Elife Holdings Limited — Proxy Solicitation & Information Statement 2022

Jan 7, 2022

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.

This circular appears for information only and does not constitute an invitation or offer to shareholders or any other persons to acquire, purchase, or subscribe for securities of the Company.

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

(1) PROPOSED SHARE CONSOLIDATION;

(2) PROPOSED GRANT OF NEW SHARES TO CONNECTED PERSONS UNDER THE SHARE AWARD SCHEME; AND

• (3) 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 27 of this circular. A letter from the Independent Board Committee is set out on pages 28 to 29 of this circular. A letter from Draco Capital containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 30 to 42 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 Tuesday, 25 January 2022 at 11:00 a.m., is set out on pages 50 to 53 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 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong, or via the designated URL (https://spot-emeeting.tricor.hk) by using the username and password provided on the notification letter sent by the Company 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.

MEASURES TAKEN IN LIGHT OF 2019 NOVEL CORONAVIRUS (‘‘COVID-19’’)

Please see page ii of this circular for measures being taken to try to prevent and control the spread of the COVID-19 at the EGM, including:

• compulsory temperature check and health declaration (which may also be used for the purposes of contact tracing if required)

• compulsory wearing of surgical face mask • no serving of refreshments at the EGM

Any person who does not comply with the precautionary measures or who has a fever or exhibits flu-like symptoms may be denied entry into the EGM venue. The Company reminds the Shareholders that they may appoint the Chairman of the meeting as their proxy to vote on the relevant resolutions at the EGM as an alternative to attending the EGM in person.

10 January 2022

CONTENTS

	Page
PRECAUTIONARY MEASURES FOR THE EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	ii
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
EXPECTED TIMETABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . .	28
LETTER FROM THE INDEPENDENT FINANCIAL ADVISER . . . . . . . . . . . . . . . . . . . . . . . . . .	30
APPENDIX – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	43
NOTICE OF EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	50

i

PRECAUTIONARY MEASURES FOR THE EGM

In view of the ongoing COVID-19 situation, the Company reserves the right to take the following precautionary measures as may be appropriate at the EGM:

• All attendees will be required to undergo a temperature check and sign a health declaration form (which may also be used for the purposes of contact tracing if required) before entering the EGM venue

• Compulsory wearing of surgical face masks by attendees inside the EGM venue at all times, and to maintain a safe distance between seats

• Any person who has a fever will not be permitted to attend the EGM

• Any person who is subject to the Hong Kong Government’s prescribed quarantine requirement, or has any flu-like symptoms, or has travelled outside of Hong Kong within 21 days immediately before the EGM (‘‘recent travel history’’) unless exempted by the authorities of the Hong Kong Government (as per guidelines issued by the Hong Kong government at www.chp.gov.hk/en/features/102742.html), or has close contact with any person under quarantine or with recent travel history, will be denied entry into the EGM venue or be required to promptly leave the EGM venue

• No refreshments will be served at the EGM

The Shareholders who are feeling unwell or have been placed on leave of absence on the date of the EGM are advised not to attend the EGM.

Although webcast, teleconferencing or videoconferencing of the EGM will not be made available, the Shareholders who prefer not to attend or are restricted from attending the EGM, may still vote by proxy and are advised to take note of the last date and time for the lodgement of the proxy form.

As the COVID-19 situation continues to evolve, the Company will closely monitor the situation and reserves the right to take further measures as appropriate in order to minimise any risk to the Shareholders and others attending the EGM and to comply with any requirements or recommendations of any government agencies from time to time.

The Company seeks the understanding and cooperation of all Shareholders to minimise the risk of community spread of COVID-19.

The EGM will commence sharply at 11:00 a.m., and the Shareholders are encouraged to arrive at the EGM venue at least half an hour prior to the commencement time of the meeting to avoid delays from precautionary measures mentioned above in the registration process.

ii

DEFINITIONS

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

• ‘‘2021 AGM’’

• the annual general meeting of the Company held on 23 September 2021

• ‘‘Awarded Shares’’

• an aggregate of 13,600,000 Consolidated Shares proposed to be allotted and issued as new Shares by the Company pursuant to the Share Award Scheme

• ‘‘Board’’ the board of Directors

• ‘‘Business Day(s)’’

• a day (excluding Saturday or Sunday) and any day on which a tropical cyclone warning No. 8 or above is hoisted or remains hoisted or a ‘‘black’’ rainstorm warning signal is hoisted or remains in effect between 9:00 a.m. and 5:00 p.m. on which licensed banks in Hong Kong and the PRC are generally open for business

• ‘‘CCASS’’

• Central Clearing and Settlement System, a securities settlement system used within the Hong Kong Exchanges and Clearing Limited market system

• ‘‘CCASS Operational Procedures’’

• the Operational Procedures of HKSCC in relation to CCASS, containing the practices, procedures and administrative requirements relating to operations and functions of CCASS, as from time to time

• ‘‘Company’’

• Elife Holdings Limited, a company incorporated in the Cayman Islands with limited liability, and the Shares of which are listed on the Main Board of the Stock Exchange (stock code: 223)

• ‘‘Connected Awarded Shares’’

• an aggregate of 13,000,000 Consolidated Shares which are proposed to be awarded to the Connected Selected Participants

• ‘‘connected person(s)’’

• has the meaning ascribed to it under the Listing Rules

• ‘‘Connected New Shares Grant’’

• the grant of the Connected Awarded Shares to the Connected Selected Participants

• ‘‘Connected Selected Participants’’

• Selected Participants who are directors of certain subsidiary(ies) of the Company, being connected persons of the Company

• ‘‘Consolidated Share(s)’’

• ordinary share(s) of HK$0.1 each in the share capital of the Company upon the Share Consolidation becoming effective

• ‘‘Director(s)’’

• the director(s) of the Company

1

DEFINITIONS

• ‘‘EGM’’

• ‘‘Eligible Participant’’

• ‘‘Excluded Participant’’

• ‘‘Existing Share(s)’’ or ‘‘Share(s)’’

• ‘‘General Rules of CCASS’’

• ‘‘HKSCC’’

• ‘‘HK$’’

• ‘‘Hong Kong’’

• ‘‘Independent Board Committee’’

• the extraordinary general meeting of the Company to be convened at Unit 806, Level 8, Core D, Cyberport 3, 100 Cyberport Road, Hong Kong on Tuesday, 25 January 2022 at 11:00 a.m. to consider and if thought fit, approve the Share Consolidation and the Connected New Shares Grant

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

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

• ordinary share(s) of HK$0.02 each in the share capital of the Company prior to the Share Consolidation becoming effective

• 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

• Hong Kong Securities Clearing Company Limited

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

• the Hong Kong Special Administrative Region of the People’s Republic of China

• the independent committee of the Board which comprises all of the 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 allotment and issue of the Connected Awarded Shares and the transactions contemplated thereunder

2

DEFINITIONS

• ‘‘Independent Financial Adviser’’ or Draco Capital Limited, a licensed corporation to carry out Type 6 ‘‘Draco 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 Connected New Shares Grant

• ‘‘Independent Shareholder(s)’’

• Shareholder(s) other than the Connected Selected Participants and their associates who are required to abstain from voting at the EGM

• ‘‘Joint Venture Group’’

• the group of companies comprising Century Smart Group Limited, Smart Challenger Global Limited, Elife International Trading Limited and Yiansheng International Trading (Yangzhou) Co., Ltd. (易安生國際貿易(揚州)有限公司) which are indirect non wholly-owned subsidiaries of the Company

• ‘‘Latest Practicable Date’’

• 6 January 2022, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained herein

• ‘‘Listing Rules’’

• the Rules Governing the Listing of Securities on the Stock Exchange

• ‘‘Other Awarded Shares’’

• an aggregate of 600,000 Consolidated Shares which are proposed to be awarded to the Other Selected Participants

• ‘‘Other Selected Participants’’

• Selected Participants who are not connected persons of the Company and are employees of the Company

• ‘‘Registrar’’

• the Hong Kong branch share registrar of the Company, being Tricor Tengis Limited as at the date of this circular

• ‘‘Remuneration Committee’’

• the remuneration committee of the Company

• ‘‘Scheme Mandate’’

• a mandate granted to the Directors at the 2021 AGM to allot and issue up to 10% of the total number of issued Shares as at the date of passing such resolution, in connection with the Share Award Scheme

• ‘‘Selected Participant’’

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

• ‘‘SFO’’

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

• ‘‘Share Award Scheme’’

• the share award scheme of the Company adopted by the Shareholders on 27 June 2017

3

DEFINITIONS

• ‘‘Share Option Scheme’’

the share option scheme of the Company adopted by the Shareholders on 23 September 2021

‘‘Shareholder(s)’’ the holder(s) of the issued Share(s)

‘‘Share Consolidation’’ the proposed consolidation of every five (5) issued and unissued Existing Shares into one (1) Consolidated Share

‘‘Stock Exchange’’ The Stock Exchange of Hong Kong Limited

4

EXPECTED TIMETABLE

The expected timetable for the Share Consolidation 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

Latest date and time for lodging transfer documents
in order to qualify for attending and voting at the EGM	. . . . . . . . . . . . . 4:30 p.m. on Wednesday,
		19 January 2022
Closure of the register of members of the Company . . . .	. . . . . . . . . . Thursday, 20 January 2022 to
	Tuesday, 25 January 2022
		(both days inclusive)
Latest time for lodging the proxy form for the EGM . . .	. . . . . . . . . . . . . .	. 11:00 a.m. on Sunday,
		23 January 2022
Record date . . . . . . . . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . Tuesday, 25 January 2022
Expected date and time of the EGM . . . . . . . . . . . . .	. . . . . . . . . . . . . .	11:00 a.m. on Tuesday,
		25 January 2022
Publication of announcement on poll results of the EGM	. . . . . . . . . . . . . Tuesday, 25 January 2022
The following events are conditional on the fulfilment of the conditions for the implementation of
the Share Consolidation.
Effective date of the Share Consolidation . . . . . . . . . .	. . . . . . . . . . . . Thursday, 27 January 2022
Dealing in the Consolidated Shares commences . . . . . .	. . . . . . . . . . . . . .	9:00 a.m. on Thursday,
		27 January 2022
Original counter for trading in the Existing Shares of the Company
in board lots of 20,000 Existing Shares temporarily closes . . . . . . . . . . . .		9:00 a.m. on Thursday,
		27 January 2022
Temporary counter for trading in the Consolidated Shares
in board lots of 4,000 Consolidated Shares
(in the form of existing share certificates) opens . . . .	. . . . . . . . . . . . . .	9:00 a.m. on Thursday,
		27 January 2022
First day of free exchange of existing share certificates
for new share certificates for the Consolidated Shares .	. . . . . . . . . . . . Thursday, 27 January 2022

5

EXPECTED TIMETABLE

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,
		15 February 2022
Parallel trading in the Consolidated Shares (in the form of
new share certificates and existing share certificates) commences . . .	. . . . .	. 9:00 a.m. on Tuesday,
		15 February 2022
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,
		15 February 2022
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 Monday,
		7 March 2022
Temporary counter for trading in board lots of 4,000 Consolidated Shares
(in the form of existing share certificates) closes . . . . . . . . . . . . .	. . . . .	. 4:10 p.m. on Monday,
		7 March 2022
Parallel trading in the Consolidated Shares (in the form of new share
certificates and existing share certificates) ends . . . . . . . . . . . . .	. . . . .	. 4:10 p.m. on Monday,
		7 March 2022
Last day for free exchange of existing share certificates for new share
certificates for the Consolidated Shares . . . . . . . . . . . . . . . . . .	. . . Wednesday, 9 March 2022

6

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)

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

10 January 2022

To the Shareholders

Dear Sir or Madam,

(1) PROPOSED SHARE CONSOLIDATION;

(2) PROPOSED GRANT OF NEW SHARES TO CONNECTED PERSONS UNDER THE SHARE AWARD SCHEME; AND (3) NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

The Company refers to the announcement of the Company dated 9 December 2021 in relation to, among other things, the proposed Share Consolidation and the proposed issue of new Shares under the Share Award Scheme. The purpose of this circular is to provide you with, among other things, (i) details in relation to the Share Consolidation; (ii) details of the Connected New Shares Grant; (iii) a letter of advice from the Independent Board Committee to the Independent Shareholders; (iv) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in relation to the Connected New Shares Grant; (v) the notice of the EGM; and (ix) other information of the Group.

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

7

LETTER FROM THE BOARD

(1) PROPOSED SHARE CONSOLIDATION

The Board proposes to implement the Share Consolidation on the basis that every five (5) 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 date of this circular, the authorised share capital of the Company is HK$300,000,000 divided into 15,000,000,000 Existing Shares with par value of HK$0.02 each, of which 3,324,643,562 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 3,000,000,000 Consolidated Shares with par value of HK$0.1 each, of which 664,928,712 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.

No change in board lot size

The Existing Shares are currently traded on the Stock Exchange in board lot size of 20,000 Shares. Upon the Share Consolidation becoming effective, the board lot size for trading in the Consolidated Shares will remain unchanged at 20,000 Consolidated Shares per board lot. Based on the closing price of HK$0.037 per Existing Share (equivalent to the theoretical closing price of HK$0.185 per Consolidated Share) as at the Latest Practicable Date, (i) the value per board lot of 20,000 Existing Shares is HK$740; and (ii) the value per board lot of 20,000 Consolidated Shares would be HK$3,700 on the assumption that the Share Consolidation becomes effective.

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.

8

LETTER FROM THE BOARD

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 is listed, or dealt in, on 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. Other than the Stock Exchange, no equity or debt securities of the Company are listed, or dealt in, on any other stock exchange on which listing or permission to deal is being or is proposed to be sought.

OTHER ARRANGEMENTS

Fractional entitlement to the 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 will appoint a securities firm as an 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.

Shareholders who wish to take advantage of this facility either to dispose of their odd lots of the Consolidated Shares or top up to a full board lot may, directly or through their brokers, contact Mr. Li of DL Securities (HK) Limited at Unit 2801, Vertical Square, 28 Heung Yip Road, Wong Chuk Hang, Hong Kong or by phone at (852) 3575 8788 during office hours from 9:00 a.m. on Tuesday, 15 February 2022 to 4:00 p.m. on Monday, 7 March 2022. 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. Shareholders who are in any doubt about the odd lots matching arrangement are recommended to consult their own professional advisers.

Exchange of share certificates

Subject to the Share Consolidation becoming effective, which is currently expected to be on Thursday, 27 January 2022, being one clear 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 Thursday, 27 January 2022 to Wednesday, 9 March 2022 (both days inclusive), submit share certificates for the Existing Shares (in yellow 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 blue colour) at the expense of the Company.

9

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 Monday, 7 March 2022, trading will only be in Consolidated Shares which share certificates will be issued in blue colour. Existing share certificates in yellow 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, save for the 242,860,000 outstanding share options (including share options granted but not yet vested) under the share option scheme of the Company adopted on 8 October 2010 and terminated on 23 September 2021, the Company has no outstanding options, warrants or other securities in issue which are convertible into or giving rights to subscribe for, convert or exchange into, any Existing Shares or Consolidated Shares, as the case may be. The Company adopted the new Share Option Scheme on 23 September 2021 but has not granted any share options thereunder as at the Latest Practicable Date.

Pursuant to the terms and conditions of the share option scheme adopted on 8 October 2010 and amended on 17 August 2017 and the Listing Rules, the exercise price and the number of the outstanding share options granted under the share option scheme will be adjusted in the following manner with effect from 27 January 2022, being the effective date of the Share Consolidation:

				Immediately after	Immediately after	the Share
	As at the			Consolidation becoming
	Latest Practicable		Date	effective
	Number of			Number of
	Existing			Consolidated
	Shares to be	Exercise price		Shares to be	Exercise price
	issued upon		per	issued upon		per
	exercise of the		Existing	exercise of the	Consolidated
Date of grant	share options		Share	share options		Share
27 June 2017	24,460,000		HK$0.42	4,892,000		HK$2.10
21 January 2020	218,400,000		HK$0.11	43,680,000		HK$0.55

Save as disclosed above, the Company had no other outstanding convertible securities, options, warrants or other similar rights in issue which may confer any right to subscribe for, convert or exchange into Shares as at the Latest Practicable Date. The Company also has no intention to issue or grant any convertible securities, options or warrants in issue which confer any right to subscribe for, convert or exchange into Shares on or before the effective date.

10

LETTER FROM THE BOARD

REASONS FOR THE SHARE CONSOLIDATION

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 addition, as disclosed in the announcement of the Company dated 15 September 2021, the Stock Exchange reminded the Company in its listing approval dated 9 September 2021 that it would not consider approving listing application on any future fund raising of the Company if the share price of the Company is close to the extremity of HK$0.01, and that should the Company decide to conduct any equity fund raising in the future and the share price continues trading below HK$0.1, the Company might need to carry out corporate actions including but not limited to share consolidation and/or change in board lot size. The ‘‘Guide on Trading Arrangements for Selected Types of Corporate Actions’’ issued by the Hong Kong Exchanges and Clearing Limited on 28 November 2008 and updated on 1 October 2020 further states that (i) market price of the Shares at a level less than HK$0.1 will be considered as approaching the extremities of HK$0.01 as referred to Rule 13.64 of the Listing Rules; and (ii) taking into account the minimum transaction costs for a securities trade, the expected board lot value with the closing price of Shares as at the Latest Practicable Date would be greater than HK$2,000. 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), the Board proposes to implement the Share Consolidation such that the Company will be able to comply with the aforesaid trading requirements of the Listing Rules.

Over the past 12 months, the existing board lot value of the Company has been constantly less than HK$2,000 and the Existing Shares have been trading at a closing price below HK$0.1. The Board considers that the proposed Share Consolidation, resulting in a theoretical value of HK$0.185 per Consolidated Share and a theoretical value of HK$3,700 per board lot (based on the closing price of HK$0.037 per Existing Share as at the Latest Practicable Date), would enable the Company to avoid the occurrence of non-compliance with the trading requirements under the Listing Rules.

The Share Consolidation will bring about a corresponding upward adjustment in the trading price per board lot of the Consolidated Shares on the Stock Exchange, which will reduce the overall transaction and handling costs of dealings in the Consolidated Shares. As a result, the Share Consolidation would not only enable the Company to comply with the trading requirements under the Listing Rules, but would also attract more investors and hence broaden the Shareholder base.

The Share Consolidation will increase the nominal value of the Shares and will reduce the total number of Shares currently in issue. It is expected that the Share Consolidation will bring about a corresponding increase in the trading price of the Consolidated Shares. Accordingly, the Board is of the view that the Share Consolidation is beneficial to and in the interests of the Company and the Shareholders as a whole.

Other than the expenses to be incurred in relation to the Share Consolidation which are expected to be insignificant in the context of the net asset value of the Company, the implementation of the Share Consolidation 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 will not have any material adverse effect on the financial position of the Group and are in the interests of the Company and the Shareholders as a whole.

As at the Latest Practicable Date, the Company had no intention to carry out other corporate actions in the next 12 months which might have an effect of undermining or negating the intended purpose of the Share Consolidation. The Company has from time to time been considering various fund-raising options available to the Group including share issue, rights issue and debt financing according to its financing needs. As at the Latest Practicable Date, the Company does not have any concrete plan regarding such fund-raising activities. However, the Board cannot rule out the possibility that the Company will conduct debt and/or equity fund raising exercises when suitable fund raising opportunities arise for future development of the Group. The Company will make further announcement in this regard in accordance with the Listing Rules as and when appropriate.

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LETTER FROM THE BOARD

(2) PROPOSED ISSUE OF NEW SHARES UNDER THE SHARE AWARD SCHEME

On 6 December 2021, based on the recommendation of the Remuneration Committee, the Board resolved to, subject to the completion of the Share Consolidation and approval of the Independent Shareholders (where necessary), award an aggregate of 13,600,000 Awarded Shares, representing approximately 2.05% of the total number of issued Shares immediately after the Share Consolidation has become effective and before the issue of the Awarded Shares and approximately 2% of the total number of Shares in issue as enlarged by the allotment and issue of the Awarded Shares, to 7 Selected Participants under the Share Award Scheme by way of allotment and issue of new Shares.

Among the 13,600,000 Awarded Shares:

• (a) the 13,000,000 Connected Awarded Shares will be awarded to 5 Connected Selected Participants; and

• (b) the 600,000 Other Awarded Shares will be awarded to 2 Other Selected Participants.

Award to the Connected Selected Participants

As the 5 Connected Selected Participants are connected persons of the Company, the allotment and issue of the Connected Awarded Shares to the Connected Selected Participants under the Share Award Scheme shall constitute connected transactions of the Company under Chapter 14A of the Listing Rules. The allotment and issue of the Connected Awarded Shares shall be subject to, among others, the approval by the Independent Shareholders at the EGM. As no Director is a grantee, none of the Directors was required to abstain from voting on the Board resolution(s) approving the grant of the Awarded Shares.

The Connected Awarded Shares are proposed to be granted to the following connected persons of the Company:

			Approximate
			percentage of the
			total issued Shares
		Number of	(after Share
		Connected	Consolidation) as	Market value
		Awarded Shares	at the Latest	(as at the Latest
Name of Connected		(after Share	Practicable Date	Practicable Date)
Selected Participants	Relationship with the Group	Consolidation)	(%)	(HK$)
Mr. Zhu Qian	A director of each of three subsidiaries of the	5,800,000	0.87	1,073,000
	Company, including Century Smart Group
	Limited, Smart Challenger Global Limited and
	Elife International Trading Limited; a general
	manager of Yiansheng International Trading
	(Yangzhou) Co., Ltd., a subsidiary of the
	Company; a substantial shareholder of two
	subsidiaries of the Company, including holding
	49% of the shareholding interests of each of
	Century Smart Group Limited and Smart
	Challenger Global Limited. (Note: Each of
	Century Smart Group Limited, Smart
	Challenger Global Limited, Elife International
	Trading Limited and Yiansheng International
	Trading (Yangzhou) Co., Ltd. is a member of
	the Joint Venture Group.)

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LETTER FROM THE BOARD

			Approximate
			percentage of the
			total issued Shares
		Number of	(after Share
		Connected	Consolidation) as	Market value
		Awarded Shares	at the Latest	(as at the Latest
Name of Connected		(after Share	Practicable Date	Practicable Date)
Selected Participants	Relationship with the Group	Consolidation)	(%)	(HK$)
Mr. Zhang Shaoyan	Chief investment officer and a director of	5,400,000	0.81	999,000
	Yiansheng International Trading (Yangzhou)
	Co., Ltd., a subsidiary of the Company and a
	member of the Joint Venture Group
Mr. Jing Bingkun	Head of operations in the PRC; a director and	600,000	0.09	111,000
	legal representative of certain subsidiaries of
	the Company (including but not limited to
	Yiansheng International Trading (Yangzhou)
	Co., Ltd.)
Mr. Chow Chi Fai	Financial controller and company secretary of the	600,000	0.09	111,000
	Company and a director of certain subsidiaries
	of the Company (including but not limited to
	Century Smart Group Limited, Smart
	Challenger Global Limited and Elife
	International Trading Limited, all being
	members of the Joint Venture Group)
Ms. Lau Yat Ning	Operation director of the Company and a director	600,000	0.09	111,000
	of certain subsidiary(ies) of the Company

Vesting

The Connected Awarded Shares proposed to be granted to Mr. Zhu Qian and Mr. Zhang Shaoyan will be vested in four tranches as follows:

• (1) 25% of the Connected Awarded Shares will be vested on the date of grant;

• (2) 25% of the Connected Awarded Shares will be vested on the 90th day after the date of grant;

• (3) 25% of the Connected Awarded Shares will be vested on the 180th day after the date of grant;

• (4) 25% of the Connected Awarded Shares will be vested on the 270th day after the date of grant.

For the Connected Awarded Shares proposed to be granted to the other 3 Connected Selected Participants, all such Connected Awarded Shares will be vested on the date of grant.

For the reasons that (i) Mr. Jing Bingkun, Mr. Chow Chi Fai and Ms. Lau Yat Ning are long-term employees of the Group and each of them has worked for the Group for more than 5 years, 11 years and 11 years, respectively; (ii) Mr. Jing Bingkun, Mr. Chow Chi Fai and Ms. Lau Yat Ning have exceeded performance expectation for a number of years; (iii) some of them have taken a downward salary adjustment due to the outbreak of COVID-19 pandemic (as detailed in the announcement of the Company dated 4 March 2020); and (iv) the Board considered that the Connected Awarded Shares should be granted to them in place of a bonus payment which would allow the Group to reserve its cash for other uses, the Remuneration Committee and the Board are of the view that the Connected Awarded Shares proposed to be granted to them being vested immediately is appropriate in the circumstances.

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LETTER FROM THE BOARD

As the Share Award Scheme’s purposes are, among others, to recognise employees’ contributions to the Group and to provide them with incentives in order to retain them for the continual operation and development of the Group, by issuing the Connected Awarded Shares to Mr. Jing Bingkun, Mr. Chow Chi Fai and Ms. Lau Yat Ning, their commitment in working for the Group in the long term and their contributions are confirmed and recognised by the Directors and their contribution in achieving the increase in revenue of the Group and commitment in working for the Company in the long term are awarded with the Connected Awarded Shares. In addition, as they have become Shareholders, their performance will also be reflected in the share price of the Company which will align their interest with that of the Company and incentivise them to continue to exceed their respective performance expectations. Considering the fact that Mr. Jing Bingkun, Mr. Chow Chi Fai and Ms. Lau Yat Ning are granted the Connected Awarded Shares mainly as a reward for their past outstanding performances and contributions to the success of the Group in recent years, the Connected Awarded Shares proposed to be granted to them are not subject to fulfillment of any performance target and will be vested on the date of grant.

Lapse

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

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

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

Award to the Other Selected Participants

The Other Awarded Shares are proposed to be granted to the 2 Other Selected Participants, who are both employees of the Company but not directors nor chief executive of the Group. The Other Awarded Shares shall be allotted and issued at par pursuant to the Scheme Mandate granted by the Shareholders at the 2021 AGM and the terms of the Share Award Scheme. All of the Other Awarded Shares will be vested in the Other Selected Participants on the date of grant.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, the Other Selected Participants are not connected persons of the Company.

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LETTER FROM THE BOARD

Conditions

The allotment and issue of the Connected Awarded Shares to the Connected Selected Participants shall be subject to:

• (a) the grant of the listing approval by the Stock Exchange for the listing of, and permission to deal in, the Connected Awarded Shares;

• (b) the approval by the Independent Shareholders at the EGM for the allotment and issue of the Connected Awarded Shares; and

• (c) upon the Share Consolidation becoming effective and dealings in the Consolidated Shares have commenced.

As at the Latest Practicable Date, condition (a) had been fulfilled.

The allotment and issue of the Other Awarded Shares to the Other Selected Participants shall be subject to:

• (a) the grant of the listing approval by the Stock Exchange for the allotment and issue of the Other Awarded Shares; and

• (b) upon the Share Consolidation becoming effective and dealings in the Consolidated Shares have commenced.

As at the Latest Practicable Date, condition (a) had been fulfilled.

Application for listing

An application was made by the Company to the Listing Committee of the Stock Exchange for the granting of the listing of, and permission to deal in, 332,464,356 Shares which may be allotted and issued pursuant to the Scheme Mandate granted by the Shareholders at the 2021 AGM, representing 10% of the Shares in issue as at the date of the 2021 AGM. Such application has been granted by the Stock Exchange. The Connected Awarded Shares and the Other Awarded Shares will be allotted and issued pursuant to the Scheme Mandate.

Further details of the Awarded Shares

Further information in relation to the allotment and issue of the 13,600,000 Awarded Shares to the Selected Participants is set out below:

Securities to be issued:

An aggregate of 13,600,000 Consolidated Shares, comprising (i) 13,000,000 Connected Awarded Shares to be allotted and issued to the Connected Selected Participants and (ii) 600,000 Other Awarded Shares to be allotted and issued to the Other Selected Participants.

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LETTER FROM THE BOARD

• Percentage of Awarded Shares in the share capital of the Company:

• The aggregate of 13,600,000 Awarded Shares (equivalent to 68,000,000 Existing Shares) to be allotted and issued by the Company to the Selected Participants represent approximately 2.05% of the total number of Shares in issue as at the date of this circular and approximately 2% of the total number of Shares in issue as enlarged by the allotment and issue of the Awarded Shares.

• Market value of Awarded Shares:

• Based on the closing price of HK$0.037 per Share as quoted on the Stock Exchange as at the Latest Practicable Date, the market values of the Connected Awarded Shares and the Other Awarded Shares are HK$2,405,000 and HK$111,000, respectively. Based on the closing price of HK$0.05 per Share as quoted on the Stock Exchange as at the date of the announcement dated 9 December 2021, the market values of the Connected Awarded Shares and the Other Awarded Shares are HK$3,250,000 and HK$150,000, respectively.

• Status of Awarded Shares:

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

Funds to be raised:

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

• Identity of the allottees: The Awarded Shares will be allotted and issued directly to the Selected Participants.

• Market price of the Existing Shares:

• The closing price of the Existing Shares on the Latest Practicable Date as quoted on the Stock Exchange is HK$0.037 per Existing Share.

• The average closing price of the Existing Shares for the five consecutive trading days immediately preceding the Latest Practicable Date as quoted on the Stock Exchange was HK$0.0402 per Existing Share.

Contributions made by the Selected Participants

A number of the Connected Selected Participants, namely, Mr. Zhu Qian, Mr. Zhang Shaoyan and Mr. Jing Bingkun, are directors and/or senior management of the Joint Venture Group engaging in daily cleaning, anti-epidemic and other consumable products business. The Joint Venture Group has achieved performance targets successfully and has contributed to the increase of revenue of the Group. For the six months ended 30 September 2021, the Joint Venture Group recorded unaudited turnover of approximately

16

LETTER FROM THE BOARD

HK$62.6 million and achieved net profit after tax of approximately HK$10.7 million, representing an increase of 6 times and 3.5 times when compared to the unaudited turnover and net profit recorded for the six months ended 30 September 2020, respectively.

Amidst the contributions of the management of the Joint Venture Group, the Joint Venture Group, the Company and its other subsidiaries have not paid any salary, any dividend nor other kinds of emoluments to Mr. Zhu Qian. In addition, Mr. Zhang Shaoyan only received his regular monthly salary. In this regard, the Board proposes to grant the Awarded Shares to the said Connected Selected Participants, considering that it would recognise the continuous support of the relevant directors and senior management to the Group and their effort in promoting the Group’s long-term growth and development. Given that Mr. Zhu Qian holds 49% of the shareholding interests in each of Century Smart Group Limited and Smart Challenger Global Limited, he could through such interests benefit from the performance of the Joint Venture Group in the future. None of the other Connected Selected Participants has any interests in the Joint Venture Group.

The Group’s expansion into the daily cleaning, anti-epidemic and other consumable products business enables the Group to increase its revenue and profit through a new stream of revenue. As such, the contributions made by the new management have not only enhanced the short-term profitability and growth potentials but have also repositioned the Group in rapid expansion when the economy is impacted by the COVID-19 pandemic. Leveraging their professional expertise, solid experience and business network, the new management has significantly contributed to a series of major developments in connection with the Group’s new business development in the daily cleaning, anti-epidemic and other consumable products market. The Board is of the view that the grant of the Awarded Shares to the new management is justifiable having considered their contributions to the Group’s long-term competitiveness and growth potentials.

Two of the Connected Selected Participants and the two Other Selected Participants have served the Company in the Investment, Finance and Administration departments for more than 10 years and most of them did not have salary increment. Some of them also accepted downward adjustments to their salary in response to the challenging and tough time of the Company. In light of their contributions to the Group’s development in recent years, the Board considers it appropriate to reward them for their continuous support to the Group by way of granting the Awarded Shares.

Further, the Board considers that there will not be any actual cash outflow by the Group under the award of the Awarded Shares to provide incentives to the relevant Selected Participants. The Board considers that the award of the Awarded Shares to the relevant Selected Participants is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

The roles and responsibilities of the Connected Selected Participants in the Group (including the Joint Venture Group) are set out as follows:

Name of
Connected
Selected		Year of
Participants	Position	service	Responsibilities
		(approximately)
Mr. Zhu Qian	A director of each of	1.5 years	Responsible for the business
	three subsidiaries of		development of the main PRC
	the Company,		operating subsidiary of the Joint
	including Century		Venture Group, identifying and
	Smart Group Limited,		evaluating suitable business
	Smart Challenger		opportunities and conducting
	Global Limited and		business negotiations with business
	Elife International		partners.
	Trading Limited; a
	general manager of
	Yiansheng
	International Trading
	(Yangzhou) Co., Ltd.,
	a subsidiary of the
	Company
Mr. Zhang Shaoyan	Chief investment officer	3 years	Responsible for the business
	and a director of		development of the Group’s
	Yiansheng		domestic and overseas investment,
	International Trading		financing and mergers and
	(Yangzhou) Co., Ltd.,		acquisitions and other related
	a subsidiary of the		businesses, identifying and
	Company and a		evaluating suitable investment
	member of the Joint		opportunities, and supervising the
	Venture Group		business operations of the Joint
			Venture Group.
Mr. Jing Bingkun	Head of operations in the	5 years	Responsible for organizing,
	PRC; a director and		planning, promoting the
	legal representative of		implementation of the Group’s
	certain subsidiary(ies)		operational strategies and processes,
	of the Company		and achieving the operational goals,
	(including but not		and overall management of the
	limited to being a		business operations of certain
	director of Yiansheng		subsidiaries of the Group.
	International Trading
	Yangzhou) Co., Ltd., a
	member of the Joint
	Venture Group)

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LETTER FROM THE BOARD

Name of
Connected
Selected
Participants	Position	Year of service	Responsibilities
		(approximately)
Mr. Chow Chi Fai	Financial controller and	11 years	Responsible for supervising the
	company secretary of		financial and accounting functions
	the Company and a		of the entire Group, including the
	director of certain		Joint Venture Group, as well as
	subsidiaries of the		company secretarial matters;
	Company (including		ensuring proper accounting
	but not limited to		processes are carried out;
	Century Smart Group		supervising and managing financial
	Limited, Smart		reporting systems, internal control
	Challenger Global		and cash management functions; as
	Limited and Elife		well as corporate governance and
	International Trading		regulatory compliance matters.
	Limited, all being
	members of the Joint
	Venture Group)
Ms. Lau Yat Ning	Operation director of the	11 years	Responsible for supervising the
	Company and a		daily operations of the Group,
	director of certain		resource allocation, risk control and
	subsidiary(ies) of the		human resource management,
	Company		supervising business operations of a
			number of subsidiaries of the
			Company.

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

Identity of
Other Selected
Participants	Position	Year of service	Responsibilities
		(approximately)
Employee A	Financial manager of	10 years	Responsible for the Group’s
	the Group		consolidated financial
			statements, annual audits,
			interim reports, cash flow
			control, secretarial services for
			each subsidiary and assisting in
			monitoring the Group’s internal
			control policies
Employee B	Senior project and	13 years	Responsible for the
	administration		administration and human
	officer		resources management of the
			Group

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LETTER FROM THE BOARD

Remuneration policy

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

Due to the Group’s business expansion into the daily cleaning, anti-epidemic and other consumable products business, which is dependent on having a stable core management team with sufficient market experience and to encourage and retain key employees including senior management and executive Directors to commit in the long-term to the Company’s growth and development and achieving the objectives of increasing the value of the Company, the Board considered other remuneration package structure as compared to the Share Award Scheme and considered that it is a preferred option as there will not be any actual cash outflow by the Group under the Award(s) and the Group can better utilise the cash flow for the development of its daily consumer goods trading business. The Awarded Shares serve as an important incentive to the Selected Participants to achieve higher return to the Company, which in turn achieves the objectives of increasing the value of the Company and creating higher value to the Shareholders as a whole. The amount of the Awarded Shares granted to each Selected Participant reflects the value and benefits that he or she has brought or will bring to the Group through his or her qualifications, professional expertise, solid experience and business network. In light of the aforesaid and as disclosed in the paragraph headed ‘‘Contributions made by the Selected Participants’’ above, the Board considers that (i) the Awards to the Selected Participants are justifiable and in line with the Company’s remuneration policy; and (ii) the benefits to the Group shall offset the dilution impact of the Awarded Shares.

In addition, the Board notes that it is not exceptional for listed companies in Hong Kong to adopt share-based compensation (including share option scheme and/or share award scheme) for their core management team and employees. Recently, there is an increasing trend for Hong Kong listed companies adopting both share option scheme and share award scheme (with structure and terms thereof similar to the Share Award Scheme) to provide flexibility in rewarding and providing incentives to their key personnel. Some of such companies include Ocumension Therapeutics (stock code: 1477), Goldstream Investment Limited (stock code: 1328), Homeland Interactive Technology Ltd. (stock code: 3798), Concord New Energy Group Limited (stock code: 182) and China ITS (Holdings) Co., Ltd. (stock code: 1900). As such, the Board considers that the grant of the Awarded Shares to the Selected Participants as part of their remuneration package is in line with the market practice.

The Board made reference to the individual limit of a participant under the Share Award Scheme in any 12-month period (1% of the issued share capital of the Company as at the date of refreshment of the scheme limit), which is the same as the maximum entitlement of each participant under the scheme rules of the share option scheme and as required in Chapter 17 of the Listing Rules, and treated it as a reference point when determining the number of Awarded Shares to be granted to each of the Selected Participants. Considering the key roles of the three directors of the subsidiaries of the Joint Venture Group in the overall strategic, operational planning and management of the Joint Venture Group and/or their past significant contribution to the development of the Group, and the amount of profit and revenue they have brought to the Group, their executive functions in the Company and its subsidiaries, Awarded

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LETTER FROM THE BOARD

Shares representing a total of 1.96% of the number of issued Shares (and 1.92% after enlargement of the total number of issued Shares due to the allotment and issue of the Connected Awarded Shares) were granted to all of the Connected Selected Participants. For the rest of the Selected Participants, the number of Awarded Shares granted to each of them was determined with reference to the his/her roles and responsibilities, year of service and their performance and/or contribution to the Group.

Based on the closing price of the Shares on 9 December 2021 (being the date of the announcement of the Company in relation to the grant of the Awarded Shares) of HK$0.05 or that on the Latest Practicable Date of HK$0.037 per Share, the total cost of issuance of the Awarded Shares was HK$3.4 million (as at 9 December 2021) or HK$2.516 million (as at the Latest Practicable Date), each as calculated by multiplying the share price with the number of Awarded Shares to be issued after the Share Consolidation has become effective. The Board considers that the cost of granting the Awarded Shares as part of the remuneration package of the respective directors and senior management is justifiable and in line with the remuneration policy taking into account the following factors: (i) the Joint Venture Group achieved improvement in its financial performance as evidenced by the increase in its unaudited turnover and net profit recorded in the six months ended 30 September 2021, which was contributed by the effort of some of the Connected Selected Participants; (ii) the other Connected Selected Participants and the Other Selected Participants have worked for the Group for more than ten years, contributing to the Group’s development in recent years; (iii) grant of the Awarded Shares as opposed to cash bonus payment can reserve cash for the Group’s other uses; and (iv) the amount of the Awarded Shares granted to each Selected Participant reflects the value and benefits to the Group considering his/her role and contribution to the strategic and sustainable development of the Group.

Fund raising activities in the past twelve months

	Description of			Actual use of net
Date of	fund	Net proceeds	Intended use of net	proceeds as at the date
announcement	raising activity	raised	proceeds	of this circular
15 December 2020	Partial completion	Approximately	For general working	For general working
	of the subscription	HK$20,980,000	capital to maintain the	capital purpose of
	of new Shares by		Group’s daily	approximately
	Mr. Gao Feng, the		operations and	HK$20,980,000
	vice chairman of		funding for
	the Board and an		developing the daily
	executive Director		consumer goods
	under specific		trading business of
	mandate		the Group

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LETTER FROM THE BOARD

	Description of			Actual use of net
Date of	fund	Net proceeds	Intended use of net	proceeds as at the date
announcement	raising activity	raised	proceeds	of this circular
31 March 2021	Partial completion	Approximately	For general working	For general working
	of the subscription	HK$3,500,000	capital to maintain the	capital purpose of
	of new Shares by		Group’s daily	approximately
	Mr. Gao Feng, the		operations and	HK$3,500,000
	vice chairman of		funding for
	the Board and an		developing the daily
	executive Director		consumer goods
	under specific		trading business of
	mandate		the Group
19 July 2021	Subscription for	Approximately	To satisfy the	For general working
	new Shares by	HK$7,700,000	working capital	capital purpose of
	Mr. Zhu Qian,		requirements of the	approximately
	a substantial		Group, including the	HK$7,700,000
	shareholder of two		working capital to
	subsidiaries of the		maintain the Group’s
	Company and a		daily operations and
	connected person		funding for
	of the Company at		developing the
	subsidiary level,		businesses of the
	under specific		Group.
	mandate

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LETTER FROM THE BOARD

Effects on the shareholding structure of the Company

As at the Latest Practicable Date, the Company had 3,324,643,562 Shares in issue. Assuming there are no other changes to the issued share capital of the Company, set out below is the shareholding structure of the Company (i) as at the Latest Practicable Date; (ii) immediately after the Share Consolidation has become effective; (iii) immediately after the allotment and issue and full vesting of the Connected Awarded Shares and Other Awarded Shares:

					Immediately after the	Immediately after the
					allotment and issue and full
			Immediately after the Share		vesting of the Connected
	As at the Latest	Practicable	Consolidation has become		Awarded Shares and the
	Date		effective		Other Awarded Shares
		Approximate		Approximate		Approximate
	No. of	%	No. of	%	No. of	%
	Existing		Consolidated		Consolidated
	Shares		Shares		Shares
Substantial Shareholders
Ms. Liu Qiuhua	358,817,000	10.79%	71,763,400	10.79%	71,763,400	10.58%
Directors
Mr. Zhang Xiaobin	95,651,489	2.88%	19,130,298	2.88%	19,130,298	2.82%
Mr. Gao Feng (Note)	162,757,531	4.90%	32,551,506	4.90%	32,551,506	4.80%
Mr. Chiu Sui Keung	28,271,000	0.85%	5,654,200	0.85%	5,654,200	0.83%
Mr. Cheng Wing Keung, Raymond	2,041,000	0.06%	408,200	0.06%	408,200	0.06%
Mr. Lam Williamson	2,181,000	0.07%	436,200	0.07%	436,200	0.06%
Mr. Wong Hoi Kuen	2,181,000	0.07%	436,200	0.07%	436,200	0.06%
Dr. Lam Lee G.	1,000,000	0.03%	200,000	0.03%	200,000	0.03%
Other directors of the subsidiaries of the
Company (not including Mr. Zhu Qian)	11,946,000	0.36%	2,389,200	0.36%	9,589,200	1.41%
Mr. Zhu Qian	209,000,000	6.29%	41,800,000	6.29%	47,600,000	7.02%
Public
Public Shareholders	2,342,797,542	70.47%	468,559,508	70.47%	469,159,508	69.14%
Total	3,324,643,562	100%	664,928,712	100%	678,528,712	100%

Note: Mr. Gao Feng is beneficially interested in the entire issued share capital of ACE Channel Limited (‘‘ACE Channel’’). By virtue of the SFO, he is deemed to be interested in the 89,000,000 Shares beneficially owned by ACE Channel.

The above shareholdings of the Company in the table above are for illustration purpose only. The Directors confirm that, as at the Latest Practicable Date and up to the date of allotment and issue of the Connected Awarded Shares and Other Awarded Shares, none of the Connected Selected Participants or Other Selected Participants was granted with Awarded Shares more than the maximum number of Awarded Shares which may be awarded under the Share Award Scheme to a Selected Participant in the last 12 months, being 1% of the issued share capital of the Company as at the date of refreshment of the Scheme Mandate of the Share Award Scheme (i.e. 23 September 2021).

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LETTER FROM THE BOARD

REASONS FOR AND BENEFITS OF ISSUING NEW AWARDED SHARES

The Group is principally engaged in commodities, trading and daily cleaning, anti-epidemic and other consumer products businesses. It has also been expanding its business into the consumer products market conforming to the Group’s business principle of ‘‘making live well and better life’’ (易生活,惠民 生). The Share Award Scheme forms part of the incentive schemes of the Group, and would provide an additional means for the Company to incentivise the Eligible Participants.

Three of the Connected Selected Participants namely, Zhu Qian, Zhang Shaoyan and Jing Bingkun, are directors and/or senior management of the Joint Venture Group engaging in daily cleaning, antiepidemic and other consumable products business. Mr. Zhu Qian is experienced in the field of daily cleaning materials and sanitizing products and established the Joint Venture Group with the Group in August 2020. Mr. Zhang Shaoyan holds a doctorate degree in Finance from Nankai University and is a postdoctoral fellow of the Chinese Academy of Social Sciences. He has 20 years of experience in investment industry and has served as the chief listing representative of Shenzhen Stock Exchange, the managing director of China RE Asset Management Co. Ltd. and the chairman of Beijing Hilltop Asset Management Co. Ltd. He is the chief investment officer of the Group and a director of Yiansheng International Trading (Yangzhou) Co., Ltd., which is the main operating subsidiary of the Joint Venture Group. The Joint Venture Group has achieved performance targets successfully and has contributed to the increase of revenue of the Group. For the six months ended 30 September 2021, the Joint Venture Group recorded unaudited turnover of approximately HK$62.6 million and achieved net profit after tax of approximately HK$10.7 million, representing an increase of 6 times and 3.5 times when compared to the unaudited turnover and net profit recorded for the six months ended 30 September 2020, respectively. Amidst the contributions of the management of the Joint Venture Group, the Joint Venture Group, the Company and its other subsidiaries have not paid any salary, any dividend nor other kinds of emoluments to Mr. Zhu Qian. In addition, Mr. Zhang Shaoyan only received his regular monthly salary. As the Connected Selected Participants have made significant contributions to the Group and have not been compensated by the Company beyond their regular or reduced salary and in the case of Mr. Zhu Qian has not been compensated at all, the Board proposes to grant the Awarded Shares to the said Connected Selected Participants, considering that it would recognise the continuous support of the relevant directors and senior management to the Group and their effort in promoting the Group’s long-term growth and development. Given that Mr. Zhu Qian holds 49% of the shareholding interests in each of Century Smart Group Limited and Smart Challenger Global Limited, through such interests he could benefit from the performance of the Joint Venture Group in the future. None of the other Connected Selected Participants has any interests in the Joint Venture Group.

The other two Connected Selected Participants and the two Other Selected Participants have served the Company in the Investment, Finance and Administration departments for more than 10 years and most of them did not have salary increment. Some of them also accepted downward adjustments to their salary in response to the challenging and tough time of the Company. In light of their contributions to the Group’s development in recent years, the Board considers it appropriate to reward them for their continuous support to the Group by way of granting the Awarded Shares.

Further, the Board considers that there will not be any actual cash outflow by the Group under the award of the Awarded Shares to provide incentives to the relevant Selected Participants. The Board considers that the award of the Awarded Shares to the relevant Selected Participants is fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

LISTING RULES IMPLICATIONS

As the five Connected Selected Participants are directors of certain subsidiaries of the Company, they are connected persons of the Company at the subsidiary level. As such, the allotment and issue of the Connected Awarded Shares to the Connected Selected Participants under the Share Award Scheme constitute connected transactions of the Company under Chapter 14A of the Listing Rules. The allotment and issue of the Connected Awarded Shares shall be subject to, among others, the approval by the Independent Shareholders at the EGM.

To the best knowledge, information and belief of the Directors, as at the Latest Practicable Date, other than the Connected Selected Participants who are Shareholders and together hold 220,946,000 Existing Shares (of which 209,000,000 Existing Shares, 6,496,000 Existing Shares, 5,050,000 Existing Shares and 400,000 Existing Shares are held by Mr. Zhu Qian, Ms. Lau Yat Ning, Mr. Zhang Shaoyan and Mr. Chow Chi Fai, respectively), representing 6.65% of the total number of Shares in issue and are required to abstain from voting on the resolution approving the grant of the Connected Awarded Shares to himself/herself at the EGM, no other Shareholders are required to abstain from voting on the resolution in respect of the Connected New Shares Grant to be proposed at the EGM. The Independent Financial Adviser has been appointed by the Company to advise the Independent Board Committee and the Independent Shareholders in this regard.

None of the Directors is or is deemed to have a material interest in the Connected Awarded Shares or the Other Awarded Shares and is required to abstain from voting on the Board resolution(s) approving the grant of the Connected Awarded Shares or the Other Awarded Shares.

(3) EGM

The EGM will be convened and held (i) for the Shareholders to consider and if thought fit, approve the Share Consolidation, and (ii) for the Independent Shareholders to consider and if thought fit, approve the making of the Connected New Shares Grant to the Connected Selected Participants. The Connected Selected Participants who are Shareholders are required to abstain from voting on the resolution(s) approving the grant of the Connected Awarded Shares to himself/herself at the EGM.

The EGM will be held at Unit 806, Level 8, Core D, Cyberport 3, 100 Cyberport Road, Hong Kong on Tuesday, 25 January 2022 at 11:00 a.m.. The notice of the EGM is set out on pages 50 to 53 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 Registrar, Tricor Tengis Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong, or via the designated URL (https://spotemeeting.tricor.hk) by using the username and password provided on the notification letter sent by the Company as soon as possible and in any event not later than 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, information and belief of the Directors after making all reasonable enquiries, save for the Connected Selected Participants and their

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LETTER FROM THE BOARD

respective associates shall abstain from voting in respect of the resolution(s) relating to the issue of Connected Awarded Shares to the Connected Selected Participants, none of the Shareholders is required to abstain from voting on the resolution(s) to be proposed 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.

Shareholders and potential investors should note that the Share Consolidation is conditional upon satisfaction of the conditions as set out in the paragraph headed ‘‘Conditions of the Share Consolidation’’ in this circular. Accordingly, the Share Consolidation may or may not proceed. Shareholders and potential investors are advised to exercise caution when dealing in the securities of the Company and are recommended to consult their professional advisers if they are in any doubt about their position and as to actions that they should take.

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 Thursday, 20 January 2022 to Tuesday, 25 January 2022, both days inclusive, during which period no transfer of Shares will be registered. The record date for such purposes is Tuesday, 25 January 2022.

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 Registrar, Tricor Tengis Limited, at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong, not later than 4:30 p.m. on Wednesday, 19 January 2022.

RECOMMENDATION

The Board considers that the Share Consolidation is in the best interests of the Company and the Shareholders as a whole and recommends the Shareholders to vote in favour of such resolution at the EGM.

Your attention is drawn to (i) the letter from the Independent Board Committee set out on pages 28 to 29 of this circular which contains the recommendation of the Independent Board Committee to the Independent Shareholders in relation to the Connected New Shares Grant and the transactions contemplated thereunder; and (ii) the letter from the Independent Financial Adviser is set out on pages 30 to 42 of this circular which contains its advice to the Independent Board Committee and the Independent Shareholders in relation to the Connected New Shares Grant together with the principal factors and reasons considered by it in concluding its advice.

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LETTER FROM THE BOARD

The Independent Board Committee, having taken into account the advice of the Independent Financial Adviser, considers that the terms of the Connected New Shares Grant are fair and reasonable so far as the Independent Shareholders are concerned and that the Connected New Shares Grant are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors (including the independent non-executive Directors) consider that the terms of the Connected New Shares Grant are fair and reasonable, and that the Connected New Shares Grant is on normal commercial terms and in the interests of the Company and the Shareholders as a whole and recommend the Shareholders to vote in favour of such resolution at the EGM.

FURTHER INFORMATION

Your attention is also drawn to the additional information set out in the Appendix 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

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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

10 January 2022

To the Shareholders

Dear Sir or Madam,

PROPOSED ISSUE OF NEW SHARES TO CONNECTED PERSONS UNDER THE SHARE AWARD SCHEME

We refer to the circular of the Company to the Shareholders dated 10 January 2022 (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 proposed issue of Connected Awarded Shares to the Connected Selected Participants under the Share Award Scheme are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Draco Capital Limited has been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in relation to the proposed issue of Connected Awarded Shares under the Share Award Scheme. Details of its advice, together with the principal factors and reasons taken into consideration in arriving at such advice, are set out on pages 30 to 42 of the Circular. Your attention is also drawn to the letter from the Board set out on pages 7 to 27 of the Circular and the additional information set out in the Appendix to the Circular.

Having considered the terms of the Connected New Shares Grant and the situation of the Company, and the factors and reasons considered by the Independent Financial Adviser and its opinion as stated in its letter of advice, we consider that (i) even though the issue of the Connected Awarded Shares to the Connected Selected Participants is not in the ordinary and usual course of business of the Group, it is incidental to the Group’s development of its ordinary and usual course of business. We consider that the terms of the Connected New Shares Grant are on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned, and (ii) the Connected New Shares Grant is 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(s) to be proposed at the EGM to approve the Connected New Shares Grant.

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Yours faithfully, Independent Board Committee of Elife Holdings Limited

Mr. Cheng Wing Keung, Raymond Independent Nonexecutive Director

Mr. Lam Williamson Mr. Wong Hoi Kuen Dr. Lam Lee G Independent NonIndependent NonIndependent Nonexecutive Director executive Director executive Director

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

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

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Draco Capital Limited 4/F Connaught Harbourfront House 35 Connaught Road West, Sheung Wan, Hong Kong

+852 3619 2588

10 January 2022

To: The independent shareholders of Elife Holdings Limited

Dear Sir/Madam,

CONNECTED NEW SHARES GRANT UNDER THE SHARE AWARD SCHEME

INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Shareholders in respect of the Connected New Shares Grant, details of which are set out in the letter from the Board (the ‘‘Board Letter’’) contained in the circular dated 10 January 2022 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 6 December 2021, the Board resolved to award 13,600,000 Awarded Shares (equivalent to 68,000,000 Existing Shares) to 7 Selected Participants by way of allotment and issue of new Shares pursuant to the Scheme Mandate.

Among the 7 Selected Participants pursuant to the New Shares Grant, as the 5 Connected Selected Participants are connected persons of the Company, the allotment and issue of the Connected Awarded Shares to the Connected Selected Participants under the Share Award Scheme shall constitute connected transactions of the Company under Chapter 14A of the Listing Rules. The allotment and issue of the Connected Awarded Shares shall be subject to, among others, the approval by the Independent Shareholders at the EGM.

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

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

INDEPENDENCE

We, Draco Capital, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard. Draco Capital is a licensed corporation licensed under the Securities and Futures Ordinance to conduct type 6 (advising on corporate finance) regulated activities, and participated in and completed various independent financial advisory transactions.

As at the Latest Practicable Date, we confirmed that there is no relationship or interest between Draco Capital and the Company or any other parties that could be reasonably be regarded as hindrance to Draco Capital’s independence as set out under Rule 13.84 of the Listing Rules to act as the Independent Financial Adviser to the Independent Board Committee and the Shareholders in respect of the transactions.

We are not associated with the Company, its subsidiaries, its associates or their respective substantial shareholders or associates, and accordingly, are eligible to give independent advice and recommendations. Apart from normal professional fees payable to us in connection with this appointment as the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, no arrangement exists whereby we will receive any fees from the Company, its subsidiaries, its associates or their respective substantial shareholders or associates. We are not aware of the existence of or change in any circumstances that would affect our independence. During the past two years, we have been appointed as the independent financial adviser to the Company regarding (i) connected transaction in relation to subscription of new shares by connected person under specific mandate, of which the announcement was dated 8 April 2021; and (ii) disclosable and connected transaction in relation to increase of shareholding interests in subsidiaries involving issue of consideration shares and convertible bonds under specific mandate, of which the announcement was dated 27 November 2020. The professional fees in connections with the above appointments have been fully settled and we are not aware of change in any circumstance that would affect our independence. Accordingly, we consider that we are eligible to give independent advise on the terms of Connected Awarded Shares grant under the Share Award Scheme.

BASIS OF OUR OPINION

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

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

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

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

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

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

PRINCIPAL FACTORS AND REASONS CONSIDERED

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

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

Principal business of the Group

With reference to the Board Letter, the Group is principally engaged in commodities trading and daily cleaning, anti-epidemic other consumable products businesses. It has also been expanding its business into the consumer products market.

Information on the Connected Selected Participants

Details of the 5 Connected Selected Participants are set out as follows:

Relationship with the Group

Name Relationship with the Group Mr. Zhu Qian A director of each of three subsidiaries of the Company, including Century Smart Group Limited, Smart Challenger Global Limited and Elife International Trading Limited; a general manager of Yiansheng International Trading (Yangzhou) Co., Ltd., a subsidiary of the Company Mr. Zhang Shaoyan Chief investment officer and a director of Yiansheng International Trading (Yangzhou) Co., Ltd., a subsidiary of the Company and a member of the Joint Venture Group Mr. Jing Bingkun Head of operations in the PRC; and director and legal representative of certain subsidiary(ies) of the Company (including but not limited to being a director of Yiansheng International Trading (Yangzhou) Co., Ltd., a member of the Joint Venture Group) Mr. Chow Chi Fai Financial controller and company secretary of the Company and a director of certain subsidiary(ies) of the Company (including but not limited to Century Smart Group Limited, Smart Challenger Global Limited and Elife International Trading Limited, all being members of the Joint Venture Group) Ms. Lau Yat Ning Operation director of the Company and a director of certain subsidiary(ies) of the Company

The profiles of Mr. Zhang Shao Yan and Mr. Chow Chi Fai are set out under the section headed ‘‘Directors & Senior Management Profiles’’ in the annual report of the Company for the year ended 31 March 2021 (the ‘‘2021 Annual Report’’).

As advised by the Directors, (i) Mr. Zhu Qian is the director of certain subsidiaries of the Company. Mr. Zhu Qian joined the Group in 2020 when the Company and Mr. Zhu Qian entered into a cooperation agreement to establish a joint venture group and cooperate in developing the daily cleaning chemicals and sanitizing products business. Mr. Zhu Qian is experienced in the field of daily cleaning materials and sanitizing products and is responsible for business development, evaluation of suitable business

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

opportunities, and business negotiation with business partners (ii) Mr. Jing Bingkun is the director of certain subsidiaries of the Company. Mr. Jing Bingkun has joined the Group for approximately 5 years and is currently operation director of China region of the Group, responsible for organizing, planning and promoting the implementation of the company’s operational strategy and achieve the company’s operational goals. He also oversees the business operations of certain subsidiaries of the Group. (iii) Ms. Lau Yat Ning is the director of certain subsidiaries of the Company. Ms. Lau Yat Ning has joined the Group for approximately 11 years and is currently operation director of the Group, responsible for supervision of the group’s daily operations, resource allocation, risk control, human resource management and monitoring the business operations of some of the Group’s subsidiaries.

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

Reasons for and benefits of the Connected New Shares Grant

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

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

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

For our due diligence purpose, we have searched over the website of the Stock Exchange and to the best of our knowledge and as far as we are aware of, we found the following grant of award shares by Hong Kong listed companies pursuant to their respective share award schemes announced from 1 November 2021 to 9 December 2021, (i.e. the date of announcement of the Connected New Shares Grant, the ‘‘Announcement Date’’):

		Whether the
		grants were made
		to its key
Company name (Stock	Announcement	personnel and
code)	Date	employees	The size of the grant
Riverine China Holdings	12 April 2021	Yes	2.03% of issued shares
Limited (1417)
China Environmental	20 April 2021	Yes	8.50% of issued shares
Technology and
Bioenergy Holdings
Limited (1237)
Midea Real Estate Holding	22 April 2021	Yes	0.42% of issued shares
Limited (3990)
TCL Electronics Holdings	19 May 2021	Yes	1.7% of issued shares
Limited (1070)
Haidilao International	20 May 2021	Yes	3.0% of issued shares
Holdings Ltd. (6862)
IGG Inc (799)	21 May 2021	Yes	6.0% of issued shares
Ocumension Therapeutics	2 July 2021	Yes	5.0% of issued shares
(1477)
Goldstream Investment	26 July 2021	Yes	2.92% of issued shares
Limited (1328)
Homeland Interactive	30 September 2021	Yes	2.18% of issued shares
Technology Ltd. (3798)
Concord New Energy	15 October 2021	Yes	0.691% of issued shares
Group Limited (182)
China ITS (Holdings) Co.,	8 November 2021	Yes	4.0% of issued shares
Ltd. (1900)

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

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

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

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

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

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

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

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

2. Principal terms of the Connected New Shares Grant

On 9 December 2021, the Board has resolved to award 13,000,000 Awarded Shares to 5 Connected Selected Participants and 600,000 Other Awarded Shares to 2 Other Selected Participants, who are both employees of the Company but not directors nor chief executive of the Group, by way of allotment and issue of new Shares. The number of Awarded Shares granted to each Connected Selected Participant is set out under the section headed ‘‘Award to the Connected Selected Participants’’ of the Board Letter. Further information of the Awarded Shares is set out below:

Market value of the Awarded Shares:

Based on the closing price of HK$0.037 per existing Share (equivalent to the theoretical closing price of HK$0.185 per Consolidated Share) as quoted on the Stock Exchange as at the Latest Practicable Date, the market values of 13,000,000 Connected Awarded Shares and the 600,000 Other Awarded Shares after the Share Consolidation has become effective amounted to approximately HK$2,516,000.

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

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Funds to be raised:

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

Identity of the allottee(s):

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

Vesting conditions:

The Connected Awarded Shares of Mr. Zhu Qian and Mr. Zhang Shaoyan will be vested in four tranches as follows:

• (1) 25% of the Awarded Shares will be vested on the date of grant;

• (2) 25% of the Awarded Shares will be vested on the 90th days after the date of grant;

• (3) 25% of the Awarded Shares will be vested on the 180th days after the date of grant;

• (4) 25% of the Awarded Shares will be vested on the 270th days after the date of grant.

All of the relevant Awarded Shares of the other Connected Selected Participants and Other Selected Participants will be vested on the date of grant, given the fact that other Connected Selected Participants and Other Selected Participants have already made considerable amount of efforts on the Group ’s business developments which led to today’s success.

The 13,600,000 Awarded Shares (equivalent to 68,000,000 Existing Shares) represent approximately 2.05% of the total issue Shares as at the Latest Practicable Date and approximately 2% of the total issued Shares as enlarged by the issue of 13,600,000 Awarded Shares issued pursuant to the New Shares Grant.

With reference to the Board Letter, the Connected Selected Participants have made remarkable contributions to the Group’s business transformation together with other members of the management team and staff. The Group’s transformation into the daily consumer goods and related value-added services market including developing the daily cleaning chemicals and sanitizing products business is essential to the Group’s future sustainability, given the gloomy performance of the Group’s shrinking commodities trading business. As such, the contributions made by the management have not just enhanced the short-term profitability and growth potentials in the areas as mentioned above but have also re-engineered the Group in a broader and long-term context by introducing a more competitive strategic focus and positioning of the Group’s businesses. Leveraging their professional expertise, solid experience and business network, the management has significantly contributed to a series of major developments in connection with the Group’s business transformation, which include that the Company and Mr. Zhu Qian entered into the cooperation agreement to establish a joint venture group (the ‘‘Joint Venture Group’’) in July 2020 which possesses the brand ‘‘易安生’’/’’E’ANSN’’ and the supply chain including the formula, brand and package design of the anti-epidemic and daily cleaning products and is principally

37

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

engaged in the sale, marketing and brand building of such products in the PRC and overseas. The Joint Venture Group also has further differentiated and expanded its business by developing the sales and marketing of personal healthcare, protective products (e.g. medical diagnostic test kit of COVID-19 and surgical gloves and nitrile gloves). The Board is of the view that the grant of the Awarded Shares to the management is justifiable having considered their contributions to the Group’s long-term competitiveness and growth potentials.

We noted from announcements of the Company on 31 July 2020 that the Company and Mr. Zhu Qian entered into a cooperation agreement to establish the Joint Venture Group and cooperate in developing the daily cleaning chemicals and sanitizing products business. Mr. Zhu Qian, Mr. Zhang Shaoyan and Mr. Jin Bingkun are directors and/or senior management of the Joint Venture Group. With reference to the 2021 Annual Report for the year ended 31 March 2021, the Joint Venture Group also has further differentiated and expanded its business by developing the sales and marketing of personal healthcare, protective products and that the joint venture group’s financial results have been consolidated into the financial statements of the Company. We also noted the 2021 Interim Report of the Company for the six months ended 30 September 2021 that there is a substantial increase of revenue of daily cleaning, anti-epidemic and other consumable products business, increased from HKD8.9 million for the six months ended 30 September 2020 to HKD62.6 million for the same period in 2021, representing an increment of 599%. The Board anticipates that the daily cleaning, anti-epidemic and other consumable products business will continue to be the new key performance driver for the Group. Amidst the contributions of the management of the Joint Venture Group, the Joint Venture Group, the Company and its other subsidiaries have not paid any salary nor any dividend or other kinds of emoluments to Mr. Zhu Qian. Given that Mr. Zhu Qian holds 49% of the shareholding interests in each of Century Smart Group Limited and Smart Challenger Global Limited, he could through such interests benefit from the performance of the Joint Venture Group in the future. None of the other Connected Selected Participants has any interests in the Joint Venture Group. In addition, Mr. Zhang Shaoyan only received his regular monthly salary. The other two Connected Selected Participants and the two Other Selected Participants have served the Company in the Investment, Finance and Administration departments for more than 10 years and most of them did not have salary increment. Some of them also accepted downward adjustments to their salary in response to the challenging and tough time of the Company. Taking into account of the above, we concur with the Directors for the above said management contribution to the Group.

With reference to the annual report, Mr. Zhang Shao Yan, was appointed as the chief investment officer on 1 October 2019 and is primarily responsible for the development of the domestic and overseas investment and financial business and the merger and acquisition business of the Company. Mr. Zhang has nearly 20 years of experience in investment industry and has served as the chief listing representative of the Shenzhen Stock Exchange, the managing director of China RE Asset Management Co. Ltd. and the chairman of Beijing Hilltop Asset Management Co. Ltd. Mr. Zhang Shao Yan holds a doctorate degree in Finance from Nankai University and is a postdoctoral fellow of the Chinese Academy of Social Sciences. The rest of the Connected Selected Participants, with the cooperation of Mr. Zhu Qian and Mr. Zhang Shao Yan, hold senior managerial positions in the Group for approximately 5 to 13 years. We also understand from the Directors that (i) Mr. Chow Chi Fai, was appointed as the company secretary of the Company (the ‘‘Company Secretary’’) on 29 December 2008 and possesses over 23 years of experience in accounting and finance field; (ii) Mr. Zhu Qian is the director of certain subsidiaries of the Company. Mr. Zhu Qian joined the Group in 2020 when the Company and Mr. Zhu Qian entered into a cooperation agreement to establish a joint venture group and cooperate in developing the daily cleaning chemicals

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

and sanitizing products business. Mr. Zhu Qian is experienced in the field of daily cleaning materials and sanitizing products and is responsible for business development, evaluation of suitable business opportunities, and business negotiation with business partners; (iii) Mr. Jing Bingkun is the director of certain subsidiaries of the Company. Mr. Jing Bingkun has joined the Group for approximately 5 years and is currently operation director of China region of the Group, responsible for organizing, planning and promoting the implementation of the company’s operational strategy and achieve the company’s operational goals. He also oversees the business operations of certain subsidiaries of the Group; (iv) Ms. Lau Yat Ning is the director of certain subsidiaries of the Company. Ms. Lau Yat Ning has joined the Group for approximately 11 years and is currently operation director of the Group, responsible for supervision of the group’s daily operations, resource allocation, risk control, human resource management and monitoring the business operations of some of the Group’s subsidiaries. In light of the Connected Selected Participants’ contributions to the Group’s key developments in recent years, the Board considers it appropriate to reward these Connected Selected Participants for their continuous supports to the Group by way of granting the Awarded Shares.

Upon our enquiry, we were advised by the Directors that the remuneration committee of the Company considered the contributions, roles and responsibilities of the Connected Selected Participants when determining the number of Award Shares to be granted under the Connected New Shares Grant (for example, more Award Shares are granted to Mr. Zhu Qian and Mr. Zhang Shaoyan who are considered to play more important roles in the daily management and operation of the Group and hence shall have more significant contribution to the Group’s businesses than the other Connected Selected Participants). In addition, based on the closing price of the Shares on the Latest Practicable Date (i.e. 6 January 2022) of HK$0.037 per Share, the total cost of the Awarded Shares was approximately HK$2,516,000. The Board considers that the cost of granting the Awarded Shares as part of the remuneration package of the respective key personnel is justifiable and in line with the remuneration policy taking into account the following factors: (i) while reflected in the interim results of the Group for the six months ended 30 June 2021, it is presently expected that the Group’s overall financial performance in the segment of daily cleaning, anti-epidemic and other consumable products business will be improved, based on the existing circumstances and business environment, and contributed by the Group’s transformed businesses in that segment; and (ii) the amount of the Awarded Shares granted to each Selected Participant reflects the value and benefits to the Group considering his/her role and contribution to the strategic and sustainable development of the Group.

For our due diligence, we have also obtained and reviewed the Scheme Rules from the Company. We noted that the terms of the Connected New Shares Grant have complied with the Scheme Rules, in particular the scheme limit and individual limit. The total number of Connected Awarded Shares and Other Awarded Shares amounted to 13,600,000, representing approximately 2.05% of the total issue Shares as at the Latest Practicable Date and approximately 2% of the total issued Shares as enlarged by the issue of 13,600,000 Awarded Shares issued pursuant to the New Shares Grant which is less than the 10% scheme limit. In addition, none of the Connected Selected Participants (i) was awarded with any Awarded Shares in the 12-month period before the Connected New Shares Grant and (ii) was awarded with more than 1% of the total issued Shares as at the Adoption Date. For further details of the Scheme Rules, please refer to appendix I to the Circular dated 19 July 2017.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Vesting Period

We consider that due to the reasons that (i) Mr. Jing Bingkun, Mr. Chow Chi Fai and Ms. Lau Yat Ning are long-term employees of the Group and each of them have worked for the Group for more than 5 years, 11 years and 11 years, respectively; (ii) Mr. Jing Bingkun, Mr. Chow Chi Fai and Ms. Lau Yat Ning have exceeded performance expectation for a number of years; (iii) some of them have taken a downward salary adjustment due to the COVID-19 pandemic; and (iv) considered that the Connected Awarded Shares should be granted to them in place of a bonus payment which would allow the Group to reserve its cash for other uses, we are of the view that the Connected Awarded Shares proposed to be granted to them being vested immediately is appropriate in the circumstances.

As the Connected Awarded Shares are proposed to be granted to the Connected Selected Participants as a reward for their past outstanding performance which has contributed to the success of the Group in the recent years and for achieving internal performance target, there is no future performance target for the vesting of the Connected Awarded Shares. We have reviewed and considers that as the Joint Venture Group recorded unaudited turnover of approximately HK$62.6 million and achieved net profit after tax of approximately HK$10.7 million for the six months ended 30 September 2021, representing an increase of 6 times and 3.5 times when compared to the unaudited turnover and net profit recorded for the six months ended 30 September 2020 respectively, the Connected Selected Participants have successfully assisted the Joint Venture Group to achieve its performance targets which have contributed to the increase of revenue of the Group.

We concur with the Directors’ view that as the Share Award Scheme’s purposes are, among others, to recognise employees’ contributions to the Group and to provide them with incentives in order to retain them for the continual operation and development of the Group, by issuing the Connected Awarded Shares to Mr. Jing Bingkun, Mr. Chow Chi Fai and Ms. Lau Yat Ning, their commitment in working for the Group in the long term and their contributions are confirmed and recognised by the Directors of the Company and their contributions in achieving the increase in revenue of the Group and commitment in working for the Company in the long term are awarded with the Connected Awarded Shares. In addition, as they have become Shareholders, their performance will also be reflected in the share price of the Company which will align their interest with the Company and incentivise them to continue to exceed performance expectation by the Directors of the Company. We concur with the Board’s view that considering the fact that Mr. Jing Bingkun, Mr. Chow Chi Fai and Ms. Lau Yat Ning are granted the Connected Awarded Shares mainly as a reward for their past outstanding performances and contributions to the success of the Group in recent years, the Connected Awarded Shares proposed to be granted to them are not subject to fulfillment of any performance target and will be vested on the date of grant.

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

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

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

With reference to the shareholding table of the Company under the sub-section headed ‘‘Effects on the shareholding structure of the Company’’ of the Circular, the shareholding interests of the existing public Shareholders (including the Other Selected Participants) would be diluted from approximately 70% to approximately 69% while the shareholding interests of the existing public Shareholders (excluding the Other Selected Participants) would be diluted from approximately 70% to approximately 69% as a result of the Connected New Shares Grant.

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

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

RECOMMENDATION

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

Yours faithfully, For and on behalf of Draco Capital Limited Kevin Choi Ivan Chan Managing Director Director

Mr. Kevin Choi and Mr. Ivan Chan are licensed persons under the SFO to carry out type 6 (advising on corporate finance) regulated activity under the SFO and regarded as responsible officers of Draco Capital Limited. Mr. Kevin Choi and Mr. Ivan Chan have over 10 and 5 years of experience in corporate finance industry, respectively.

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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; (ii) immediately upon Share Consolidation; and (iii) immediately upon allotment and issue of the Connected Awarded Shares and the Other Awarded Shares (assuming there will be no other change in the number of issued Shares between the Latest Practicable Date and the date of allotment and issue) as follows:

• (i) as at the Latest Practicable Date

	Nominal value	Number of
	per Existing	Existing
	Share	Shares	Amount
	HK$		HK$
Authorised:
As at the Latest Practicable
Date	0.02	15,000,000,000	300,000,000.00
Issued and fully paid:
As at the Latest Practicable
Date	0.02	3,324,643,562	66,492,871.24

• (ii) immediately upon Share Consolidation

	Nominal
	value per	Number of
	Consolidated	Consolidated
	Share	Shares	Amount
	HK$		HK$
Authorised:
As at the Latest Practicable
Date	0.1	3,000,000,000	300,000,000.00
Issued and fully paid:
As at the Latest Practicable
Date	0.1	664,928,712	66,492,871.20

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GENERAL INFORMATION

APPENDIX

• (iii) immediately upon allotment and issue of the Connected Awarded Shares and the Other Awarded Shares (assuming there will be no other change in the number of issued Shares between the Latest Practicable Date and the date of allotment and issue)

	Nominal
	value per	Number of
	Consolidated	Consolidated
	Share	Shares	Amount
	HK$		HK$
Authorised:
As at the Latest Practicable
Date	0.1	3,000,000,000	300,000,000.00
Issued and fully paid:
As at the Latest Practicable
Date	0.1	678,528,712	67,852,871.20

(b) Share options and share awards

The Share Option Scheme was adopted on 23 September 2021, with options to be granted to any directors, employees and other parties at the discretion of the Board. No share option thereunder has been granted as at the Latest Practicable Date. The Company previously adopted a share option scheme on 8 October 2010 (with its terms amended on 17 August 2017), which was terminated on 23 September 2021. As at the Latest Practicable Date, 242,860,000 share options thereunder remained outstanding. The Group also refreshed the share award scheme mandate limit of 332,464,356 Existing Shares under the Share Award Scheme on 23 September 2021. Since the refreshment of the Scheme Mandate of the Share Award Scheme and up to the Latest Practicable Date, other than the Connected Awarded Shares and the Other Awarded Shares as proposed to be granted, no Awarded Shares were granted to eligible participants by way of allotment and issue of new Shares.

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) DISCLOSURE OF INTERESTS

(a) Directors and Chief Executive

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

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APPENDIX

GENERAL INFORMATION

as otherwise required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies adopted by the Company were as follows:

				Approximate
				percentage of
	Interest in		Number of	existing issued
	Shares/		Shares/	share capital
	Underlying		Underlying	of the
Name of Directors	Shares	Capacity	Shares held	Company
			(Note 1)
Zhang Xiaobin	Shares	Beneficial owner	95,651,489(L)	2.88%
	Share options	Beneficial owner	51,500,000(L)	1.55%
Gao Feng (Note 2)	Shares	Beneficial owner	162,757,531(L)	4.90%
	Shares	Interest of a	89,000,000(L)	2.68%
		controlled
		corporation
	Share options	Beneficial owner	51,500,000(L)	1.55%
Chiu Sui Keung	Shares	Beneficial owner	28,271,000(L)	0.85%
	Share options	Beneficial owner	51,500,000(L)	1.55%
Cheng Wing Keung,	Shares	Beneficial owner	2,041,000(L)	0.06%
Raymond	Share options	Beneficial owner	3,900,000(L)	0.12%
Lam Williamson	Shares	Beneficial owner	2,181,000(L)	0.07%
	Share options	Beneficial owner	3,900,000(L)	0.12%
Wong Hoi Kuen	Shares	Beneficial owner	2,181,000(L)	0.07%
	Share options	Beneficial owner	3,900,000(L)	0.12%
Lam Lee G.	Shares	Beneficial owner	1,000,000(L)	0.03%
	Share options	Beneficial owner	5,081,000(L)	0.15%

Notes:

1. ‘‘L’’ stands for a long position in the Shares.

2. Mr. Gao Feng is beneficially interested in the entire issued share capital of ACE Channel.

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GENERAL INFORMATION

APPENDIX

(b) Substantial Shareholders

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

				Approximate
				percentage of
				existing issued
Name of	Number of	Nature of		share capital of
Shareholders	Shares interested	interests	Capacity	the Company
				(Note 2)
Ms. Liu Qiuhua	358,817,000	Long positions	Beneficial owner	10.79%
ACE Channel (Note 1)	89,000,000	Long positions	Interest of a	2.68%
			controlled
			corporation
Mr. Gao Feng (Note 1)	162,757,531	Long positions	Beneficial owner	4.90%
Mr. Zhu Qian	209,000,000	Long positions	Beneficial owner	6.29%

Notes:

1. Mr. Gao Feng is beneficially interested in the entire issued share capital of ACE Channel. By virtue of the SFO, he is deemed to be interested in the 89,000,000 Shares beneficially owned by ACE Channel.

2. The shareholding percentage is calculated based on the issued share capital of the Company as at the Latest Practicable Date.

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

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

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GENERAL INFORMATION

APPENDIX

(4) COMPETING BUSINESS INTEREST OF DIRECTORS

As at the Latest Practicable Date, none of the Directors, controlling Shareholders of the Company or their respective close associates (as defined under the Listing Rules) was interested in any business which competes or is likely to compete, either directly or indirectly, with the business of the Company or had any other conflict of interests with the Company.

(5) DIRECTORS’ AND EXPERTS’ INTERESTS IN ASSETS

None of the Directors nor the experts (as named in this circular) had any interest, directly or indirectly, in any asset which has, since 31 March 2021 (being the date to which the latest published audited consolidated financial statements of the Company 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.

(6) 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).

(7) 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.

(8) 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 2021, being the date to which the latest published audited accounts of the Company were made up.

(9) 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.

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GENERAL INFORMATION

APPENDIX

(10) EXPERTS 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:

Name Qualifications Draco Capital Limited A corporation licensed to carry out type 6 (advising on corporate finance) regulated activity under the SFO

As at the Latest Practicable Date, Draco 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, Draco Capital did not have any interest, direct or indirect, in any assets which have been since 31 March 2021, the date up to which the latest published audited financial statements of the Company 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.

Draco 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.

(11) 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 Group or proposed to be so acquired, disposed of by or leased to any member of the Group since 31 March 2021, 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 Group, which was subsisting and was significant in relation to the business of the Group.

• (c) The company secretary of the Company is Mr. Chow Chi Fai, a member of the Hong Kong Institute of Certified Public Accountants.

• (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 Registrar is Tricor Tengis Limited.

• (g) The English text of this circular shall prevail over their respective Chinese text for the purpose of interpretation.

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GENERAL INFORMATION

APPENDIX

(12) DOCUMENTS ON DISPLAY

Copies of the following documents will be published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (www.elife.com.hk) for a period of 14 days 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 letter from the Board as set out on pages 7 to 27 of this circular;

• (c) the letter from the Independent Board Committee to the Independent Shareholders, the text of which is set out on pages 28 to 29 of this circular;

• (d) the letter from Draco Capital to the Independent Board Committee and the Independent Shareholders, the text of which is set out on pages 30 to 42 of this circular;

• (e) the Share Award Scheme;

• (f) the written consent of the expert as referred to in the section headed ‘‘Expert and Consent’’ of this Appendix; and

• (g) this circular.

49

NOTICE OF EGM

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(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 Tuesday, 25 January 2022 at 11:00 a.m., for the purpose of considering and, if thought fit, passing the following resolutions as ordinary resolutions of the Company.

Unless otherwise defined, capitalised terms used herein shall have the same meanings as ascribed to them in the circular of the Company dated 10 January 2022.

ORDINARY RESOLUTIONS

1. ‘‘THAT

conditional upon the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the Consolidated Shares,

• (a) the Share Consolidation and the transactions contemplated thereunder be and are hereby approved confirmed and ratified; and

• (b) 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 Share Consolidation and the transactions contemplated thereby and thereunder.’’

• ‘‘THAT

conditional upon the ordinary resolution no. 1 contained in this notice of the EGM being approved and the Share Consolidation becoming effective and dealings in the Consolidated Shares have commenced, the Connected New Shares Grant be and are hereby approved, confirmed and ratified as separate resolutions and any Director be and is hereby authorised to take any step and execute such other documents as they consider necessary, desirable or expedient to carry out or give effect to or otherwise in connection with the Connected New Shares Grant or the transactions contemplated thereby and thereunder:

• (a) grant of 5,800,000 Connected Awarded Shares to Mr. Zhu Qian;

• (b) grant of 5,400,000 Connected Awarded Shares to Mr. Zhang Shaoyan;

• (c) grant of 600,000 Connected Awarded Shares to Mr. Jing Bingkun;

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NOTICE OF EGM

• (d) grant of 600,000 Connected Awarded Shares to Mr. Chow Chi Fai; and

• (e) grant of 600,000 Connected Awarded Shares to Ms. Lau Yat Ning.’’

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

Hong Kong, 10 January 2022

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

Notes:

1. 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.

2. 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.

3. 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 Hong Kong branch share registrar and transfer office, Tricor Tengis Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong,, or via the designated URL (https://spot-emeeting.tricor.hk) by using the username and password provided on the notification letter sent by the Company as soon as possible and in any event not less than 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.

4. 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.

5. 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.

6. The above resolutions put to the EGM will be decided by way of poll as required by the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

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NOTICE OF EGM

1. As at the date of this notice, the Board comprised seven Directors, of which Mr. Zhang Xiaobin, Mr. Gao Feng and Mr. Chiu Sui Keung are executive Directors and Mr. Cheng Wing Keung, Raymond, Mr. Lam Williamson, Mr. Wong Hoi Kuen and Dr. Lam Lee G are independent non-executive Directors.

2. The register of members of the Company will be closed from Thursday, 20 January 2022 to Tuesday, 25 January 2022 (both days inclusive), during which period no transfer of Shares will be effected. In order to qualify for attending the Meeting, all transfers accompanied by the relevant share certificates and transfer forms must be lodged with the Company’s Hong Kong branch share registrar and transfer office, Tricor Tengis Limited at Level 54, Hopewell Centre, 183 Queen’s Road East, Hong Kong not later than 4:30 p.m. on Wednesday, 19 January 2022.

In view of the ongoing COVID-19 situation, the Company reserves the right to take the following precautionary measures as may be appropriate at the EGM:

• All attendees will be required to undergo a temperature check and sign a health declaration form (which may also be used for the purposes of contact tracing if required) before entering the EGM venue

• Compulsory wearing of surgical face masks by attendees inside the EGM venue at all times, and to maintain a safe distance between seats

• Any person who has a fever will not be permitted to attend the EGM

• Any person who is subject to the Hong Kong Government’s prescribed quarantine requirement, or has any flu-like symptoms, or has travelled outside of Hong Kong within 21 days immediately before the EGM (‘‘recent travel history’’) unless exempted by the authorities of the Hong Kong Government (as per guidelines issued by the Hong Kong government at www.chp.gov.hk/en/ features/102742.html), or has close contact with any person under quarantine or with recent travel history, will be denied entry into the EGM venue or be required to promptly leave the EGM venue

• No refreshments will be served at the EGM

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NOTICE OF EGM

The Shareholders who are feeling unwell or have been placed on leave of absence on the date of the EGM are advised not to attend the EGM.

Although webcast, teleconferencing or videoconferencing of the EGM will not be made available, the Shareholders who prefer not to attend or are restricted from attending the EGM, may still vote by proxy and are advised to take note of the last date and time for the lodgement of the proxy form.

As the COVID-19 situation continues to evolve, the Company will closely monitor the situation and reserves the right to take further measures as appropriate in order to minimise any risk to the Shareholders and others attending the EGM and to comply with any requirements or recommendations of any government agencies from time to time.

The Company seeks the understanding and cooperation of all Shareholders to minimise the risk of community spread of COVID-19.

The EGM will commence sharply at 11:00 a.m., and the Shareholders are encouraged to arrive at the EGM venue at least half an hour prior to the commencement time of the meeting to avoid delays from precautionary measures mentioned above in the registration process.

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