
	amended or modified from time to time and where the context so
	permits, shall include the CCASS Operational Procedures;
“Group”	the Company together with its subsidiaries;
“HKSCC”	Hong Kong Securities Clearing Company Limited;
“HK$”	Hong Kong dollar(s), the lawful currency of Hong Kong;
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC;
“Independent Board	the independent committee of the Board which comprises all the
Committee”	independent non-executive Directors, namely Mr. Cheng Wing
	Keung Raymond, Mr. Lam Williamson, Mr. Wong Hoi Kuen and
	Dr. Lam Lee G, established to advise the Independent
	Shareholders in respect of the Subscription Agreements and the
	transactions contemplated thereunder;
“Independent Financial	Gram Capital Limited, a licensed corporation to carry out Type 6
Advisor” or “Gram Capital”	(advising on corporate finance) regulated activity under the SFO,
	being the independent financial adviser to the Independent Board
	Committee and the Independent Shareholders in respect of the
	Subscriptions;
“Independent Shareholder(s)”	Shareholder(s) other than the Subscribers and their associates who
	are required to abstain from voting at the EGM;
“Last Trading Date”	25 October 2018, being the last full trading day of the Shares on
	the Stock Exchange immediately prior to the signing of the
	Subscription Agreements;
“Latest Practicable Date”	14 December 2018, being the latest practicable date prior to the
	publication of this circular for the purpose of ascertaining certain
	information contained in this circular;

DEFINITIONS

“Listing Committee”	has the meaning ascribed thereto under the Listing Rules;
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange;
“PRC”	the People’s Republic of China, and for the sole purpose of this
	circular excludes Hong Kong, Macau Special Administrative
	Region and Taiwan;
“Registrar”	the Hong Kong branch share registrar of the Company, being
	Tricor Tengis Limited as at the Latest Practicable Date;
“Relevant Period”	the period commencing on the date falling six months preceding
	26 October 2018, being the date of the Subscription Announcement,
	up to and including the Latest Practicable Date;
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the Laws of
	Hong Kong);
“Share Award Scheme”	the share award scheme of the Company adopted on 17 August
	2017;
“Share(s)”	the Existing Share(s) and/or the Consolidated Share(s), as the case
	may be;
“Shareholder(s)”	holder(s) of the issued Share(s);
“Share Consolidation”	the proposed consolidation of every two (2) issued and unissued
	Existing Shares into one (1) Consolidated Share;
“Share Consolidation	the announcement dated 14 November 2018 made by the
Announcement”	Company in relation to the proposed Share Consolidation and the
	proposed Change in Board Lot Size;
“Share Option Scheme”	the share option scheme of the Company adopted on 8 October
	2010 and amended on 17 August 2017;
“Specific Mandate”	the specific mandate to be sought from the Independent
	Shareholders at the EGM and to be granted to the Board for the
	allotment and issue of the Subscription Shares;
“Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“Subscriber A”	Mr. Zhang Xiaobin (張曉彬), the Chairman of the Board and an
	executive Director;

DEFINITIONS

“Subscriber B”
Mr. Gao Feng (高峰), the Vice-Chairman of the Board and an executive Director;
“Subscribers” collectively, Subscriber A and Subscriber B;
“Subscription(s)”
the respective subscription(s) of the Subscription Shares by the Subscribers pursuant to the Subscription Agreements;
“Subscription Agreement A” the conditional subscription agreement dated 26 October 2018 (as supplemented by the Supplemental Agreements) and entered into between the Company and Subscriber A in relation to the subscription of 95,238,095 Subscription Shares;
“Subscription Agreement B” the conditional subscription agreement dated 26 October 2018 (as supplemented by the Supplemental Agreements B) and entered into between the Company and Subscriber B in relation to the subscription of 476,190,476 Subscription Shares;
“Subscription Agreements” collectively, Subscription Agreement A and Subscription Agreement B;
“Subscription Announcements” the announcements dated 26 October 2018, 15 November 2018 and 14 December 2018 made by the Company in relation to the Subscriptions;
“Subscription Price”
the subscription price of HK$0.21 per Subscription Share;
“Subscription Share(s)” the 95,238,095 new and fully paid Consolidated Shares to be subscribed for by Subscriber A, and the 476,190,476 new and fully paid Consolidated Shares to be subscribed for by Subscriber B;
“Supplemental Agreements A” the supplemental agreements dated 15 November 2018 and 14 December 2018 and entered into between the Company and Subscriber A in relation to the Subscription;
“Supplemental Agreements B” the supplemental agreements dated 15 November 2018 and 14 December 2018 and entered into between the Company and Subscriber B in relation to the Subscription;
“Supplemental Agreements” collectively, the Supplemental Agreements A and the Supplemental Agreements B; and

“%”

per cent.

EXPECTED TIMETABLE

The expected timetable for the Share Consolidation and the Change in Board Lot Size is set out below. The expected timetable is for indicative purpose only and is subject to the Share Consolidation becoming unconditional, and may be extended or varied by the Company. Any change to the expected timetable will be announced in separate announcement(s) by the Company as and when appropriate. All times and dates in this Circular refer to Hong Kong local times and dates.

Event

Time and Date

Despatch date of circular with notice of the EGM. . . . . . . . . . . . . . . . . . . . . . Tuesday, 18 December 2018

Latest date and time for lodging transfer

documents in order to qualify for attending and voting at the EGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4:30 p.m. on Monday, 31 December 2018

Closure of the register of members of the Company . . . . . . . . . . . . . . . . . . Wednesday, 2 January 2019 to Monday, 7 January 2019 (both days inclusive) Latest time for lodging the proxy form for the EGM . . . . . . . . . . . 2:30 p.m. on Saturday, 5 January 2019 Record date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 7 January 2019 Expected date and time of the EGM . . . . . . . . . . . . . . . . . . . . . . . . 2:30 p.m. on Monday, 7 January 2019

Publication of announcement on poll results of the EGM . . . . . . . . . . . . . . . . . . Monday, 7 January 2019

The following events are conditional on the fulfilment of the conditions for the implementation of the Share Consolidation

Effective date of the Share Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Tuesday, 8 January 2019

Dealing in the Consolidated Shares commences . . . . . . . . . . . . . . . 9:00 a.m. on Tuesday, 8 January 2019

Original counter for trading in the Existing

Shares of the Company in board lots of

2,000 Existing Shares temporarily closes . . . . . . . . . . . . . . . . . . 9:00 a.m. on Tuesday, 8 January 2019

Temporary counter for trading in the Consolidated Shares in

board lots of 1,000 Consolidated Shares (in the form of existing share certificates) opens . . . . . . . . . . . . 9:00 a.m. on Tuesday, 8 January 2019

EXPECTED TIMETABLE

First day of free exchange of existing share certificates

for new share certificates for the Consolidated Shares . . . . . . . . . . . . . . . . . . .Tuesday, 8 January 2019

Original counter for trading in the Consolidated

Shares in board lots of 20,000 Consolidated Shares

(in the form of new share certificates) re-opens . . . . . . . . . . . . 9:00 a.m. on Tuesday, 22 January 2019

Parallel trading in the Consolidated Shares

(in the form of new share certificates and

existing share certificates) commences . . . . . . . . . . . . . . . . . . . 9:00 a.m. on Tuesday, 22 January 2019

Designated broker starts to stand in the market

to provide matching services for the sale and

purchase of odd lots of Consolidated Shares . . . . . . . . . . . . . . 9:00 a.m. on Tuesday, 22 January 2019

Temporary counter for trading

in board lots of 1,000 Consolidated Shares

(in the form of existing share certificates) closes . . . . . . . . . .4:00 p.m. on Thursday, 14 February 2019

Parallel trading in the Consolidated Shares

(in the form of new share certificates and existing share certificates) ends . . . . . . . . . . . . . . . . . . . .4:00 p.m. on Thursday, 14 February 2019

Designated broker ceases to stand in the market

to provide matching services for the sale and purchase of odd lots of Consolidated Shares . . . . . . . . . . . . . .4:00 p.m. on Thursday, 14 February 2019

Last day for free exchange of existing share

certificates for new share certificates

for the Consolidated Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 18 February 2019

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) Mr. Sun Qiang (Chief Technology Officer)

Non-executive Directors:

Mr. Zhang Yichun (Vice Chairman) 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: Unit 806, Level 8, Core D, Cyberport 3, 100 Cyberport Road, Hong Kong

18 December 2018

To the Shareholders

Dear Sir or Madam,

(1) CONNECTED TRANSACTION IN RELATION TO SUBSCRIPTIONS OF NEW SHARES BY THE DIRECTORS UNDER SPECIFIC MANDATE; (2) PROPOSED SHARE CONSOLIDATION; (3) PROPOSED CHANGE IN BOARD LOT SIZE AND

(4) NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

The Company refers to the Subscription Announcements dated 26 October 2018 and 15 November 2018 in relation to the Subscriptions of New Shares by the Directors under Specific Mandate, and the Share Consolidation Announcement dated 14 November 2018 in relation to the proposed Share Consolidation and the proposed Change in Board Lot Size. The purpose of this circular is to provide you with, among other things, (i) details of the Subscription Agreements (as supplemented by the Supplemental Agreements); (ii) details of the proposed Share Consolidation; (iii) details of the proposed Change in Board Lot Size; (iv) the recommendation from the Independent Board Committee to the Independent Shareholders in relation to the Subscription Agreements and the transactions contemplated thereunder; (v) the letter of advice from Gram Capital to the Independent Board Committee and the Independent Shareholders in relation to the Subscription Agreements and the transactions contemplated thereunder; (vi) the notice of the EGM; and (vii) other information as required under the Listing Rules.

The notice of the EGM is enclosed herein as part of this circular.

LETTER FROM THE BOARD

(1) SUBSCRIPTIONS OF NEW SHARES UNDER SPECIFIC MANDATE

On 26 October 2018, the Company entered into the Subscription Agreements (as supplemented by the Supplemental Agreements) with each of the Subscribers respectively. Pursuant to the Subscription Agreements (as supplemented by the Supplemental Agreements), the Company has conditionally agreed to allot and issue, and the Subscribers have conditionally agreed to subscribe for, an aggregate of 571,428,571 Subscription Shares at the Subscription Price of HK$0.21 per Subscription Share for an aggregate consideration of HK$120,000,000. Save for the number of Subscription Shares and the aggregate consideration to be paid by the Subscribers, the terms of the Subscription Agreements are identical. The salient terms of the Subscription Agreements are set out as follows:

Principal terms of the Subscription Agreements (as supplemented by the Supplemental Agreements)

Date

26 October 2018 (Subscription Agreements) and 15 November 2018 and 14 December 2018 (Supplemental Agreements)

Parties to the Subscription Agreement A

(i) the Company; and
(ii) Subscriber A

Parties to the Subscription Agreement B

(i) the Company; and
(ii) Subscriber B

The Subscriptions

Pursuant to the Subscription Agreement A, the Company conditionally agreed to issue (pursuant to the Specific Mandate), and Subscriber A conditionally agreed to subscribe for, 95,238,095 Subscription Shares at the Subscription Price for each Subscription Share. The cash consideration payable by Subscriber A shall be HK$20,000,000 (payable in full on the date of the Completion).

Pursuant to the Subscription Agreement B, the Company conditionally agreed to issue (pursuant to the Specific Mandate), and Subscriber B conditionally agreed to subscribe for, 476,190,476 Subscription Shares at the Subscription Price for each Subscription Share. The cash consideration payable by Subscriber B shall be HK$100,000,000 (payable in full on the date of the Completion).

LETTER FROM THE BOARD

The Subscription Shares

The 571,428,571 Subscription Shares represent:

(i) approximately 20.50% of the existing issued share capital of the Company (assuming the Share Consolidation has become effective and there is no other change in the issued share capital of the Company and shareholding structure of the Company from the Latest Practicable Date to the date of Completion save for the issue of Consolidated Shares pursuant to the Share Consolidation); and
(ii) approximately 17.01% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares (assuming there is no other change in the issued share capital of the Company and shareholding structure of the Company from the Latest Practicable Date to the date of Completion save for the issue of Consolidated Shares pursuant to the Share Consolidation).

The aggregate nominal value of the Subscription Shares is HK$5,714,285.71.

The Subscription Price

The Subscription Price is HK$0.21 per Subscription Share (after the Share Consolidation has become effective), which was originally HK$0.105 under the Subscription Agreements and was subsequently adjusted to HK$0.21 pursuant to the Supplemental Agreements dated 15 November 2018 to reflect the adjusted number of Subscription Shares and thus the Subscription Price following completion of the Share Consolidation).

The Subscriptions were first announced by the Company on 26 October 2018, prior to the announcement of the Share Consolidation and the Change in Board Lot Size on 14 November 2018. The original Subscription Price of HK$0.105 per Subscription Share (prior to adjustment to HK$0.21 pursuant to the Supplemental Agreements dated 15 November 2018 ) represents:

(i) a premium of approximately 6.06% over the closing price of HK$0.099 per Share as quoted on the Stock Exchange on the Last Trading Date;
(ii) a premium of approximately 5% over closing price of HK$0.1 per Share as quoted on the Stock Exchange on the date of the Subscription Agreements;
(iii) a premium of approximately 9.83% over the average of the closing price of HK$0.0956 per Share quoted on the Stock Exchange for the last five consecutive trading days immediately prior to and including the Last Trading Date;
(iv) a premium of approximately 9.03% over the average of the closing price of HK$0.0963 per Share quoted on the Stock Exchange for the last ten consecutive trading days immediately prior to and including the Last Trading Date;
(v) a premium of approximately 128.26% over the Group’s audited consolidated tangible net assets per Share as at 31 March 2018 of approximately HK$0.046; and

LETTER FROM THE BOARD

(vi) a premium of approximately 23.53% over the closing price of HK$0.085 per Share quoted on the Stock Exchange on the Latest Practicable Date.

The net Subscription Price, after deduction of relevant expenses, is estimated to be approximately HK$0.2092 per Subscription Share. The cash consideration of HK$20,000,000 under the Subscription Agreement A (as supplemented by the Supplemental Agreement A dated 15 November 2018) and HK$100,000,000 under the Subscription Agreement B (as supplemented by the Supplemental Agreement B dated 15 November 2018), are payable in cash by the Subscribers respectively on or before the Completion. The Subscription Price was arrived at after arm’s length negotiations between the Company and the Subscribers taking into account the prevailing market price of the Shares, the Group’s historical performances and present financial position as well as current market condition. The Directors (including the independent non-executive Directors) consider that the Subscription Price, which represents a premium over the recent prevailing market prices of the Shares, is fair and reasonable.

Ranking

The Subscription Shares, when issued and fully paid, will rank pari passu in all respects with Shares in issue at the time of allotment and issue of the Subscription Shares.

Conditions Precedent

Completion is conditional upon the fulfilment of the following conditions:

(i) the Listing Committee of the Stock Exchange having granted (conditionally or unconditionally) the listing of, and permission to deal in, the Subscription Shares on the main board of the Stock Exchange;
(ii) the passing of the resolution(s) at the EGM by the Independent Shareholders to approve the Subscription Agreements, the Share Consolidation and the transactions contemplated thereunder, including the grant of the Specific Mandate to allot and issue the Subscription Shares; and
(iii) the Listing Committee of the Stock Exchange having granted the listing of, and permission to deal in, the Consolidated Shares.

None of the conditions aforesaid can be waived by any party to the Subscription Agreements. The Company shall use its endeavours to make the aforesaid conditions to be fulfilled on or before 31 January 2019.

In the event that the aforesaid conditions are not fulfilled on or before 31 January 2019, the Subscription Agreements will lapse and become null and void forthwith and the parties thereto shall be released from all obligations thereunder.

The Subscription Agreements are not inter-conditional upon each other.

LETTER FROM THE BOARD

Completion

Completion of the Subscriptions shall take place within three (3) Business Days after fulfilment of the Conditions Precedent or any other date as agreed by the parties to the Subscription Agreements in writing.

On or before the date of the Completion, Subscriber A and Subscriber B shall pay to the Company cash consideration of HK$20,000,000 under the Subscription Agreement A and HK$100,000,000 under the Subscription Agreement B, respectively, for the subscription of the Subscription Shares.

On the date of the Completion, the Company shall issue and deliver share certificates in relation to the Subscription Shares to the Subscribers respectively.

Lock-up Undertakings

The Subscribers undertake to and covenant with the Company that, without the prior written consent of the Company and unless in compliance with the requirements of the Listing Rules, the Subscribers shall not, in the period commencing on the date of the Completion and ending on the date which is 6 months from the date of the Completion, dispose of, or enter into any agreement to dispose of or otherwise create any Encumbrance in respect of, any of the Subscription Shares.

The 6 months’ lock-up period was agreed upon between the Company and each of the Subscribers after arm’s length negotiations with reference to the connected share subscriptions conducted by other Hong Kong listed companies in recent months. Each of the Subscribers has no intention to dispose of or otherwise create any Encumbrance on the Subscription Shares during the 6 months’ lock-up period. The lock-up period is beneficial to the Company and the Shareholders in the sense that it signifies the long-term nature of the investment which would therefore align the interests of the Company and the Shareholders with those of the Subscribers and would also limit the negative impact of the issue of the Subscription Shares on the market price of the Shares.

Specific Mandate to Issue Subscription Shares

The Subscription Shares will be allotted and issued pursuant to the Specific Mandate proposed to be sought from the Independent Shareholders at the EGM.

Application for listing

An application will be made by the Company to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Subscription Shares on the Main Board of the Stock Exchange.

Information of the Company and the Subscribers

The Company is a company incorporated under the laws of the Cayman Islands with limited liability and the issued Shares of which are listed on the Main Board of the Stock Exchange. The Company is an investment holding company and the Group is principally engaged in provision of esmart terminal services for retail stores in the PRC, trading businesses across Asia and developing its business into the consumer product market, which conform to the Group’s business principle of “making life easier and benefiting people’s livehood” (易生活，惠民生).

LETTER FROM THE BOARD

Subscriber A, Mr. Zhang Xiaobin, aged 66, is the Chairman of the Board and an executive Director. Subscriber A holds 84,920,000 Existing Shares, representing approximately 1.52% of the total number of issued Existing Shares.

Subscriber B, Mr. Gao Feng, aged 48, is the Vice-Chairman of the Board and an executive Director. Subscriber B holds 242,164,000 Existing Shares, representing approximately 4.34% of the total number of issued Existing Shares.

Reasons for the Subscriptions and use of proceeds

The Group has imminent funding needs and the current cash level will not be sufficient to meet the same without conducting the Subscriptions as detailed below:

a. As at 31 October 2018, the Group had available cash and cash balances of approximately HK$11 million.
b. It is estimated that the funding requirements of the Group from October 2018 to March 2019 amount to approximately HK$103.6 million comprising the operating costs for its commodities trading and esmart terminal businesses of approximately HK$37 million, the cash consideration for the Acquisition of approximately HK$46 million and general working capital of approximately HK$20.6 million.
c. The Group is in the process of recovering certain “other receivables” as referred to in Note 24 to the consolidated financial statements of the Group for the year ended 31 March 2018 contained in the 2017/18 annual report of the Company, which include (i) the consideration of approximately HK$74.5 million payable to the Group by an independent third party for the sale by the Group of certain shares in an associated company to be due on 31 December 2018 (the “ Sales Consideration ”); and (ii) the performance deposit of approximately HK$62.4 million in relation to a supply of goods agreement payable by Zhongshang Huimin (Beijing) E-Commerce Co. Ltd. (“ Huimin ”) and due on 16 September 2018 (the “ Performance Deposit ”).

The Sales Consideration represents the third instalment of the consideration for sale of 10.5% of the issued share capital of Sino United Energy Investment Co., Ltd (the “ Sale Shares ”) payable by Jetgo Group Limited (the purchaser) (“ Jetgo ”) to the Group on or before 31 December 2018. The Sale Shares have been charged by Jetgo in favour of the Group as security for its payment obligations. For details, please refer to the announcement of the Company dated 3 June 2015. Jetgo settled HK$200,000 of the Sales Consideration in 22 June 2018 and as at the date of this submission, HK$74,496,000 out of the Sales Consideration has remained outstanding. The said amount will be due on 31 December 2018. The management of the Company will continue to discuss with the management of Jetgo on the settlement of the outstanding balance of the Sales Consideration.

LETTER FROM THE BOARD

The Performance Deposit of RMB50,000,000 was provided to Huimin pursuant to the supply agreement dated 8 March 2017 and was due on 16 September 2018. The Performance Deposit was secured by the personal guarantee of Mr. Zhang Yichun, a non-executive Director and Vice-Chairman of the Company. For details, please refer to the announcement of the Company dated 8 March 2017. As at the Latest Practicable Date, the Performance Deposit of RMB50,000,000 (equivalent to approximately HK$62,459,000) has remained outstanding. Since August 2018, the Group has from time to time demanded repayment by Huimin and Mr. Zhang Yichun of the Performance Deposit by various means including but not limited to issuance of demand letters by itself or its PRC legal counsel and physical meetings with management of Huimin to discuss settlement of the Performance Deposit. As at the Latest Practicable Date, no settlement proposal or schedule of the Performance Deposit has been agreed upon between the parties.

While the recovery process of the Sales Consideration and the Performance Deposit is ongoing, it is uncertain as to when the full amounts thereof will be recovered. The Company as a listed company has working capital requirements on an ongoing basis and it is essential for the Company to plan ahead and secure funding from different sources in advance in order to support its daily operations. As explained below, the Subscriptions by the Directors is the most suitable fund-raising method available to the Company under the current market conditions and the Group’s financial conditions.

In summary, since the Sales Consideration will only become due on 31 December 2018 and the recovery process of the Sales Consideration and the Performance Deposit is still under ongoing while completion of the Acquisition is expected to take place on or before 31 December 2018 and cash consideration of HK$46 million is required to be paid by the Group within 3 months from the date of completion of the Acquisition, also taking into account the other funding requirements of the Group in the next few months, the Board considers that the current cash level of the Group will not be sufficient to meet the funding needs of the Group without conducting the Subscriptions.

Regarding the cash consideration of the Acquisition (HK$46 million) with half payable on the completion date and the remaining half payable within 3 months from the completion date, it would not be commercially feasible to defer the payment thereof. The Board stressed that the payment terms of the consideration for the Acquisition are the best package that could be secured for the Company after arm’s length negotiations with the vendors for months and are structured to minimise the investment risk of the Company and safeguard the interests of the Company and the Shareholders in the Acquisition. The vendors requested the Company to provide a cash deposit upon signing of the share transfer agreement in a number of occasions but were turned down by the Company.

In response to the funding needs of the Group, the Company has considered a number of financing methods such as debt financing and other ways of equity financing (including open offer, rights issue and share placement to independent institutional and individual investors). Debt and bank financing usually require security of properties and other assets which is not feasible to the Company and will incur additional interest burden to the Group, rendering it not the optimal financing method under the prevailing market conditions. Open offer and rights issue may impose financial burden on the existing Shareholders and will incur high underwriting commission and may not be beneficial to the Company and the Shareholders as a whole. The underwriting commission (assuming the underwriting commission of a

LETTER FROM THE BOARD

rights issue or an open offer payable to the underwriter(s) would be 3% (with reference to market rates)) on the gross proceeds of the Subscriptions (HK$120,000,000) will amount to HK$3.6 million while no commission is payable to the Subscribers under the Subscriptions. Under the prevailing market conditions and the small market capitalisation and loss-making position of the Company, it is unlikely that there is any third-party securities firm who is willing to take the risk to underwrite a rights issue or an open offer conducted by the Company. The Company contacted four securities firms which are Independent Third Parties and licensed cooperations under the SFO and was informed that it would be difficult to locate investors for share placements due to the recent poor market sentiment and the relatively small market capitalisation of the Company (about HK$560 million as at the date of the Subscription Agreements). The Company then approached the two Subscribers and agreed on the terms of the Subscriptions and entered into the Subscription Agreements after arm’s length negotiations. In addition, other equity financing methods, including open offer, rights issue and share placement to independent institutional and individual investors customarily involve the issue of new shares at a discount to the market price. In contrast, the Subscription Price has been set at HK$0.21, representing a premium over the prevailing market prices of the Shares prior to entering into the Subscription Agreements. The Subscriptions by the two Subscribers, being the Chairman and Vice-Chairman of the Company, reflects the confidence and commitment of the Board towards the long-term and sustainable growth of the Group, and the continuing support of the Board would be beneficial to the long-term business development of the Group. The Company notes that the Subscriptions will dilute the shareholding of the public shareholders from approximately 78.17% to approximately 64.87% upon the Completion. Having considered the aforesaid reasons and benefits of the Subscriptions and that the terms of the Subscription Agreements are fair and reasonable and the Subscriptions are in the interests of the Company and the Shareholders as a whole, the Company is of the view that the said dilution to the public shareholding is acceptable. Based on the aforesaid, the Directors (including the independent non-executive Directors) are of the view that the terms of the Subscription Agreements and the transactions contemplated thereunder are on normal commercial terms agreed upon after arm’s length negotiations between the parties, fair and reasonable and in the interests of the Company and the Shareholders as a whole. In the event that the Subscriptions are not proceeded or completed for any reason, the Company will consider conducting rights issue to meet the funding requirements.

Save and except the Subscribers who are materially interested in the Subscription Agreements and the transactions contemplated thereunder, and therefore, abstained from voting on the relevant Board resolutions approving the Subscription Agreements and the transactions contemplated thereunder, none of the other Directors was in any way materially interested in the Subscription Agreements and the transactions contemplated thereunder, and was required to abstain from voting on the relevant Board resolutions.

The aggregate gross proceeds of the Subscriptions will amount to HK$120,000,000 and the aggregate net proceeds, after the deduction of the related expenses, will be approximately HK$119,500,000, representing a net Subscription Price of approximately HK$0.2092 per Subscription Share. The Company intends to use the net proceeds from the Subscriptions as follows: (i) as to approximately HK$46 million for settling part of the consideration for the Acquisition; (ii) as to approximately HK$37 million for developing the Group’s daily consumer goods trading and esmart terminal businesses and in particular, for manufacturing and supplying esmart terminals pursuant to the strategic cooperation agreement dated 28 September 2018 entered into by the Group with China Tobacco

LETTER FROM THE BOARD

Hunan Industrial Co. Ltd. (“ China Tobacco (Hunan) ”) (please refer to the announcement of the Company of the same date for details); and (iii) approximately HK$36.5 million for general working capital of the Group. Out of the HK$37 million for developing the Group’s daily consumer goods trading and esmart terminal businesses, HK$5 million is intended to be used for the daily consumer goods trading business while HK$32 million is intended to be used for the esmart terminal business. The latter HK$32 million is intended to be used as to HK$17 million for manufacturing 11,500 esmart terminals for China Tobacco (Hunan) and other customers, HK$10 million as research and development expenses and the remaining HK$5 million for installation, upgrading, maintenance and marketing of the esmart terminals. The strategic cooperation agreement with China Tobacco was entered into on 28 September 2018 and the parties are in the preliminary stage in implementing the cooperation thereunder. Funding is required for the manufacturing, delivery and installation of the esmart terminals to China Tobacco. It is expected that Esmart Technology Co., Ltd., an indirect non wholly-owned subsidiary of the Company in which the Company holds an effective interest of approximately 26.112%, will not be able to finance its future expenditure pursuant to the strategic cooperation agreement with China Tobacco within 2019.

The Group will continue to (i) expand its scale of operations to facilitate the granting of bank loans; (ii) develop the esmart terminal and daily consumer goods trading businesses so as to achieve break-even and profitability as soon as practicable; and (iii) reduce its operating expenses by way of (a) disposing of dormant companies or companies not generating any cash flow (including but not limited to the companies engaging in unconventional gas business) (the “ Disposed Businesses ”); and (b) reducing staff in relation to the Disposed Businesses.

LETTER FROM THE BOARD

Fund raising activities in the past twelve months prior to the Latest Practicable Date

The Company has conducted the following equity fund raising exercises in the past twelve months immediately prior to the Latest Practicable Date:

	Equity
Date of	fund raising	Net proceeds	Intended use of	Actual use
announcement	exercise	raised	proceeds	of proceeds
28 May 2018	Allotment and	Approximately	For general	Approximately
	issue of an	HK$9,750,000	working capital	HK$4,000,000
	aggregate of		of the Group and	has been used for
	95,660,000		development of	general working
	Existing Shares at		the Group’s daily	capital and
	HK$0.128 each		consumer goods	development of
	to an independent		trading and	the Group’s daily
	subscriber (the		esmart terminal	consumer goods
	number of		businesses	trading and
	Existing Shares			esmart terminal
	was adjusted to			businesses. The
	76,500,000			remaining
	pursuant to a			HK$5.75 million
	supplemental			will be used as
	agreement			intended for
	entered into			general working
	between the			capital or the
	Company and the			Group’s daily
	independent			consumer goods
	subscriber on 26			trading or esmart
	June 2018)			terminal
				businesses,
				depending on the
				urgency of the
				funding needs of
				the respective
				business segment
				or working
				capital
27 April 2018	Allotment and	Approximately	For general	Approximately
	issue of an	HK$39,200,000	working capital	HK$39,200,000
	aggregate of		of the Group and	has been used for
	306,875,000		development of	general working
	Existing Shares at		the Group’s daily	capital and
	HK$0.128 each		consumer goods	development of
	to 5 independent		trading and	the Group’s daily
	subscribers		esmart terminal	consumer goods
			businesses	trading and
				esmart terminal
				businesses

LETTER FROM THE BOARD

The actual uses of proceeds from the abovementioned equity fund raising exercises are set out as follows:

(i) approximately HK$18,200,000 has been used for general working capital;
(ii) approximately HK$11,000,000 has been used for the development of the Group’s daily consumer goods trading; and
(iii) approximately HK$14,000,000 has been used for the development of the Group’s esmart terminal business.

Shareholding structures of the Company

The shareholding structures of the Company (i) as at the Latest Practicable Date; (ii) upon completion of the Share Consolidation but before Completion of the Subscriptions; and (iii) upon Completion of the Subscriptions are summarised as follows:

Substantial Shareholder Ms. Liu Qiuhua Directors Mr. Zhang Xiaobin Mr. Gao Feng Mr. Chiu Sui Keung Other Directors/directors of the subsidiaries of the Company Public Other public shareholders Total:	As at the Latest Practicable Date Number of Shares Approximate shareholding percentage % 717,634,000 12.88 84,920,000 1.52 242,164,000 4.34 56,542,000 1.01 115,932,000 2.08 4,358,343,400 78.17 5,575,535,400 100.00	Upon completion of the Share Consolidation but before Completion of the Acquisition Number of Shares Approximate shareholding percentage % 358,817,000 12.88 42,460,000 1.52 121,082,000 4.34 28,271,000 1.01 57,966,000 2.08 2,179,171,700 78.17 2,787,767,700 100.00	Immediately following the Completion Number of Shares Approximate shareholding percentage % 358,817,000 10.08 137,698,095 4.10 597,272,476 17.78 28,271,000 0.84 57,966,000 1.73 2,179,171,700 64.87 3,359,196,271 100.00	Immediately following the Completion Number of Shares Approximate shareholding percentage % 358,817,000 10.08 137,698,095 4.10 597,272,476 17.78 28,271,000 0.84 57,966,000 1.73 2,179,171,700 64.87 3,359,196,271 100.00
				100.00

LETTER FROM THE BOARD

Listing Rules Implications

The Subscribers are Directors and connected persons under Chapter 14A of the Listing Rules. Accordingly, the Subscriptions constitute connected transactions of the Company under the Listing Rules and are subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

Independent Board Committee and Independent Financial Adviser

The Independent Board Committee, comprising all the independent non-executive Directors, namely Mr. Cheng Wing Keung Raymond, Mr. Lam Williamson, Mr. Wong Hoi Kuen and Dr. Lam Lee G, has been established to consider the terms of the Subscription Agreements and the transactions contemplated thereunder, and to advise the Independent Shareholders as to whether the aforesaid transactions are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Gram Capital has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the Subscriptions.

(2) PROPOSED SHARE CONSOLIDATION

The Board proposes to implement the Share Consolidation on the basis that every two (2) issued Existing Shares be consolidated into one (1) Consolidated Share.

Conditions of the Share Consolidation

The Share Consolidation is conditional upon:

(i) the passing of an ordinary resolution by the Shareholders at the EGM to approve the Share Consolidation; and
(ii) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Consolidated Shares.

Effects of the Share Consolidation

As at the Latest Practicable Date, the authorised share capital of the Company is HK$300,000,000 divided into 30,000,000,000 Existing Shares with par value of HK$0.01 each, of which 5,575,535,400 Existing Shares have been issued and are fully paid or credited as fully paid. Assuming no further Existing Shares will be issued or repurchased from the date hereof until the date of the EGM, immediately upon the Share Consolidation becoming effective, the authorised share capital of the Company will become HK$300,000,000 divided into 15,000,000,000 Consolidated Shares with par value of HK$0.02 each, of which 2,787,767,700 Consolidated Shares will be in issue.

Upon the Share Consolidation becoming effective, the Consolidated Shares shall rank pari passu in all respects with each other and the Share Consolidation will not result in any change in the relative rights of the Shareholders.

LETTER FROM THE BOARD

Application for the listing of the Consolidated Shares

An application will be made by the Company to the Listing Committee of the Stock Exchange for the listing of, and the permission to deal in, the Consolidated Shares upon the Share Consolidation becoming effective.

Subject to the granting of listing of, and permission to deal in, the Consolidated Shares on the Stock Exchange upon the Share Consolidation becoming effective, as well as compliance with the stock admission requirements of the HKSCC, the Consolidated Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the Consolidated Shares on the Stock Exchange or such other date as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second settlement day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time. All necessary arrangements will be made for the Consolidated Shares to be admitted into CCASS established and operated by HKSCC.

None of the Existing Shares are listed or dealt in any other stock exchange other than the Stock Exchange, and at the time the Share Consolidation becoming effective, the Consolidated Shares in issue will not be listed or dealt in on any stock exchange other than the Stock Exchange, and no such listing or permission to deal is being or is proposed to be sought.

Fractional entitlement to Consolidated Shares following the Share Consolidation

Fractional Consolidated Shares arising from the Share Consolidation, if any, will be disregarded and will not be allocated to the Shareholders, but will be aggregated and, if possible, sold for the benefit of the Company. Fractional Consolidated Shares will only arise in respect of the entire shareholding of a holder of the Existing Shares regardless of the number of share certificates held by such holder.

Arrangement on odd lots trading

In order to facilitate the trading of odd lots of the Consolidated Shares arising from the Share Consolidation, the Company has appointed Changjiang Securities Brokerage (HK) Limited, at Suite 1908, Cosco Tower, 183 Queen’s Road C., Hong Kong, as agent to provide matching services, on a best efforts basis, to those Shareholders who wish to acquire odd lots of the Consolidated Shares to make up a full board lot, or to dispose of their holding of odd lots of the Consolidated Shares.

Holders of odd lots of the Consolidated Shares should note that the matching of the sale and purchase of odd lots of the Consolidated Shares is not guaranteed.

Exchange of share certificates

Subject to the Share Consolidation becoming effective, which is currently expected to be on Tuesday, 8 January 2019, being the business day immediately after the date of the EGM, Shareholders may between 9:00 a.m. and 4:30 p.m. on any business day during the period from Tuesday, 8 January 2019 to Monday, 18 February 2019 (both days inclusive), submit share certificates for the Existing Shares (in blue colour) to the Registrar at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong to exchange for new share certificates for the Consolidated Shares (in yellow colour) at the expense of the Company.

LETTER FROM THE BOARD

Shareholders should note that after the prescribed time for free exchange of share certificates, a fee of HK$2.50 each (or such higher amount as may from time to time be allowed by the Stock Exchange) will be payable by the Shareholders to the Registrar for each share certificate for the Existing Shares submitted for cancellation or each new share certificate issued for the Consolidated Shares, whichever the number of share certificates involved is higher.

After 4:00 p.m. on Thursday, 14 February 2019, trading will only be in Consolidated Shares which share certificates will be issued in yellow colour. Existing share certificates in blue colour for the Existing Shares will cease to be valid for trading and settlement purpose, but will remain valid and effective as documents of title.

Adjustments in relation to other securities of the Company

As at the Latest Practicable Date, there are 546,834,000 outstanding share options under the Share Option Scheme. Under the relevant terms and conditions thereof, the Share Consolidation may lead to adjustments to the exercise price and the number of Shares falling to be issued upon exercise of the aforesaid share options pursuant to the terms thereof. The Company will make further announcement(s) on such adjustment(s) as and when appropriate.

Save for the aforesaid, the Company does not have any options outstanding under any share option scheme of the Company or any other derivatives, options, warrants and conversion rights or other similar rights which are convertible or exchangeable into Shares as at the Latest Practicable Date.

(3) PROPOSED CHANGE IN BOARD LOT SIZE

As at the Latest Practicable Date, the Existing Shares are traded on the Stock Exchange in the board lot size of 2,000 Existing Shares. The Board proposes to change the board lot size for trading on the Stock Exchange from 2,000 Existing Shares to 20,000 Consolidated Shares conditional upon the Share Consolidation becoming effective.

Based on the closing price of HK$0.085 per Existing Share (equivalent to the theoretical closing price of HK$0.17 per Consolidated Share) as at the Latest Practicable Date, (i) the value of each existing board lot of Existing Shares is HK$170; (ii) the value of each board lot of 2,000 Consolidated Shares would be HK$340 assuming the Share Consolidation becoming effective; and (iii) the estimated value per board lot of 20,000 Consolidated Shares would be HK$3,400 assuming that the Change in Board Lot Size had also been effective.

The Change in Board Lot Size will not result in change in the relative rights of the Shareholders.

REASONS FOR THE SHARE CONSOLIDATION AND THE CHANGE IN BOARD LOT SIZE

Pursuant to Rule 13.64 of the Listing Rules, where the market price of the securities of an issuer approaches the extremities of HK$0.01 or HK$9,995.00, the Stock Exchange reserves the right to require the issuer either to change the trading method or proceed with a consolidation or splitting of securities. In this regard, the Share Consolidation would enable the Company to comply with the trading requirements of the Listing Rules.

In view that the Shares had been traded at around or below HK$0.10 at certain time in the past 12 months (based on the closing price per Share as quoted on the Stock Exchange) and at the request of the Stock Exchange, the Board proposes to implement the Share Consolidation.

LETTER FROM THE BOARD

In the announcement of the Company dated 25 October 2018 in relation to the supplemental agreement to the share transfer agreement relating to the Acquisition, it was disclosed among other things that the Board was of the view that a consolidation of the Existing Shares was not in the interest of the Company and the Shareholders as a whole. However, following the publication of the announcement of the Company dated 26 October 2018 (the “ 26 October Announcement ”) relating to the Subscriptions, the Company received a post-vet enquiry fax in which it stated that it would not grant listing approval to the new shares to be allotted and issued under the Subscriptions unless the Company has taken appropriate action to bring about an upward adjustment in the trading price of the Existing Shares and comply with the trading requirements under the Listing Rules and the “Guide on Trading Arrangements for Selected Types of Corporate Actions” (the “ Trading Arrangements Guide ”).

As disclosed in the paragraph headed “Reasons for the Subscriptions and use of proceeds” above, (i) the Company has considered other financing methods (including debt financing and other equity financing methods) and came to the conclusion that the Subscriptions is the best option available to the Company under the prevailing market conditions; and (ii) the Subscriptions reflect the confidence and commitment of the management and the Board towards the long-term business development of the Group and it would be in the interests of the Company and the Shareholders to proceed with the Subscriptions. In addition, the Group has imminent funding needs for meeting its working capital requirements as well as the cash consideration for the Acquisition. On this basis, the Share Consolidation would enable the Company to comply with the trading requirements under the Listing Rules and the Trading Arrangements Guidance, which is a pre-requisite for completion of the Subscriptions while the net proceeds obtained from the Subscriptions are essential for supporting the Group’s future working capital needs and settling the consideration for the Acquisition.

Subject to the Share Consolidation becoming effective, the Board also proposes to change the board lot size for trading from 2,000 Existing Shares to 20,000 Consolidated Shares. The Change in Board Lot Size will enable to the Company to comply with the minimum transaction costs for a securities trade of HK$2,000 as set out in the Trading Arrangements Guide.

The basis for the Share Consolidation and the Change in Board Lot Size was determined after striking a balance between full compliance with the trading requirements under the Listing Rules and the Trading Arrangements Guide and minimising the impact of the Share Consolidation on the share price of the Company and with reference made to the share consolidation with similar structure recently conducted by China Best Group Holding Limited (Stock code: 370).

Save for the Subscriptions, as at the Latest Practicable Date, (i) there is no agreement, arrangement, understanding, intention, negotiation (concluded or otherwise) for any fund-raising activity for the Company in the coming 12 months; and (ii) the Company has no intention to carry out any other corporate actions or arrangements that may affect the trading in the Shares (including share consolidation, share sub-division and change in board lot size) in the coming 12 months.

Other than the expenses to be incurred in relation to the Share Consolidation and the Change in Board Lot Size which are expected to be insignificant in the context of the net asset value of the Company, the implementation of the Share Consolidation and the Change in Board Lot Size will not alter the underlying assets, business operations, management or financial position of the Company or the proportionate interests or rights of the Shareholders. The Directors believe that the Share Consolidation and the Change in Board Lot Size will not have any material adverse effect on the financial position of the Group and are in the interest of the Company and the Shareholders as a whole.

LETTER FROM THE BOARD

(4) EGM

An EGM will be convened for the purpose of considering and, if thought fit, approving, among other things, (1) the Subscription Agreements and the transactions contemplated thereunder, including the grant of Specific Mandate to allot and issue the Subscription Shares; and (2) the Share Consolidation. The EGM will be held at Unit 806, Level 8, Core D, Cyberport 3, 100 Cyberport Road, Hong Kong on Monday, 7 January 2019 at 2:30 p.m.. The notice of the EGM is set out on pages 47 and 48 of this circular. Whether or not you are able to attend the EGM, please complete the form of proxy in accordance with the instructions printed thereon and return the same to the Hong Kong branch share registrar and transfer office, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong as soon as possible and in any event not later than forty-eight (48) hours before the time appointed for holding the EGM or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish and, in such event, the proxy form previously submitted shall be deemed to be revoked.

The votes of the Independent Shareholders at the EGM will be taken by poll in accordance with Rule 13.39(4) of the Listing Rules and the Company will announce the results of the poll in the manner prescribed under Rule 13.39(5) of the Listing Rules. To the best knowledge of the Directors after making all reasonable enquiries, the Subscribers and their associates, are collectively interested in 327,084,000 Existing Shares, representing approximately 5.87% of the existing issued share capital of the Company, are required to abstain from voting in respect of the resolution(s) that would be proposed to approve the Subscription Agreements and the transactions contemplated thereunder at the EGM. To the best knowledge, information and belief of the Directors, having made all reasonable enquiries, there is (i) no voting trust or other agreement or arrangement or understanding entered into by or binding upon any Shareholder; and (ii) no obligation or entitlement of any Shareholder as at the Latest Practicable Date, whereby he/she has or may have temporarily or permanently passed control over the exercise of the voting right in respect of his/her Shares to a third party, either generally or on a case-by-case basis. Accordingly, to the best knowledge, information and belief of the Directors, there exists no discrepancy between any Shareholder ’s beneficial shareholding interest in the Company and the number of Shares in respect of which such Shareholder will control or will be entitled to exercise control over the voting right at the EGM.

As Completion of each of the Subscriptions is subject to the satisfaction of the condition precedent as set out in the Subscription Agreements, the Subscriptions may or may not proceed. Shareholders and prospective investors of the Company are advised to exercise caution when dealing in the Shares.

CLOSURE OF REGISTER OF MEMBERS

For the purposes of determining Shareholders’ eligibility to attend and vote at the EGM, the register of members of the Company will be closed from Wednesday, 2 January 2019 to Monday, 7 January 2019, both days inclusive, during which period no transfer of Shares will be registered. The record date for such purposes is Monday, 7 January 2019.

LETTER FROM THE BOARD

In order to be eligible to attend and vote at the EGM, all properly completed transfer forms accompanied by the relevant share certificates must be lodged with the Company’s branch share registrar and transfer office in Hong Kong, Tricor Tengis Limited, at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, not later than 4:30 p.m. on Monday, 31 December 2018.

RECOMMENDATION

Your attention is drawn to (i) the letter from the Independent Board Committee set out on page 24 of this circular which contains the recommendation of the Independent Board Committee to the Independent Shareholders in relation to the Subscription Agreements and the transactions contemplated thereunder; and (ii) the letter from the Gram Capital set out on pages 25 to 38 of this circular which contains its advice to the Independent Board Committee and the Independent Shareholders in relation to the Subscriptions together with the principal factors and reasons considered by it in concluding its advice.

The Independent Board Committee, having taken into account the advice of Gram Capital, considers that the terms of the Subscription Agreements are fair and reasonable so far as the Independent Shareholders are concerned and that the Subscriptions are on normal commercial terms and in the interests of the Company and the Shareholders as whole. Accordingly, the Directors (including the independent non-executive Directors) consider that the terms of the Subscription Agreements are fair and reasonable, and that the Subscriptions are on normal commercial terms and in the interests of the Company and the Shareholders as whole.

The Directors consider that the Share Consolidation is in the interest of the Company and the Shareholders as a whole and so recommend all Shareholders to vote in favour of the resolution approving the Share Consolidation at the EGM.

FURTHER INFORMATION

Your attention is also drawn to the additional information set out in the appendices and the notice of EGM, which form part of this circular.

Yours faithfully, By order of the Board Elife Holdings Limited Chow Chi Fai Company Secretary

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [278 x 52] intentionally omitted <==

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

18 December 2018

To the Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION IN RELATION TO SUBSCRIPTIONS OF NEW SHARES BY THE DIRECTORS UNDER SPECIFIC MANDATE

We refer to the circular of the Company to the Shareholders dated 18 December 2018 (the “ Circular ”), in which this letter forms part. Unless the context requires otherwise, capitalised terms used in this letter will have the same meanings as defined in the Circular unless the context otherwise requires.

We have been appointed by the Board as members to form the Independent Board Committee to advise the Independent Shareholders on the Subscription Agreements and the transactions contemplated thereunder are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Gram Capital Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the Subscriptions. Details of its advice, together with the principal factors and reasons taken into consideration in arriving at such advice, are set out on pages 25 to 38 of the Circular. Your attention is also drawn to the letter from the Board set out on pages 7 to 23 of the Circular and the additional information set out in the appendix to the Circular.

Having considered the terms of the Subscription Agreements and the situation of the Company, and the factors and reasons considered by Gram Capital and its opinion as stated in its letter of advice, we consider that (i) the terms of the Subscription Agreements are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned, and (ii) the entering into of the Subscription Agreements is in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the EGM to approve the Subscription Agreements and the transactions contemplated thereunder.

Yours faithfully,

Independent Board Committee of

Mr. Cheng Wing Keung, Raymond Mr. Lam Williamson Mr. Wong Hoi Kuen Dr. Lam Lee G Independent Non-executive Independent Non-executive Independent Non-executive Independent Non-executive Directors Directors Directors Directors

LETTER FROM GRAM CAPITAL

Set out below is the text of a letter received from Gram Capital, the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Subscriptions for the purpose of inclusion in this circular.

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

18 December 2018

To: The independent board committee and the independent shareholders of Elife Holdings Limited

Dear Sir/Madam,

CONNECTED TRANSACTION IN RELATION TO SUBSCRIPTIONS OF NEW SHARES BY THE DIRECTORS UNDER SPECIFIC MANDATE

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in respect of the Subscriptions, details of which are set out in the letter from the Board (the “ Board Letter ”) contained in the circular dated 18 December 2018 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 26 October 2018 the Company entered into the Subscription Agreements (as supplemented by the Supplemental Agreements dated 15 November 2018 and 14 December 2018) with each of the Subscribers respectively. Pursuant to the Subscription Agreements (as supplemented by the Supplemental Agreements dated 15 November 2018 and 14 December 2018), the Company has conditionally agreed to allot and issue, and the Subscribers have conditionally agreed to subscribe for, an aggregate of 571,428,571 Subscription Shares. The Subscription Shares will be issued at the Subscription Price of HK$0.21 for an aggregate consideration of HK$120,000,000.

With reference to the Board Letter, the Subscriptions constitute connected transactions of the Company and are subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

LETTER FROM GRAM CAPITAL

The Independent Board Committee comprising Mr. Cheng Wing Keung Raymond, Mr. Lam Williamson, Mr. Wong Hoi Kuen and Dr. Lam Lee G (all being independent non-executive Directors) has been established to advise the Independent Shareholders on (i) whether the terms of the Subscriptions are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; (ii) whether the Subscriptions are 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 Subscriptions at the EGM. We, Gram Capital Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this respect.

BASIS OF OUR OPINION

In formulating our opinion to the Independent Board Committee and 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 Subscriptions. 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.

The 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 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 Subscribers or their respective subsidiaries or associates, nor have we considered the taxation implication on the Group or the Shareholders as a result of the Subscriptions. 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.

LETTER FROM GRAM CAPITAL

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.

PRINCIPAL FACTORS AND REASONS CONSIDERED

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

1. Background of and reasons for the Subscriptions

Business overview of the Group

With reference to the Board Letter, the Company is an investment holding company and the Group is principally engaged in the provision of esmart developing terminal services for retail stores in the PRC, trading businesses across Asia and its business into the consumer product market, which conform to the Group’s business principle of “making life easier and benefiting people’s livehood” (易生活，惠民生).

Set out below are the consolidated financial information of the Group for the six months ended 30 September 2018 (with comparative figures) and the two years ended 31 March 2018 as extracted from the Company’s interim report for the six months ended 30 September 2018 (the “ 2018 Interim Report ”) and annual report for the financial year ended 31 March 2018 (the “ 2018 Annual Report ”):

	For the year ended	For the year ended	Year-on-year
	31 March 2018	31 March 2017	change
	HK$’000	HK$’000	%
	(audited)	(audited)
Turnover	153,039	19,450	686.83
– Commodities sales	144,522	19,450	643.04
– Service fee	8,517	Nil	N/A
Gross profit	9,311	200	4,555.50
Loss attributable to owners of
the Company	(126,655)	(152,116)	(16.74)

LETTER FROM GRAM CAPITAL

	For the six months	For the six months
	ended 30 September	ended 30 September	Year-on-year
	2018	2017	change
	HK$’000	HK$’000	%
	(unaudited)	(unaudited)
Turnover	52,496	33,967	54.55
– Commodities sales	52,201	32,301	61.61
– Service fee	295	1,666	(82.29)
Gross profit	211	2,138	(90.13)
Loss attributable to owners of
the Company	(24,707)	(81,903)	(69.83)
	As at	As at	As at
	30 September	31 March	31 March
	2018	2018	2017
	HK$’000	HK$’000	HK$’000
	(unaudited)	(audited)	(audited)
Cash and cash equivalents	12,074	7,867	132,453
Net assets	258,247	257,805	337,472

As illustrated by the above table, the Group recorded turnover of approximately HK$153 million for the year ended 31 March 2018 (“ FY2018 ”), representing a substantial increase of approximately 686.83% as compared to that for the year ended 31 March 2017 (“ FY2017 ”). With reference to the 2018 Annual Report, such increase in turnover was primarily due to a substantial increase in the volume of consumer products trading as the Group rapidly expanded the customer base and made use of different sales channels and network in the PRC. The Group also acquired new subsidiaries during FY2018 to generate new income source from esmart terminal business by expanding its trading business.

As illustrated by the above table, the Group recorded turnover of approximately HK$52 million for the six month ended 30 September 2018 (“ HY2018 ”), representing an increase of approximately 54.55% as compared to that for the six months ended 30 September 2017 (“ HY2017 ”). With reference to the 2018 Interim Report, such increase in turnover was primarily due to a substantial increase in the volume of consumer products trading as the Group rapidly expanded its customer base and made use of different sales channels and network in the PRC.

The loss attributable to owners of the Company in FY2018 reduced as compared to FY2017. With reference to the 2018 Annual Report, such reduction was mainly due to (i) decrease in non-cash items, such as share-based payment and impairment loss of goodwill during FY2018; and (ii) no impairment loss on interests in associates provided during FY2018. In HY2018, the Group also recorded a reduction in loss attributable to owners of the Company as compared to that for HY2017. With reference to the 2018 Interim Report, such reduction was primarily attributable to (i) absence of non-cash items such as share-based payment; and (ii) that there was no share of negative results of associates recorded, during HY2018.

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As at 30 September 2018, the Group had cash and cash equivalents and net assets of approximately HK$12 million and HK$258 million respectively.

With reference to the 2018 Annual Report, in the foreseeable future, the Company intends to allocate resources for developing into the benefit of people related consumer goods market, in particular daily consumer products, by expanding its existing trading business to this area and considering acquisitions of relevant businesses with growth potentials.

With reference to the 2018 Interim Report, the Company has undergone a period of adjustment, focusing on developing and identifying business opportunities in the daily consumer goods market and related value-added services, at the same time developed into an enterprise that bases itself on technology development and application as well as technical services. The Company continues to rely on internet technologies platform in its operations and applies the concept of business intelligence platform to integrate various applications such as artificial intelligence, cloud computing, blockchain and mobile technology, so as to enable the Group to have the opportunity to capture a leading position in the commercial market, and it is possible to develop the Group into an important player in the massive PRC market.

Information on the Subscribers

With reference to the Board Letter, Subscriber A (i.e. Mr. Zhang Xiaobin), aged 66, is the Chairman of the Company and an executive Director. Subscriber A is interested in 84,920,000 Existing Shares, representing approximately 1.52% of the total number of issued Existing Shares as at the Latest Practicable Date. Subscriber B (i.e. Mr. Gao Feng), aged 48, is the Vice-Chairman of the Company and an executive Director. Subscriber B is interested in 242,164,000 Existing Shares, representing approximately 4.34% of the total number of issued Existing Shares as at the Latest Practicable Date.

Reasons for and benefits of the Subscriptions and use of proceeds

With reference to the Board Letter, the Group has imminent funding needs and the current cash level will not be sufficient to meet the same without conducting the Subscriptions as detailed below:

a. As at 31 October 2018, the Group had available cash and cash balances of approximately HK$11 million.
b. It is estimated that the funding requirements of the Group from October 2018 to March 2019 amount to approximately HK$103.6 million comprising the operating costs for its commodities trading and esmart terminal businesses of approximately HK$37 million, the cash consideration for the Acquisition of approximately HK$46 million and general working capital of approximately HK$20.6 million.
c. The Group is in the process of recovering certain “other receivables” as referred to in Note 24 to the consolidated financial statements of the Group for the year ended 31 March 2018 contained in the 2017/18 annual report of the Company, which include (i) the Sales Consideration of approximately HK$74.5 million; and (ii) the Performance Deposit of approximately HK$62.4 million.

LETTER FROM GRAM CAPITAL

Since the Sales Consideration will only become due on 31 December 2018 and the recovery process of the Sales Consideration and the Performance Deposit is still ongoing while completion of the Acquisition is expected to take place on or before 31 December 2018 and cash consideration of HK$46 million is required to be paid by the Group within 3 months from the date of completion of the Acquisition, also taking into account the other funding requirements of the Group in the next few months, the Board considers that the current cash level of the Group will not be sufficient to meet the funding needs of the Group without conducting the Subscriptions.

With reference to the Board Letter, in response to the funding needs of the Group, the Company has considered a number of financing methods such as debt financing and other ways of equity financing (including open offer, rights issue and share placement to independent institutional and individual investors):

Debt and bank financing usually require security of properties and other assets which is not feasible to the Company and will incur additional interest burden to the Group, rendering it not the optimal financing method under the prevailing market conditions.

Upon our further enquiry, we were advised by the Directors that the Group is lack of properties and other assets for the purpose of securing bank borrowings. Although we noted from the 2018 Interim Report that the Group had property, plant and equipment of approximately HK$40 million as at 30 September 2018, the Directors provided us a breakdown which demonstrated that most of the said property, plant and equipment are plant and equipment, leasehold improvement, furniture and equipment, fixtures and fittings, computer equipment and motor vehicles which are not suitable for pledging.

Open offer and rights issue may impose financial burden on the existing Shareholders and will incur high underwriting commission and may not be beneficial to the Company and the Shareholders as a whole.

In this regard, we noticed that the underwriting commission charged by independent underwriters for open offer or rights issue exercises announced by Hong Kong listed companies from 1 May 2018 to 26 October 2018 ranged from 0.6% to 3.5%.

The Company recently contacted four securities firms which are Independent Third Parties and licensed corporations under the SFO and was informed that it would be difficult to locate investors for share placements due to the recent poor market sentiment and the relatively small market capitalisation of the Company (about HK$560 million prior to the Last Trading Date).
Other equity financing methods, including open offer, rights issue and share placement to independent institutional and individual investors customarily involve the issue of new shares at a discount to the market price. In contrast, the Subscription Price has been set at HK$0.21, representing a premium over the equivalent closing prices of the Consolidated Shares based on the prevailing market prices of the Existing Shares prior to the Last Trading Date.

LETTER FROM GRAM CAPITAL

In this regard, we noticed from (i) 14 out of 15 open offer/rights issue exercises announced by Hong Kong listed companies from 1 May 2018 to 26 October 2018 involve issue offer shares/rights shares at discount to market price; and (ii) 19 out of 23 share placing exercises announced by Hong Kong listed companies from 1 August 2018 to 26 October 2018 involve issue of new shares at discount to market price.

In addition, the Subscriptions by the two Subscribers, being the Chairman and ViceChairman of the Company, reflects the confidence and commitment of the Board towards the long-term and sustainable growth of the Group, and the continuing support of the Board would be beneficial to the long-term business development of the Group.

In light of the above, we concur with the Directors that the Subscriptions are appropriate means of fund raising.

As further mentioned in the Board Letter, the gross proceeds from the Subscriptions are expected to be approximately HK$120 million and the aggregate net proceeds, after the deduction of the related expenses, are expected to be approximately HK$119.5 million. The Company intends to use the net proceeds from the Subscriptions in the following manner: (i) as to approximately HK$46 million for settling part of the consideration for the Acquisition; (ii) as to approximately HK$37 million for developing the Group’s daily consumer goods trading and esmart terminal businesses (the “ Development Fund ”) and in particular, for manufacturing and supplying esmart terminals pursuant to the strategic cooperation agreement dated 28 September 2018 entered into by the Group with China Tobacco (Hunan); and (iii) approximately HK$36.5 million for general working capital of the Group. Out of the HK$37 million for developing the Group’s daily consumer goods trading and esmart terminal businesses, HK$5 million is intended to be used for the daily consumer goods trading business while HK$32 million is intended to be used for the esmart terminal business. The latter HK$32 million is intended to be used as to HK$17 million for manufacturing 11,500 esmart terminals for China Tobacco (Hunan) and other customers, HK$10 million as research and development expenses and the remaining HK$5 million for installation, upgrading, maintenance and marketing of the esmart terminals. The Company’s indirectly owned subsidiary, Esmart Technology Co., Ltd. (珠海惠付通科技有限公司) (“ Esmart Technology* ”) and China Tobacco (Hunan) entered into a strategic cooperation agreement on 28 September 2018 and the parties are in the preliminary stage in implementing the cooperation thereunder. Funding is required for the manufacturing, delivery and installation of the esmart terminals to China Tobacco (Hunan). It is expected that Esmart Technology will not be able to finance its future expenditure pursuant to the strategic cooperation agreement with China Tobacco (Hunan) within 2019.

The Group will continue to (i) expand its scale of operations to facilitate the granting of bank loans; (ii) develop the esmart terminal and daily consumer goods trading businesses so as to achieve break-even and profitability as soon as practicable; and (iii) reduce its operating expenses by way of (a) disposing of dormant companies or companies not generating any cash flow (including but not limited to the companies engaging in unconventional gas business) (i.e. the Disposed Businesses); and (b) reducing staff in relation to the Disposed Businesses.

LETTER FROM GRAM CAPITAL

As aforementioned and with reference to the 2018 Annual Report, in the foreseeable future, the Company intends to allocate resources for developing into the benefit of people related consumer goods market, in particular daily consumer products, by expanding its existing trading business to this area and considering acquisitions of relevant businesses with growth potentials. Accordingly, the intended use of proceeds from the Subscriptions are in line with the Group’s business strategies and will contribute to the development of the Group’s business development. For our due diligence purpose, we also obtained business plans/budgeting for the Development Fund and discussed the same with the Company for better understanding.

Having considered that (i) the Subscriptions are appropriate means of fund raising; and (ii) the intended use of proceeds from the Subscriptions are in line with the Group’s business strategies and will contribute to the development of the Group’s business development, we are of the view that the Subscriptions are in the interest of the Company and the Shareholders as a whole.

2. Principal terms of the Subscriptions

The Subscription Agreement A

Date	26 October 2018 (original), 15 November 2018 (supplemental),
	14 December 2018 (supplemental)
Parties	The Company (as the issuer)
	Mr. Zhang Xiaobin (as Subscriber A)

The Subscription Agreement B

Date	26 October 2018 (original), 15 November 2018 (supplemental),
	14 December 2018 (supplemental)
Parties	The Company (as the issuer)
	Mr. Gao Feng (as Subscriber B)

Subscription Shares

Pursuant to the Subscription Agreements (as supplemented by the Supplemental Agreements), the Company conditionally agreed to allot and issue, and the Subscribers have conditionally agreed to subscribe for 571,428,571 Subscription Shares at the Subscription Price.

The 571,428,571 Subscription Shares represent (i) approximately 20.50% of the existing issued share capital of the Company as at the date of the Share Consolidation has become effective (assuming there is no other change in the issued share capital of the Company and shareholding structure of the Company from the Latest Practicable Date to the date of Completion save for the

LETTER FROM GRAM CAPITAL

issue of Consolidated Shares pursuant to the Share Consolidation); and (ii) approximately 17.01% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares (assuming there is no other changes in the issued share capital of the Company and shareholding structure of the Company from the Latest Practicable Date to the date of Completion save for the issue of Consolidated Shares pursuant to the Share Consolidation).

Subscription Price

The Subscription Price of HK$0.21 represents:

(a) a premium of approximately 6.06% over the equivalent closing price of HK$0.198 per Consolidated Share based on the closing price of HK$0.099 per Existing Share as quoted on the Stock Exchange on the Last Trading Date and adjusted taking into account the effect of the Share Consolidation;
(b) a premium of approximately 9.83% over the equivalent average closing price of HK$0.1912 per Consolidated Share based on the average closing price of HK$0.0956 per Existing Share as quoted on the Stock Exchange on the last five consecutive trading days up to and including the Last Trading Date and adjusted taking into account the effect of the Share Consolidation;
(c) a premium of approximately 9.03% over the equivalent average closing price of HK$0.1926 per Consolidated Share based on the average closing price per Share of HK$0.0963 for the last ten consecutive trading days up to and including the Last Trading Date and adjusted taking into account the effect of the Share Consolidation; and
(d) a premium of approximately 23.53% over the equivalent closing price of HK$0.17 per Consolidated Share based on the closing price of HK$0.085 per Existing Share as quoted on the Stock Exchange on the Latest Practicable Date and adjusted taking into account the effect of the Share Consolidation.

With reference to the Board Letter, the Subscription Price was arrived at after arm’s length negotiations between the Company and the Subscribers taking into account the prevailing market price of the Shares, the Group’s historical performances and present financial position as well as current market condition.

LETTER FROM GRAM CAPITAL

In order to assess the fairness and reasonableness of the Subscription Price, we reviewed the daily closing price of the Existing Shares as quoted on the Stock Exchange from 1 November 2017 up to and including the Last Trading Date (i.e. 25 October 2018) (the “ Review Period ”), being a period of approximately one year up to and including the Last Trading Date. The comparison of daily closing prices of the Existing Shares and the Subscription Price is illustrated as follows:

==> picture [398 x 216] intentionally omitted <==

----- Start of picture text -----

HK$ Historical daily closing price per Existing Share (adjusted)
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct
2017 2017 2018 2018 2018 2018 2018 2018 2018 2018 2018 2018
Closing price (adjusted) Subscription Price
----- End of picture text -----

Source: the Stock Exchange’s website

Note: The historical closing price of Shares was adjusted assuming the Share Consolidation was effective since the beginning of the Review Period.

During the Review Period, the lowest and highest adjusted closing prices of the Existing Shares as quoted on the Stock Exchange were HK$0.172 recorded on 19 July 2018 and 20 July 2018 and HK$0.322 per Share recorded on 3 November 2017 respectively. The Subscription Price of HK$0.21 is within the range of the lowest and highest adjusted closing prices of the Existing Shares as quoted on the Stock Exchange during the Review Period. From 1 November 2017 to 25 October 2018 (being the Last Trading Date), the closing price of Shares fluctuated and showed a general decreasing trend.

As part of our analysis, we further identified transactions in relation to the subscriptions of new shares under specific mandate (listed on the Stock Exchange) for cash which were announced by companies listed on the Stock Exchange from 1 May 2018 up to 25 October 2018, being a period of six months up to and including the Last Trading Date (the “ Comparables ”)(excluding any transactions involving other aspects that may materially affect pricing such as restructuring). Since the list of Comparables is for the purpose of providing reference for the recent market practice in relation to the determination of subscription prices under similar market conditions prior to the original date of the Subscription Agreements, we consider that the Comparables during the Review Period would reflect the market trend of the subscriptions of new shares under specific mandate prior to the original date of the Subscription Agreements. Accordingly, we consider that a review period of approximately six months is sufficient and appropriate.

LETTER FROM GRAM CAPITAL

To the best of our knowledge and as far as we are aware of, we found 12 transactions which met the said criteria and they are exhaustive as far as we are aware of. Although the businesses, operations, prospects and valuation of the Company are not the same as the Comparables, subscription size and uses of proceeds of the Subscriptions are not the same as the Comparables, we consider the Comparables to be fair, representative and meaningful samples for the purpose of providing reference for the recent market practice in relation to the determination of subscription prices under similar market conditions prior to the original date of the Subscription Agreements.

		Premium/
		(discount) of the
		issue price to/over
		closing price per
		share on the last
		trading day prior
		to or on the date
		of agreement/	Subscription size
		announcement in	relative to the then
		relation to the	issued capital
		respective	prior to respective	Connected
	Date of	subscription of	subscription of	transaction
Company name (stock code)	announcement	new shares	new shares	involved	Use of proceeds
		(%)	(%)
China Grand Pharmaceutical and	24 May 2018	(21.10)	9.89	Yes	(i) Cash payment for
Healthcare Holdings Limited					acquisition; and (ii) group’s
(512)					general working capital
China Baofeng (International)	24 May 2018	(13.33)	16.94	Yes	Repayment of existing
Limited (3966)					interest-bearing loan
China Grand Pharmaceutical and	1 June 2018	(15.90)	10.29	Yes	(i) Cash payment for
Healthcare Holdings Limited					acquisition; and (ii) group’s
(512)					general working capital
CMBC Capital Holdings Limited	3 July 2018	(18.40)	2.95	Yes	(i) Expansion of loan and
(1141)					financing business of the
					group; (ii) further
					strengthening the group’s
					brokerage service capability;
					(iii) expansion of the group’s
					corporate finance advisory
					business; (iv) development of
					asset management business;
					and (v) general working
					capital of the group

LETTER FROM GRAM CAPITAL

		Premium/
		(discount) of the
		issue price to/over
		closing price per
		share on the last
		trading day prior
		to or on the date
		of agreement/	Subscription size
		announcement in	relative to the then
		relation to the	issued capital
		respective	prior to respective	Connected
	Date of	subscription of	subscription of	transaction
Company name (stock code)	announcement	new shares	new shares	involved	Use of proceeds
		(%)	(%)
Sinofortune Financial Holdings	6 July 2018	5.26	23.02	Yes	(i) Development and
Limited (8123)					expansion of the existing
					motor vehicle business of the
					group; (ii) investments
					including potential
					acquisitions of business
					related to the motor vehicle
					business of the group; and
					(iii) general working capital
					of the group
FDG Electric Vehicles Limited	11 July 2018	(53.49)	49.12	No	Repayment of debts and
(729)					supporting production for
					orders from US customer and
					general working
					capital purposes
Shougang Concord International	24 July 2018	28.87	25.86	Yes	(i) Investment in car parking
Enterprises Company Limited					business and operations; and
(697)					(ii) development of
					Shougang Park
China Putian Food Holding	30 July 2018	(27.10)	18.06	Yes	Partial repayment of
Limited (1699)					shareholder loan and
					repayment of existing
					bank borrowings
Truly International Holdings	31 July 2018	(6.35)	5.41	Yes	General working capital of the
Limited (732)					group and strengthening the
					group’s financial position

LETTER FROM GRAM CAPITAL

		Premium/
		(discount) of the
		issue price to/over
		closing price per
		share on the last
		trading day prior
		to or on the date
		of agreement/	Subscription size
		announcement in	relative to the then
		relation to the	issued capital
		respective	prior to respective	Connected
	Date of	subscription of	subscription of	transaction
Company name (stock code)	announcement	new shares	new shares	involved	Use of proceeds
		(%)	(%)
Ban Loong Holdings Limited (30)	20 August 2018	Nil	18.35	Yes	(i) The business development
					and expansion of the group’s
					trading business; (ii) the
					business development and
					expansion of the group’s
					money lending business; and
					(iii) group’s general
					working capital
FDG Electric Vehicles Limited	9 September 2018	(5.26)	29.90	No	Supporting the development of
(729)					its electric vehicle business,
					repayment of some debts of
					the group and general working
					capital of the group
Xinyang Maojian Group Limited	5 October 2018	(1.59)	19.80	Yes	Repayment of bank loans
(formerly known as China					and bonds payable
Zenith Chemical Group
Limited) (362)
Range of (discount)/premium		From (53.49)
		to 28.87
Average		(10.70)
Median		(9.84)
The Company		6.06

We noted from the above table that the subscription prices of the Comparables ranged from a discount of approximately 53.49% to a premium of approximately 28.87% to/over the respective closing prices of their shares on the date of agreement/announcement or the last trading day prior to the date of agreement/announcement in relation to the respective subscriptions of new shares (the “ Discount/Premium Market Range ”), with an average of a discount of approximately

LETTER FROM GRAM CAPITAL

10.70% (the “ Market Average ”) and a median of a discount of approximately 9.84% (the “ Market Median ”). As such, the Subscription Price, which represents a premium of approximately 6.06% over the equivalent closing price of the Consolidated Shares on the Last Trading Date, (i) falls within the Discount/Premium Market Range; and (ii) above the Market Average and the Market Median. Therefore, we are of the opinion that the Subscription Price is in line with the recent market practice and in the interest of the Company and its Shareholders as a whole..

Having also taken into account that the Subscription Price of HK$0.21 is within the range of the lowest and highest adjusted closing prices of the Existing Shares as quoted on the Stock Exchange during the Review Period, we consider the Subscription Price to be fair and reasonable.

For further details and terms of the Subscriptions, please refer to the section headed “(1) SUBSCRIPTIONS OF NEW SHARES UNDER SPECIFIC MANDATE” of the Board Letter.

Taking into account the principal terms of the Subscriptions as highlighted above, we are of the view that the terms of the Subscriptions are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned.

3. Possible dilution effect on the shareholding interests of the public Shareholders

With reference to the shareholding table in the section headed “Shareholding Structures of the Company” of the Board Letter, the shareholding interests of the other public Shareholders would be diluted by approximately 13.3 percentage point as a result of the Subscriptions. In this regard, taking into account (i) the reasons for and benefits of the Subscriptions as illustrated above; (ii) the Subscription Price represents a premium of approximately 6.06% over the equivalent closing price of HK$0.198 per Consolidated Share based on the closing price of HK$0.099 per Existing Share as quoted on the Stock Exchange on the Last Trading Date and adjusted taking into account the effect of the Share Consolidation; and (iii) the terms of the Subscription Agreements (as supplemented by the Supplemental Agreements) being fair and reasonable, we are of the view that the said level of dilution to the shareholding interests of the public Shareholders as a result of the Subscriptions is acceptable.

RECOMMENDATION

Having taken into consideration the factors and reasons as stated above, we are of the opinion that (i) the terms of the Subscriptions are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) although the Subscriptions are not conducted under the Company’s ordinary and usual course of business, the Subscriptions are in the interests of the Company and the Shareholders as a whole. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the resolution(s) to be proposed at the EGM to approve the Subscriptions and we recommend the Independent Shareholders to vote in favour of the resolution(s) in this regard.

Yours faithfully, For and on behalf of

Gram Capital Limited Graham Lam Managing Director

GENERAL INFORMATION

APPENDIX

(1) 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 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) SHARE CAPITAL

(a) Share capital of the Company

The authorised and issued share capital of the Company (i) as at the Latest Practicable Date; and (ii) immediately upon Completion (assuming there will be no other change in the number of issued Shares between the Latest Practicable Date and the date of the Completion) as follows:

(i) Share capital as at the Latest Practicable Date

	Nominal
	Value	Number of
	per Share	Shares	Amount
	HK$		HK$
Authorised:
As at the Latest Practicable Date	0.01	30,000,000,000	300,000,000.00
Issued and fully paid:
As at the Latest Practicable Date	0.01	5,575,535,400	55,755,354.00

GENERAL INFORMATION

APPENDIX

(ii) Share capital immediately upon Completion (assuming there will be no other change in the number of issued Shares between the Latest Practicable Date and the date of the Completion save for the Consolidation Shares to be issued pursuant to the Share Consolidation)

	Nominal
	Value	Number of
	per Share	Shares	Amount
	HK$		HK$
Authorised:
As at the date of Completion	0.02	15,000,000,000	300,000,000.00
Issued and fully paid:
Immediately before the date of
Completion	0.02	2,787,767,700	55,755,354.00
Subscription Shares to be issued	0.02	571,428,571	11,428,571.42.
pursuant to the Subscriptions
Shares in issue upon Completion	0.02	3,359,196,271	67,183,925.42

All issued Shares rank pari passu in all respects with each other, including, in particular, as to dividends, voting rights and return of capital.

The Subscription Shares to be allotted and issued will, when issued, rank pari passu in all respects with the Consolidated Shares then in issue. The Subscribers will be entitled to receive all dividends and distributions which may be declared, made or paid on or after the date of issue of Subscription Shares. As at the Latest Practicable Date, there was no arrangement under which future dividends are waived or agreed to be waived.

The issued Shares are listed on the Stock Exchange. None of the securities of the Company is listed or dealt in, and no listing or permission to deal in the securities of the Company is being or is proposed to be sought on any other stock exchange.

(b) Share options and share awards

The Share Option Scheme was adopted on 8 October 2010 and amended on 17 August 2017, with options to be granted to any directors, employees and other parties at the discretion of the Board. As at the Latest Practicable Date, 546,834,000 share options remained outstanding. The Group also adopted the Share Award Scheme on 27 July 2017. As at the Latest Practicable Date, 249,370,000 awarded Shares were granted to eligible directors and employees by way of allotment and issue of new shares.

GENERAL INFORMATION

APPENDIX

Save as disclosed above, the Company did not have any outstanding convertible securities, options or warrants in issue or similar rights which confer any right to subscribe for, convert or exchange into the Shares or any agreement or arrangement to issue Shares.

(3) MARKET PRICE

The table below sets out the closing prices of the Existing Shares on the Stock Exchange (i) on the last trading day of each of the calendar months during the Relevant Period; (ii) on the Last Trading Day; and (iii) on the Latest Practicable Date.

	Closing price
	per Share
Date	(HK$)
30 April 2018	0.127
31 May 2018	0.111
29 June 2018	0.099
31 July 2018	0.087
31 August 2018	0.100
28 September 2018	0.102
25 October 2018 (being the Last Trading Day)	0.099
31 October 2018	0.100
30 November 2018	0.088
14 December 2018 (being the Latest Practicable Date)	0.085

The highest and lowest closing market prices of the Existing Shares recorded on the Stock Exchange during the Relevant Period were HK$0.132 on 7 May 2018 and HK$0.082 on 6 December 2018, respectively.

GENERAL INFORMATION

APPENDIX

(4) 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 Existing Shares, underlying Existing 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:

		Number	Approximate
		of Existing	percentage of
Name of Directors	Nature of interest	Shares	shareholding
		(Note 1)
Zhang Xiaobin	Beneficial owner	320,396,190 (L)	5.75%
		(Note 2)
Gao Feng	Beneficial owner	1,255,544,952 (L)	22.52%
		(Note 3)
Chiu Sui Keung	Beneficial owner	117,542,000(L)	2.11%
		(Note 4)
Zhang Yichun	Beneficial owner	47,000,000 (L)	0.84%
		(Note 5)
Sun Qiang	Beneficial owner	48,920,000 (L)	0.88%
		(Note 6)
Xu Ying	Beneficial owner	47,000,000 (L)	0.84%
		(Note 7)
Cheng Wing Keung, Raymond	Beneficial owner	6,362,000 (L)	0.11%
		(Note 8)
Lam Williamson	Beneficial owner	6,362,000 (L)	0.11%
		(Note 9)
Wong Hoi Kuen	Beneficial owner	6,362,000 (L)	0.11%
		(Note 10)
Lam Lee G	Beneficial owner	6,362,000 (L)	0.11%
		(Note 11)

Notes:

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

36,000,000 Existing Shares out of the 320,396,190 Existing Shares are beneficially held by Mr. Zhang Xiaobin in his own capacity, 190,476,190 Existing Shares are the Subscription Shares subscribed by Mr. Zhang Xiaobin pursuant to the Subscription Agreement A (without consideration of the effect of the Share Consolidation and the amendments under the Supplemental Agreement A). 45,000,000 Existing Shares are held by Mr. Zhang Xiaobin pursuant to share options granted under the Share Option Scheme while the remaining 48,920,000 Existing Shares are held by Mr. Zhang Xiaobin pursuant to the Awards granted under the Share Award Scheme.

GENERAL INFORMATION

APPENDIX

178,000,000 Existing Shares out of the 1,255,544,952 Existing Shares are interest of a controlled corporation held by Mr. Gao Feng, 61,000,000 Existing Shares are held pursuant to share options granted under the Share Option Scheme, 15,244,000 Existing Shares are held in his own capacity while the remaining 48,920,000 Existing Shares are held by Mr. Gao Feng pursuant to the Awards granted under the Share Award Scheme. 952,380,952 Existing Shares are the Subscription Shares subscribed by Mr. Gao Feng pursuant to the Subscription Agreement B (without consideration of the effect of the Share Consolidation and the amendments under the Supplemental Agreement B).
7,622,000 Existing Shares out of the 117,542,000 Existing Shares are beneficially held by Mr. Chiu Sui Keung in his own capacity, 61,000,000 Existing Shares are held pursuant to share options granted under the Share Option Scheme while the remaining 48,920,000 Existing Shares are held by Mr. Chiu Sui Keung pursuant to the Awards granted under the Share Award Scheme.
45,000,000 Existing Shares out of the 47,000,000 Existing Shares are held by Mr. Zhang Yichun pursuant to share options granted under the Share Option Scheme while the remaining 2,000,000 Existing Shares are held by Mr. Zhang Yichun pursuant to the Awards granted under the Share Award Scheme.
These 48,920,000 Existing Shares are held by Mr. Sun Qiang pursuant to share options granted under the Share Option Scheme.
45,000,000 Existing Shares out of the 47,000,000 Existing Shares are held by Ms. Xu Ying pursuant to share options granted under the Share Option Scheme while the remaining 2,000,000 Existing Shares are held by Ms. Xu Ying pursuant to the Awards granted under the Share Award Scheme.
2,362,000 Existing Shares out of the 6,362,000 Existing Shares are beneficially held by Mr. Cheng Wing Keung, Raymond in his own capacity, 2,000,000 Existing Shares are held pursuant to share options granted under the Share Option Scheme while the remaining 2,000,000 Existing Shares are held by Mr. Cheng Wing Keung, Raymond pursuant to the Awards granted under the Share Award Scheme.
2,362,000 Existing Shares out of the 6,362,000 Existing Shares are beneficially held by Mr. Lam Williamson in his own capacity, 2,000,000 Existing Shares are held pursuant to share options granted under the Share Option Scheme while the remaining 2,000,000 Existing Shares are held by Mr. Lam Williamson pursuant to the Awards granted under the Share Award Scheme.
2,362,000 Existing Shares out of the 6,362,000 Existing Shares are beneficially held by Mr. Wong Hoi Kuen in his own capacity, 2,000,000 Existing Shares are held pursuant to share options granted under the Share Option Scheme while the remaining 2,000,000 Existing Shares are held by Mr. Wong Hoi Kuen pursuant to the Awards granted under the Share Award Scheme.
4,362,000 Existing Shares out of the 6,360,000 Existing Shares are held by Dr. Lam Lee G pursuant to share options granted under the Share Option Scheme while the remaining 2,000,000 Existing 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:

	Capacity/		Approximate %
	Nature of	Number of	of Interest
Name	Interest	Shares	in the Company
Ms. Liu Qiuhua	Beneficial owner	717,634,000	12.88

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.

GENERAL INFORMATION

APPENDIX

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.

(5) COMPETING BUSINESS INTEREST OF DIRECTORS

As at the Latest Practicable Date, none of the Directors or their respective close associates was interested in any business which competes or is likely to compete, either directly or indirectly, with the business of the Group as required to be disclosed pursuant to the Listing Rules.

(6) DIRECTORS’ AND EXPERT’S INTERESTS IN ASSETS

None of the Directors nor the expert (as named in this circular) had any interest, directly or indirectly, in any asset which has, since 31 March 2018 (being the date to which the latest published audited consolidated financial statements of the Group were made up), up to the Latest Practicable Date, been acquired or disposed of by, or 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.

(7) DIRECTORS’ SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had any existing or proposed service contracts with any member of the Group which does not expire or is not determinable by such member of the Group within one year without payment of compensation (other than statutory compensation).

(8) DIRECTORS’ INTEREST IN CONTRACTS OR ARRANGEMENT SIGNIFICANT TO THE GROUP

As at the Latest Practicable Date, none of the Directors was materially interested, directly or indirectly, in any contract or arrangement subsisting entered into by any member of the Group subsisting as at the Latest Practicable Date and which is significant in relation to the business of the Group.

(9) MATERIAL ADVERSE CHANGE

The Directors are not aware of any material adverse change in the financial or trading position or prospects of the Group since 31 March 2018, being the date to which the latest published audited accounts of the Company were made up.

GENERAL INFORMATION

APPENDIX

(10) LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries were engaged in any litigation or arbitration proceedings of material importance and no litigation or claim of material importance was known to the Directors to be pending or threatened by or against any member of the Group.

(11) EXPERT AND CONSENT

The following are the qualifications of the expert who has been named in this circular or has given opinion or letter contained in this circular:

Names Qualifications Gram Capital Limited A corporation licensed to carry on Type 6 (advising on corporate finance) regulated activities under the SFO

As at the Latest Practicable Date, Gram Capital does not have any interest, direct or indirect, in any member of the Group or any right (whether legally enforceable or not), to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

As at the Latest Practicable Date, Gram Capital does not have any interest, direct or indirect, in any assets which have been since 31 March 2018, the date up to which the latest published audited financial statements of the Group were made up, acquired or disposed of by or 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.

Gram Capital has given and has not withdrawn its written consent to the issue of this circular with the inclusion in this circular of its letter of advice or report and/or references to its names in the form and context in which they appear.

(12) GENERAL

(a) None of the Directors had any direct or indirect interest in any assets which had been acquired or disposed of by or leased to any member of the Resulting Group or proposed to be so acquired, disposed of by or leased to any member of the Group since 31 March 2018, being the date to which the latest published audited accounts of the Company were made up, and up to the Latest Practicable Date.
(b) Save as disclosed in this circular, as at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement entered into by any member of the Resulting Group, which was subsisting and was significant in relation to the business of the Resulting Group.

GENERAL INFORMATION

APPENDIX

(c) The joint company secretaries of the Company are Mr. CHOW Chi Fai, a member of the Hong Kong Institute of Certified Public Accountants and Mr. LEUNG Pak Keung, a member of the Law Society of Hong Kong.
(d) The registered office of the Company is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands.
(e) The principal place of business of the Company in Hong Kong is Unit 806, Level 8, Core D, Cyberport 3, 100 Cyberport Road, Hong Kong.
(f) The share registrar and transfer office of the Company in Hong Kong is Tricor Tengis Limited.
(g) The English text of this circular shall prevail over their respective Chinese text for the purpose of interpretation.

(13) DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the Company’s principal place of business in Hong Kong at Unit 806, Level 8, Core D, Cyberport 3, 100 Cyberport Road, Hong Kong during normal business hours on any weekdays, except public holidays, from the date of this circular up to and including the date of the EGM:

(a) the memorandum and articles of association of the Company;
(b) the annual reports of the Company for the years ended 31 March 2016, 2017 and 2018;
(c) the Subscription Agreements;
(d) the Supplemental Agreements;
(e) the letter from the Board as set out in this circular;
(f) the letter from the Independent Board Committee as set out in this circular;
(g) the letter from Gram Capital as set out in this circular;
(h) the written consent of the expert as referred to in the section headed “Expert and Consent” of this Appendix; and
(i) this circular.

NOTICE OF EGM

==> picture [278 x 52] intentionally omitted <==

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

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the extraordinary general meeting (the “ EGM ”) of Elife Holdings Limited (the “ Company ”) will be held at Unit 806, Level 8, Core D, Cyberport 3, 100 Cyberport Road, Hong Kong on Monday, 7 January 2019 at 2:30 p.m., for the purpose of considering and, if thought fit, passing the following resolutions:

ORDINARY RESOLUTIONS

“ THAT subject to and conditional upon the Listing Committee of The Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”) granting the listing of, and permission to deal in, the Consolidated Shares (as hereinafter defined), every two existing issued and unissued shares of HK$0.01 each in the share capital of the Company be and are hereby consolidated into one share of HK$0.02 (each a “ Consolidated Share ”) with effect from the business day immediately following the day on which this resolution is passed (the “ Share Consolidation ”) and the directors of the Company (the “ Directors ”) be authorised to issue new share certificates in respect of the Consolidated Shares to holders of issued existing shares of the Company pursuant to the Share Consolidation and to do all things and execute all documents in connection with or incidental to the Share Consolidation.”
“ THAT subject to the passing of resolution 1 as set out in the notice of the EGM,
(a) the conditional subscription agreements agreement dated 26 October 2018 (as amended and supplemented by the supplemental agreements thereto dated 15 November 2018 and 14 December 2018) (the “ Subscription Agreements ”) entered into by the Company with each of Mr. Zhang Xiaobin and Mr. Gao Feng (the “ Subscribers ”) respectively, in relation to the allotment and issue of 571,428,571 new Consolidated Shares of the Company (each a “ Subscription Shares ”) by the Company under the Specific Mandate (as defined below), a copy of which has been produced to the EGM marked “A” and signed by the Chairman for the purpose of identification, pursuant to which the Company are to allot and issue to the Subscribers the Subscription Shares at the subscription price of HK$0.21 per Subscription Share be and are hereby approved, confirmed and ratified;
(b) conditional upon, among others, the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Subscription Shares, the grant of the specific mandate to the Directors to allot and issue the Subscription Shares (the “ Specific Mandate ”) be and is hereby approved, confirmed and ratified; the Specific Mandate is in addition to, and shall not prejudice nor revoke any general or specific

NOTICE OF EGM

mandate(s) which has/have been granted or may from time to time be granted to the Directors by the shareholders of the Company prior to the passing of this resolution; and

(c) any one or more of the Directors be and is/are hereby authorised to do all such further acts and things and to sign and execute all such documents and to take all such steps which in his opinion may be necessary, appropriate, desirable or expedient to implement and/or give effects to the transactions contemplated under the Subscription Agreements.”

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

Hong Kong, 18 December 2018

Registered Office: Principal Place of Business in Cricket Square Hong Kong: Hutchins Drive Unit 806, Level 8, Core D, P.O. Box 2681 Cyberport 3, 100 Cyberport Road, Grand Cayman KY1-1111 Hong Kong Cayman Islands

Notes:

Any member entitled to attend and vote at the EGM (and any adjournment of such meeting) shall be entitled to appoint another person as his proxy to attend and vote instead of him. A member who is the holder of two or more shares of the Company may appoint more than one proxy to represent him and vote on his behalf at the EGM (and any adjournment of such meeting). A proxy need not be a member of the Company. In addition, a proxy or proxies representing either a member who is an individual or a member which is a corporation shall be entitled to exercise the same powers on behalf of the member which he or they represent as such member could exercise.
The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorised in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer, attorney or other person authorised to sign the same.
In order to be valid, the proxy form and the power of attorney or other authority (if any) under which it is signed, or a certified copy of such power of attorney or authority, must be deposited with the Company’s branch share registrar and transfer office in Hong Kong, Tricor Tengis Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, as soon as possible and in any event not less than forty-eight (48) hours before the time appointed for holding the EGM (or any adjournment of such meeting) (as the case may be) at which the person named in the instrument proposes to vote.
Completion and return of the proxy form does not preclude a member from attending and voting in person at the EGM (or any adjournment of such meeting) and, in such event, the proxy form shall be deemed to be revoked.
Where there are joint holders of any shares of the Company, any one of such joint holders may vote, either in person or by proxy, in respect of such shares as if he were solely entitled thereto; but if more than one of such joint holders are present at the EGM (and any adjournment of such meeting), the most senior will alone be entitled to vote, whether in person or by proxy. For this purpose, seniority will be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding.

AI assistant

Elife Holdings Limited — Proxy Solicitation & Information Statement 2018

49047_rns_2018-12-17_d7df622b-55dd-4413-bc1f-d21d4ed45a47.pdf

AND

(4) NOTICE OF EXTRAORDINARY GENERAL MEETING

CONTENTS

DEFINITIONS

DEFINITIONS

DEFINITIONS

DEFINITIONS

EXPECTED TIMETABLE

Event

Time and Date

Parallel trading in the Consolidated Shares

(1) CONNECTED TRANSACTION IN RELATION TO SUBSCRIPTIONS OF NEW SHARES BY THE DIRECTORS UNDER SPECIFIC MANDATE; (2) PROPOSED SHARE CONSOLIDATION; (3) PROPOSED CHANGE IN BOARD LOT SIZE AND

(4) NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

(1) SUBSCRIPTIONS OF NEW SHARES UNDER SPECIFIC MANDATE

Principal terms of the Subscription Agreements (as supplemented by the Supplemental Agreements)

Date

Parties to the Subscription Agreement A

Parties to the Subscription Agreement B

The Subscriptions

The Subscription Shares

The Subscription Price

Ranking

Conditions Precedent

Completion

Lock-up Undertakings

Specific Mandate to Issue Subscription Shares

Application for listing

Information of the Company and the Subscribers

Reasons for the Subscriptions and use of proceeds

LETTER FROM THE BOARD

Fund raising activities in the past twelve months prior to the Latest Practicable Date

LETTER FROM THE BOARD

Shareholding structures of the Company

Listing Rules Implications

Independent Board Committee and Independent Financial Adviser

(2) PROPOSED SHARE CONSOLIDATION

Conditions of the Share Consolidation

Effects of the Share Consolidation

Application for the listing of the Consolidated Shares

Fractional entitlement to Consolidated Shares following the Share Consolidation

Arrangement on odd lots trading

Exchange of share certificates

Adjustments in relation to other securities of the Company

(3) PROPOSED CHANGE IN BOARD LOT SIZE

REASONS FOR THE SHARE CONSOLIDATION AND THE CHANGE IN BOARD LOT SIZE

LETTER FROM THE BOARD

LETTER FROM THE BOARD

(4) EGM

CLOSURE OF REGISTER OF MEMBERS

RECOMMENDATION

FURTHER INFORMATION

CONNECTED TRANSACTION IN RELATION TO SUBSCRIPTIONS OF NEW SHARES BY THE DIRECTORS UNDER SPECIFIC MANDATE

Independent Board Committee of