THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular, 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 EPS Creative Health Technology Group Limited, you should at once hand this circular and the accompanying form of proxy to the purchaser or transferee or to the bank, the licensed securities dealer or registered institution 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 is for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company.

EPS

EPS Creative Health Technology Group Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 3860)

MAJOR AND CONNECTED TRANSACTION

IN RELATION TO

THE DISPOSAL OF THE ENTIRE ISSUED SHARE CAPITAL OF

THE TARGET COMPANY AND SALE LOANS; AND

NOTICE OF EXTRAORDINARY GENERAL MEETING

Financial adviser to the Company

Independent Financial Adviser

to the Independent Board Committee and the Independent Shareholders

VEDA CAPITAL

智略资本

Unless the context requires otherwise, capitalized terms used on this cover page have the same meanings as defined in the section headed "Definitions" in this circular.

A letter from the Board is set out on pages 5 to 22 of this circular. A letter from the Independent Board Committee containing its recommendation to the Independent Shareholders is set out on pages 23 to 24 of this circular. A letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 25 to 44 of this circular.

A notice convening the EGM (as defined herein) to be held at 35/F, Dah Sing Financial Centre, 248 Queen's Road East, Wanchai, Hong Kong at 9:30 a.m. on Monday, 31 March 2025 is set out on pages EGM-1 to EGM-3 of this circular. Whether or not you are able to attend and vote at the EGM, you are requested to complete and sign the accompanying form of proxy in accordance with the instructions printed thereon and deposit the same at the office of Hong Kong branch share registrar and transfer office of the Company, Tricor Investor Services Limited, at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong as soon as possible and in any event not less than 48 hours (i.e 9:30 a.m. on Saturday, 29 March 2025) 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 instrument appointing the proxy shall be deemed to be revoked.

14 March 2025

CONTENTS

Page

DEFINITIONS 1

LETTER FROM THE BOARD 5

LETTER FROM THE INDEPENDENT BOARD COMMITTEE 23

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER 25

APPENDIX I — FINANCIAL INFORMATION OF THE GROUP I-1

APPENDIX II — VALUATION REPORT II-1

APPENDIX III — GENERAL INFORMATION III-1

APPENDIX IV — REPORT FROM CONFUCIUS INTERNATIONAL RELATING TO THE PROFIT FORECAST IV-1

APPENDIX V — LETTER FROM THE FINANCIAL ADVISER IN RELATION TO THE PROFIT FORECAST V-1

NOTICE OF EGM EGM-1

DEFINITIONS

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

"Announcement"
the announcement of the Company dated 19 February 2025

"associate(s)"
has the meaning ascribed to it under the Listing Rules

"Biotube"
Biotube Co., Ltd., a company incorporated in Japan with limited Liability and an indirect non-wholly owned subsidiary of the Target Company as at the Latest Practicable Date

"Board"
the board of Directors

"Business Day(s)"
day(s) (excluding Saturday, Sunday or public holiday) in Japan and/or Hong Kong on which licensed banks are generally open for business throughout the normal working hours

"Company"
EPS Creative Health Technology Group Limited, a company incorporated in the Cayman Islands with limited liability and its Shares are listed on the Main Board of the Stock Exchange (stock code: 3860)

"Completion"
the completion of the Disposal

"Completion Date"
the date of Completion, which shall be the third (3rd) Business Day after the fulfillment or waiver (as the case may be) of the conditions precedent set out in the paragraph headed "Conditions precedent" in this circular or such other date as the Company and the Purchaser may agree in writing

"Confucius International"
Confucius International CPA Limited

"connected person(s)"
has the meaning ascribed to it under the Listing Rules

"Disposal"
the sale and purchase of the Sale Shares and the Sale Loans

"Director(s)"
the director(s) of the Company

"EGM"
the extraordinary general meeting of the Company to be convened and held at 35/F, Dah Sing Financial Centre, 248 Queen's Road East, Wanchai, Hong Kong at 9:30 a.m. on Monday, 31 March 2025 to consider and, if thought fit, approve the Sale and Purchase Agreement and the transactions contemplated thereunder

"EPD HK"
EPD Hong Kong Limited, a company incorporated in Hong Kong with limited liability and a direct non-wholly owned subsidiary of the Target Company as at the Latest Practicable Date

DEFINITIONS

“EPS Healthcare”	EPS Healthcare Limited, a company incorporated in Hong Kong and a wholly-owned subsidiary of the Company as at the Latest Practicable Date
“EPS Medical”	EPS Medical Consultancy Services Limited, a company incorporated in Hong Kong and a wholly-owned subsidiary of the Company as at the Latest Practicable Date
“EPD KK”	EPD Co., Ltd.* (EPD 株式會社), a company incorporated in Japan with limited liability and an indirect non-wholly owned subsidiary of the Target Company as at the Latest Practicable Date
“FEF”	FEF Pharmaceutical Co., Ltd.* (FEF創薬株式會社), a company incorporated in Japan with limited liability and a direct wholly-owned subsidiary of the Target Company as at the Latest Practicable Date
“Group”	the Company and its subsidiaries from time to time
“HK$” or “Hong Kong dollars”	Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s Republic of China
“Independent Board Committee”	the independent board committee of the Company, comprising all the independent non-executive Directors which was established to advise the Independent Shareholders on the Sale and Purchase Agreement and the transactions contemplated thereunder
“Independent Financial Adviser”	Veda Capital Limited, a corporation licensed to carry on Type 6 (advising on corporate finance) regulated activity under the SFO, being the independent financial adviser appointed to advise the Independent Board Committee and the Independent Shareholders in respect of the Sale and Purchase Agreement and the transactions contemplated thereunder
“Independent Shareholders”	the Shareholders other than the Purchaser, its associate and any other Shareholder who is interested or involved in the transaction contemplated under the Sale and Purchase Agreement
“Independent Third Party(ies)”	has the meaning ascribed to it under the Listing Rules
“Independent Valuer”	Peak Vision Appraisals Limited, an independent valuer engaged by the Company

DEFINITIONS

"Inomed JP"
EPS Innovative Medicine (Japan) Co., Ltd.* (EPS創藥株式會社), a company incorporated in Japan with limited liability and a direct wholly-owned subsidiary of the Target Company as at the Latest Practicable Date

"JPY"
Japanese Yen, the lawful currency of Japan

"Latest Practicable Date"
13 March 2025, being the latest practicable date prior to the printing of this circular for the purpose of ascertaining certain information contained in this circular

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

"Long Stop Date"
31 March 2025, or such later date as the Company and the Purchaser may agree in writing

"Purchaser" or "EPS HD"
EPS Holdings, Inc., the controlling shareholder of the Company who beneficially holds 375,000,000 Shares representing approximately 71.8% of the issued share capital of the Company as at the Latest Practicable Date

"Sale and Purchase Agreement"
the conditional sale and purchase agreement dated 19 February 2025 entered into between the Purchaser and the Company in relation to the Disposal

"Sale Loans"
certain loans owed by the Target Company and EPD HK to the Company, EPS Healthcare and EPS Medical respectively in the aggregate amount of JPY1,250,000,000 (equivalent to approximately HK$61,365,000)

"Sale Shares"
the entire issued share capital of the Target Company held by the Company as at the Latest Practicable Date

"SFO"
the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

"Share(s)"
ordinary share(s) of HK$0.01 each in the issued share capital of the Company

"Shareholder(s)"
holder(s) of the Share(s)

"Stock Exchange"
The Stock Exchange of Hong Kong Limited

DEFINITIONS

“Target Company”	EPS Innovative Medicine (Hong Kong) Limited, a company incorporated in Hong Kong with limited liability and a direct wholly-owned subsidiary of the Company as at the Latest Practicable Date
“Target Group”	the Target Company and its subsidiaries
“Valuation”	the valuation of the market value of the 51% equity interest of Biotube conducted by the Independent Valuer
“Valuation Date”	31 December 2024
“Valuation Report”	the valuation report prepared by the Independent Valuer in respect of the valuation of the 51% equity interest of Biotube as at the Valuation Date by adopting the income approach
“%”	per cent.

The Chinese translation of this circular is for reference only. In case of any inconsistency, the English version shall prevail. Unless otherwise specified, references to dates and times of a day in this circular refer to Hong Kong local dates and times.

LETTER FROM THE BOARD

EPS

EPS Creative Health Technology Group Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 3860)

Executive Directors:

Mr. Washikita Kenichiro (Chairman and Chief Executive Officer)
Mr. Miyano Tsumoru (Chief Administrative Officer)
Mr. Narumi Shoichi (Chief Financial Officer)
Mr. Chiu Chun Tak
Ms. Du Yao (Chief Technology Officer)
Mr. Liang Fei

Non-executive Directors

Mr. Uematsu Takahiro
Mr. Yan Ping

Independent non-executive Directors:

Mr. Chan Cheuk Ho
Mr. Choi Koon Ming
Mr. Saito Hironobu
Ms. Zhang Cuiping

Registered Office:

Cricket Square
Hutchins Drive
P.O. Box 2681
Grand Cayman, KY1-1111
Cayman Islands

Head Office and Principal Place of Business in Hong Kong:

Flat A, 17/F.
Gemstar Tower
23 Man Lok Street
Hung Hom
Kowloon, Hong Kong

14 March 2025

To the Shareholders,

Dear Sir/Madam,

MAJOR AND CONNECTED TRANSACTION IN RELATION TO

THE DISPOSAL OF THE ENTIRE ISSUED SHARE CAPITAL OF THE TARGET COMPANY AND SALE LOANS; AND NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

Reference is made to the announcement of the Company dated 19 February 2025 in relation to, among others, the Sale and Purchase Agreement.

LETTER FROM THE BOARD

The purpose of this circular is to provide you with, among others, (i) further information in relation to the Sale and Purchase Agreement and the transactions contemplated thereunder; (ii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders in relation to the Sale and Purchase Agreement; (iii) a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders; and (iv) the notice of the EGM.

THE DISPOSAL

The Board is pleased to announce that on 19 February 2025 (after trading hours of the Stock Exchange), the Company, as vendor, entered into the Sale and Purchase Agreement with the Purchaser (the controlling shareholder of the Company), pursuant to which the Company conditionally agreed to sell and the Purchaser conditionally agreed to acquire the entire issued share capital of the Target Company, at a consideration of JPY1.00 (equivalent to approximately HK$0.049092). Upon Completion, the Company will cease to hold any interests in the Target Company. Accordingly, members of the Target Group will cease to be subsidiaries of the Company and their financial results will no longer be consolidated into the consolidated financial statements of the Company upon Completion.

Pursuant to the Sale and Purchase Agreement, the Company also conditionally agreed to sell or procure to sell, and the Purchaser conditionally agreed to purchase the Sale Loans, i.e. certain loans in the aggregate amount of JPY1,250,000,000 (equivalent to approximately HK$61,365,000) owed by the Target Company and EPD HK to the Company, EPS Healthcare and EPS Medical as at the date of Sale and Purchase Agreement, at face value, for a consideration of JPY1,250,000,000 (equivalent to approximately HK$61,365,000).

THE SALE AND PURCHASE AGREEMENT

The principal terms of the Sale and Purchase Agreement are set out below:

Date 19 February 2025 (after trading hours of the Stock Exchange)

Parties (i) The Company; and

(ii) The Purchaser

Subject matter

Pursuant to the Sale and Purchase Agreement, (i) the Company conditionally agreed to sell, and the Purchaser conditionally agreed to acquire the Sale Shares, i.e. the entire issued share capital of the Target Company, at a consideration of JPY1.00 (equivalent to approximately HK$0.049092); and (ii) the Company also conditionally agreed to sell or procure to sell, and the Purchaser conditionally agreed to purchase the Sale Loans, i.e. certain loans in the aggregate amount of JPY1,250,000,000 (equivalent to approximately HK$61,365,000) owed by the Target Company and EPD HK to the Company, EPS Healthcare and EPS Medical as at the date of Sale and Purchase Agreement, at face value, for a consideration of JPY1,250,000,000 (equivalent to approximately HK$61,365,000).

LETTER FROM THE BOARD

The Target Group is principally engaged in the research and development of regenerative medicine and search for functional foods, the development of new drugs, the development of new medical devices and the promotion of in-house researches.

Consideration

The aggregate consideration for the Sale Shares and the Sale Loans shall be the sum of JPY1,250,000,001 (equivalent to approximately HK$61,365,000), of which, as to JPY1 (equivalent to approximately HK$0.049092) is the consideration for the Sale Shares; and as to JPY1,250,000,000 (equivalent to approximately HK$61,365,000) is the consideration for the Sale Loans, which shall be payable by the Purchaser in cash at Completion.

The consideration was arrived at after arm's length negotiations between the Company and the Purchaser having taken into account, among others, (i) the unaudited net liabilities value of the Target Group as at 31 December 2024 of approximately HK$3,285,000; (ii) the appraised fair value of the 51.0% equity interest in Biotube (in which the Company indirectly holds approximately 51.0% effective equity interest) of approximately JPY615,215,000 (equivalent to approximately HK$30,202,000) as at 31 December 2024 based on the Valuation Report prepared by the Independent Valuer using the income approach; (iii) the recent financial performance and business prospects of the Target Group; (iv) having considered that EPD KK, FEF and Inomed JP who engaged in research or development have incurred expenses exceeding JPY1 billion in aggregate, while no substantial breakthroughs and estimated cash flow are anticipated in the foreseeable future, the Company is of the view that EPD KK, FEF and Inomed JP are cash-burning enterprises and would increase financial burden to the Company in general, therefore the Directors considered their relevant net book values as its valuation; (v) the Target Company and EPD HK are engaged in investment holding only; (vi) the uncertainty of future prospects of the Target Group's operations, results and performance as more particularly discussed in the section headed "Reasons for and benefits of the Disposal" in this circular; (vii) the carrying amount of the Sale Loans as at the date of the Sale and Purchase Agreement of JPY1,250,000,000 (equivalent to approximately HK$61,365,000); and (viii) the benefits of the Disposal to the Group as discussed in the section headed "Reasons for and benefits of the Disposal" in this circular.

Although the appraised fair value of the 51.0% equity interest in Biotube was approximately JPY615,215,000 (equivalent to approximately HK$30,202,000) as at 31 December 2024 based on the Valuation Report, the Directors considered that such valuation on its own is not indicative of the overall value of the Disposal Group and should be assessed together with the financial and operational condition of the Disposal Group as a whole, in particular, (i) the Disposal Group has recorded considerable and increasing unaudited consolidated losses after tax of approximately HK$23.1 million and HK$51.9 million for the two years ended 31 December 2023 and 2024, respectively, and the unaudited consolidated net liabilities of the Disposal Group reached approximately HK$3.3 million as at 31 December 2024; (ii) these financial issues were compounded by the lack of satisfactory results from the ongoing operation and research and development efforts by members of the Target Group, which are expected to result in substantial additional and continuous costs, time, and resources being incurred before the biotechnology products, which have faced delays in their launch, can be successfully brought to the market; (iii) the prospects of necessitating additional investments in time and resources by the Group in the Target Group without

LETTER FROM THE BOARD

guaranteed returns would impose significant risks on the Group; and (iv) the uncertainty of future prospects of the Target Group's operations, results and performance as more particularly discussed in the section headed "Reasons for and benefits of the Disposal" in this circular.

The Company has attempted to identify potential independent buyers to acquire the Target Company but it has proven to be a significant challenge due to several intertwined factors. The broader market trends and shifts in investor interest have created an environment where potential buyers are increasingly cautious. Many investors are focusing on opportunities with more immediate and tangible returns, leading to a decreased willingness to engage with companies still in the early stages of development or facing uncertainty. Besides, most of the information and materials related to the research and development of EPD KK and FEF are highly confidential. It is necessary for the Management to be cautious when identifying independent buyers without causing leakage of confidential information. Accordingly, it had been very difficult to identify any potential independent buyers who are understanding of the circumstances of the Target Group. The two key pipelines in the Target Group, namely, EPD KK and FEF, present unique challenges that make it difficult for buyers to see the value for the following reasons:

(i) regarding EPD KK, the approval from The Japanese Association for the Promotion of State-of-the-Art in Medicine for clinical study has not yet been confirmed. This means that the development is still in a very early stage. Furthermore, as there are no similar products to be used for comparison globally, potential buyers may struggle to grasp the pipeline's future potential and value. This uncertainty can deter investors who are seeking clear, definable paths to profitability; and

(ii) regarding FEF, the development has been progressing step by step but it was significantly delayed in comparison with the initial plan, causing the Target Group to further lose its appeal to any potential buyers. Although the clinical trial is ongoing, the results of the development are uncertain and cannot be assessed comprehensively at all at this moment. Without solid, persuasive data to demonstrate the value of the research and development investments, it becomes increasingly difficult to attract buyers who typically look for evidence of potential returns.

The combination of market conditions, the uncertainty surrounding the development stages of both pipelines, and the absence of persuasive evidence of their value collectively contribute to the difficulty in identifying potential independent buyers.

In view of the foregoing, the Directors considered the consideration of the Sale Shares of JPY1.00 (equivalent to approximately HK$0.049092) for the disposal of the Target Group to the Purchaser (i.e. the controlling shareholder of the Company) to be fair and reasonable and in the interest of the Company and the Shareholders.

The consideration of the Sale Loans was determined at its face value, for a consideration of JPY1,250,000,000 (equivalent to approximately HK$61,365,000) on dollar-to-dollar basis, which the Directors considered to be fair and reasonable and in the interest of the Company and its shareholders. Having considered the above, the aggregate consideration for the Sale Shares and the Sale Loans shall be the sum of JPY1,250,000,001 (equivalent to approximately HK$61,365,000).

LETTER FROM THE BOARD

Conditions precedent

Completion shall be subject to and conditional upon the fulfilment or waiver (as the case may be) of the following conditions precedent:

(i) the obtaining of the approval from the Independent Shareholders at the EGM to approve the Sale and Purchase Agreement and the transactions contemplated thereunder as required under the Listing Rules;

(ii) all the warranties given by the Purchaser remaining true and accurate in all material respects and not misleading in any material respects from the date of the Sale and Purchase Agreement up to and immediately before Completion;

(iii) all the warranties given by the Company remaining true and accurate in all material respects and not misleading in any material respects from the date of the Sale and Purchase Agreement up to and immediately before Completion; and

(iv) all approvals, consents or authorisation required to proceed with the transactions contemplated under the Sale and Purchase Agreement, including but not limited to all approvals, consents, authorisation, registrations and filings of relevant governmental authorities or regulatory bodies such as the Stock Exchange, institutions, organisations or any other third parties, having been obtained by the Company.

The Purchaser may at any time waive (in whole or in part) the condition referred to in paragraph (iii) above at its sole and reasonable discretion. The other conditions set out above are incapable of being waived. If the conditions set out in above have not been satisfied (or as the case may be, waived by the Purchaser) on or before 5:00 p.m. on the Long Stop Date, the Sale and Purchase Agreement shall cease and determine, and thereafter neither party shall have any obligations and liabilities towards each other thereunder.

As at the Latest Practicable Date, none of the above conditions have been satisfied.

Completion

Subject to the fulfilment and/or waiver of the conditions precedent, Completion shall take place on the Completion Date or such other date as the Company and the Purchaser may agree in writing.

Upon Completion, the Company will cease to hold any interest in the Target Company and, accordingly, members of the Target Group will cease to be subsidiaries of the Company and their financial results and assets and liabilities will no longer be consolidated into the consolidated financial statements of the Company.

VALUATION

The Company engaged Peak Vision Appraisals Limited as the independent valuer to conduct a valuation of the market value of 51% equity interest of Biotube for the purpose of the Disposal. The Valuation has been prepared in accordance with the HKIS Valuation Standards 2024 published by the Hong Kong Institute of

LETTER FROM THE BOARD

Surveyors, the RICS Valuation – Global Standards (Effective from 31 January 2025) published by the Royal Institution of Chartered Surveyors (the “RICS”) and the International Valuation Standards (Effective 31 January 2025) published by the International Valuation Standards Council, where applicable.

The Valuation Report is prepared by Mr. Nick C. L. Kung, a RICS Registered Valuer, Registered Professional Surveyor (General Practice) and Registered Business Valuer of the Hong Kong Business Valuation Forum who has more than 20 years of experience in the valuation of business assets and business entities in Hong Kong and overseas. The text of the Valuation Report is set out in Appendix II to this circular.

As mentioned in the paragraph headed “The Sale and Purchase Agreement – Consideration” above, the appraised fair value of the 51% equity interest in Biotube (in which the Company indirectly holds approximately 51.0% effective equity interest) was approximately JPY615,215,000 (equivalent to approximately HK$30,202,000) as at 31 December 2024 based on the Valuation Report dated 14 March 2025 prepared by the Independent Valuer using the income approach.

There are three general valuation approaches, namely the income approach, market approach, and asset approach. Having considered that (i) the business nature, specialty of operations, current condition, and industry of Biotube; (ii) the limited guideline public companies and comparable transactions with similar portfolio risks and rewards to form a reliable basis for the market approach and as the market approach may not fully reflect the economic benefits attributable to Biotube, the Independent Valuer is of the view that market approach is less representative than the income approach for the Valuation; (iii) as the asset approach ignores future economic benefits of the business as a whole, the Independent Valuer is of the view that asset approach is not appropriate for the Valuation; and (iv) income approach could specifically consider the projected income derived from the Biotube’s biotechnology business, the Independent Valuer considers the income approach would be appropriate and reasonable in the valuation of the market value of Biotube.

Key inputs adopted in the Valuation

The key inputs adopted in the Valuation are set out as follows:

Name of key inputs	Inputs	Basis/sources of assumptions
Discount Rate	15.1%	based on the weighted average cost of capital
Corporate Income Tax	30.6%	the corporate income tax rate of Japan
Terminal Growth Rate	2.0%	the projected inflation rate sourced from the International Monetary Fund
Lack of Marketability Discount	20.4%	Stout Restricted Stock Study Companion Guide (2024 Edition)

LETTER FROM THE BOARD

Valuation Assumption

Details of the principal assumptions, including commercial assumptions on which the profit forecast is made, are set out below:

(i) The knowhow relating to Biotube’s products will not be copied or infringed upon in a manner which would materially affect the profitability derived from Biotube’s products;

(ii) Biotube’s products will be developed and commercialised according to the timetable of the estimated development plan as provided by the Company;

(iii) For Biotube to continue as a going concern, the Biotube will successfully carry out all necessary activities for the development of its business;

(iv) Key management, competent personnel, professional and technical staff will all be retained to support the ongoing operations of Biotube;

(v) The availability of finance will not be a constraint on the forecast growth of the Biotube’s operations in accordance with the business plans;

(vi) Market trends and conditions where the Biotube operates will not deviate significantly from the economic forecasts in general;

(vii) The financial information of the Biotube as supplied to the Independent Valuer has been prepared in a manner which truly and accurately reflects the financial performances and positions of the Biotube as at the respective financial statement dates;

(viii) There will be no material changes in the business strategy of the Biotube and its operating structure;

(ix) Interest rates and exchange rates in the localities for the operations of the Biotube will not differ materially from those presently prevailing;

(x) All relevant approvals, business certificates, licences or other legislative or administrative authority from any local, provincial or national government, or private entity or organization required to operate in the localities where the Biotube operates or intends to operate will be officially obtained and renewable upon expiry unless otherwise stated; and

(xi) There will be no major changes in the political, legal, technological, economic or financial conditions and taxation laws in the localities in which the Biotube operates or intends to operate, which would adversely affect the revenues and profits attributable to the Biotube.

Having considered (i) the qualifications and experience of the Independent Valuer of which Mr. Nick C. L. Kung, the director of the Independent Valuer and the signor of the Valuation Report, is a RICS Registered Valuer, Registered Professional Surveyor (General Practice) and Registered Business Valuer of the Hong Kong Business Valuation Forum who has more than 20 years of experience in the valuation of business assets and business entities in Hong Kong and overseas; and (ii) the independence of the Independent

11 -

LETTER FROM THE BOARD

Valuer, which, to the best of the knowledge of the Directors, is an Independent Third Party, the Board is of the view that the Independent Valuer is qualified, experienced and competent in performing valuation and providing opinion in respect of the valuation of the Biotube.

Having discussed with the Independent Valuer the basis and rationale for the three general valuation approaches, and having considered (i) that the income approach is one of the three common-used approaches in the valuation industry and the analysis of the Independent Valuer in relation to the applicability of each approach as explained above; (ii) as advised by the Independent Valuer, the assumptions adopted for the Valuation are commonly used in valuation industry; (iii) the parameters adopted in the Valuation, including, discount rate, corporate income tax, terminal growth rate and lack of marketability discount, have been reviewed by the Board and considered appropriate; and (iv) the Board has reviewed the above principal assumptions and confirmed that the discounted future cash flows has been made after due and careful enquiry, the Directors concurred with the Independent Valuer's analysis and are of the view that the adoption of the income approach of the Valuation is fair and reasonable.

Report from the Confucius International and Letter from the financial adviser

As the Valuation has adopted income-based approach through the use of discounted cash flow method, the Valuation constitutes a profit forecast under Rule 14.61 of the Listing Rules and the requirements of Rule 14.60A of the Listing Rules are therefore applicable. In accordance with Rule 14.60A(2) of the Listing Rules, the Reporting Accountant has examined the arithmetical accuracy of the calculations of the discounted future cash flows of the Biotube in which the Valuation was based. The Board has reviewed the above principal assumptions and confirmed that the forecast has been made after due and careful enquiry. On the basis of the above, the Financial Adviser is of the view that the forecast has been made after due and careful enquiry of the Directors. A letter from Confucius International and a letter from the Financial Adviser are included in Appendix IV and Appendix V to this circular, respectively.

The Board has reviewed and considered the Valuation including and the underlying valuation methodology and assumptions upon which the Valuation was based. On the basis of the foregoing, the Board is of the opinion that the Valuation has been made after due and careful enquiry.

INFORMATION OF PARTIES

The Company is an investment holding company and its subsidiaries are principally engaged in the garment business, health products business, provision of innovation research organisation business with specialised contract research organisation services ("IRO with CRO services") and in-house research and development business.

The Purchaser is a controlling shareholder (as defined under the Listing Rules) of the Company which beneficially holds 375,000,000 Shares, representing approximately $71.8\%$ of the existing issued share capital of the Company, as at the Latest Practicable Date. The Purchaser is incorporated in Japan with limited liability and principally engaged in the services of CRO, SMO (Site Management Organization), CSO (Contract Sales Organization).

12 -

LETTER FROM THE BOARD

To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, based on the information made available to the Company, the Purchaser is owned as to (i) approximately 2.32% by Mr. Yan Hao, (ii) approximately 20.00% by Suzuken Co., Ltd (“Suzuken”), (iii) approximately 67.26% by Y&G Limited which is wholly-owned by Mr. Yan Hao, (iv) approximately 2.11% by Mr. Yu Huanrang; and (v) the remaining 89 individual shareholders each of whom owned less than 2.00% equity interest as at the Latest Practicable Date. Mr. Miyano Tsumoru, Mr. Chiu Chun Tak and Mr. Yan Ping, being Directors, hold in aggregate less than 1% of the issued share capital of the Purchaser.

Suzuken is a company listed on Prime Markets of the Tokyo and Nagoya Stock Exchanges, and the Sapporo Securities Exchange in Japan (stock code: 9987). Based on publicly available information, Suzuken and its subsidiaries are principally engaged in (i) pharmaceutical distribution; (ii) community healthcare and nursing care support; (iii) healthcare product development; and (iv) healthcare-related services businesses.

INFORMATION OF THE TARGET GROUP

13 -

LETTER FROM THE BOARD

The following table sets out the principal business activities carried on by the members of the Target Group (other than the Target Company):

Company name	Principal business activities
EPD HK	Investment holding
Inomed JP	Promotion of in-house researches and investment holding
FEF	Development of new drugs
EPD KK	Research and development of regenerative medicine and search for functional foods
Biotube	Development of new medical devices

Set out below is the key unaudited consolidated financial information of the Target Group for the two financial years ended 31 December 2023 and 2024:

	For the year ended 31 December
	2023
(unaudited)	2024
(unaudited)
	HK$’000	HK$’000
Revenue	–	–
Loss before taxation	23,016	55,090
Loss after taxation	23,056	51,892

As at 31 December 2024, the unaudited consolidated net liability value of the Target Group was approximately HK$3,285,000.

The original investment cost of the Company in the Target Company was approximately HK$116,446,000 which comprised (i) capital injection of approximately HK$77,039,000; and (ii) cost of acquisition of Biotube of approximately HK$39,407,000.

14 -

LETTER FROM THE BOARD

As at the Latest Practicable Date, the shareholding structure of the Target Group is as follows:

LETTER FROM THE BOARD

The following chart sets out the shareholding structure of the Target Group immediately upon Completion:

REASONS FOR AND BENEFITS OF THE DISPOSAL

As set out in the 2024 interim report of the Company, in view of the continuing dynamic situation, the management of the Group (the “Management”) has been actively assessing the impact of the global economic backdrop on the Group’s financial performance and business operations, and closely monitors the Group’s exposure to the market uncertainties and associated business risks. To mitigate these and ensure sustainable growth for the Group, the Management has implemented various stringent cost control measures.

In the recent assessment of the investment portfolio of the Group, the Management observed that the operational and financial performance of the Target Group under the segment of Provision of Innovative Research Organization (“IRO”) Business with Specialised Contract Research Organization (“CRO”) Services and In-house R&D Business (“IRO with CRO and In-House R&D Business segment”) was less satisfactory than expected. As set out in the annual report of the Company for the year ended 31 March 2024 (the “Annual Report”), the Group recorded a loss of approximately HK$34.3 million and HK$36.4 million for the year ended 31 March 2023 and 2024, respectively in relation to the IRO with CRO and In-House R&D Business segment. The Target Group recorded unaudited loss of approximately HK$51.9 million for

16 -

LETTER FROM THE BOARD

the year ended 31 December 2024. This unsatisfactory performance can be attributed to several factors, including the ongoing economic challenges and the prolonged timelines related to its research and development efforts.

Biotube is principally engaged in in-house research and development in relation to the projects of (i) autologous sheet tissue for autograft by in-body tissue architecture for the patients of refractory diabetic foot ulcer (“Biosheet Products”); and (ii) autologous tubular tissue for autograft by in-body tissue architecture for the patients of lower extremity peripheral arterial disease (“Biotube Products”). At the time of the acquisition of Biotube, the clinical trials for the Biosheet Products and the Biotube Products were in progress and 25% progress of the clinical trials were expected to be completed by December 2023 and the Management estimated that the Group could enjoy the revenue and profit generated from the Biosheet Products and the Biotube Products from December 2025. However, the progress of research and development of the Biosheet Products and the Biotube Products suffered from substantial delay. For the Biosheet Products, there are outstanding confirmatory clinical trials which must be completed before its launch and the process would be time-consuming. For the Biotube Products, its exploratory clinical trial is currently still on-going, but it was previously halted once and the study protocol was modified as per the suggestion from Pharmaceuticals and Medical Devices Agency of Japan (“PMDA”). The exploratory clinical trial has since resumed based on the modified protocols, but without any significant progress in comparison with the previous status since 31 March 2024. Both the Biosheet Products and the Biotube Products are expected to experience a further substantial delay for approximately two years as compared to the original timetable. Having considered that (i) the Biosheet Products and the Biotube Products could not be launched on time to generate revenue for the Group; (ii) the uncertainty on the launching timetable of the Biosheet Products and the Biotube Products; (iii) the additional time, cost and resources that may be incurred due to the delay; and (iv) PMDA has the right to issue further suggestions which may cause further delays, the Directors are of the view that the disposal of Biotube could retrieve the cost of investment and avoid further cash outflow of the Group.

Moreover, it is estimated that the ongoing operation and research and development efforts by members of the Target Group will likely result in additional and continuous costs, time, and resources being incurred to bring to market the biotechnology products which have faced delays in their launch. This may necessitate additional investments in time and resources by the Group in the Target Group without guaranteed returns, further complicating the financial outlook.

The Management considers that the pressing need of the Group is to optimise its financial resources and strategic focus. The decision to divest in the Target Group is not a reflection of the potential viability of the Target Group, but rather a strategic pivot to ensure the Group’s overall health and future profitability. Given the challenges associated with the Target Group, the Disposal represents a good opportunity for the Company to avert additional costs incurred by the Target Group while replenishing the Group’s financial resources to improve the Group’s liquidity and strengthen the Group’s financial position. Given the uncertainty surrounding the completion date of research and development and the subsequent launch of the biotechnology products, the Disposal presents an opportunity to divest the Target Group from the Group. This will enable the Group to more effectively deploy and allocate its resources, both time and financial, to other profitable core segments, such as the healthcare products business segment, as well as meeting the Group’s general working capital requirements and financial obligations. During the years ended 31 March 2023 and 2024, the healthcare products business segment has improved its performance from approximately HK$5.4 million segment loss during the year ended 31 March 2023 to segment profit of approximately

17 -

LETTER FROM THE BOARD

HK$7.7 million during the year ended 31 March 2024, while IRO with CRO and In-House R&D Business segment has continued loss making during the years ended 31 March 2023 and 2024. This approach not only alleviates the Group from the burdens associated with the Target Group’s underperformance but also enhances its strategic flexibility.

The operation of IRO with CRO and In-House R&D Business in Japan will not continue but will continue in the PRC and it is expected to be decreased after the disposal of the Target Group. The Company observed that the operational and financial performance of the IRO with CRO and In-House R&D Business segment was less satisfactory than expected and was determined to reduce the investment on the IRO with CRO and In-House R&D Business segment and focus more on the other core businesses which are profitable (i.e. healthcare products business segment). IRO with CRO and In-House R&D Business segment will not be one of the core business segments of the Company.

As the current management focus of the Group is on the profitable core businesses (i.e. healthcare products business segment) and it was considered that the businesses of the Target Group, which are of a long-term pre-investment type, do not align as well with the present management focus, the Management has therefore sought to dispose of the Target Group to mitigate the adverse financial effects of the unsatisfactory financial performance of the Target Group on the overall profitability of the Group. Therefore, for the benefit of the Group, the Purchaser as the controlling Shareholder of the Company has conditionally agreed to facilitate this strategic move by providing the Group with an exit for the investment in the Target Group by purchasing the Sale Shares, while enabling the Group to concentrate on enhancing its performance in more profitable and core segments.

Having considered that (i) the progress of research and development of the Biosheet Products and the Biotube Products have suffered from substantial delay; and (ii) there are outstanding confirmatory clinical trials for the Biosheet Product, which must be completed before its launch and the process would be time-consuming; (iii) the exploratory clinical trial of the Biotube Products is still on-going for which the approval is subject to relevant regulatory body, etc. PMDA; (iv) the significant financial resources, an aggregated of JPY430 million (equivalent to approximately HK$21.3 million) based on present value of free cash outflow for the four years ending 31 December 2029, are necessary to finance the Biotube before the expected cash inflow is generated from Biotube and that additional time, cost and resources may be incurred due to the further delay before the Group could enjoy the profits and cash inflow from Biotube; (v) the profit forecast of the Biotube was prepared based on the assumption that Biotube’s products will be developed and commercialised according to the timetable of the estimated development plan made on best effort basis, however, the actual result is variable subject to the results of confirmatory clinical trials and relevant approval from relevant regulatory bodies; (vi) the consideration of the Disposal is fair and reasonable, details of which please refer to the section headed “The Sale and Purchase Agreement – Consideration”; and (vii) it would be more beneficial to the Group if the Group could make use of the proceeds from the Disposal on developing more profitable and core healthcare products business and repayment of the outstanding payables of the Group to improve the financial position, details of which please refer to the section headed “Possible financial effects of the Disposal”; and (viii) the Disposal will provide immediate positive effects to mitigate the adverse financial impact of the unsatisfactory financial performance of the Target Group on the overall profitability of the Group, the Board (including the independent non-executive Directors who will give their view after taking into consideration of the advice of the Independent Financial Adviser) is of the view that the terms of the Sale and Purchase Agreement are on normal commercial terms, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

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LETTER FROM THE BOARD

POSSIBLE FINANCIAL EFFECTS OF THE DISPOSAL

Upon Completion, the Company will cease to have any interest in the Target Company, and accordingly, members of the Target Group will cease to be subsidiaries of the Company and their financial results thereafter will no longer be consolidated in the consolidated financial statements of the Group.

Earnings

Based on (i) the consideration of the Disposal; (ii) the unaudited consolidated net liability value of the Target Group as at 31 December 2024; (iii) the related expenses of approximately HK$1.0 million for the Disposal, the Group expects to record a gain of disposal of approximately HK$29.1 million from the Disposal. The actual gain/loss on the Disposal is subject to audit and therefore may be different from the amount mentioned above. Details of the estimated gain on disposal are as follows:

	HK$
Consideration received from the Disposal	1
Net liabilities of the Target Group	3,285,494
Non-controlling interests of the Target Group^{Note 1}	23,301,502
Reclassification of cumulative translation reserve of the Target Group to profit or loss of the Target Group^{Note 2}	3,545,584
Estimated professional fees of the Disposal	(1,020,000)
Estimated gain on disposal	29,112,581

Notes:

The carrying amount of non-controlling interests ("NCI") of the Target Group as at 31 December 2024 is HK$23,301,502. Companies in the Target Group have NCI included EPD HK, EPD KK and Biotube. During the year ended 31 March 2024, the Company has acquired 51% of the issued share capital of Biotube, which is part of the Target Group. At its acquisition-date, each identifiable asset and liability of Biotube is measured at its fair value. NCI are the present ownership instruments' proportionate share in the recognised amounts of the net assets acquired. The NCI in Biotube recognised at HK$38,810,000 was measured by reference to the proportionate share of recognised amounts of net assets of Biotube at acquisition date. For details please refer to the annual report of the Company for the year ended 31 March 2024 and the announcements of the Company dated 29 November 2023, 18 December 2023 and 29 January 2024. NCI would be allocated its share of net loss, and its respective share of other comprehensive income. As a result, the carrying amount of NCI of the Target Group as at 31 December 2024 is HK$23,301,502. The carrying amount of any non-controlling interests in the Target Group would be derecognised when the control is lost on disposal of the Target Group.
The carrying amount of cumulative translation reserve of the Target Group as at 31 December 2024 was HK$3,545,584. Certain of companies in the Target Group undertake transactions denominated in foreign currency, Japanese Yen and therefore, the financial statements of such companies need to be translated to the currency presented in the consolidated financial statements of the Company, Hong Kong dollar. Assets and liabilities are translated at the closing rate, and income and expenses are translated at the average rate for the relevant year. All resulting exchange differences would be recognised initially in other comprehensive income and reclassified from equity to profit or loss on disposal of the Target Group.

LETTER FROM THE BOARD

Assets and liabilities

Upon Completion, the unaudited total assets of the Group will be decreased by approximately HK$97,047,000 and the unaudited total liabilities of the Group will be decreased by approximately HK$100,334,000. The actual change in total assets and total liabilities of the Group attributable to the Disposal is subject to audit and therefore may be different from the amounts mentioned above.

The net proceeds from the Disposal are estimated to be approximately HK$60.3 million and are expected to be used as to (i) approximately HK$35.0 million for the repayment of outstanding payables of the Group including a partial payment of promissory notes held by Mr. Chan Wing Kai, a director of Speed Apparel (BVI) Limited, a company incorporated in the British Virgin Islands and a wholly-owned subsidiary of the Company, further details of which are set out in the announcement of the Company dated 6 March 2024; (ii) approximately HK$20.0 million for the operation and development, including, inventory financing and working capital for (a) source and distribution of healthcare products for preclinical trials and services of leasing medical devices; and (b) distribution of Japanese health food brands, including, among others, Ryukakusan (龍角散) candy series, Ito En (伊藤園) products, Tokyo Banana (東京香蕉) and Ichiran (一蘭) Ramen so as to increase the sales volume under (ii) approximately HK$20.0 million for the operation and development of the healthcare products businesses of the Group; and (iii) approximately HK$5.3 million for the general working capital of the Group, such as salary, rental, operating expenses and professional fees.

LISTING RULES IMPLICATIONS

As at the Latest Practicable Date, the Purchaser, being the controlling shareholder of the Company who beneficially holds 375,000,000 Shares, representing approximately 71.8% of the existing issued share capital of the Company, it is therefore a connected person of the Company under Rule 14A.07 of the Listing Rules. Accordingly, the Disposal constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules.

As one or more of the applicable percentage ratios calculated in accordance with the Listing Rules in respect of the Disposal exceeds 25% but is less than 75%, the Disposal also constitutes a major transaction for the Company and is therefore subject to the notification, announcement, circular and Independent Shareholders' approval requirements under Chapter 14 of the Listing Rules.

The Purchaser, being the controlling shareholder of the Company who beneficially holds 375,000,000 Shares, representing approximately 71.8% of the existing issued share capital of the Company as at the Latest Practicable Date, and its associates shall abstain from voting on the resolution to approve the Sale and Purchase Agreement and the transactions contemplated thereunder at the EGM. Save as aforementioned, to the best knowledge, information and belief of the Directors having made all reasonable enquiry, no other Shareholder has any material interest in the Disposal and would be required to abstain from voting at the EGM.

Mr. Miyano Tsumoru, Mr. Chiu Chun Tak and Mr. Yan Ping, the Directors who have beneficial interests in EPS HD, are considered to have material interest in the Sale and Purchase Agreement, and accordingly, have abstained from voting on the relevant board resolutions proposed to approve the Sale and Purchase

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LETTER FROM THE BOARD

Agreement and the transactions contemplated thereunder. Save as disclosed above, none of the Directors has any interest in the Sale and Purchase Agreement and the transactions contemplated thereunder and were required to abstain from voting on the relevant board resolutions.

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

An Independent Board Committee comprising all the independent non-executive Directors has been established to advise the Independent Shareholders on whether the terms under the Sale and Purchase Agreement are fair and reasonable and in the interests of the Company and the Shareholders as a whole. With the approval of the Independent Board Committee, Veda Capital Limited has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

The letter from the Independent Board Committee is set out on pages 23 to 24 in this circular and the letter from the Independent Financial Adviser is set out on pages 25 to 44 in this circular.

GENERAL

The EGM will be convened and held by the Company on Monday, 31 March 2025 at 9:30 a.m. at 35/F, Dah Sing Financial Centre, 248 Queen's Road East, Wanchai, Hong Kong to seek the approval from the Independent Shareholders for the Sale and Purchase Agreement and the transactions contemplated thereunder by way of poll. The notice of the EGM is set out on pages EGM-1 to EGM-3 of this circular.

VOTING BY POLL

In accordance with Rule 13.39(4) of the Listing Rules, any vote of shareholders at a general meeting must be taken by poll. Accordingly, the voting on all resolutions at the EGM will be conducted by way of poll.

RECOMMENDATION

The Directors (including the independent non-executive Directors who have expressed their views in the letter from the Independent Board Committee after taking into account the advice of the Independent Financial Adviser) consider that the terms of the Sale and Purchase Agreement and the transactions contemplated thereunder are fair and reasonable and are in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors (including the independent non-executive Directors who have expressed their views in the letter from the Independent Board Committee after taking into account the advice of the Independent Financial Adviser) recommend the Independent Shareholders to vote for the resolutions to approve the Sale and Purchase Agreement and the transactions contemplated thereunder at the EGM.

You are advised to read the letter from the Independent Board Committee and the letter from the Independent Financial Adviser before deciding how to vote on the resolutions relating to the Sale and Purchase Agreement and the transactions contemplated thereunder to be proposed at the EGM.

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LETTER FROM THE BOARD

ADDITIONAL INFORMATION

Your attention is also drawn to the additional information set out in the appendices to this circular and the notice convening the EGM.

Yours faithfully

For and on behalf of the Board

EPS Creative Health Technology Group Limited

Miyano Tsumoru

Executive Director

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

EPS

EPS Creative Health Technology Group Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 3860)

14 March 2025

To the Independent Shareholders

Dear Sir/Madam,

MAJOR AND CONNECTED TRANSACTION IN RELATION TO THE DISPOSAL OF THE ENTIRE ISSUED SHARE CAPITAL OF THE TARGET COMPANY AND SALE LOANS

We refer to the circular issued by the Company to the Shareholders dated 14 March 2025 (the "Circular"), of which this letter forms part. Terms used in this letter shall have the same meanings as those defined in the Circular unless the context otherwise requires.

We have been appointed by the Board as the members of the Independent Board Committee to advise the Independent Shareholders on whether, in our opinion, the Sale and Purchase Agreement and the transactions contemplated thereunder are in the ordinary and usual course of business of the Group, on normal commercial terms and fair and reasonable as far as the Independent Shareholders are concerned and in the interests of the Company and the Shareholders as a whole. Veda Capital Limited has been appointed as the Independent Financial Adviser in this regard.

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

We wish to draw your attention to the “Letter from the Board” and the “Letter from the Independent Financial Adviser” as set out in the Circular. Having taken into account the advice of the Independent Financial Adviser, we concur with the view of the Independent Financial Adviser and consider that although the Disposal is not in the ordinary and usual course of business of the Group, (i) the Sale and Purchase Agreement and the transactions contemplated thereunder is on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) the Disposal 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 resolution to be proposed at the EGM to approve the Sale and Purchase Agreement and the transactions contemplated thereunder.

Yours faithfully,

For and on behalf of the Independent Board Committee of

EPS Creative Health Technology Group Limited

Mr. Chan Cheuk Ho
Independent non-executive Director

Mr. Choi Koon Ming
Independent non-executive Director

Mr. Saito Hironobu
Independent non-executive Director

Ms. Zhang Cuiping
Independent non-executive Director

24 -

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the full text of the letter from the Independent Financial Adviser setting out the advice to the Independent Board Committee and the Independent Shareholders in respect of the terms of the Sale and Purchase Agreement and the transactions contemplated thereunder, which has been prepared for the purpose of inclusion in this circular.

VEDA | CAPITAL

智略资本

Room 27, Units 405-414, Level 4

Core E, Cyberport 3

100 Cyberport Road, Hong Kong

14 March 2025

To: Independent Board Committee and Independent Shareholders of

EPS Creative Health Technology Group Limited

Dear Sirs/Madams,

MAJOR AND CONNECTED TRANSACTION

IN RELATION TO

THE DISPOSAL OF THE ENTIRE ISSUED SHARE CAPITAL OF

THE TARGET COMPANY AND SALE LOANS

INTRODUCTION

We refer to our appointment as the independent financial adviser (the "Independent Financial Adviser") to advise the Independent Board Committee and the Independent Shareholders in respect of the entering into of the Sale and Purchase Agreement and the transactions contemplated thereunder, details of which are set out in the letter of the Board (the "Board Letter") contained in the circular of the Company to the Shareholders dated 14 March 2025 (the "Circular"), of which this letter forms part. Capitalized terms used in this letter have the same meanings as those defined in the Circular unless the context otherwise specifies.

On 19 February 2025 (after trading hours of the Stock Exchange), the Company, as vendor, entered into the Sale and Purchase Agreement with the Purchaser (the controlling shareholder of the Company), pursuant to which the Company conditionally agreed to sell and the Purchaser conditionally agreed to acquire the Sale Shares and the Sale Loans at an aggregate consideration of JPY1,250,000,001 (equivalent to approximately HK$61,365,000).

As at the Latest Practicable Date, the Purchaser, being the controlling shareholder of the Company, beneficially holds 375,000,000 Shares representing approximately $71.8\%$ of the existing issued share capital of the Company, it is therefore a connected person of the Company under Rule 14A.07 of the Listing Rules. Accordingly, the Disposal constitutes connected transactions for the Company under Chapter 14A of the Listing Rules.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As one or more of the applicable percentage ratios calculated in accordance with the Listing Rules in respect of the Disposal exceeds 25% but is less than 75%, the Disposal also constitutes a major transaction for the Company and are is therefore subject to the notification, announcement, circular and Independent Shareholders’ approval requirements under Chapter 14 of the Listing Rules.

The EGM will be convened and held for the Independent Shareholders to consider and, if thought fit, approve the Sale and Purchase Agreement and the transactions contemplated thereunder. Save for the Purchaser who shall abstain from voting on the relevant resolution, to the best knowledge, information and belief of the Directors having made all reasonable enquiry, no other Shareholder has any material interest in the Disposal and would be required to abstain from voting at the EGM.

The Independent Board Committee comprising all four independent non-executive Directors has been established to consider the terms of the Sale and Purchase Agreement and the transactions contemplated thereunder, and to advise the Independent Shareholders as to whether the terms of the Sale and Purchase Agreement are fair and reasonable, on normal commercial terms and in the interests of the Company and the Shareholders as a whole. We, Veda Capital Limited, have been appointed as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

OUR INDEPENDENCE

As at the Latest Practicable Date, we do not have any relationships or interests with the Company or any other parties that could reasonably be regarded as relevant to our independence. Save for the appointments as the independent financial advisers in respect of (a) the sale and purchase agreement dated 28 March 2023 and the transactions contemplated thereunder; (b) the framework purchase agreement dated 27 July 2023 (and supplemented by a supplemental agreement dated 5 September 2023) and the transactions contemplated; and (c) this appointment as the Independent Financial Adviser in respect of the Sale and Purchase Agreement and the transactions contemplated thereunder, there was no other engagement between us and the Group in the past two years that could reasonably be regarded as relevant to our independence. Apart from normal professional fees paid or payable to us in connection with this transaction, no other arrangement exists whereby we had received or would receive any fees or benefits from the Company or any parties that could reasonably be regarded as relevant to our independence. Accordingly, we consider ourselves independent in accordance with Rule 13.84 of the Listing Rules.

BASIS AND ASSUMPTIONS OF OUR OPINION

In formulating our opinion and advice, we have relied upon the accuracy of the information and representations contained in the Circular and information provided to us by the Directors and the management of the Company (collectively, the "Management"). We have assumed that all statements, information and representations made or referred to in the Circular and all information and representations which have been provided by the Management, for which they are solely and wholly responsible, were true at the time they were made and continue to be true as at the Latest Practicable Date. The Directors have collectively and individually accepted full responsibility for the accuracy of the information contained in the Circular and have confirmed, having made all reasonable enquiries that, to the best of their knowledge and belief, there are no omission of other facts that would make any statements in the Circular misleading. The

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Shareholders will be notified of material changes as soon as possible, if any, to the information and representations provided and made to us after the Latest Practicable Date and up to and including the date of the EGM.

As the Independent Financial Adviser, we take no responsibility for the contents of any part of the Circular, save and except for this letter. We have no reason to believe that any information and representations relied on by us in forming our opinion is untrue, inaccurate or misleading, nor are we aware of any omission of any material facts that would render the information provided and the representations made to us untrue, inaccurate or misleading. We consider that we have been provided with sufficient information to reach an informed view and to provide a reasonable basis for our opinion. In rendering our opinion in the Circular, we have also researched, analyzed and relied on (i) the Circular; (ii) published information of the Group, including but not limited to, the financial reports of the Company for the two financial years ended 31 March 2023 and 2024 and the interim report of the Company for the six months ended 30 September 2024; (iii) information provided by the Management; and (iv) information provided by the Valuer and the relevant disclosure in the Valuation Report.

In light of the above, we consider that we have performed all reasonable steps as required under Rule 13.80 of the Listing Rules (including the notes thereto) to formulate our opinion and recommendation. We have not, however, conducted any independent in-depth investigation into the business affairs, financial position or future prospects of the Group, nor have we carried out any independent verification of the information provided by the Management.

PRINCIPAL FACTORS AND REASONS CONSIDERED

In formulating our opinion and recommendations to the Independent Board Committee and the Independent Shareholders, we have taken into consideration the following principal factors and reasons. Our conclusions are based on results of all analysis taken as a whole.

1. Business and financial information of the Group

The Company is an investment holding company and its subsidiaries are principally engaged in the garment business ("Garment"), health product business ("HCP"), provision of innovation research organization business with specialized contract research organization services and in-house research and development business ("IRO/CRO and In-House R&D").

Financial performance for the six months ended 30 September 2023 and 2024

Set out below a summary of the financial information of the Group for the six months ended 30 September 2023 and 2024 respectively.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

	For the six months ended
	30 September	30 September
	2023	2024
	HK$'000	HK$'000
Revenue	357,829	346,878
- Garment	274,964	244,981
- HCP	65,060	73,408
- IRO/CRO and In-House R&D	17,805	28,489
Gross profit	48,831	49,551
Other income and loss	15,170	29,731
Expenses (note)	(69,032)	(55,234)
Finance costs	(3,151)	(4,746)
(Loss)/Profit attributable to owners of the Company	(5,235)	14,684
	As at
		30 September
	31 March 2024	2024
	HK$'000	HK$'000
Total assets	429,885	474,950
Total liabilities	291,703	298,752
Net assets	138,182	176,198

Note: including administrative expenses, research and development expenses and selling and distribution expenses

The Group recorded a revenue of approximately HK$346.88 million for the six months ended 30 September 2024, representing a slight decrease of approximately 3.06% as compared to that of approximately HK$357.83 million for the six months ended 30 September 2023.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Breakdown of the segment contribution to the Group's revenues for the six months ended 30 September 2023 and 2024 are as follows,

	For the six months ended
	30 September 2023	30 September 2024
Garment	76.84%	70.63%
HCP	18.18%	21.16%
IRO/CRO and In-House R&D	4.98%	8.21%
Total	100%	100%

Furthermore, the Group recorded a profit attributable to owners of the Company of approximately HK$14.68 million for the six months ended 30 September 2024, representing a turnaround from a loss attributable to owners of the Company of approximately HK$5.24 million for the six months ended 30 September 2023. As advised by the Company, the turnaround was mainly attributable to, among other things, the decrease in administrative, selling and distribution expenses of the Group and an increase in other income and loss that include (i) government grants of approximately HK$4.71 million received by the Group; and (ii) gain from exchange difference with approximately HK$3.43 million during the period for the six months ended 30 September 2024.

Financial performance for the years ended 31 March 2022, 2023 and 2024

Set out below a summary of the financial information of the Group for the three financial years ended 31 March 2022, 2023 and 2024.

	For the financial years ended
	31 March 2022	31 March 2023	31 March 2024
	HK$'000	HK$'000	HK$'000
Revenue	519,947	452,906	644,615
- Garment	424,638	381,500	466,978
- HCP	79,518	55,844	139,488
- IRO/CRO and In-House R&D	15,791	15,562	38,149
Gross profit	76,781	67,847	99,257
Other income, gains and (losses)	(3,702)	(261)	11,883
Expenses (note)	(91,209)	(109,952)	(128,122)
Finance costs	(4,614)	(5,795)	(7,070)
Profit/(Loss) attributable to owners of the Company	(22,600)	(45,737)	(22,066)

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

	As at
	31 March 2022
HK$’000	31 March 2023
HK$’000	31 March 2024
HK$’000
Total assets	296,560	227,494	429,885
Total liabilities	156,696	135,850	291,703
Net assets	139,864	91,644	138,182

Note: including administrative expenses, research and development expenses and selling and distribution expenses

As set out in the table above, the Group's revenues have been relatively stable throughout the three years ended 31 March 2024 as driven by its Garment business and HCP business. The Group recorded a revenue of approximately HK$644.62 million for the year ended 31 March 2024, representing an increase of approximately 42.33% as compared to that of approximately HK$452.91 million for the year ended 31 March 2023. As advised by the Company, the increase in the revenue was due to the Group's expansion in its HCP business after acquiring, and also recognizing full year results into the Group from, EP Trading Co., Ltd. that provides leasing of medical devices service for preclinical trials and R&E Corporation Limited that distributes popular Japanese food products to the PRC. For the year ended 31 March 2024, the Group's revenue was generated as to approximately 72.44% from the Garment business, approximately 21.64% from the HCP business and approximately 5.92% from the IRO/CRO and In-House R&D business.

Breakdown of the segment contribution to the Group's revenues for the financial years ended 31 March 2023 and 2024 are as follows,

	For the years ended
	31 March 2023	31 March 2024
Garment	84.23%	72.44%
HCP	12.33%	21.64%
IRO/CRO and In-House R&D	3.44%	5.92%
Total	100%	100%

On the other hand, as the Group had been incurring substantial expenses (i.e. more than HK$90 million per year over the three years ended 31 March 2022, 2023 and 2024) for the purposes of, including, increasing competitiveness and market shares of, and achieving long-term benefits for, the Group, it recorded losses attributable to owners of the Company of approximately HK$22.07 million for the year ended 31 March 2024, approximately HK$45.74 million for the year ended 31 March 2023 and approximately HK$22.60 million for the year ended 31 March 2022.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The above financial information illustrated to us that (i) the stable contribution from Garment business and the increasing contribution from the HCP business attributed most of the Group's revenue in the recent years; and (ii) the Group's performance may be improving as it has turned around from loss makings for the three years ended 31 March 2024 to profit making for the six months ended 30 September 2024 as it has, among other things, recorded more revenue while cut down its expenses.

2. Information of the Purchaser

The Purchaser is a controlling shareholder (as defined under the Listing Rules) of the Company which beneficially holds 375,000,000 Shares, representing approximately 71.8% of the existing issued share capital of the Company, as at the Latest Practicable Date. The Purchaser is incorporated in Japan with limited liability and principally engaged in the services of CRO, SMO (Site Management Organization), CSO (Contract Sales Organization).

To the best of the knowledge, information and belief of the Directors, having made all reasonable enquiries, based on the information made available to the Company, the Purchaser is owned as to (i) approximately 2.32% by Mr. Yan Hao; (ii) approximately 67.26% by Y&G Limited which is wholly-owned by Mr. Yan Hao; (iii) approximately 20.00% by Suzuken; (iv) approximately 2.11% by Mr. Yu Huanrang; and (v) the remaining 89 individual shareholders each of whom owned less than 2.00% equity interest as at the date of the Sale and Purchase Agreement. Mr. Miyano Tsumoru, Mr. Chiu Chun Tak and Mr. Yan Ping, being Directors, hold in aggregate less than 1% of the issued share capital of the Purchaser.

3. Information of the Target Group

The Target Company, EPS Innovative Medicine (Hong Kong) Limited, is incorporated in Hong Kong with limited liability and is principally engaged in investment holding in other members of the Target Group, and the holding of certain limited partnership units in a limited partnership established under the laws of Japan. The Target Group is principally engaged in the research and development of regenerative medicine and search for functional foods, the development of new drugs, the development of new medical devices and the promotion of in-house researches.

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

As extracted from the Board Letter, the table below sets out the principal business activities carried on by the members of the Target Group (other than the Target Company).

Company name	Principal business activities
EPD HK	Investment holding
Inomed JP	Promotion of in-house researches and investment holding
FEF	Development of new drugs
EPD KK	Research and development of regenerative medicine and search for functional foods
Biotube	Development of new medical devices

Set out below is the key unaudited consolidated financial information of the Target Group for the two financial years ended 31 December 2023 and 2024:

	For the years ended 31 December
	2023
HK$’000	2024
HK$’000
Revenue	–	–
Loss before taxation	23,016	55,090
Loss after taxation	23,056	51,892

As advised by the Company, the increase in loss of approximately HK$51.89 million for the year ended 31 December 2024, from approximately HK$23.06 million for the year ended 31 December 2023 was primarily due to the increase in research and development expenses for the development of new drugs.

As at 31 December 2024, the unaudited consolidated net liability value of the Target Group was approximately HK$3,285,000.

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4. Reasons for and benefits of the Disposal

With reference to the Board Letter, the Management has been actively assessing the impact of the global economic backdrop on the Group's financial performance and business operations, and closely monitors the Group's exposure to the market uncertainties and associated business risks. To mitigate these and ensure sustainable growth for the Group, the Management has implemented various stringent cost control measures.

From our inquiries with the Management in relation to the reasons for and benefits of the Disposal, we understood that the Management considered the operations and financial performances of the members of the Target Group under the segment of IRO/CRO and In-House R&D were less satisfactory than expected. The Group recorded consecutive losses of approximately HK$34.3 million and HK$36.4 million for the years ended 31 March 2023 and 2024 for its IRO/CRO and In-House R&D business. The Target Group recorded unaudited loss of approximately HK$51.9 million for the year ended 31 December 2024. Moreover, it is estimated that the ongoing operation and research and development efforts by members of the Target Group will result in additional and continuous costs, time, and resources being incurred to bring to market the biotechnology products which have faced delays in their launch. This may necessitate additional investments in time and resources by the Group in the Target Group without guaranteed returns. Accordingly, the Board is of the view that the Disposal represents a good opportunity for the Company to avert additional costs incurred by the Target Group while replenishing the Group's financial resources to improve the Group's liquidity and strengthen the Group's financial position.

As mentioned in the previous section, the Company has injected investment amounts not less than HK$77.04 million for the researches and the development of the products for the members of the Target Group, including Inomed JP, FEF, EDP HK and EDP KK. We were given to understand that the timing for the researching results and products under these subsidiaries (i.e. completion of products development) are longer than initially expected and are still in their respective beginning phrases that will not enable the Management to properly assess for the remaining completion time and costs they needed. Accordingly, should the Group carry on to engage the business development of the members of the Target Group (more information of Biotube will be further described in the paragraphs below), it is likely that the Group will have to incur notable expenses and losses in its IRO/CRO and In-House R&D business in the upcoming years. We were also given to understand that although Biotube is facing similar concerns as described in the above, the development of the products under Biotube are comparatively more advanced and notable progress has been achieved which will be further discussed below.

With reference to the Company's announcements dated 29 November 2023, 18 December 2023 and 29 January 2024 (the "Biotube Announcements"), the Group acquired Biotube in late 2023 and early 2024 after considered that, among others, (i) the resources and innovative research technology controlled by Biotube are of high quality; and (ii) the operations of Biotube may improve the development the Group's innovative research sector and thus create synergy effect with the Group's HCP business. Biotube principally engages in in-house research and development in relation to the projects of autologous sheet tissue for autograft by in-body tissue architecture for the patients of Refractory diabetic foot ulcer (the "Biosheet Products") and autologous tubular tissue for autograft by in-body tissue architecture for the patients of lower extremity peripheral arterial disease (the

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

"Biotube Products"). As mentioned in the Biotube Announcements, at the time of the acquisition of Biotube, the clinical trials for Biosheet Products and Biotube Products have already been initiated after careful review for the procedure by Pharmaceuticals and Medical Devices Agency of Japan ("PMDA") without any quality matters. The Management expected that after the completions of the clinical trials required for the Biosheet Products and Biotube Products, the Group will be able to enjoy favorable returns by December 2025. However, as advised by the Management, the progress of research and development of Biosheet Products and Biotube Products suffered from substantial delay for the follow reasons,

Products	Reasons for the delay
Biosheet Products	Outstanding confirmatory clinical trials to be completed before launching and the process can be time consuming
Biotube Products	Its exploratory clinical trial is still on-going but it was previously halted as the study protocol was modified according to suggestions from PDMA

In light of the above, it is re-estimated that the completions of the development of the Biosheet Products and Biotube Products will have to be delayed for around two more years while such development process will require the Group to continue to allocate time, costs and resources before any commercial returns may be generated. With reference to the Valuation, an aggregated of JPY 430 million (equivalent to approximately HK$21.3 million) based on present value of free cash outflow for the four years ending 31 December 2029 will be used to finance the researches of Biotube. We were given to understand by the Management that further trials and/or more modification suggestions from PMDA may or may not be required and cannot be certain as at the moment and are subject to the then results and circumstances. Accordingly, the said completion time of around two more years is estimated based on best effort basis, subject to be altered with variables that may not be under the Group's control such as, having sufficient and satisfying confirmatory clinical trials and obtaining approvals from relevant regulatory bodies.

Given the uncertainty surrounding the completion date of research and development and the subsequent launch of the biotechnology products, the Disposal presents an opportunity to divest the Target Group from the Group which will enable the Group to more effectively deploy and allocate its resources, both time and financial, to other profitable core segments of the Group as well as meeting the Group's general working capital requirements and financial obligations. Unlike the IRO/CRO and In-House business of the Group, the performance of the HCP business of the Group, where the Group involves in (i) sourcing and distributing large and medium-sized healthcare products for preclinical trials and added services of leasing medical devices; and (ii) exporting and distributing Japanese health food (brands such as 北陵製菓, 東京香蕉, 龍角散, 伊藤園 and etc.) to the PRC market, has improved from approximately HK$5.4 million segment loss for the year ended 31 March 2023 to a segment profit of approximately HK$7.7 million for the year ended 31 March 2024. As the current Management's development focus on the Group is on the HCP business, taking advantages of its well-established suppliers and customers network, the Management believes that the Group will be able to respond to market demand more actively and efficiently and thus generate more profits to the Group, it was considered that the businesses of the Target Group, which are of a long-term pre

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investment type, do not align as well with the Management's focus, and has therefore sought for the Disposal. The Company expects that, upon Completion, the IRO/CRO and In-House business of the Group will cease to be considered as one of the core business segments of the Group.

We noted from the section above headed "3. Information of the Target Group", the Target Group has been recording losses over time and as advised by the Management, the losses were mainly due to, among other things, the relatively high costs and resources utilized by the Group for the continuing operation of the business to develop new drugs and that more commercial benefits are expected to be recognized in the long term when the development of such new drugs are completed successfully.

With reference to the annual report of the Company for the year ended 31 March 2024, the Group has recorded research and development expenses of approximately HK$24.31 million and approximately HK$13.04 million for the years ended 31 March 2024 and 31 March 2023 respectively, that, as advised by the Management, were incurred by the members of the Target Group to, among others, complete the research and development of new drugs for the Group. Based on our understanding with the Management, the developments of certain new drugs from the Target Group are yet to be completed and therefore, unless giving up on its previous investments and/or without the Disposal, it is expected that additional costs and time will be required from the Group to continue to complete these products until they can obtain the relevant regulatory approvals and begin to recognize revenue for the Group. However, in view of the circumstances that, including but not limited to, (i) the Group has been loss-makings for the three consecutive years ended 31 March 2022, 2023 and 2024; (ii) the Target Group has also been loss-making and is expected to require more investment from the Group; and (iii) the ongoing unstable economic environment, it is the Group's intentions to minimize the risks and cut costs in order to create more financial flexibility and to improve its financial position.

As mentioned in the Board Letter, the Company has attempted to identify other potential independent buyers to acquire the Target Company but has also encountered certain challenges (the "Challenges"). As advised by the Management, it is difficult to identify potential buyers due to the facts that (i) the completion and the effectiveness of the developing products of the Target Group as such products have yet to produce persuasive data or results that could demonstrate their respective values; (ii) the Group's reluctance to provide full relevant information (i.e. trial results and methodologies applied etc) of the developing products of the Target Group as they are considered to be highly confidential; and (iii) the required pharmaceutical related knowledge, costs and efforts to be incurred to take-over and run the business of the Target Group. We were also given to understand that, after the relevant research results may be completely shared to such new purchaser(s), if any, that agree to acquire the Target Group, there will likely be a setback or time required for the new purchaser(s), if any, and/or the new developing team, to have to revisit, understand and agree with the existing results (i.e. research steps, methodologies and clinic results) which may or may not require more time for the completion of development. The Challenges therefore, require interested buyers to be understanding of the circumstances of the Target Group and have imposed inevitable limitations to and barriers for the Management to identify willing buyers with interests to participate in the Target Group's development projects.

Further to the above-mentioned, the Company also explained that the Management had attempted to obtain external fundings from banks and/or other financial investors as investments from other investors and potential buyers are uneasy to be identified as explained in the previous paragraph, but

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fundings are not as easy to be obtained to support the operations of the Target Group given most of the products' development are yet to be approved and/or proven to be able to generate commercial benefits in the near future particularly under the current slow-recovering economy. The Group entered into subscription agreements with two subscribers on 9 April 2024, the completions of which took place on 22 April 2024 and raised a total gross proceed of HK$22.0 million for the Group to fund its working capital. Other than the subscriptions as mentioned, the Group did not conduct other fund-raising activities in the past twelve months immediately preceding the date of the Sale and Purchase Agreement. As at 30 September 2024, the Group recorded a bank and cash balances of HK$91.29 million that will be used for the Group's Garment and HCP businesses and the continuations of notable research and development expenses will further tighten up the Group's financial liquidity and operations. Accordingly, taking into account (i) the developments of the HCP business and Garment business of the Group are with less uncertainties and are more likely to generate immediate commercial returns to the Group; (ii) the Group's IRO/CRO and In-House R&D business is considered to be riskier and will require the Group to allocate more resources; and (iii) the financial liquidity of the Group under the recent slow-recovering economy, we are of the opinion that it is reasonable for the Group to shift its focus, efforts and resources to other segments that will be able to generate immediate returns to the Group such as its HCP business to establish a stronger financial position.

Given that (i) the Target Group has been utilizing the Group's resources but did not generate returns; (ii) it would be more beneficial to the Group if the Group could make use of the proceeds from the Disposal on developing more profitable and core healthcare products business as against the development of new drugs, which requires the Group to endure relatively higher costs and risks; (iii) the uncertainties and Challenges associated with the development of the products of the Target Group imposed high difficulties for the Company to identify other purchasers and/or obtain funds to run the business of the Target Group; and (iv) the Target Group is at a net liabilities position and the Group's intentions to minimize the risks and cut costs in order to create more financial flexibility and to improve its financial position, we believe the net consideration of RMB1 for the Target Group to be reasonable and acceptable.

Meanwhile, the Disposal will also allow the Group to diversify the operations of the Target Group (i.e. in-house research and development business under its IRO/CRO segment) with funds that will enable the Group to reallocate resources towards its other core businesses that possess of less risks such as the Garment and HCP businesses that contributed more than 90% of the Group's revenue for the years ended 31 March 2022 and 2023. As mentioned in the Board Letter and confirmed by the Management, the net proceeds from the Disposal of approximately HK$60.3 million are expected to be used as to (i) approximately HK$35.0 million for the repayment of outstanding payables of the Group including a partial payment of promissory notes; (ii) approximately HK$20.0 million for the operation and development of the HCP business of the Group; and (iii) approximately HK$5.3 million for the general working capital of the Group, such as salary, rental, operating expenses and professional fees. We also noted from the section headed "Possible Financial Effects of the Disposal" in the Board Letter, the consideration of the Disposal, after comparing with the unaudited consolidated net liability value of the Target Group as at 31 December 2024 and the related expenses to the Disposal, subject to audit, is expected to provide the Group a gain on disposal of approximately HK$29.1 million.

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Having considered the above reasons and benefits, we concur with the Directors that the Disposal is in the interests of the Company and the Shareholders as a whole.

5. Principal terms of the Sale and Purchase Agreement

Date
19 February 2025 (after trading hours of Stock Exchange)

Parties
(i) The Company; and
(ii) The Purchaser

Subject matter

Pursuant to the Sale and Purchase Agreement, (i) the Company conditionally agreed to sell, and the Purchaser conditionally agreed to acquire the Sale Shares, i.e. the entire issued share capital of the Target Company, at a consideration of JPY1.00 (equivalent to approximately HK$0.049092); and (ii) the Company also conditionally agreed to sell and/or procure to sell, and the Purchaser conditionally agreed to purchase the Sale Loans, i.e. certain loans in the aggregate amount of JPY1,250,000,000 (equivalent to approximately HK$61,365,000) owed by the Target Company and EPD HK to the Company, EPS Healthcare and EPS Medical as at the date of the Sale and Purchase Agreement, at face value, for a consideration of JPY1,250,000,000 (equivalent to approximately HK$61,365,000).

Completion

Upon Completion, the Company will cease to hold any interest in the Target Company, and accordingly, members of the Target Group will cease to be subsidiaries of the Company and their financial results thereafter will no longer be consolidated into the consolidated financial statements of the Company.

Consideration

The aggregate consideration for the Sale Shares and the Sale Loans shall be the sum of JPY1,250,000,001 (equivalent to approximately HK$61,365,000), of which, as to JPY1.00 (equivalent to approximately HK$0.049092) is the consideration for the Sale Shares; and as to JPY1,250,000,000 (equivalent to approximately HK$61,365,000) is the consideration for the Sale Loans, which shall be payable by the Purchaser in cash at Completion.

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while no substantial breakthroughs and estimated cash flow are anticipated in the foreseeable future, the Company is of the view that EPD KK, FEF and Inomed JP, as elaborated in the section headed "4. Reasons and benefits of the Disposal", are cash-burning enterprises and would increase financial burden to the Company in general, therefore the Directors considered their relevant net book values as their valuations; (v) the Target Company and EPD HK are engaged in investment holding only; (vi) the uncertainty of future prospects of the Target Group's operations, results and performance; (vii) the carrying amount of the Sale Loans as at the date of the Sale and Purchase Agreement of JPY1,250,000,000 (equivalent to approximately HK$61,365,000) on a dollar-to dollar basis; and (viii) the benefits of the Disposal to the Group as discussed in the section headed "Reasons for and benefits of the Disposal" in the Board Letter.

As advised by the Management, among the members of the Target Group, since (i) EPD HK and Inomed JP are intermediate holdings with minimal business operations; (ii) the drugs being developed by FEF and EPD KK are still in its first phrase (i.e. mainly in researching stages and recruiting patients for clinic trials without reliable sufficient results etc.) and at such preliminary phases, they are not expected to generate revenue for the Group in the foreseeable future; and (iii) the products being developed by Biotube had successfully completed first phrase development and are at second phrase (i.e. products are proven effective, safe-dosing and are expected to be applied to a small number of patients), with notable development, may be able to generate commercial values given time, a business valuation was conducted to appraise the fair value of Biotube and then assessed together with the financial and operation condition of the Disposal Group as a whole in arriving the consideration of the Disposal.

Based on the financial information provided by the Management, we noted that, as at 31 December 2024, the unaudited consolidated net liability value of the Target Group of HK$3,285,000 comprised of the followings,

Company name	Net assets/ (liabilities) value (HK$'000)
The Target Company	21,375
Inomed JP	(10,376)
EPD HK and its subsidiaries	(9,867)
FEF	(22,181)
Biotube (Note)	17,764
Total	(3,285)
Non-controlling interests of the Target Group	(23,301)
Adjusted net liability value of the Target Group	(26,586)

Note: Net asset value of 100% equity interests of Biotube after taking into account of the revaluation of the Valuation

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

It is understood that the characteristics of products like the Biosheet Products and the Biotube Products may be considered to be high risks with high returns and once successfully developed and launched to the market may in fact generate substantial returns to the Group. However, taking into consideration of (i) our analysis as discussed in the section headed "4. Reasons for and benefits of the Disposal" including the current status of the products development; (ii) the Target Group were loss-makings and the completion of the product developments to generate sufficient commercial returns are not guaranteed at current stage; (iii) the businesses of the Target Group require further investment to carry on; and (iv) the unaudited consolidated net liability position of the Target Group, we are of the view that the consideration of the Sale Shares at JPY1 is fair and reasonable and together with the Sale Loans which were determined on dollar-to-dollar basis, the Total Consideration is also fair and reasonable so far as the Shareholders are concerned.

6. Valuation of the 51% equity interests of Biotube (the "Valuation")

The Company has engaged Peak Vision Appraisals Limited (the "Valuer") as the independent valuer to appraise the market value of 51% of equity interest in Biotube as at 31 December 2024. As stated in the Valuation Report in relation to the Valuation as set out in appendix II to the circular, the market value of 51% of equity interest in Biotube as at 31 December 2024 was JPY615,215,000 (equivalent to HK$30,202,000).

Qualification and experience of the Valuer

In assessing the expertise and independent of the Valuer, we have (i) reviewed the engagement letter between the Company and the Valuer; and (ii) conducted an interview with the Valuer to discuss, among other things, its experience on valuations on companies engaged in the biotechnology and medical research segment and relationships with the Group and the Purchaser.

Based on the above, we understand that the Valuer (i) is an established appraisal firm with extensive experience in undertaking appraisals and had conducted various projects in the biotechnology segment. Moreover, after having reviewed the terms of its engagement (including the scope of work), we consider that the scope of work is appropriate.

The Valuation is led by Mr. Nick C. L. Kung, who is a member of the Royal Institution of Chartered Surveyors, Hong Kong Institute of Surveyors, China Institute of Real Estate Appraisers and an RICS Registered Valuer who possess over 20 years of valuation in Hong Kong, the PRC and Asia-Pacific countries and territories. He has extensive experience in the valuation of tangible assets, intangible assets and business enterprises in Hong Kong and overseas.

Valuation methodologies and assumptions

We have reviewed with the Valuer the valuation methodologies stated in the Valuation Report and are advised that they have considered the income approach, market approach and cost approach in assessing the market value of 51% of equity interest in Biotube. Among the three valuation methods, income approach is adopted as such approach can take into account of the projected income that can be derived from the biotechnology business of Biotube; whereas, the Valuer considers that (i) the market approach is less representative than the income approach since there are limited guideline

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public companies and comparable transactions with similar stage of development, portfolio risks and rewards to form a reliable basis for its opinion; and (ii) the asset approach is not appropriate as it ignores the future economic benefits of the business as a whole. Having considered the future earning potential of Biotube and the above limitations from the market approach and asset approach as suggested in the above, we concur with the Valuer that the adoption of the income approach for the Valuation is fair and reasonable.

We have also discussed with the Valuer in respect of the key assumptions adopted for performing the Valuation and we understand from the Valuer that it has assumed that the products of the Biotube will be developed and commercialized according to the timetable of the estimated development plan as provided by the Company, and such estimation was based on best-effort basis and may require more time, such that the risk of undervaluing Biotube will be relatively low given the Valuer applied the earliest completion time for Biotube's products in conducting the Valuation. Additional to the above, we also understand and consider the other assumptions are commonly adopted in other valuations of similar assets and there is no unusual assumption which has been adopted during the Valuation. Accordingly, we considered the assumptions adopted in the Valuation Report are general in nature and are not aware of any material fact which led us to doubt the assumptions adopted by the Valuer.

Given that (i) the Valuer is independent from the Company and the Purchaser and is competent for the preparation of the Valuation; and (ii) the valuation methodology, the principal basis and assumptions adopted in the Valuation are justifiable, we are of the view that the Valuation is fair and reasonable.

The Valuation

Based on our discussions with the Valuer that the Valuation is derived from the discounted cash flow forecast (the "DCF") during the period from the year ended 31 December 2025 to the year ended 31 December 2030 (the "Forecast Period"). We have also obtained the relevant worksheet (the "Worksheet") in relation to the Valuation and discussed with the Valuer the key bases and variables adopted in the income approach for the Valuation. With reference to the comfort letters included in appendix II to the circular, we understand that Confucius International CPA Limited checked the arithmetical accuracy of the calculations of the discounted cash flow forecast while Red Sun Capital Limited reviewed and confirmed that the cash flow forecast has been prepared by the Directors after due and careful enquiry, who are solely responsible for the cash flow forecast.

Nevertheless, in our discussion with the Valuer and our review of the Worksheet, we noted that the market value of equity interest of Biotube is derived at by calculating (i) determining the free cash flows for the Forecast Period after taking into account the operational information including revenue, cost of goods sold, operating expenses, corporate tax rates in Japan, the available assets (excluding available cash) to keep operations going (i.e. non-cash working capital), the success rate of products of Biotube that were estimated and provided by the Management and the discount rate (the "Discount Rate") calculated based on the weighted average cost of capital formula in order to arrive the present value of Biotube; (ii) a terminal growth rate of $2\%$ with reference to the projected inflation rate sourced from International Monetary Fund; (iii) adjusted with cash and non-operating assets and liabilities provided by the Management; and (iv) adjusted with the discount for lack of marketability

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("DLOM") considering that Biotube is a private company, in order to arrive with the equity value of Biotube. Please also refer to the full details of the calculations of the Valuation as set out in appendix II to the Circular.

The Discount Rate

As set out in the Valuation Report, a 15.1% discount rate was adopted by the Valuer in the Valuation based on the weighted average cost of capital which is calculated taking into account of the relative weights of each component of the capital structure follows the formula below:

Discount rate = We × Re + Wd × Rd × (1 - T)

in which,

Re = Cost of equity 15.80%
Rd = Cost of debt 1.90%
We = Portion of equity value to enterprise value 95%
Wd = Portion of debt value to enterprise value 5%
T = Corporate tax rate 30.62%

approximately 15.10%

The cost of equity which account for the risk premium and calculated with the use of capital asset pricing model is a widely accepted model used to determine theoretically appropriate required rate of return of an asset. Considering the specific risk of Biotube in its development require for relevant trials and experiments, the Valuer has applied an additional risk premium to the cost of equity in arriving the cost of equity.

The cost of debt represents the estimated required return of debt financing for Biotube when borrowing or issue debt (such as corporate bonds).

The weight of equity and debt and were derived from analysis of debt to equity ratios of the industry comparable companies. In this regard, we have requested for the workings for the Valuation from the Valuer for our review and upon review, we consider that the industry comparable companies chosen in the Valuation similar to the business of Biotube and are reasonable and representative as they were also engaged in the biotechnology and medical research industry according to The Refinitiv Business Classification and are listed for not less than two years.

The corporate tax rate was referred to the corporate income tax rate in Japan.

From our discussions with the Valuer, we understood that the above measures were referenced from, including but not limited to, government sources, Refinitiv, Kroll Cost of Capital Navigator and Damodaran Online which are commonly adopted in conducting business valuations from our discussions with the Valuer.

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Inflation rate

We noted from the website of the IMF and based on its information for world economic outlook (October 2024) (https://www.imf.org/external/datamapper/profile/JPN), Japan is estimated to have an annual inflation rate of 2% from 2025 to 2029 which is in line with the inflation rate adopted by the Valuer in the Valuation.

Discount for lack of marketability

As advised by the Valuer, DLOM is commonly considered in the valuations of privately held companies as they are not readily marketable and would face more difficulty in converting their shares into cash as compared with publicly held companies. The DLOM of 20.4% was adopted in the Valuation that was determined with reference to Stout Restricted Stock Study Companion Guide (2024 Edition). We have obtained a copy of the report and understood that the DLOM of 20.4% was arrived after reviewing 779 private placement transactions of unregistered common stock issued by publicly traded companies from July 1980 through March 2024.

Conclusion

Taking into account the above work and steps we have conducted in relation to the relevant Valuation Report, including but not limited to (i) interviewing the Valuer as to its expertise and its independence; (ii) reviewing the terms of engagement of the Valuer and assessing the appropriateness of its scope of work; and (iii) our review and cross-checking of the methodologies, key bases and key assumptions as set out in the Valuation Reports and Worksheet prepared by the Valuer, together with the comfort letters from Confucius International CPA Limited and Red Sun Capital Limited in respect of the calculations of the forecast cashflow of Biotube, we consider that the Valuation is fair and reasonable so far as the Shareholders are concerned.

Accordingly, having considered (i) the unaudited net liabilities value of the Target Group as at 31 December 2024 of HK$3,285,000; (ii) the aggregated amount of the Sale Loans; and the (iii) value of Biotube with reference to the Valuation, we are of the view that the consideration of the Disposal is in the interests of the Company and the Shareholders as a whole.

7. Financial effects of the Disposal

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Based on (i) the consideration of the Disposal; (ii) the unaudited consolidated net liability value of the Target Group as at 31 December 2024; (iii) the related expenses of approximately HK$1.0 million for the Disposal, the Group expects to record a gain of disposal of approximately HK$29.1 million from the Disposal. Details of the estimated gain from the Disposal are as follows:

	HK$
Consideration received from the Disposal	1
Net liabilities of the Target Group	3,285,494
Non-controlling interests of the Target Group (“NCI”) (Note 1)	23,301,502
Reclassification of cumulative translation reserve of the Target Group to profit or loss of the Target Group (Note 2)	3,545,584
Estimated professional fees of the Disposal	(1,020,000)

Estimated gain on disposal

29,112,581

Notes:

The carrying amount of NCI as at 31 December 2024 was HK$23,301,502. Companies in the Target Group have NCI included EPD HK, EPD KK and Biotube and the carrying amount of NCI will be derecognized upon the Disposal.
The carrying amount of cumulative translation reserve of the Target Group as at 31 December 2024 was HK$3,545,584. Certain companies in the Target Group undertake transactions denominated in Japanese Yen and therefore, the financial statements of such companies need to be translated to the currency presented in the consolidated financial statements of the Company in Hong Kong dollars. Assets and liabilities are translated at the closing rate, and income and expenses are translated at the average rate for the relevant year. All resulting exchange differences would be recognized initially in other comprehensive income and reclassified from equity to profit or loss on the Disposal.

In terms of assets and liabilities, upon Completion, the unaudited total assets of the Group will be decreased by approximately HK$97,047,000 and the unaudited total liabilities of the Group will be decreased by approximately HK$100,334,000.

The actual financial impact of the Disposal on the Group is subject to audit and therefore may be different from the amount mentioned above.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

RECOMMENDATION

Having considered the above principal factors and reasons, we are of the view that although the Disposal is not in the ordinary and usual course of business of the Group, (i) the Sale and Purchase Agreement and the transactions contemplated thereunder is on normal commercial terms and are fair and reasonable so far as the Independent Shareholders are concerned; and (ii) the Disposal is in the interests of the Company and the Independent Shareholders as a whole. Accordingly, we advise the Independent Board Committee to recommend the Independent Shareholders, and we also recommend Independent Shareholders to vote in favour of the relevant resolution(s) for approving the Disposal.

Yours faithfully,

For and on behalf of

Veda Capital Limited

Julisa Fong

Managing Director

Ms. Julisa Fong is a licensed person registered with the SFC and a responsible officer of Veda Capital Limited which is licensed under the SFO to carry out Type 6 (advising on corporate finance) regulated activity and has over 28 years of experience in corporate finance industry.

44 -

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

1. FINANCIAL INFORMATION OF THE GROUP

The audited consolidated financial statements, together with the accompanying notes to the financial statements, of the Group for the years ended 31 March 2022, 2023 and 2024 and the unaudited consolidated financial information, together with the accompanying notes to the financial statements, of the Group for the six months ended 30 September 2024 are disclosed in the following documents which have been published on the websites of the Stock Exchange (www.hkexnews.hk) and the Company (https://www.epshk.hk):

(i) annual report for the year ended 31 March 2022 (pages 74 to 135): https://www1.hkexnews.hk/listedco/listconews/sehk/2022/0715/2022071500037.pdf
(ii) annual report for the year ended 31 March 2023 (pages 79 to 153): https://www1.hkexnews.hk/listedco/listconews/sehk/2023/0728/2023072800536.pdf
(iii) annual report for the year ended 31 March 2024 pages 124 to 243): https://www1.hkexnews.hk/listedco/listconews/sehk/2024/0724/2024072400394.pdf
(iv) interim report for the six months ended 30 September 2024 (pages 6 to 31): https://www1.hkexnews.hk/listedco/listconews/sehk/2024/1219/2024121900369.pdf

2. INDEBTEDNESS STATEMENT

As at the close of business on 31 January 2025, being the Latest Practicable Date for the purpose of ascertaining the indebtedness of the Group prior to the printing of this Circular, details of the indebtedness statement of the Group are as follows:

| | Secured
HK$’000 | Unsecured
HK$’000 | Total
HK$’000 |
| --- | --- | --- | --- |
| Carrying amount of bank borrowing | 2,897 | – | 2,897 |
| Carrying amounts of other borrowings | – | 117,067 | 117,067 |
| Lease liabilities | – | 4,215 | 4,215 |
| | 2,897 | 121,282 | 124,179 |

As at 31 January 2025, bank borrowing was secured by the pledge of bank deposits of approximately HK$4,000,000.

As at 31 January 2025, (i) a borrowing of approximately HK$22,704,000 was loan from ultimate holding company; (ii) a borrowing of approximately HK$44,598,000 was loan from non-controlling interest; and (iii) a borrowing of approximately HK$49,765,000 was loan from a related party.

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

Save as aforesaid or as otherwise disclosed herein, the Group did not, as at the close of business on 31 January 2025, have any outstanding loan capital issued, outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances or acceptance credits, debentures, mortgages, charges, finance lease, hire purchase commitments, guarantees or other material contingent liabilities.

3. WORKING CAPITAL SUFFICIENCY

The Directors are of the opinion that, after taking into account the financial resources available to the Group, including the internally generated funds, as well as the effects of the Disposal, the Group will have sufficient working capital to satisfy its requirements for at least the next 12 months from the date of the circular in the absence of unforeseen circumstances.

4. MATERIAL ADVERSE CHANGE

The Directors confirm that, as at the Latest Practicable Date, the Directors were not aware of any material adverse change in the financial or trading position of the Group since 31 March 2024, being the date up to which the latest published audited accounts of the Company were made.

5. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

The Company is an investment holding company and its subsidiaries are principally engaged in the garment business, health products business, provision of IRO with CRO services and in-house research and development business.

Regarding the garment business segment, although it is a mature industry, it has a competitive advantage due to its uniqueness based on the experience of the Group cultivated over many years, and the Company can expect a certain amount of demand in the Japan, Europe, and US markets.

Regarding the healthcare products business segment, in particular, the demand for Japanese products in the mainland China market is still strong, and the Company expects significant growth in certain products even amid the recent temporary slowdown in demand in the mainland China market. In the current food trade and wholesale business, the Company has the know-how and network to respond quickly to market demand, as well as the trust of the suppliers in Japan, and the Company are able to replace and expand the product portfolio by taking advantage of the strengths. In addition, the Company would like to actively work on products other than food.

Regarding the IRO with CRO and In-house R&D Business segment, in the IRO with CRO business, the Group is focusing not only on support services for Japanese manufacturers to expand into China from Japan, but also on responding to the increasing number of local projects in China. In addition, the number of Chinese manufacturers planning to expand from China to Japan is increasing remarkably, and the Company is taking advantage of the strengths as its parent company (i.e. EPS Holdings Inc.), which is a leading CRO/Site Management Organization/Contract Sales Organization) service company in Japan to support the expansion of these Chinese companies. In the in-house R&D business, it is likely that it will take some time to monetize in Japan, and it will take considerably more time to expand into the Chinese (Hong Kong) market.

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APPENDIX II

VALUATION REPORT

The following is the text of the valuation report prepared for the purpose of incorporation in this circular received from Peak Vision Appraisals Limited, an independent valuer, in connection with its opinion of market value of 51% equity interest of Biotube as at 31 December 2024.

14 March 2025

The Board of Directors
EPS Creative Health Technology Group Limited
Flat A, 17th Floor
Gemstar Tower
23 Man Lok Street
Hung Hom, Kowloon
Hong Kong

Our Ref: NK/BV241211R

Dear Sirs,

Re: Valuation of 51% equity interest of Biotube Co., Ltd.

In accordance with your instruction, we have conducted a valuation of the market value of 51% equity interest of Biotube Co., Ltd. (the "Business Enterprise"). It is our understanding that the Business Enterprise is principally engaged in in-house research and development in relation to the projects of (i) autologous sheet tissue for autograft by in-body tissue architecture for the patients of refractory diabetic foot ulcer ("Biosheet"); and (ii) autologous tubular tissue for autograft by in-body tissue architecture for the patients of lower extremity peripheral arterial disease ("Biotube") in Japan. We confirm that we have made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of 51% equity interest of the Business Enterprise as at 31 December 2024 (the "Valuation Date").

This report states the purpose of valuation and basis of value, sources of information, identifies the business valued, describes the methodology of our valuation, investigation and analysis, assumptions and limiting conditions, and presents our opinion of value.

1.0 PURPOSE OF VALUATION

This report is being prepared solely for the use of the directors and management (together, the "Management") of EPS Creative Health Technology Group Limited (the "Company") for internal reference and incorporation into the circular of the Company in connection with proposed disposal of the Business Enterprise. The Company is listed on the Main Board of The Stock Exchange of Hong Kong Limited. As advised, the Company intends to dispose 51% equity interest of the Business Enterprise.

Peak Vision Appraisals Limited ("Peak Vision Appraisals") acknowledges that this report may be used by the Management as one of the sources of information for the proposed disposal of the Business Enterprise and may also be made available to the auditors of the Company for auditing

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VALUATION REPORT

reference only. The proposed disposal, if materialised, and the corresponding transaction price would be the result of negotiations between the transacting parties. The Management should be solely responsible for determining the consideration of the proposed disposal, in which Peak Vision Appraisals is not involved in the negotiation and has no comment on the agreed consideration. Peak Vision Appraisals assumes no responsibility whatsoever to any person other than the Management in respect of, or arising out of, the contents of this report. If others choose to rely in any way on the contents of this report they do so entirely on their own risk.

2.0 BASIS OF VALUE

Our valuation has been prepared in accordance with the HKIS Valuation Standards 2024 published by the Hong Kong Institute of Surveyors (the "HKIS"), the RICS Valuation – Global Standards (Effective from 31 January 2025) published by the Royal Institution of Chartered Surveyors (the "RICS") and the International Valuation Standards (Effective 31 January 2025) published by the International Valuation Standards Council, where applicable.

Our valuation of the Business Enterprise is based on the going concern premise and conducted on market value basis. Market Value is defined as "the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently, and without compulsion".

3.0 SOURCES OF INFORMATION

In the course of our valuation, we have had discussion with the Management on the development of the Business Enterprise and the prospect of the biotechnology and medical research industry in Japan. We have also relied on the following major documents and information in the valuation analysis. Some of the information and materials are furnished by the Management. Other information is extracted from public sources such as government sources, Refinitiv, Kroll Cost of Capital Navigator*, etc.

Kroll Cost of Capital Navigator is a global cost of capital tool and data delivery platform developed by Kroll Inc. (rebranded from Duff & Phelps LLC in 2022), which is a leading independent corporate investigation, risk consulting and financial advisory solutions provider established in 1972.

The major documents and information include the following:

Copies of certificate(s) or license(s) and other relevant information of the Business Enterprise as provided by the Management or extracted from public sources;
Company profile of the Business Enterprise;
Historical financial information such as income statements and balance sheet of the Business Enterprise as provided by the Management;
Operational information of the Business Enterprise as discussed with the Management; and

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VALUATION REPORT

Industry and economic data.

As agreed with the Company, a visit to the company premises of the Business Enterprise is not required since the research and development of its products have been majority outsourced to a Contract Research Organization (CRO), and the Business Enterprise's office functions mainly serve as an administrative, project coordination and analysis office. We have been provided with photos of this administrative office. Additionally, we have conducted interviews with the management team of the Business Enterprise. Based on the agreed terms, we will perform our valuation using the information provided.

4.0 LIMITATIONS AND RELIANCE ON INFORMATION

We have no reason to believe that any material facts have been withheld from us, however, we do not warrant that our investigations have revealed all of the matters which an audit or more extensive examination might disclose.

This report is based upon business, financial and other information provided by the Management. We have made reference to or reviewed the above information and data and assumed such information and data are true and accurate without independent verification except as expressly described herein. We have made reasonable enquiries and exercised our judgment on the reasonable use of such information and found no reason to doubt the accuracy or reliability of the information.

Preparation of this report does not imply that Peak Vision Appraisals has audited in any way the financial or other information of the Business Enterprise. It is understood that the financial information provided is prepared in accordance with generally accepted accounting principles and has been prepared in a manner which truly and accurately reflects the financial performances and positions of the Business Enterprise as at the respective financial statement dates.

In arriving at our opinion of value, it is assumed that the projections provided to us are based on the assumptions reflecting the best available estimates, judgment and knowledge of the Management in relation to the proposed operations and are reasonable, reflecting market conditions and economic fundamentals. However, we do not express any opinion regarding the accuracy of the projections provided by the Management.

We do not express an opinion as to whether the actual results of the operations of the Business Enterprise will approximate the projections because assumptions regarding future events by their nature are not capable of independent substantiation. We are making no representation that the business operations will be successful, or that market growth and penetration will be realized.

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VALUATION REPORT

5.0 BUSINESS REGISTRATION DETAILS

5.1 Business Enterprise

Biotube Co., Ltd. (the Business Enterprise), officially known as “バイオチニープ株式会社”, is a company incorporated in Japan on 30 May 2017 with corporate registration number (i.e. 会社法人等番号) 1200-01-206172. The registered office address of the Business Enterprise is 日本東京都中央區新川二丁目13番11号內田ビル4階.

5.2 Shareholding Structure

As confirmed by the Management, the extracted shareholding structure of the Business Enterprise as at the Valuation Date is tabulated as follows:

Figure 1: Extracted shareholding structure of the Business Enterprise as at the Valuation Date

Source: Management

6.0 BUSINESS OVERVIEW

The Business Enterprise is principally engaged in in-house research and development in relation to the projects of (i) autologous sheet tissue for autograft by in-body tissue architecture for the patients of Refractory diabetic foot ulcer (Biosheet); and (ii) autologous tubular tissue for autograft by in-body tissue architecture for the patients of lower extremity peripheral arterial disease (Biotube). As advised by the Management, Biosheet and Biotube (together, the “Products”) originated from the development of autologous transplant tissues using in vivo body tissue aplasty (the “iBTA”) technology by the National Cerebral and Cardiovascular Center of Japan. The Business Enterprise aims to form tubular tissues (i.e. Biotube) or membranous tissue (i.e. Biosheet) by embedding a plastic or metal “mold” under the patient’s skin, which can then be used as tissue for transplantation after removal.

6.1 iBTA Technology

The Business Enterprise’s core technology is the iBTA technology. When a foreign object is implanted in a living body, a biological reaction called encapsulation occurs in which fibroblasts accumulate around the foreign object and secrete collagen to cover the foreign object. iBTA technology utilizes this phenomenon to create an “autologous tissue” that can be used as a transplant. In other words, by implanting a plastic or metal mold under the patient’s

APPENDIX II
VALUATION REPORT

skin for a month or two, a tissue body made of the patient’s own collagen will be formed. By taking out this tissue and removing it from the mold, it is possible to obtain a tissue that matches the shape of the mold.

Depending on the shape of the mold, tubular tissues (i.e. Biotubes) or membranous tissues (i.e. Biosheets) can be obtained. Biotubes are used to repair defects in blood vessels, etc., whereas Biosheets are used to repair defects in the dura mater, cornea, heart muscle, etc. The Business Enterprise is also developing biovalves which are used to form heart valves.

6.2 Biotubes

As at the Valuation Date, the Business Enterprise has successfully created the Biotubes of various diameters and thicknesses, including microbiotubes with an inner diameter of 0.6 mm in animal experiments. Furthermore, by using a spiral mold, the Business Enterprise has succeeded in producing the Biotubes over 20 cm in length.

Animal experiments have shown that when a biotube is implanted into the femoral artery of a beagle dog, the vascular wall, which is made up of a SMA-positive cells and vascular endothelial cells, is rebuilt in the lumen, and no thrombus or other adhesion occurs. In beagle dogs, long-term patency for up to 8 years has been achieved, with no aneurysm or stenosis observed during that time. In addition, as a result of transplantation into a young dog, the blood vessels made of the transplanted biotube also grow, and one year after transplantation, the diameter increases by up to 1.5 times and the length increases by up to 1.5 times, which is in line with the growth of the dog’s body.

6.3 Biosheets

Using the similar iBTA technology of the Biotubes, the Business Enterprise is also developing the Biosheets. Biosheets are made by open cutting the Biotubes. A biosheet with a thickness of 0.5 mm made from goats has superior mechanical properties compared to goat pericardium, and animal experiments using rats have shown that it can be used as a scaffold for myocardial regeneration by patching it into myocardial defects.

6.4 Potential Application

As advised by the Management, some of the potential applications of the Products under development are shown as follows:

Dialysis shunt vascular bypass

In dialysis, it is necessary to remove a large amount of blood, so a blood vessel called a “shunt” is created by anastomosing an artery and a vein. However, shunt vessels can become narrowed for various reasons. For such cases, clinical trials are underway to create artificial blood vessels using the Biotubes and create bypasses in the stenotic areas.

APPENDIX II

VALUATION REPORT

Severe lower limb ischemia

Critical limb ischemia is a condition in which poor circulation due to arteriosclerosis progresses and is a serious disease that can lead to limb amputation or death. There is a surgical method to replace clogged blood vessels with artificial blood vessels, but there is no artificial blood vessel with a small diameter of 5 mm or less that can be used in peripheral arteries below the knee, so it could not be applied to lower limb ischemia. The Business Enterprise's iBTA technology allows the production of such small-diameter biotubes, and the use of biotubes as bypass artificial blood vessels is expected to have therapeutic effects. Since a length of 30 cm or more is required to use as a bypass blood vessel, the Business Enterprise is developing long artificial blood vessels.

6.5 Patents

As advised by the Management, as at the Valuation Date, the Business Enterprise owns several authorized patents (the "Patents") related to its products. Details of the Patents granted by the Japan Patent Office are summarized as follows:

文献番号	出願番号	Application date	Publication date	Invention name
特許6978142	特願 2021-141332	31 August 2021	8 December 2021	組織体形成装置、および組織体形成方法
特許6931261	特願 2021-029946	26 February 2021	1 September 2021	組織体形成装置、組織体形成方法、および結合組織体
特許6875691	特願 2020-108916	24 June 2020	26 May 2021	組織体形成装置、組織体形成方法、および結合組織体
特許6813923	特願 2020-103747	16 June 2020	13 January 2021	体性幹細胞集積組織構造体及びその製造器具
特許6789532	特願 2020-123048	17 July 2020	25 November 2020	血管内留置用ステント
特許6755052	特願 2019-128790	10 July 2019	16 September 2020	結合組織体及びその製造方法
特許6727637	特願 2020-027293	20 February 2020	22 July 2020	組織体形成装置、組織体形成方法、および結合組織体

Table 1: Summary of the Patents owned by the Business Enterprise

Source: Management

APPENDIX II

VALUATION REPORT

6.6 Historical Financial Performances and Positions

Based on the financial information provided by the Company, the historical financial performances of the Business Enterprise for the period between 1 April 2024 to 31 December 2024 is as follows:

	From 1 April 2024 to 31 December 2024 (HK$)
Revenue	–
Other income	4,873,000
Operating income/expenses	(5,505,000)
Operating profit/(loss)	(632,000)

Figures above are subject to rounding

Table 2: Historical performances of the Business Enterprise

Source: Management

As at 31 December 2024, the Business Enterprise had a net asset value of approximately HK$71,359,000.

7.0 INVESTIGATION AND ANALYSIS

Our investigation included discussion with the Management in relation to the biotechnology and medical research industry in Japan, and the development, operations and other relevant information of the Business Enterprise. In addition, we have made relevant inquiries and obtained such further information including financial and business information, and statistical figures from other sources as we consider necessary for the purpose of this valuation. As part of our analysis, we have made reference to the financial information, projections and other pertinent data concerning the Business Enterprise provided to us by the Management.

The valuation of the Business Enterprise requires consideration of all pertinent factors, which affect the operations of the business and its ability to generate future investment returns. The factors considered in this valuation include the following:

Nature and operations of the Business Enterprise;
Historical information of the Business Enterprise;
Financial performances and positions of the Business Enterprise;
Proposed business development of the Business Enterprise;

APPENDIX II
VALUATION REPORT

Regulations and rules of the biotechnology and medical research industry in Japan;
Economic and industry data affecting the biotechnology and medical research industry and other dependent industries;
Market-derived investment return(s) of similar business; and
Industry and economic data.

8.0 GENERAL VALUATION APPROACHES AND METHODS

There are three generally accepted approaches to obtain the market value of the Business Enterprise, namely the Market Approach, the Asset Approach and the Income Approach. Under each approach, a number of methods are available which can be used to assess the value of a business subject. Each method uses a specific procedure to determine the business value.

Each of these approaches is appropriate in one or more circumstances, and sometimes, two or more approaches may be used together. Whether to adopt a particular approach will be determined by the specific characteristics of the subject of the valuation. It is also common practice to employ a number of valuation methods under each approach. Therefore, no single business valuation approach or method is definitive.

8.1 Market Approach

The Market Approach values a business entity by comparison of the prices at which other similar business nature companies or interests changed hands in arm's length transactions. The underlying theory of this approach is that one would not pay more than one would have to pay for an equally desirable alternative. By adopting this approach, we will first look for an indication of value from the prices of other similar companies or equity interest in companies that were sold recently.

The right transactions employed in analyzing for indications of value need to be sold at an arm's length basis, assuming that the buyers and sellers are well informed and have no special motivations or compulsions to buy or to sell.

The derived multiples (most commonly used are: price to earnings, price to sales and price to book multiple) based on the analysis of those transactions are then applied to the fundamental financial variables of the subject business entity to arrive an indication of value.

8.2 Asset Approach

The Asset Approach is based on the general concept that the earning power of a business entity is derived primarily from its existing assets. The assumption of this approach is that when each of the elements of working capital, tangible and intangible assets is individually valued, their

APPENDIX II
VALUATION REPORT

sum represents the value of a business entity and equals the value of its invested capital (equity and debt capital). In other words, the value of the business entity is represented by the fund that has been made available to purchase the business assets needed.

This fund comes from investors who buy stocks of the business entity (equity) and investors who lend fund to the business entity (debt). After collecting the total amounts of fund from equity and debt, and converted into various types of assets of the business entity for its operations the sum of such assets equals the value of the business entity.

From a valuation perspective, we will restate the values of all types of assets of a business entity from book values, i.e. historical cost minus depreciation to appropriate standards of value. After the restatement, we can identify the indicated value of the business entity, or, by applying the accounting principle "assets minus liabilities", to arrive at the value of the equity interest of the business entity.

8.3 Income Approach

The Income Approach focuses on the economic benefits generated by the income producing capability of a business entity. The underlying theory of this approach is that the value of a business entity can be measured by the present worth of the economic benefits to be received over the life of the business entity.

Based on this valuation principle, the Income Approach estimates the future economic benefits and discounts these benefits to its present value using a discount rate appropriate for the risks associated with realizing those benefits.

Alternatively, this can be calculated by capitalizing the economic benefits to be received in the next period at an appropriate capitalization rate. This is subject to the assumption that the business entity will continue to maintain stable economic benefits and growth rate.

9.0 VALUATION ANALYSIS

9.1 Valuation Approaches

In the process of valuing the Business Enterprise, we have taken into consideration the business nature, specialty of its operations, its current condition, and the industry it is participating. Having considered the three general valuation approaches, we consider that the Income Approach would be appropriate and reasonable in the valuation of the market value of the Business Enterprise.

In this valuation, the Market Approach is not adopted as we consider it to be less representative than the Income Approach since the Market Approach may not fully reflect the economic benefits attributable to the Business Enterprise. Compared to the Market Approach, the Income Approach specifically considers the projected income of the Business Enterprise derived from the Products. Meanwhile, there are limited guideline public companies and comparable transactions with similar portfolio risks and rewards to form a reliable basis for our

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APPENDIX II

VALUATION REPORT

opinion. The Asset Approach is not appropriate as it ignores the future economic benefits of the business as a whole. We have therefore solely relied on the Income Approach in determining our opinion of value.

It is simple adopting the Income Approach to state the value of a business entity in present value terms. This method is well accepted by most analysts and practitioners. One common method under the Income Approach is by looking from the perspective of the firm's investors including shareholders and debtholders. That is the free cash flow available to the business as a whole.

9.2 Projections of the Business Enterprise

According to the Company, as at the Valuation Date, Biotube was undergoing the exploratory clinical trial stage whereas Biosheet was waiting for the final report of its exploratory clinical trial stage. The preparation of confirmatory clinical trial for Biosheet was also initiated. The Company expects the clinical trials of the Products will continue in 2025 and 2026. Projected revenue in 2025 and 2026 are only government subsidies covering portions of the clinical trial expenses. The Company expects the Products will be launched by the end of 2027.

For the projected revenue after the launch of Biosheet up to 31 December 2030, the Company derived the projected revenue by estimating the total number of diabetes patients according to statistics published by the Ministry of Health, Labour and Welfare of Japan, the frequency of lower limb amputation among diabetic patients according to empirical research and with estimated penetration rates. The unit price of Biosheet was determined with reference to one of the approved medical instrument for ulcer treatment.

For the projected revenue after the launch of Biotube up to 31 December 2030, the Company derived the projected revenue by estimating the number of hospitalized patients with obstructive peripheral artery disease according to statistics published by the Ministry of Health, Labour and Welfare of Japan and with estimated penetration rates. The unit price of Biotube was determined with reference to the unit price of general artificial blood vessel in Japan.

In the course of our valuation, we have adopted the projections attributable to the Business Enterprise for the next 6 years ended 31 December prepared by the Company, which are presented as follows:

	Year ended 31 December
(JPY million)	2025	2026	2027	2028	2029	2030
Revenue	161	182	330	7,361	11,015	14,497
Less: operating expenses	(220)	(241)	(288)	(6,434)	(9,627)	(12,670)
Operating profit/(loss)	(59)	(59)	42	927	1,388	1,827

Figures above are subject to rounding

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VALUATION REPORT

** Our valuation is based on the projections provided by the Management as above. We do not express any opinion regarding the accuracy of the projections provided by the Management

Table 3: Projected performance of the Business Enterprise

Source: Management

9.3 Discount Rate

In determining the discount rate, we have applied the weighted average cost of capital appropriate for the Business Enterprise, which is based on an estimation of the cost of equity and cost of debt. Based on our analysis, which is set out below, the discount rate as at the Valuation Date was 15.1%, which is a nominal post tax discount rate applied to nominal post tax cash flows.

We have determined the discount rate adopted in the Income Approach based on the weighted average cost of capital (“WACC”) appropriate for the Business Enterprise. It is the minimum required return that a valuation subject must earn to satisfy its various capital providers including shareholders and debtholders. The WACC is calculated taking into account the relative weights of each component of the capital structure. In the course of our analysis, the discount rate adopted in our valuation follows the formula:

$$
\text{Discount rate} = \mathrm{We} \times \mathrm{Re} + \mathrm{Wd} \times \mathrm{Rd} \times (1 - \mathrm{T})
$$

in which

$\mathrm{Re} = \text{cost of equity}$

$\mathrm{Rd} = \text{cost of debt}$

$\mathrm{We} = \text{portion of equity value to enterprise value}$

$\mathrm{Wd} = \text{portion of debt value to enterprise value}$

$\mathrm{T} = \text{corporate tax rate}$

i) Cost of equity

From a modern portfolio management perspective, typical investors are risk-averse and rational. They make all investment decisions based on risk and return of an investment opportunity. The cost of equity, therefore, should account for the risk premium, which is the required additional return over the risk free rate. Additional risk premiums such as country risk premium, size premium and specific risk premium are added to reflect other risk factors concerning the Business Enterprise. All the estimates are supported by public data sources such as Refinitiv and Kroll Cost of Capital Navigator. We have used the capital asset pricing model (“CAPM”) to determine the appropriate cost of equity of the Business Enterprise.

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VALUATION REPORT

Cost of equity = risk free rate + equity beta x market risk premium + size premium + country risk premium + specific risk premium

The CAPM states that the required return of the asset is based on the non-diversifiable risk, as represented by the beta, and the market return and the risk free rate. In estimating the beta, we have identified comparable companies based on the criteria that they are engaged in the biotechnology and medical research activities according to The Refinitiv Business Classification and listed in Japan. The 18 selected comparable companies listed as follows are based on exhaustive search according to Refinitiv:

Refinitiv Ticker	Name	Company market capitalization (HK$ 'million)	Total debt (HK$ 'million)	Geared beta	Debt to equity ratio	Tax rate	Ungeared beta (1)
2160.T	GNI Group Ltd	8,458	373	1.10	4.41%	30.12%	1.06
2183.T	Linical Co Ltd	424	140	0.77	32.94%	48.77%	0.66
2370.T	Medinet Co Ltd	472	0	0.81	0.01%	30.62%	0.81
2395.T	Shin Nippon Biomedical Laboratories Ltd	3,417	1,901	0.97	55.63%	17.08%	0.66
2397.T	DNA Chip Research Inc	216	0	1.25	0.00%	30.62%	1.25
2929.T	Pharma Foods International Co Ltd	1,439	699	0.94	48.57%	59.35%	0.79
4572.T	Carna Biosciences Inc	284	3	0.89	1.11%	30.62%	0.88
4583.T	Chiome Bioscience Inc	892	16	1.05	1.84%	30.62%	1.04
4594.T	BrightPath Biotherapeutics Co Ltd	195	18	1.32	9.02%	30.62%	1.24
4881.T	FunPep Co Ltd	215	0	1.16	0.00%	30.62%	1.16
4884.T	Kringle Pharma Inc	294	0	1.16	0.00%	30.62%	1.16
4890.T	Tsubota Laboratory Inc	490	6	0.51	1.13%	8.18%	0.50
4891.T	TMS Co Ltd	435	0	1.24	0.00%	30.62%	1.24
4892.T	Cyfuse Biomedical KK	182	43	0.72	23.76%	30.62%	0.62
4974.T	Takara Bio Inc	6,222	0	0.75	0.00%	19.18%	0.75
6090.T	Human Metabolome Technologies Inc	179	12	0.58	6.69%	7.12%	0.54
6190.T	PhoenixBio Co Ltd	66	24	0.58	36.14%	55.88%	0.50
7777.T	3-D Matrix Ltd	861	197	0.73	22.90%	30.62%	0.63
Mean					13.56%		0.86
Standard deviation					18.43%		0.27
Mean excluding outliers (2)					5.06%		0.79

Figures above are subject to rounding

Notes:

The ungeared beta is derived by the geared beta, tax rate and debt to equity ratio of the respective comparable companies with the formula: Ungeared beta = geared beta/(1 + (1 - tax rate) × debt to equity ratio).

APPENDIX II

VALUATION REPORT

Sample values outside one standard deviation of the mean are determined as outliers.

Table 4: Data and figures of the comparable companies that have been considered in our valuation

Source: Refinitiv

The above data and figures were used to determine the WACC of the Business Enterprise. Based on the above table, the mean excluding outliers of the debt to equity ratio is 5.06% whereas the mean excluding outliers of the ungeared beta is 0.79. The ungeared beta needs to be re-geared up again at the comparable companies' industry average capital structure and the corporate income tax of the Business Enterprise with the formula:

Ungeared beta × (1 + (1 - corporate income tax of the Business Enterprise) × comparable companies' industry average debt to equity ratio
= 0.79 × (1 + (1 - 30.62%) × 5.06%)
= 0.82

The resulting geared up beta of 0.82 represents the equity beta to be adopted in our cost of equity calculation shown as follows:

Cost of equity calculation:

(1) Risk free rate¹ 1.10%
(2) Equity beta² 0.82
(3) Market risk premium³ 7.17%
(4) Size premium⁴ 2.91%
(5) Country risk premium⁵ 0.94%
(6) Specific risk premium⁶ 5.00%

Cost of equity 15.80%

Figures above are subject to rounding

Notes:

1 This is the 10-year yield of the Japan Government Bond Benchmark Yield Curve, which is a mature market risk free rate.
2 This is the adjusted beta by making reference to publicly listed companies with comparable business nature and operations, which are sourced from Refinitiv.
3 Market risk premium = market rate of return - risk free rate. To derive a long-term, equity risk premium, we refer to the long-horizon expected equity risk premium for the United States (based on historical data), published by Kroll Cost of Capital Navigator. A mature market equity risk premium is used since we derive a stable, long-term discount rate adopted in the valuation; therefore we have adopted the average market return of the United States instead of one from developing equity markets. The country risk premium (in Note 5 below) reflects the expected operating location of the Business Enterprise.

II-13 -

APPENDIX II

VALUATION REPORT

4 Based on the research published by Kroll Cost of Capital Navigator, the CAPM does not fully account for the higher returns of smaller company stocks. According to their research data of historical returns from 1926 – 2023 of micro-cap companies, the size premium (returns in excess of those predicted by CAPM) is 2.91%.

5 This is the increased risk with operating in Japan, where the risk profile is different to the market premium applied in our analysis, including business risk, financial risk, liquidity risk, exchange rate risk & country risk. We refer to the data and methodology derived on Damodaran Online (http://pages.stern.nyu.edu/~adamodar/), updated for 2025, in determining the country risk premium for the Business Enterprise. Damodaran Online is prepared by Aswath Damodaran, who is currently a Professor of Finance at the Stern School of Business at New York University. Mr. Damodaran has published several books, including four books on equity valuation and two on corporate finance. He has also published papers in the Journal of Financial and Quantitative Analysis, the Journal of Finance, the Journal of Financial Economics and the Review of Financial Studies.

6 Considering the specific risk of the Business Enterprise, we have applied an additional risk premium to the cost of equity.

Given the above variables, we have derived the cost of equity of 15.80%.

ii) Cost of debt

The cost of debt represents the estimated required return of debt financing for the Business Enterprise when borrowing or issuing debt (such as corporate bonds). We have estimated the cost of debt by applying the Japan long term prime rate of 1.9%.

iii) Weight of debt

To stay competitive in the industry, it is reasonable to assume that the Business Enterprise, over time, would operate at a debt level close to the average of the weight of debt of its industry comparables. Through the analysis of the industry comparables, the weight of debt is estimated as 5%.

iv) Weight of equity

The weight of equity is estimated as 95% by adopting the same basis as above.

v) Corporate income tax rate

As at the Valuation Date, the corporate income tax rate in Japan was 30.62%.

Based on our foregoing analysis, the discount rate adopted for the valuation of the Business Enterprise is calculated as follows:

Discount rate = 95% x 15.80% + 5% x 1.90% x (1 - 30.62%)
≈ 15.10%

Figures above are subject to rounding

APPENDIX II
VALUATION REPORT

9.4 Corporate Income Tax

We have adopted a tax rate of 30.6%, which was the corporate income tax rate of Japan as at the Valuation Date.

9.5 Non-cash Working Capital Investment

By referring to researches performed by Aswath Damodaran, the non-cash working capital investment is estimated to be approximately 22.8% of the projected annual revenue.

9.6 Success Rate

In the course of our valuation, we have adopted a success rate of 42.5% for the commercialization approval of the Products according to the stage of development of the Products as at the Valuation Date as advised by the Management.

9.7 Maintenance Capital Expenditure

The maintenance capital expenditure is assumed to be the same as depreciation and therefore completely offset by depreciation expense.

9.8 Terminal Growth Rate

The terminal growth rate adopted is 2.0%, which is based on the projected inflation rate sourced from the International Monetary Fund.

9.9 Non-operating Assets and Liabilities

In computing the market value of the Business Enterprise, we have adjusted the cash, debts and other net non-operating assets and liabilities as at the Valuation Date. Based on financial information provided by the Management, the cash, debts and other net non-operating assets and liabilities are as follows:

(JPY '000)

Cash 29,479
Debts
Other net non-operating assets and liabilities (50,220)

Figures above are subject to rounding

APPENDIX II
VALUATION REPORT

9.10 Lack of Marketability Discount

We have adopted a discount for lack of marketability of approximately 20.4% as ownership interest in closely held companies are typically not readily marketable compared to similar interest in publicly listed companies. Therefore, a share of stock in a privately held company is usually worth less than an otherwise comparable share in a publicly held company.

The discount of 20.4% was determined with reference to Stout Restricted Stock Study Companion Guide (2024 Edition).

II-16 -

APPENDIX II

VALUATION REPORT

9.11 Valuation summary

A summary of the valuation process is shown as the following discounted free cash flow table:

Currency: JPY '000

Year Date		2025-12-31	2026-12-31	2027-12-31	2028-12-31	2029-12-31	2030-12-31	Terminal cash flow
Revenue		160,510	182,000	330,376	7,360,942	11,014,951	14,497,239	14,787,184
Less: operating expenses		-219,226	-240,716	-288,000	-6,434,00	-9,627,000	-12,670,000	-12,923,400
Operating profit/(loss)		-58,716	-58,716	42,376	926,942	1,387,951	1,827,239	1,863,784
Less: operating income tax	30.6%	0	0	-12,975	-283,829	-424,991	-559,500	-570,691
Operating profit/(loss) after tax		-58,716	-58,716	29,401	643,113	962,960	1,267,739	1,293,093
Adjustments
Depreciation & amortization		0	0	0	0	0	0	0
Non-cash working capital investment	22.8%	-76,325	-4,902	-33,846	-1,603,736	-833,512	-794,342	-66,139
Maintenance capital expenditure		0	0	0	0	0	0	0
Free cash flows before Success Rate		-135,041	-63,618	-4,445	-960,623	129,448	473,397	1,226,954
Success Rate		100.0%	100.0%	100.0%	42.5%	42.5%	42.5%	42.5%
Free cash flows after Success Rate		-135,041	-63,618	-4,445	-408,265	55,015	201,194	521,456
Terminal value(1)								3,980,578
Discount period		0.50	1.50	2.50	3.50	4.50	5.50
Discount factor(2)		0.93	0.81	0.70	0.61	0.53	0.46
Present value of free cash flows		-125,872	-51,519	-3,128	-249,562	29,218	92,833	1,836,673
Value of operating assets		1,528,643
Ajustment
Other net non-operating assets and liabilities		-50,220
		1,478,423
Lack of marketability discount	20.4%	-301,599
		1,176,824
Add: Cash		29,479
Less: Debts		0
100% equity interest of the Business Enterprise		1,206,303
51% equity interest of the Business Enterprise		615,215

II-17 -

APPENDIX II

VALUATION REPORT

Notes:

(1): The terminal value is calculated by terminal free cash flow after success rate/(r-g); whereas r is the discount rate i.e. 15.10% and g is the terminal growth rate i.e. 2.0%

(2): The discount factor is calculated by $1 / (1 + r)^n$, whereas r is the discount rate i.e. 15.10% and n is the discount period

10.0 VALUATION ASSUMPTIONS

The knowhow relating to the Products will not be copied or infringed upon in a manner which would materially affect the profitability derived from the Products;
The Products will be developed and commercialised according to the timetable of the estimated development plan as provided by the Company;
For the Business Enterprise to continue as a going concern, the Business Enterprise will successfully carry out all necessary activities for the development of its business;
Key management, competent personnel, professional and technical staff will all be retained to support the ongoing operations of the Business Enterprise;
The availability of finance will not be a constraint on the forecast growth of the Business Enterprise's operations in accordance with the business plans;
Market trends and conditions where the Business Enterprise operates will not deviate significantly from the economic forecasts in general;
The financial information of the Business Enterprise as supplied to us has been prepared in a manner which truly and accurately reflects the financial performances and positions of the Business Enterprise as at the respective financial statement dates;
There will be no material changes in the business strategy of the Business Enterprise and its operating structure;
Interest rates and exchange rates in the localities for the operations of the Business Enterprise will not differ materially from those presently prevailing;
All relevant approvals, business certificates, licences or other legislative or administrative authority from any local, provincial or national government, or private entity or organization required to operate in the localities where the Business Enterprise operates or intends to operate will be officially obtained and renewable upon expiry unless otherwise stated; and
There will be no major changes in the political, legal, technological, economic or financial conditions and taxation laws in the localities in which the Business Enterprise operates or intends to operate, which would adversely affect the revenues and profits attributable to the Business Enterprise.
II-18 -

APPENDIX II
VALUATION REPORT

11.0 LIMITING CONDITIONS

Our conclusion of the market value is derived from generally accepted valuation procedures and practices that rely substantially on the use of various assumptions and the consideration of many uncertainties, not all of which can be easily quantified or ascertained. This valuation reflects facts and conditions existing as at the Valuation Date. Subsequent events have not been considered and we are not required to update our report for such events and conditions.

To the best of our knowledge, all data set forth in this report is reasonable and accurately determined. The data, opinions, or estimates identified as being furnished by others that have been used in formulating this analysis, are gathered from reliable sources, however, no guarantee is made nor liability assumed for the accuracies.

We have relied to a considerable extent on the information provided by the Management in arriving at our opinion of value. We are not in the position to verify the accuracy of all information provided to us. However, we have had no reason to doubt the truth and accuracy of the information provided to us and to doubt that any material facts have been omitted from the information provided. No responsibility for operational and financial information that has not been provided to us is accepted.

We have not investigated the title to or any legal liabilities against the Business Enterprise and have assumed no responsibility for the title to or any legal liabilities against the Business Enterprise. In forming our opinion, we have assumed that matters such as title, compliance with laws and regulations and contracts in place are in good standing and will remain so and that there are no material legal proceedings.

To the extent that there are legal issues relating to financial instruments, assets, properties, or business interests or issues relating to compliance with applicable laws, regulations, and policies, Peak Vision Appraisals assumes no responsibility and offers no legal opinion or interpretation on any issue.

In accordance with our standard practices, we must state that this report is for the exclusive use of the party to whom it is addressed and for the specific purpose stated above. Furthermore, the report and conclusion of value are not intended by the author, and should not be construed by the reader, to be investment advice in any manner whatsoever. The conclusion of value represents the consideration based on information furnished by the Management/engagement parties and other sources. No responsibility is accepted to any third party for the whole or any part of its contents.

Actual transactions involving the subject assets/business might be concluded at a higher or lower value, depending upon the circumstances of the transaction and the business, and the knowledge and motivation of the buyers and sellers at that time.

We would particularly point out that our valuation is based on the information such as company background, business nature, market share, future prospects as well as the business plan and projections of the Business Enterprise provided to us.

II-19 -

APPENDIX II

VALUATION REPORT

12.0 REMARKS

Unless otherwise stated, all monetary amounts stated in this valuation report are in Japanese Yen (JPY). The exchange rate adopted in our valuation is approximately HK$1 = JPY20.2330, which was the approximate prevailing exchange rate as at the Valuation Date.

The Management has reviewed and confirmed the factual content and has agreed to the assumptions and limiting conditions of this report.

We hereby confirm that we have no material connection or involvement with the Business Enterprise, the Company and its subsidiaries, associates, affiliates, or the value reported herein and that we are in a position to provide an objective and unbiased valuation.

Peak Vision Appraisals has previously been involved in the valuation of the Business Enterprise and Mr. Nick C. L. Kung has been the signatory to the valuation since 2024. For the subject valuation, Peak Vision Appraisals does not yet adopt a rotation policy, and instead, our valuation will be periodically reviewed by another member of the HKIS and/or the RICS, where applicable.

In accordance with the RICS Valuation – Global Standards (Effective from 31 January 2025), we are also required to draw your attention to the possibility that this valuation may be investigated by the RICS for compliance with such standards.

The proportion of total fees payable by the Company during the preceding year relative to the total fee income of Peak Vision Appraisals is minimal.

13.0 OPINION OF VALUE

Based on the investigation and analysis stated above and on the valuation method employed and key assumptions appended above, we are of the opinion that the market value of 51% equity interest of the Business Enterprise as at the Valuation Date was in the sum of JPY615,215,000 (JAPANESE YEN SIX HUNDRED AND FIFTEEN MILLION TWO HUNDRED AND FIFTEEN THOUSAND ONLY).

Yours faithfully,

For and on behalf of

Peak Vision Appraisals Limited

Nick C. L. Kung

MRICS, MHKIS, R.P.S. (GP), RICS Registered Valuer, MCIREA

Director

Corporate Valuations

Chern Sung Lee

CFA, CPA, MRICS

Director

Corporate Valuations

Note: (1) Mr. Nick C. L. Kung is a member of the Royal Institution of Chartered Surveyors (the RICS) and member of the Hong Kong Institute of Surveyors (the HKIS), RICS Registered Valuer, Registered Professional Surveyor (General Practice) and Registered Business Valuer of the Hong Kong Business Valuation Forum (HKBVF) and has more than 20 years of experience in the valuation of business assets and business entities in Hong Kong and overseas.

APPENDIX II
VALUATION REPORT

(2) Mr. Chern Sung Lee is a CFA Charterholder, a member of the Hong Kong Institute of Certified Public Accountants and a member of the Royal Institution of Chartered Surveyors and has more than 10 years of experience in the valuation of business assets and business enterprises in Hong Kong and overseas.

II-21 -

APPENDIX III

GENERAL INFORMATION

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 Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DIRECTORS' AND CHIEF EXECUTIVES' INTERESTS

Interests and short positions of Directors and chief executive in the shares, underlying shares and debentures of the Company and its associated corporation

As at the Latest Practicable Date, the following Directors or the chief executive of the Company had interest or short position in the shares, underlying shares or debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO (Chapter 571 of the Laws of Hong Kong)) which (a) would have 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 such Directors and chief executives of the Company were taken or deemed to have under such provisions of the SFO); or (b) would be required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein; or (c) would be required, pursuant to the Model Code or Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules relating to securities transactions by the Directors to be notified to the Company and the Stock Exchange:

Name of Director	Name of associated corporation	Nature of interest/holding capacity	Number of share(s) held in the associated corporation	Percentage of issued share capital of the associated corporation
Mr. Miyano Tsumoru	EPS HD	Beneficial owner	10,000	0.04%
Mr. Chiu Chun Tak	EPS HD	Beneficial owner	30,000	0.12%
Mr. Yan Ping	EPS HD	Beneficial owner	30,000	0.12%

Save as disclosed above, no Directors or the chief executive of the Company had any interest or short position in the shares, underlying shares or debentures of the Company or any associated corporation (within the meaning of Part XV of the SFO (Chapter 571 of the Laws of Hong Kong)) which (a) would have 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 such Directors and chief executives of the Company were taken or deemed to have under such provisions of the SFO); or (b) would be required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein; or (c) would be required, pursuant to the Model Code or Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules relating to securities transactions by the Directors to be notified to the Company and the Stock Exchange.

APPENDIX III

GENERAL INFORMATION

Interests and short positions of substantial shareholders in the shares, underlying shares and debentures of the Company

As at the Latest Practicable Date, so far as it is known to the Directors or chief executive of the Company, the following persons, other than a Director or chief executive of the Company, had an interest or short position in the shares or underlying shares of the Company 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 expected, directly or indirectly, to be interested in 10% or more of the issued voting shares of any other member of the Group:

Name of substantial Shareholders	Nature of interest/holding capacity	Percentage of issued share capital of the Company	Percentage of issued share capital of the Company (note 1)
EPS Holdings, Inc.	Beneficial owner	375,000,000 (L) (notes 2 and 4)	71.80%
Y&G Limited	Interest of a controlled corporation	375,000,000 (L) (notes 2 and 4)	71.80%
Mr. Yan Hao (“Mr. Yan”)	Interest of a controlled corporation	375,000,000 (L) (notes 2 and 4)	71.80%
RIN Holding Co., Limited (“RIN Holding”)	Beneficial owner	100,000,000 (L) (notes 3 and 4)	19.15%
Taiga Industrial Co., Ltd (“Taiga Industrial”)	Interest of controlled corporation	100,000,000 (L) (notes 3 and 4)	19.15%
Mr. He Jun (“Mr. He”)	Interest of controlled corporation	100,000,000 (L) (notes 3 and 4)	19.15%

Notes:

Based on the total number of 522,177,419 Shares in issued as at the Latest Practicable Date.
EPS Holdings, Inc. (i.e. the Purchaser) is owned as to approximately 67.26% by Y&G Limited, a company incorporated in Japan which is in turn wholly-owned by Mr. Yan. Mr. Yan is also directly interested in approximately 2.32% of the equity interest of the Purchaser. By virtue of the SFO, Mr. Yan is deemed to be interested in these shares held by the Purchaser.
RIN Holding is 95% owned by Taiga Industrial, a company incorporated in Japan which is in turn 93% owned by Mr. He. By virtue of the SFO, each of Taiga Industrial and Mr. He is deemed to be interested in these shares held by RIN Holding. These shares refer to the consideration shares which may be allotted and issued in the event of the capitalisation of consideration pursuant to the sale and purchase agreement dated 28 March 2023 and entered into by the Company, RIN Holding and EPS Healthcare Limited, details of which are set out in the announcements of the Company dated 28 March 2023, 27 April 2023 and 23 May 2023.
The letter "L" denotes a long position in the Shares.
The percentage of the issued share capital of the Company interested by each of RIN Holding, Taiga Industrial and Mr. He is calculated based on the number of ordinary shares of the Company as at the Latest Practicable Date set out in Note 1 and may appear different from their disclosure of interest filings.

APPENDIX III

GENERAL INFORMATION

Save as disclosed above, as at the Latest Practicable Date, the Directors were not aware of any interests or short positions owned by any persons (other than the Directors or chief executive of the Company) in the Shares or underlying Shares which fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO.

3. COMPETING BUSINESS

As at the Latest Practicable Date, so far as the Directors were aware, none of the Directors nor their respective close associates had any direct or indirect interests in any business that constitutes or may constitute a competing business of the Company.

4. LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation or claims of material importance and no litigation or claims of material importance was known to the Directors to be pending or threatened against any member of the Group.

5. DIRECTORS' SERVICE CONTRACTS

As at the Latest Practicable Date, there were no existing or proposed service contracts between the Directors and the Company or any member of the Group (excluding contracts expiring or determinable by the Group within one year without payment of compensation other than statutory compensation).

6. DIRECTORS' INTEREST IN ASSETS OR CONTRACTS

As at the Latest Practicable Date, none of the Directors had any interest in any assets which have been, since 31 March 2024 (being the date up to which the latest published audited accounts 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 and none of the other Directors was materially interested in any contract or arrangement entered into by any member of the Group which was subsisting and significant in relation to the business of the Group.

7. QUALIFICATION OF EXPERT AND CONSENT

The qualification of the expert who has given an opinion or advice in this circular is as follow:

Name	Qualification
Confucius International CPA Limited	Certified Public Accountants
Peak Vision Appraisals Limited	Independent Professional Valuer

III-3 -

APPENDIX III

GENERAL INFORMATION

Red Sun Capital Limited
A corporation licensed to carry out Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities under the SFO

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

Each of the above experts has given and has not withdrawn its written consent to the issue of this circular with inclusion herein of its letter or report and/or reference to its name, in the form and context in which they respectively appear.

As at the Latest Practicable Date, none of the above experts has any interest in the share capital of 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, none of the above experts has any interest, direct or indirect, in any assets which have been, since 31 March 2024, being the date to which the latest published audited consolidated financial statements of the Group were made up, acquired or disposed of by or leased to or were proposed to be acquired or disposed of or leased to any member of the Group.

8. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business) have been entered into by members of the Group within the two years immediately preceding the Latest Practicable Date and which are, or may be, material to the Group:

(i) the share transfer agreement dated 2 October 2024 entered into between EPS Medical Consultancy Services Limited as the vendor and EPS HD as the purchaser in relation to the transfer of the entire equity interest in EPS Medical Consultancy (Japan) Co., Ltd., a company incorporated in Japan with limited liability, to the Purchaser, at a consideration of JPY1.00 (the "Share Transfer Agreement"); and
(ii) the Sale and Purchase Agreement.

9. MISCELLANEOUS

(i) The secretary of the Company is Mr. Chiu Chun Tak, who is a Hong Kong practicing CPA and a fellow member of Hong Kong Institute of Certified Public Accountants.
(ii) The registered office of the Company is situated at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands.
(iii) The head office and principal place of business of the Company is situated at Flat A, 17/F., Gemstar Tower, 23 Man Lok Street, Hung Hom, Kowloon, Hong Kong.

APPENDIX III

GENERAL INFORMATION

(iv) The Hong Kong branch share registrar and transfer office of the Company is Tricor Investor Services Limited, at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong.

(v) In the event of inconsistency, the English text of this circular and the accompanying form of proxy shall prevail over their respective Chinese texts.

10. DOCUMENTS ON DISPLAY

Copies of the following documents will be published on the websites of the Stock Exchange (http://www.hkexnews.hk) and the Company (https://www.epshk.hk), for a period of 14 days from the date of this circular:

(a) the Sale and Purchase Agreement;

(b) the Share Transfer Agreement;

(d) the Valuation Report;

(e) the letter from Confucius International dated 14 March 2025 in relation to the profit forecast based on discounted cash flows as set out in the Valuation Report, the text of which is set out on pages IV-1 to IV-3 of this circular;

(f) the letter from Red Sun Capital Limited dated 14 March 2025 in relation to the profit forecast based on discounted cash flows as set out in the Valuation Report, the text of which is set out on pages V-1 to V-2 of this circular; and

(g) the written consent of each of the experts as referred to in the section headed "7. Qualifications and consents of experts" in this appendix.

III-5 -

APPENDIX IV

REPORT FROM CONFUCIUS INTERNATIONAL RELATING TO THE PROFIT FORECAST

天健國際會計師事務所有限公司

Confucius International CPA Limited

Certified Public Accountants

香港湾仔莊士敦道181号大有大厦1501-08室

Rooms 1501-08,15th Floor, Tai Yau Building,

181 Johnston Road, Wanchai, Hong Kong

电话 Tel: (852) 3103 6980

传真 Fax: (852) 3104 0170

14 March 2025

PRIVATE & CONFIDENTIAL

The Board of Directors

EPS Creative Health Technology Group Limited

Flat A, 17/F., Gemstar Tower

23 Man Lok Street, Hung Hom

Kowloon, Hong Kong

INDEPENDENCE ASSURANCE REPORT ON CALCULATIONS OF THE DISCOUNTED FUTURE CASH FLOWS IN CONNECTION WITH THE VALUATION OF TARGET COMPANY

EPS Creative Health Technology Group Limited (the "Company")

We refer to the discounted future estimated cash flows on which the valuation (the "Valuation") dated 14 March 2025 prepared by Peak Vision Appraisals Limited with respect to the valuation of the fair value of 51% equity interest in Biotube Co., Ltd. (the "Target Company") as at 31 December 2024 is based. The Valuation is set out in the Company's circular dated 14 March 2025 (the "Circular"). The Valuation is prepared based in part on discounted future cash flows and is regarded as a profit forecast under paragraph 14.61 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules").

Directors' responsibilities for the Discounted Future Cash Flows

The directors of the Company (the "Directors") are solely responsible for the preparation of the discounted future cash flows including the bases and assumptions as set out in the Circular. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation of the discounted future cash flows for the Valuation and applying an appropriate basis of preparation; and making estimates that are reasonable in the circumstances.

Our Independence and Quality Management

We have complied with the independence and other ethical requirements of the "Code of Ethics for Professional Accountants" issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA"), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior.

APPENDIX IV

REPORT FROM CONFUCIUS INTERNATIONAL RELATING TO THE PROFIT FORECAST

Our firm applies Hong Kong Standard on Quality Management (HKSQM) 1, “Quality Management for Firms that Perform Audits and Reviews of Financial Statements, or Other Assurance or Related Services Engagements”, which requires the firm to design, implement and operate a system of quality management including policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Reporting accountants’ responsibilities

It is our responsibility to report, as required by paragraph 14.60A(2) of the Listing Rules, to express an opinion on the calculations of the discounted future estimated cash flows, and to report our opinion solely to you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person in respect of, arising out of or in connection with our work.

We conducted our engagement in accordance with the terms of our engagement letter dated 17 January 2025 and Hong Kong Standard on Assurance Engagements 3000 (Revised) “Assurance Engagements Other than Audits or Reviews of Historical Financial Information” issued by the HKICPA.

This standard involved performing procedures to obtain sufficient appropriate evidence as to whether the discounted future estimated cash flows, so far as the calculations are concerned, have been properly compiled, in all material respects, in accordance with the bases and assumptions as set out in the Circular. The extent of procedures selected depends on the reporting accountant’s judgement and our assessment of the engagement risk. Within the scope of our work, we, amongst others, reviewed the arithmetical calculations and the compilation of the discounted future estimated cash flows in accordance with the bases and assumptions.

Our work is substantially less in scope than an audit conducted in accordance with Hong Kong Standards on Auditing issued by the HKICPA. Accordingly, we do not express an audit opinion.

Opinion

In our opinion, so far as the calculations is concerned, the discounted future cash flows have been properly compiled, in all material respects, in accordance with the bases and assumptions adopted by the Directors as set out in the Circular.

Other matters

Without modifying our opinion, we draw your attention that we are not reporting on the appropriateness and validity of the bases and assumptions on which the discounted future cash flows are based and our work does not constitute any valuation of the Target Company or an expression of an audit or review opinion on the Valuation.

The discounted future estimated cash flows do not involve the adoption of accounting policies. The discounted future cash flows depend on future events and on a number of assumptions which cannot be confirmed and verified in the same way as past results and not all of which may remain valid throughout the period.

IV-2 -

APPENDIX IV
REPORT FROM CONFUCIUS INTERNATIONAL RELATING TO THE PROFIT FORECAST

Further, since the discounted future cash flows relates to the future, actual results are likely to be different from the discounted future cash flows because events and circumstances frequently do not occur as expected, and the differences may be material.

Confucius International CPA Limited

Certified Public Accountants
Hong Kong

IV-3 -

APPENDIX V

LETTER FROM THE FINANCIAL ADVISER IN RELATION TO THE PROFIT FORECAST

14 March 2025

EPS Creative Health Technology Group Limited
Flat A, 17/F., Gemstar Tower
23 Man Lok Street, Hung Hom
Kowloon, Hong Kong

Attn.: Board of Directors

Dear Sirs/Madams,

We refer to the circular of EPS Creative Health Technology Group Limited (the "Company") dated 14 March 2025 (the "Circular") in respect of the major and connected transaction in relation to the disposal of the entire issued share capital of the target company and sale loans (the "Disposal"). A valuation report regarding the valuation of the fair value of the 51% equity interest of Biotube Co., Ltd. was prepared by Peak Vision Appraisals Limited in respect of the Disposal (the "Valuation Report"). Capitalised terms used herein shall have the same meanings as those defined in the Circular unless the context requires otherwise.

We understand that the Independent Valuer has applied income approach, a discounted cash flow model, to implement the valuation based on the profit forecast provided by the management of the Company. The valuation on the discounted future estimated cash flows is regarded as a profit forecast under Rule 14.61 of the Rules Governing the Listing of Securities of the Stock Exchange of Hong Kong Limited (the "Listing Rules").

We have reviewed the profit forecast (the "Profit Forecast") included in the Valuation Report. We have discussed with the management of the Company and the Independent Valuer on the bases and assumptions upon which the Profit Forecast has been made. We have also considered the letter dated 14 March 2025 addressed to you from Confucius International CPA Limited ("Confucius International") as set forth in Appendix IV to the Circular regarding the calculations of the discounted future estimated cash flows.

On the basis of the foregoing, we are satisfied that the Profit Forecast, for which you as the Directors are solely responsible for, has been made after due and careful enquiry by you. Our work in connection with the Profit Forecast has been undertaken solely for the strict compliance with Rule 14.60A(3) of the Listing Rules and for no other purpose. We accept no responsibility to any other person in respect of, arising out of or in connection with our work and we accept no responsibility, whether expressly or implicitly, on the valuation as set out in the Valuation Report. We express no opinion on the reasonableness of the valuation method or whether the actual cash flows would eventually be achieved in correspondence with the Profit Forecast. We have not independently verified the assumptions and computations leading to the Independent Valuer's determination of the fair value of 51% equity interest of Biotube Co., Ltd as of 31 December 2024 on pro forma basis (the "Fair Value"). We have had no role or involvement and have not provided and will not provide any assessment of the Fair Value.

We further confirm that the assessment, review and discussion carried out by us as described above are primarily based on financial, economic, market and other conditions in effect, and the information made available to us as of the date of this letter and that we have, in arriving at our view, relied on information

V-1 -

APPENDIX V

LETTER FROM THE FINANCIAL ADVISER IN RELATION TO THE PROFIT FORECAST

and materials supplied to us by the Independent Valuer, the Company and its subsidiaries (collectively, the "Group") and opinions expressed by, and representations of, the employees and/or management of the Independent Valuer and the Group. We have assumed that all information, materials and representations provided to us by the Independent Valuer and the Group, including all information, materials and representations referred to or contained in the Circular, for which the Directors are wholly responsible, were true, accurate, complete and not misleading at the time they were supplied or made, and remained so up to the date of the Circular and that no material fact or information has been omitted from the information and materials supplied. No representation or warranty, expressed or implied, is made by us on the accuracy, truth or completeness of such information, materials or representations.

For and on behalf of

Red Sun Capital Limited

Robert Siu

Managing Director

V-2 -

NOTICE OF EGM

EPS Creative Health Technology Group Limited

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 3860)

NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that an extraordinary general meeting (the “EGM”) of EPS Creative Health Technology Group Limited (the “Company”) will be held at 35/F, Dah Sing Financial Centre, 248 Queen’s Road East, Wanchai, Hong Kong on Monday, 31 March 2025 at 9:30 a.m. for the purpose of considering and, if thought fit, passing with or without amendments, the following resolution as ordinary resolution of the Company:

ORDINARY RESOLUTION

“THAT:

(a) the sale and purchase agreement dated 19 February 2025 (the “Sale and Purchase Agreement”), a copy of which will be produced to the meeting and marked “A” and initialed by the chairman of the EGM for the purpose of identification, entered into between the Company as vendor and EPS Holdings, Inc. as purchaser (the “Purchaser”), in relation to the sale and purchase of the entire issued share capital of EPS Innovative Medicine (Hong Kong) Limited (the “Target Company”) and the sale loans owing by the Target Company and EPD Hong Kong Limited to the Company, EPS Healthcare Limited and EPS Medical Consultancy Services Limited respectively, for a total consideration of JPY1,250,000,001 (the details of which are summarised in the circular of the Company dated 14 March 2025 of which this notice forms part), and the terms and the transactions contemplated thereunder be and are hereby approved, confirmed and ratified; and

(b) any director of the Company be and is hereby generally and unconditionally authorised to do all such acts and things, to sign and execute (including the affixation of the common seal of the Company when required) all such documents for and on behalf of the Company as they may in their absolute discretion consider necessary, appropriate, desirable or expedient to give effect to or in connection with the Sale and Purchase Agreement and the transactions contemplated thereunder, and to make and agree to make such variations of the terms of the Sale and Purchase Agreement as they may in their discretion consider to be appropriate, necessary or desirable and in the interests of the Company and its shareholders as a whole.”

By order of the Board

EPS Creative Health Technology Group Limited

Miyano Tsumoru

Executive Director

Hong Kong, 14 March 2025

NOTICE OF EGM

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

Head Office and Principal Place of
Business:
Flat A, 17/F.
Gemstar Tower
23 Man Lok Street, Hung Hom
Kowloon, Hong Kong

Notes:

The resolution at the meeting will be taken by poll except where the chairman, in good faith, decides to allow a resolution which relates to purely a procedural or administrative matter to be voted on by a show of hands in accordance with the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”), and the results of the poll will be published on the websites of Hong Kong Exchanges and Clearing Limited and the Company in accordance with the Listing Rules.
The instrument appointing a proxy shall be in writing under the hand of the appointor or of his attorney duly authorized in writing or, if the appointor is a corporation, either under its seal or under the hand of an officer or attorney duly authorized.
Any member of the Company entitled to attend and vote at the above meeting is entitled to appoint a proxy (or more than one proxy if he is the holder of two or more shares) to attend and vote instead of him. A proxy need not be a member of the Company. If more than one proxy is so appointed, the appointment shall specify the number and class of shares in respect of which each such proxy is so appointed.
In order to be valid, the form of proxy together with the power of attorney or other authority, if any, under which it is signed or a certified copy of that power of attorney or authority, must be deposited at the Company’s Hong Kong branch share registrar, Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong, not less than 48 hours before the time appointed for the holding of the meeting or any adjournment thereof. Delivery of the form of proxy shall not preclude a member of the Company from attending and voting in person at the meeting and, in such event, the instrument appointing a proxy shall be deemed to be revoked.
In order to determine the entitlement to attend and vote at the EGM, the register of members of the Company will be closed from 26 March 2025 to 31 March 2025 (both days inclusive), during which period no transfer of shares can be registered. In order to qualify for attending and voting at the EGM, all transfer of shares accompanied by the relevant share certificates must be lodged with the Company’s Hong Kong branch share registrar, Tricor Investor Services Limited at 17/F, Far East Finance Centre, 16 Harcourt Road, Hong Kong, for registration by not later than 4:30 p.m. on 25 March 2025.
Where there are joint registered holders of any share of the Company, any one of such persons may vote at any meeting, either personally or by proxy, in respect of such share as if he were solely entitled thereto; but if more than one of such joint holders be present at any meeting personally or by proxy, that one of the said persons so present being the most or, as the case may be, the more senior shall alone be entitled to vote in respect of the relevant joint holding and, for this purpose, seniority shall be determined by reference to the order in which the names of the joint holders stand on the register in respect of the relevant joint holding.
Completion and delivery of an instrument appointing a proxy shall not preclude a member from attending and voting in person at the Meeting if the member so wish and in such event, the instrument appointing a proxy should be deemed to be revoked.
If Typhoon Signal No. 8 or above, or a “black” rainstorm warning is in effect any time after 7:00 a.m. on the date of the Meeting, the Meeting will be postponed. The Company will publish an announcement on the website of the Company and on the website of the Stock Exchange at http://www.hkexnews.hk to notify Shareholders of the date, time and venue of the rescheduled meeting.
EGM-2 -

NOTICE OF EGM

As at the date hereof, the executive Directors are Mr. Washikita Kenichiro, Mr. Miyano Tsumoru, Mr. Narumi Shoichi, Mr. Chiu Chun Tak, Ms. Du Yao and Mr. Liang Fei; the non-executive Directors are Mr. Uematsu Takahiro and Mr. Yan Ping; and the independent non-executive Directors are Mr. Chan Cheuk Ho, Mr. Choi Koon Ming, Mr. Saito Hironobu and Ms. Zhang Cuiping.
EGM-3 -

AI assistant

EPS Creative Health Technology Group Limited — Proxy Solicitation & Information Statement 2025

50902_rns_2025-03-14_b03f17bd-7f55-4508-a46e-242fa6a54df8.pdf

EPS

EPS Creative Health Technology Group Limited

EPS

EPS Creative Health Technology Group Limited

Executive Directors:

Non-executive Directors

Independent non-executive Directors:

Registered Office:

Head Office and Principal Place of Business in Hong Kong:

MAJOR AND CONNECTED TRANSACTION IN RELATION TO

THE DISPOSAL OF THE ENTIRE ISSUED SHARE CAPITAL OF THE TARGET COMPANY AND SALE LOANS; AND NOTICE OF EXTRAORDINARY GENERAL MEETING

INTRODUCTION

THE DISPOSAL

THE SALE AND PURCHASE AGREEMENT

Subject matter

Consideration

Conditions precedent

Completion

VALUATION

Key inputs adopted in the Valuation

Valuation Assumption

Report from the Confucius International and Letter from the financial adviser

INFORMATION OF PARTIES

INFORMATION OF THE TARGET GROUP

REASONS FOR AND BENEFITS OF THE DISPOSAL

POSSIBLE FINANCIAL EFFECTS OF THE DISPOSAL

Earnings

Notes:

Assets and liabilities

LISTING RULES IMPLICATIONS

INDEPENDENT BOARD COMMITTEE AND INDEPENDENT FINANCIAL ADVISER

GENERAL

VOTING BY POLL

RECOMMENDATION

ADDITIONAL INFORMATION

EPS

EPS Creative Health Technology Group Limited

MAJOR AND CONNECTED TRANSACTION IN RELATION TO THE DISPOSAL OF THE ENTIRE ISSUED SHARE CAPITAL OF THE TARGET COMPANY AND SALE LOANS

PRINCIPAL FACTORS AND REASONS CONSIDERED

1. Business and financial information of the Group

Financial performance for the years ended 31 March 2022, 2023 and 2024

2. Information of the Purchaser

3. Information of the Target Group

4. Reasons for and benefits of the Disposal

5. Principal terms of the Sale and Purchase Agreement

Subject matter

Completion

Consideration

6. Valuation of the 51% equity interests of Biotube (the "Valuation")

Qualification and experience of the Valuer

Valuation methodologies and assumptions

The Valuation

The Discount Rate

Inflation rate

Discount for lack of marketability

Conclusion

7. Financial effects of the Disposal

RECOMMENDATION

1. FINANCIAL INFORMATION OF THE GROUP

2. INDEBTEDNESS STATEMENT

3. WORKING CAPITAL SUFFICIENCY

4. MATERIAL ADVERSE CHANGE

5. FINANCIAL AND TRADING PROSPECTS OF THE GROUP

1.0 PURPOSE OF VALUATION

2.0 BASIS OF VALUE

3.0 SOURCES OF INFORMATION

4.0 LIMITATIONS AND RELIANCE ON INFORMATION

5.0 BUSINESS REGISTRATION DETAILS

5.1 Business Enterprise

5.2 Shareholding Structure

6.0 BUSINESS OVERVIEW

6.1 iBTA Technology

6.2 Biotubes

6.3 Biosheets

6.4 Potential Application

Dialysis shunt vascular bypass

Severe lower limb ischemia

EPS Creative Health Technology Group Limited Proxy Solicitation & Information Statement 2025