Minshang Creative Technology Holdings Limited — M&A Activity 2018

Jun 15, 2018

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Food Wise Holdings Limited, you should at once hand this Composite Document and the accompanying Form of Acceptance to the purchaser(s) or transferee(s) or to the bank or licensed securities dealer or registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser(s) or transferee(s). This Composite Document should be read in conjunction with the accompanying Form of Acceptance, the contents of which form part of the terms and conditions of the Offer contained herein.

The Stock Exchange of Hong Kong Limited and Hong Kong Exchanges and Clearing Limited take no responsibility for the contents of this Composite Document and the Form of Acceptance, make no representation as to their 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 Composite Document and the Form of Acceptance.

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MSEC Holdings Limited

(Incorporated in the British Virgin Islands with limited liability)

FOOD WISE HOLDINGS LIMITED 膳源控股有限公司

(Incorporated in the Cayman Islands with limited liability) (Stock Code: 1632)

COMPOSITE OFFER AND RESPONSE DOCUMENT IN RELATION TO THE MANDATORY UNCONDITIONAL CASH OFFER BY

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FOR AND ON BEHALF OF

MSEC HOLDINGS LIMITED TO ACQUIRE ALL THE ISSUED SHARES OF FOOD WISE HOLDINGS LIMITED (OTHER THAN THOSE ALREADY OWNED BY OR AGREED TO BE ACQUIRED BY MSEC HOLDINGS LIMITED AND PARTIES ACTING IN CONCERT WITH IT)

Joint financial advisers to the Offeror

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

Vinco Capital Limited

(A wholly-owned subsidiary of Vinco Financial Group Limited)

Capitalised terms used in this cover page shall have the same meanings as those defined in the section headed ‘‘Definitions’’ in this Composite Document.

A letter from Oceanwide Securities containing, among other things, details of the terms of the Offer is set out on pages 9 to 21 of this Composite Document. A letter from the Board is set out on pages 22 to 29 of this Composite Document.

A letter from the Independent Board Committee containing its recommendation to the Independent Shareholders in relation to the Offer is set out on pages 30 to 31 of this Composite Document.

A letter from Vinco Capital containing its advice on the Offer to the Independent Board Committee and the Independent Shareholders is set out on pages 32 to 52 of this Composite Document. The report from Vinco Capital is set out on pages III-5 to III-6 of this Composite Document.

A letter from PricewaterhouseCoopers is set out on pages III-2 to III-4 of this Composite Document.

The procedures for acceptance and settlement of the Offer and other related information are set out in Appendix I to this Composite Document and in the accompanying Form of Acceptance. Form of Acceptance should be received by the Registrar by no later than 4:00 p.m. on 6 July 2018 or such later time and/or date as the Offeror may determine and announce, in accordance with the requirements under the Takeovers Code.

PersonsoutsideSecuritiesHongincluding,’’ in Kong,this Compositewithoutshouldlimitation,readDocumentthe detailscustodians,beforein thistakingnomineesregardany whichaction.and trustees,areIt iscontainedthewhoresponsibilitywould,in the orparagraphofotherwiseeach headedOverseasintend‘‘Importantto,ShareholdersforwardNotethiswishingtoCompositethe toShareholdersacceptDocumentthe Offeroutsideand/orto Hongsatisfythe FormKonghimself,’’of inAcceptanceherselfthe ‘‘Letteror itselftofromanyasjurisdictionOceanwideto the full observance of the laws and regulations of the relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consents and any registration or filing which may be required and the compliance with all necessary formalities, regulatory and/or legal requirements. Overseas Shareholders are advised to seek professional advice on deciding whether or not to accept the Offer.

This Composite Document will remain on the website at http://www.hkexnews.hk and on the website of the Company at http://www.foodwisehl.com as long as the Offer remains open.

15 June 2018

CONTENTS

EXPECTED TIMETABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
LETTER FROM OCEANWIDE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
LETTER FROM THE BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22
LETTER FROM THE INDEPENDENT BOARD COMMITTEE . . . . . . . . . . . . . . . .	30
LETTER FROM VINCO CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	32
APPENDIX I – FURTHER TERMS OF THE OFFER . . . . . . . . . . . . . . . . . . . . .	I-1
APPENDIX II – FINANCIAL INFORMATION OF THE GROUP . . . . . . . . . . .	II-1
APPENDIX III – LOSS ESTIMATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
APPENDIX IV – GENERAL INFORMATION OF THE OFFEROR . . . . . . . . . .	IV-1
APPENDIX V – GENERAL INFORMATION OF THE GROUP . . . . . . . . . . . . .	V-1
FORM OF ACCEPTANCE

– i –

EXPECTED TIMETABLE

The timetable set out below is indicative only and may be subject to change. Further announcement(s) will be made in the event of any changes to the timetable as and when appropriate.

2018

Despatch date of this Composite Document and the accompanying Form of Acceptance and commencement date of the Offer (Note 1) . . . . . . . . . . . . Friday, 15 June

Latest time and date for acceptance of the Offer (Notes 2 and 4) . . . . . . . . . . . . . 4:00 p.m., Friday 6 July Closing Date (Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 6 July

Announcement of the results of the Offer to be posted on the Stock Exchange’s website (Note 2) . . . . . . . . . . . . . . . . . . . . . . . . .By 7:00 p.m. on Friday, 6 July

Latest date of posting of remittances for the amounts due in respect of valid acceptances received under the Offer (Notes 3 and 4) . . . . . . . . . . . . Tuesday,17 July

Notes:

1. The Offer, which is unconditional, is made on the date of posting of this Composite Document, and is capable of acceptance on and from that date until the Closing Date. Acceptances of the Offer shall be irrevocable and shall not be capable of being withdrawn, except in the circumstances set out in the section headed ‘‘6. Right of Withdrawal’’ in Appendix I to this Composite Document.

2. In accordance with the Takeovers Code, the Offer must initially be opened for acceptance for at least 21 days following the date on which this Composite Document is posted. The latest time for acceptance is at 4:00 p.m. on 6 July 2018 unless the Offeror revises or extends the Offer in accordance with the Takeovers Code. An announcement will be published on the website of the Stock Exchange by 7:00 p.m. on 6 July 2018 stating whether the Offer has been extended, revised or expired. In the event that the Offeror decides to extend the Offer and the announcement does not specify the next closing date, at least 14 days’ notice by way of an announcement will be given before the Offer is closed to those Independent Shareholders who have not accepted the Offer.

3. Remittances in respect of the cash consideration payable for the Offer Shares tendered under the Offer will be made as soon as possible, but in any event within seven (7) Business Days following the date of receipt of a duly completed acceptance form in accordance with the Takeovers Code.

– 1 –

EXPECTED TIMETABLE

1. If there is a tropical cyclone warning signal number 8 or above, or a black rainstorm warning:

2. a) in force in Hong Kong at any local time before 12:00 noon but no longer in force after 12:00 noon on the latest date for acceptance of the Offer and the latest date for posting of remittances for the amounts due under the Offer in respect of valid acceptances, the latest time for acceptance of the Offer and the posting of remittances will remain at 4:00 p.m. on the same Business Day; or

3. b) in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on the latest date for acceptance of the Offer and the latest date for posting of remittances for the amounts due under the Offer in respect of valid acceptances, the latest time for acceptance of the Offer and the posting of remittances will be rescheduled to 4:00 p.m. on the following Business Day.

All times and dates in this Composite Document and the Form of Acceptance shall refer to Hong Kong times and dates.

– 2 –

DEFINITIONS

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

• ‘‘acting in concert’’

has the meaning ascribed to it under the Takeovers Code

• ‘‘associate(s)’’

has the meaning ascribed to it under the Takeovers Code

• ‘‘Blaze Forum’’

Blaze Forum Limited, a company incorporated in the BVI on 24 November 2015 with limited liability, a company wholly-owned by Mrs. Wong

• ‘‘Board’’

• the board of Directors

• ‘‘Business Day(s)’’

a business day is a day on which the Stock Exchange is open for the transaction of business

• ‘‘BVI’’

• the British Virgin Islands

• ‘‘CCASS’’

the Central Clearing and Settlement System established and operated by Hong Kong Securities Clearing Company Limited

• ‘‘CCB International’’

CCB International Capital Limited, a corporation licensed to carry on type 1 (dealing in securities), type 4 (advising on securities) and type 6 (advising on corporate finance) regulated activities under the SFO, one of the joint financial advisers to the Offeror

• ‘‘Closing Date’’

6 July 2018, the closing date of the Offer, which is 21 days after the date on which this Composite Document is posted, or if the Offer is extended, any subsequent closing date of the Offer as extended and announced by the Offeror in accordance with the Takeovers Code

• ‘‘Company’’

Food Wise Holdings Limited（膳源控股有限公司）, a company incorporated in the Cayman Islands with limited liability, the shares of which are listed on the Main Board of the Stock Exchange

• ‘‘Completion’’

• completion of the sale and purchase of the Sale Shares in accordance with the terms and conditions of the SPA

– 3 –

DEFINITIONS

• ‘‘Composite Document’’

this composite offer and response document jointly issued by the Offeror and the Company to the Shareholders in connection with the Offer in compliance with the Takeovers Code

• ‘‘Director(s)’’ the director(s) of the Company

• ‘‘Encumbrance(s)’’

• (i) any mortgage, charge, pledge, lien, hypothecation, encumbrances or other security arrangement of any kind; (ii) any option, equity, claim, adverse interest or other third party right of any kind; (iii) any arrangement by which any right is subordinated to any right of such third party; or (iv) any contractual right of set-off,including any agreement or commitment to create or procure to create, or to permit or suffer to be created or subsisted any of the above

• ‘‘Executive’’ the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director

• ‘‘Form of Acceptance’’

• the form of acceptance and transfer of Shares in respect of the Offer accompanying this Composite Document

• ‘‘Group’’ the Company and its subsidiaries from time to time

• ‘‘Guarantor(s)’’ Mr. Wong as guarantor for Pioneer Vantage and Mrs. Wong as guarantor for Blaze Forum

• ‘‘HK$’’ Hong Kong dollar(s), the lawful currency of Hong Kong ‘‘HKSCC’’ Hong Kong Securities Clearing Company Limited ‘‘Hong Kong’’ Hong Kong Special Administrative Region of the PRC

• ‘‘Independent Board Committee’’ the independent board committee of the Board, comprising Mr. Cheung Wai Chi, Mr. Cheung Yui Kai Warren, Prof. Lai Kin Keung and Mr. Lui Hong Peace, formed for the purpose of advising the Independent Shareholders in respect of the Offer

– 4 –

DEFINITIONS

• ‘‘Independent Financial Adviser’’ or ‘‘Vinco Capital’’

• ‘‘Independent Shareholders’’

• ‘‘Joint Announcement’’

• ‘‘Last Trading Day’’

• ‘‘Latest Practicable Date’’

• ‘‘Listing Rules’’

• ‘‘Main Board’’

• ‘‘Minsheng E-Commerce Holdings’’

• ‘‘Mr. Wong’’

• ‘‘Mrs. Wong’’

• ‘‘Oceanwide Capital’’

• Vinco Capital Limited, a corporation licensed to carry on type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO, the independent financial adviser appointed by the Company to advise the Independent Board Committee and the Independent Shareholders on the Offer

• Shareholders other than the Offeror and parties acting in concert with it

• the joint announcement dated 4 May 2018 issued by the Company and the Offeror in respect of, among other things, the SPA and the Offer

• 25 April 2018, the last trading day for the Shares prior to the halt of trading of the Shares pending publication of the Joint Announcement

• 12 June 2018, being the latest practicable date prior to the printing of this Composite Document for ascertaining certain information contained herein

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

• the main board maintained and operated by the Stock Exchange

• Minsheng E-Commerce Holdings (Shenzhen) Co., Ltd（民 生電商控股（深圳）有限公司）

Mr. Wong Che Kin, an executive Director, the chairman of the Board and spouse of Mrs. Wong. He also acts as guarantor for Pioneer Vantage, who owns the entire issued share capital of Pioneer Vantage

Ms. Wong Chui Ha Iris, an executive Director and spouse of Mr. Wong. She also acts as guarantor for Blaze Forum, who owns the entire issued share capital of Blaze Forum

Oceanwide Capital Limited, a corporation licensed to carry on type 6 (advising on corporate finance) regulated activity under the SFO, one of the joint financial advisers to the Offeror

– 5 –

DEFINITIONS

• ‘‘Oceanwide Securities’’

Oceanwide Securities Company Limited, a corporation licensed to carry on type 1 (dealing in securities), type 2 (dealing in futures contracts), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activities under the SFO, the offer agent to the Offeror

• ‘‘Offer’’ the mandatory unconditional cash offer being made by Oceanwide Securities on behalf of the Offeror (and parties acting in concert with it) in accordance with the Takeovers Code for the Offer Shares

• ‘‘Offer Period’’ has the meaning ascribed to it in the Takeovers Code, being the period commencing from 19 April 2018 and ending on the Closing Date

• ‘‘Offer Price’’ HK$4.115 per Offer Share

• ‘‘Offer Share(s)’’ all the Share(s) in issue and any Share(s) duly issued while the Offer remain open for acceptance, other than those already owned or agreed to be acquired by the Offeror and parties acting in concert with it

• ‘‘Offeror’’ or ‘‘Purchaser’’ MSEC Holdings Limited, a company incorporated in the BVI with limited liability on 21 October 2014

• ‘‘Overseas Shareholder(s)’’ the Shareholder(s) whose address(es) as shown on the register of members of the Company, is (are) outside Hong Kong

• ‘‘Pioneer Vantage’’

• Pioneer Vantage Global Limited, a company incorporated in the BVI on 11 March 2016 with limited liability, a company wholly-owned by Mr. Wong

• ‘‘PRC’’ or ‘‘China’’

• the People’s Republic of China excluding, for the purpose of this Composite Document, Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan

• ‘‘Profit Warning Announcement’’

• the profit warning announcement of the Company dated 24 May 2018 in relation to the Statement

– 6 –

DEFINITIONS

• ‘‘Registrar’’ Tricor Investor Services Limited, the Hong Kong branch share registrar and transfer office of the Company

• ‘‘Relevant Period’’ the period commencing from 19 October 2017, which is six months prior to 19 April 2018, being the date of commencement of the Offer Period, and ending on the Latest Practicable Date

• ‘‘Sale Share(s)’’ 149,998,000 Shares, representing approximately 75% of the total issued share capital of the Company as at the Latest Practicable Date, sold by the Vendors to the Purchaser upon Completion, and each a Sale Share

• ‘‘SFC’’ the Securities and Futures Commission of Hong Kong ‘‘SFO’’ Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

‘‘Share(s)’’	ordinary share(s) of HK$0.01 each in the share capital of
	the Company
‘‘Shareholder(s)’’	holder(s) of the Share(s)
‘‘Short Term Facility’’	a short term facility up to HK$206,000,000 entered into
	between Oceanwide Securities (as lender) and the Offeror
	(as borrower) on 25 April 2018
‘‘SPA’’	the conditional agreement dated 25 April 2018 entered into
	among the Vendors, the Offeror and the Guarantors in
	respect of the Transactions
‘‘Statement’’	has the meaning ascribed to it under the section headed
	‘‘Letter from the Board – Information on the Group’’
‘‘Stock Exchange’’	The Stock Exchange of Hong Kong Limited
‘‘subsidiaries’’	has the meaning ascribed to it under the Listing Rules
‘‘Takeovers Code’’	the Hong Kong Code on Takeovers and Mergers
‘‘Transactions’’	transactions contemplated under the SPA

– 7 –

DEFINITIONS

‘‘Vendor(s)’’ Pioneer Vantage and Blaze Forum or any one of them ‘‘%’’%’’’’ per cent.

‘‘%’’%’’’’

1. All time and date references contained in this Composite Document refer to Hong Kong times and dates.

2. Certain amounts and percentage figures in this Composite Document have been subject to rounding adjustments.

3. The singular includes the plural and vice versa, unless the context otherwise requires.

4. References to any appendix, paragraph and any sub-paragraphs of them are references to the appendices to, and paragraphs of, this Composite Document and any sub-paragraphs of them respectively.

5. References to any statute or statutory provision include a statute or statutory provision which amends, consolidates or replaces the same whether before or after the date of this Composite Document.

6. Reference to one gender is a reference to all or any genders.

7. Certain English translations of Chinese names or words or Chinese translations of English names or words in this Composite Document are included for information and identification purposes only and should not be regarded as the official English translation of such Chinese names or words or Chinese translation of such English names or words, respectively.

8. for identification purpose only

– 8 –

LETTER FROM OCEANWIDE SECURITIES

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15 June 2018

To the Independent Shareholders

Dear Sir/Madam,

MANDATORY UNCONDITIONAL CASH OFFER BY OCEANWIDE SECURITIES COMPANY LIMITED FOR AND ON BEHALF OF MSEC HOLDINGS LIMITED TO ACQUIRE ALL THE ISSUED SHARES OF FOOD WISE HOLDINGS LIMITED (OTHER THAN THOSE ALREADY OWNED BY OR AGREED TO BE ACQUIRED BY MSEC HOLDINGS LIMITED AND PARTIES ACTING IN CONCERT WITH IT)

1. INTRODUCTION

Reference is made to the Joint Announcement. On 25 April 2018 (after trading hours), the Vendors, the Guarantors and the Offeror entered into the SPA, pursuant to which, the Vendors conditionally agreed to sell and the Offeror conditionally agreed to purchase, in aggregate, the Sale Shares, representing approximately 75.00% of the existing issued share capital of the Company as at the Latest Practicable Date. The total consideration for the Sale Shares is HK$617,241,770, equivalent to HK$4.115 per Sale Share. The purchase price per Sale Share was agreed after arm’s length negotiations between the Offeror and the Vendors with reference to, (i) the financial performance of the Group for the year ended 31 March 2017 and for the six months ended 30 September 2017; (ii) the consolidated net asset value of the Group as at 30 September 2017; and (iii) the historical price performance of the Shares.

Completion took place on 15 May 2018. Upon Completion, the Offeror and parties acting in concert with it became interested in a total of 149,998,000 Shares, representing approximately 75.00% of all the Shares in issue. Pursuant to Rule 26.1 of the Takeovers Code, the Offeror is required to make the Offer.

This letter forms part of this Composite Document and sets out, among other things, the details of the Offer, certain information on the Offeror and the intention of the Offeror regarding the Group. The terms of the Offer and the procedures of acceptances are set out in this letter, Appendix I to this Composite Document and the Form of Acceptance.

The Independent Shareholders are strongly advised to carefully consider the information contained in the ‘‘Letter from the Board’’, the ‘‘Letter from the Independent Board Committee’’ and the ‘‘Letter from Vinco Capital’’ as set out in this Composite Document before reaching a decision as to whether or not to accept the Offer.

– 9 –

LETTER FROM OCEANWIDE SECURITIES

2. THE OFFER

Oceanwide Securities, on behalf of the Offeror and in compliance with the Takeovers Code, is making the Offer to acquire all the Offer Shares, on the terms set out in this Composite Document in accordance with the Takeovers Code on the following basis:

Principal terms of the Offer

For each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$4.115 in cash

The Offer is unconditional in all respects.

Comparison of value

The Offer Price of HK$4.115 per Offer Share represents:

• (i) a discount of approximately 34.68% to the closing price of HK$6.3 per Share as quoted on the Stock Exchange on the Last Trading Day;

• (ii) a discount of approximately 46.36% to the average closing price of approximately HK$7.6720 per Share as quoted on the Stock Exchange for the last five consecutive trading days up to and including the Last Trading Day;

• (iii) a discount of approximately 52.64% to the average closing price of approximately HK$8.6890 per Share as quoted on the Stock Exchange for the last ten consecutive trading days up to and including the Last Trading Day;

• (iv) a discount of approximately 40.45% to the average closing price of approximately HK$6.9097 per Share as quoted on the Stock Exchange for the last 30 consecutive trading days up to and including the Last Trading Day;

• (v) a premium of approximately 503.18% over the audited consolidated net asset value of the Company of approximately HK$0.6822 per Share (based on 200,000,000 Shares in issue) as at 31 March 2017 (being the date to which the latest audited financial results of the Group were made up);

• (vi) a premium of approximately 487.82% over the unaudited consolidated net assets of the Company of approximately HK$0.7 per Share (based on 200,000,000 Shares in issue) as at 30 September 2017;

• (vii) a discount of approximately 47.58% to the closing price of HK$7.85 per Share as quoted on the Stock Exchange on 18 April 2018 (being the last trading day prior to commencement of the Offer Period); and

• (viii) a discount of approximately 59.26% to the closing price of HK$10.1 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

– 10 –

LETTER FROM OCEANWIDE SECURITIES

Value of the Offer

As at the Latest Practicable Date, there were 200,000,000 Shares in issue. Assuming that there is no change in the issued share capital of the Company and on the basis of the Offer Price of HK$4.115 per Offer Share, the entire issued share capital of the Company is valued at approximately HK$823,000,000. As the Offeror held 149,998,000 Shares as at the Latest Practicable Date and Pioneer Vantage has undertaken not to accept the Offer in respect of the remaining 2,000 Shares held by it, 50,000,000 Shares will be subject to the Offer, and the aggregate cash consideration payable by the Offeror for such Offer Shares will be approximately HK$205,750,000.

Highest and lowest Share prices

During the Relevant Period, the highest closing price of the Shares as quoted on the Stock Exchange was HK$12.58 per Share on 3 November 2017 and 6 November 2017 and the lowest closing price of the Shares as quoted on the Stock Exchange was HK$4.53 per Share on 6 February 2018.

Financial resources available to the Offeror

The Offeror will finance the consideration payable under the Offer from the Short Term Facility. CCB International and Oceanwide Capital, as the joint financial advisers to the Offeror, are satisfied that sufficient resources are available to the Offeror to satisfy the amount of funds required for full acceptance of the Offer.

The Offeror does not intend that the payment of interest on, repayment of or security for any liability (contingent or otherwise) will depend to any significant extent on the business of the Company.

Effect of accepting the Offer

By accepting the Offer, the Independent Shareholders will sell their tendered Offer Shares to the Offeror free from all Encumbrances and together with all rights attaching to them including the right to receive in full all dividends and other distributions, if any, declared, made or paid on or after the date on which the Offer is made, being the date of despatch of this Composite Document.

Acceptance of the Offer will be irrevocable and not capable of being withdrawn, except as permitted under the Takeovers Code.

– 11 –

LETTER FROM OCEANWIDE SECURITIES

Hong Kong stamp duty

Seller’s ad valorem stamp duty arising in connection with acceptance of the Offer will be payable by each accepting Independent Shareholder at a rate of 0.1% of (i) the market value of the Offer Shares; or (ii) the consideration payable by the Offeror in respect of the relevant acceptance of the Offer, whichever is higher, and will be deducted from the cash amount payable by the Offeror to such accepting Independent Shareholder (where the amount of stamp duty is a fraction of a dollar, the stamp duty will be rounded up to the nearest dollar).

The Offeror bear its own portion of buyer’s ad valorem stamp duty at a rate of 0.1% of (i) the market value of the Offer Shares; or (ii) the consideration payable by the Offeror in respect of the relevant acceptance of the Offer, whichever is higher, and will arrange for payment of the seller’s ad valorem stamp duty on behalf of the relevant accepting Independent Shareholder and will pay the buyer’s ad valorem stamp duty in connection with the acceptances of the Offer and the transfer of the Offer Shares.

Payment

Payment in cash in respect of acceptances of the Offer will be made as soon as possible but in any event, within seven (7) Business Days of the date on which the duly completed acceptances of the Offer and the relevant documents of title in respect of such acceptances are received by the Offeror (or its agent) to render each such acceptance complete and valid.

3. INFORMATION ON THE GROUP

Details of the information on the Group are set out in the paragraph headed ‘‘Information on the Group’’ in the ‘‘Letter from the Board’’ in this Composite Document.

– 12 –

LETTER FROM OCEANWIDE SECURITIES

4. INFORMATION ON THE OFFEROR

The Offeror was incorporated in the BVI with limited liability on 21 October 2014. It is an investment holding company. Its assets are cash and the Sale Shares. As at the Latest Practicable Date, its ordinary share capital was wholly owned by RUNMING International Limited which in turn is wholly owned by Shanghai Yingzhao Investment Management Company Limited（上海盈 昭投資管理有限公司）. Shanghai Yingzhao Investment Management Company Limited（上海盈 昭投資管理有限公司）is wholly owned by Beijing Ruitao Technology Company Limited（北京 睿韜科技有限責任公司）which is in turn owned by Minsheng E-Commerce Holdings. As at the date of the Latest Practicable Date, Minsheng E-Commerce Holdings had 13 shareholders which are PRC established corporations and organisations. The single largest shareholder, Minsheng Royal Asset Management Co., Ltd（民生加銀資產管理有限公司）(‘‘Minsheng Royal’’), a subsidiary of China Minsheng Bank（ 民生銀行）, holds approximately 21.69% of the shareholding of Minsheng E-Commerce Holdings. The second largest shareholders, South Hope Industry Co., Limited （南方希望實業有限公司）(‘‘South Hope’’) and Orient Group Commercial Investment Co., Ltd（ 東方集團商業投資有限公司）(‘‘Orient Commercial’’), each holds approximately 18.94% of the shareholding of Minsheng E-Commerce Holdings, respectively. South Hope is a subsidiary of New Hope Group Limited（新希望集團有限公司）which mainly engages in modern agricultural and food production. Orient Commercial is wholly owned by Orient Group Co., Ltd（東方集團股份有限公司）, a company listed on the Shanghai Stock Exchange which is involved in finance, trading, ports, industrial businesses.

A simplified structure of the shareholding of Minsheng E-Commerce Holdings is set out below:

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

Shenzhen
China
CommercialOrient Minshang StartupCenter (Limited Partnership)Investment 民生控股股份Minsheng Co., Ltd.Holdings Shipowners AssociationAssuranceMutual Tongling Jingda Wire Co., Ltd.Special Magnet銅陵精達特種 Investment Group 潤地投資集團Co., LtdRichland
深圳民商創業 電磁線
有限公司 中國船東 有限公司
投資中心 股份有限公司
互保協會
（有限合伙）
18.94% 11.76% 4.24% 4.24% 2.78% 1.18%
Shanghai Fosun
Giant Industrial XiaMen Shen Zhen Shanghai
Investment Technology Good First Jun Feng FU ZHI JIAN
Minsheng Development Financial Commercial Industrial
South Hope Co., Ltd
Royal 巨人投資 Co., Ltd Holding Co., Ltd Co., Ltd Co., Ltd
上海復星 廈門福信金融 深圳隽風貿易 上海福之健實業
有限公司
工業技術發展 控股有限公司 有限公司 有限公司
有限公司
21.69% 18.94% 4.24% 4.24% 4.24% 2.35% 1.18%
Minsheng E-Commerce Holdings
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– 13 –

LETTER FROM OCEANWIDE SECURITIES

Minsheng E-Commerce Holdings is mainly engaged in e-commerce and related businesses in the PRC. Through leveraging on its technological system and supply chain capabilities, Minsheng E-Commerce Holdings provides customized e-commerce and internet marketing solutions and related services including services for operation of the customer rewards scheme of financial institutions, with an aim to reduce the cost of the financial institutions and provide quality products and services.

5. INTENTION OF THE OFFEROR IN RELATION TO THE GROUP

Upon Completion, the Offeror became the controlling Shareholder. After the close of the Offer, the Offeror intends to continue the existing principal business of the Group. The Offeror reserves the right to make any changes it deems necessary or appropriate to the Group’s business and operations to increase the value of the Group. As at the Latest Practicable Date, the Offeror had no intention to terminate the employment of any employee (save for the proposed changes to the composition of the Board as detailed below). No major changes are expected in respect of the redeployment of the assets of the Group other than those in its ordinary course of business.

The Offeror will, following the close of the Offer, conduct a review on the business activities/operations and financial position of the Group for the purpose of formulating business plans and strategies for the future business development of the Group. Subject to the results of the review and should suitable investment or business opportunities arise, the Offeror may explore other business opportunities for the Company which may involve acquisitions or investments in assets and/or businesses or cooperation with business partners of the Offeror with a view of enhancing the Group’s business growth and asset base as well as broadening its income stream. As at the Latest Practicable Date, the Offeror had no plan, and had not engaged in any discussion or negotiation, on any injection of any assets or businesses into the Group.

6. CHANGE OF BOARD COMPOSITION

The Board is currently made up of two executive Directors, one non-executive Director and three independent non-executive Directors.

All of the existing Directors have tendered resignation to take effect from a date which is no earlier than such date as permitted under Rule 7 of the Takeovers Code (i.e. after the close of the Offer).

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LETTER FROM OCEANWIDE SECURITIES

The Offeror has nominated Mr. Wu Jiangtao, Mr. Lu Sheng Hong, Ms. Li Jia. Mr. Wat Tat Fei, Mr. Wong Stacey Martin, Mr. Ko Po Ming, Mr. Choi Tze Kit, Sammy, Mr. Cheung Miu and Mr. Cheung Pak To Patrick to be new Directors. The appointment of the new Directors will take effect on the close of the Offer. Any changes to the composition of the Board will be made in compliance with the Takeovers Code and the Listing Rules. The biographies of the new Directors to be nominated are set out below:

Biographies of new executive Directors nominated by the Offeror

Mr. Wu Jiangtao (‘‘Mr. Wu’’), aged 42, obtained a bachelor’s degree in money and banking from Jiangxi University of Finance and Economics in July 1998, a master’s degree of economics from Chinese Academy of Social Sciences in July 2007 and a doctor’s degree in finance from Jiangxi University of Finance and Economics in December 2012. Mr. Wu was the chairman of the board of directors and chief executive officer of Minsheng E- Commerce CO., LTD（民生電子商務有限責任公司）(‘‘Minsheng E-Commerce’’) from December 2013 to April 2015. Mr. Wu has been the chairman of the board of directors of Minsheng E-Commerce Holdings since April 2015. Prior to joint Minsheng E-Commerce, Mr. Wu served as the branch manager of China Minsheng Bank Wuhan Branch from November 2011 to December 2013.

Mr. Lu Sheng Hong (‘‘Mr. Lu’’), aged 48, obtained a bachelor’s degree in finance from Zhongnan University of Economics and Law in July 1992 and a bachelor’s degree in economics from Wuhan University in June 1998. Mr. Lu joined Minsheng E-Commerce as vice president from April 2014 to April 2015. Mr. Lu has been the vice president and the chief executive officer of Minsheng E-Commerce Holdings since April 2015, who is responsible for the day to day operation and management of Minsheng E-Commerce Holdings. Prior to joining Minsheng E-Commerce, Mr. Lu was the vice branch manager of China Minsheng Bank Wuhan Branch from September 2003 to April 2014 and an assistant to the general manager of China Merchants Bank Wuhan Branch from November 2002 to September 2003. He was an officer and 9 section officer of China Construction Bank Wubei Branch from August 1992 to July 2001.

Ms. Li Jia (‘‘Ms. Li’’), aged 33, obtained a bachelor’s degree in management from Jiangxi Finance University in July 2006 and master of business administration from New York Institute of Technology in May 2012. Ms. Li was the vice general manager of finance department of Minsheng E-Commerce from March 2014 to April 2015. Ms. Li has been the general manager of Hong Kong business of Minsheng E-Commerce Holdings since April 2015. Prior to joining Minsheng E-Commerce, Ms. Li was the assistant to general manager of finance department from February 2009 to March 2010, the vice general manager of the finance department from March 2010 to February 2011 and the finance general manager of China Minsheng Bank Nancheong Branch from February 2011 to March 2014. She was the client manager of SPD Bank Nancheong Branch from July 2006 to September 2008.

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LETTER FROM OCEANWIDE SECURITIES

Mr. Wat Tat Fei (‘‘Mr. Wat’’), aged 34, obtained bachelor of business management from Griffith University in April 2006 and Bachelor of Laws from Manchester Metropolitan University in July 2012. He was granted the designation of Financial Risk Manager (RFM) in April 2016. Mr. Wat has been employed by Kilmorey International Holdings since June 2017, and his current position is deputy chief executive officer. Mr. Wat has more than ten years of experiences in law and compliance. Mr. Wat was employed by KPMG Advisory (Hong Kong) Limited from March 2016 to February 2017. He was a senior consultant at the time leaving KPMG Advisory (Hong Kong) Limited. Mr. Wat has worked as designated money laundering reporting officer and assistant compliance manager for Core PacificYamaichi International (H.K.) Limited. Mr. Wat was a compliance consultant from June 2012 to December 2013 of Compliance Consulting Limited. From September 2011 to June 2012, Mr. Wat was employed by Intertrust Resources Management Limited as compliance analyst from September 2011 to June 2012. He worked as a legal assistant in Chung and Kwan, Solicitors from 2008 to 2011.

Biography of new non-executive Director nominated by the Offeror

Mr. Wong Stacey Martin (‘‘Mr. Wong’’), aged 50, joined China Tonghai International Financial Limited (previously known as China Oceanwide International Financial Limited) in November 2017 and is the chief operating and risk officer of China Oceanwide Holdings Limited. Mr. Wong has over 27 years of experience in the investment banking industry and has extensive experience in fund raising transactions of Hong Kong and Chinese companies and has participated in various kinds of transactions of Blue-chips, Red-chips and H-shares and mergers and acquisitions. Mr. Wong is an independent nonexecutive director of OCI International Holdings Limited (stock code: 329.hk). Prior to joining China Tonghai International Financial Limited, Mr. Wong was the chief operating officer of CMBC International Holdings Limited (a subsidiary of China Minsheng Banking Corp., Ltd) since 1 April 2015. Mr. Wong was the head of investment banking of Piper Jaffray Asia Limited（formally named as Goldbond Capital (Asia) Limited) and also headed Bear Stearns Asia Limited’s corporate finance team. He spent over 10 years with Peregrine Group, with his last position as Executive Director of BNP Paribas Peregrine Capital Limited. Mr. Wong received his master’s degree from the University of Cambridge, the United Kingdom.

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LETTER FROM OCEANWIDE SECURITIES

Biographies of new independent non-executive Directors nominated by the Offeror

Mr. Ko Po Ming (‘‘Mr. Ko’’), aged 59, has over 33 years of extensive experience in finance and investment banking business. Mr. Ko has been appointed as the joint chairman of the board, an executive director and the chief executive officer of Mason Group Holdings Limited (stock code: 273.hk) since 8 September 2016. Mr. Ko has been re-designated as the Chairman of the board and appointed as the chairman of nomination committee of Mason Group Holdings Limited on 2 January 2018. Prior to joining Mason Group Holdings Limited, Mr. Ko was the chief executive officer of CMBC International Holdings Limited, a wholly owned subsidiary of the China Minsheng Banking Corp. Ltd.

From October 2012 to March 2015, Mr. Ko was a consultant of China Minsheng Banking Corp., Ltd., Hong Kong Branch. Mr. Ko was the Chairman of Goldbond Capital Holdings Limited (‘‘GCHL’’) from April 2004. Prior to joining GCHL, he was employed by BNP Paribas Peregrine Capital Limited where he was in charge of the corporate finance business. Since June 2007 and until September 2012, Mr. Ko served as the chief executive officer of Piper Jaffray Companies. Mr. Ko graduated from The Chinese University of Hong Kong in December 1982 with a bachelor’s degree in business administration.

Mr. Ko had acted as independent non-executive directors of a number of Hong Kong and Mainland China listed companies, including (i) Nanjing Panda Electronics Company Limited (stock code: 553.hk) between 1996 and 1999; (ii) Dazhong Transport (Group) Company Limited (SHA: 600611) between 1997 and 2003; (iii) Chinese Energy Holdings Limited (formerly known as iMerchants Limited (stock code: 8009.hk)) between 2000 and 2004; and (iv) Tianjin Capital Environmental Protection Group Company Limited (stock code: 1065. hk) between 2003 and 2009. Mr. Ko was a Listing Committee member of the Main Board and Growth Enterprise Market of the Stock Exchange between May 2003 and June 2009. He was a non-executive director of Petro-king Oilfield Services Ltd. (stock code: 2178.hk) between February 2013 and March 2018. Mr. Ko is a director of Globe Metals and Mining Limited (ASX: GBE). He is also a trustee of St. Johnsbury Academy, an independent day and boarding secondary school. St. Johnsbury Academy is a non-profit corporation under section 501 (c)(3) of the Internal Revenue Code in the United States of America.

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LETTER FROM OCEANWIDE SECURITIES

Mr. Choi Tze Kit, Sammy (‘‘Mr. Choi’’), aged 55, graduated from the Hong Kong Shue Yan College (presently known as Hong Kong Shue Yan University) with a diploma in accounting in December 1985. He is an fellow member of the Institute of Chartered Accountants in England and Wales, a fellow member of the Chartered Association Certified Accountants and a Certified Public Accountant of the Hong Kong Institute of Certified Public Accountants. He is currently a partner of T.K. Choi & Co. He was an independent non-executive director of Yun Sky Chemical (International) Holdings Limited (formerly known as Swank International Manufacturing Company Limited) from July 2005 to September 2008, the issued shares of which are listed in the Stock Exchange (stock code: 663.hk). Mr. Choi was also an independent non-executive director of Fufeng Group Limited (stock code: 546.hk) from January 2007 to November 2015, China Longevity Group Company Limited (stock code: 1863) from January 2010 to February 2011, Ernest Borel Holdings Limited (stock code: 1856.hk) from October 2016 to August 2017 and PanAsialum Holdings Company Limited (stock code: 2078.hk) from February 2016 to February 2017.

Mr. Cheung Miu (‘‘Mr. Cheung’’), aged 48, obtained a bachelor’s degree in business administration from the Chinese University of Hong Kong in December 1992 and a master’s degree in business administration from The University of New South Wales in May 1998. Mr. Cheung has years of experiences in the finance industry. He joined CITIC Capital Holding Limited since 1999 and is currently a senior managing director, managing partner and head of structured investment and finance of CITIC Capital Holdings Limited. He was employed by Commonwealth Bank of Australia from January 1998 to May 1999 and his last position with the bank was as executive in the corporate finance department. He was the assistant manager of the investment banking department of Societe Generale Asia Limited from January 1995 to February 1996.

Mr. Cheung Pak To Patrick (‘‘Mr. Cheung’’), BBS, aged 69, is currently an independent non-executive director of National Agricultural Holdings Limited (stock code: 1236.hk) and an independent non-executive director of Amasse Capital Holdings Limited (stock code: 8168.hk). Mr. Cheung holds a master’s degree in public administration from the University of Hong Kong. Mr. Cheung has extensive management and administrative experiences. From 1969, Mr. Cheung had served with the United Kingdom Government, British Forces in Hong Kong for 21 years, with his final post as a Civilian Executive Officer. Thereafter from 1989, he was employed by the Securities and Futures Commission Hong Kong for 20 years, with his final position as Senior Manager of the Finance & Administration Department. On the social and community responsibilities front, Mr. Cheung was a devoted volunteer officer in the Hong Kong Civil Aid Service for 30 years during which he was appointed as honorary Aide-de-Camp to Governors Lord Wilson and Mr. Christopher Patten; and Chief Executive Mr. Tung Chee-hwa for 10 consecutive years from 1990 to 1999. Mr. Cheung achieved the rank of Assistant Commissioner in the Hong Kong Civil Aid Service and was awarded the Bronze Bauhinia Star by the Hong Kong government in 2003.

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LETTER FROM OCEANWIDE SECURITIES

7. COMPULSORY ACQUISITION

The Offeror does not intend to exercise any power of compulsory acquisition of any outstanding Offer Shares not acquired under the Offer after the close of the Offer.

8. MAINTAINING THE LISTING STATUS OF THE COMPANY

The Stock Exchange has stated that if, at the close of the Offer, less than the minimum prescribed percentage applicable to the Company, being 25% of the issued Shares are held by the public, or if the Stock Exchange believes that (i) a false market exists or may exist in the trading of the Shares; or (ii) there are insufficient Shares in public hands to maintain an orderly market, it will consider exercising its discretion to suspend trading in the Shares.

As a requirement under the terms of the Short Term Facility granted by Oceanwide Securities, the Offeror has entered into a placing agreement with a placing agent, under which the placing agent shall place Shares up to 50,000,000 Shares (representing up to 25% of the total issued share capital of the Company) held by the Offeror to independent placees (failing which the placing agent shall acquire the relevant Shares) in order to restore the Company’s public float if the Company shall have insufficient public float after the close of Offer. The Offeror shall inform the placing agent of the maximum number of Shares to be sold by the placing agent on behalf of the Offeror after the close of the Offer.

The Offeror intends that the Company will remain listed on Main Board after the close of the Offer. The new directors to be appointed to the Board and the director of the Offeror have jointly and severally undertaken to the Stock Exchange to take appropriate steps to ensure that a sufficient public float exists in the Shares.

9. IMPORTANT NOTE TO SHAREHOLDERS OUTSIDE HONG KONG

The Offer is made in respect of securities of a company incorporated in the Cayman Islands and subject to the statutory procedural and disclosure requirements of Hong Kong, which may be different from those of other jurisdictions.

The Offer is available to all Independent Shareholders including those with registered addresses outside Hong Kong. The availability of the Offer to persons not resident in Hong Kong and the ability of Overseas Shareholders to participate in the Offer will however be subject to, and may be limited by, the laws and regulations of their respective jurisdictions.

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LETTER FROM OCEANWIDE SECURITIES

The making of the Offer to Overseas Shareholders may be prohibited or limited by the laws of the relevant jurisdictions. Overseas Shareholders who are citizens, residents or nationals of a jurisdiction outside Hong Kong should observe any applicable legal or regulatory requirements and, where necessary, seek legal advice. It is the responsibility of Overseas Shareholders who wish to accept the Offer to satisfy themselves as to the full observance of the laws and regulations of the relevant jurisdictions in connection with the acceptance of the Offer (including the obtaining of any governmental or other consent which may be required or the compliance with other necessary formalities and the payment of any transfer or other taxes due by such Overseas Shareholders in respect of such jurisdictions).

10. TAX IMPLICATIONS

The Independent Shareholders are recommended to consult their own professional advisers if they are in any doubt as to the tax implications that may arise from accepting or rejecting the Offer. It is emphasised that none of the Offeror, its beneficial owners and parties acting in concert with any of them, the Company, Oceanwide Securities, Oceanwide Capital, CCB International, the Independent Financial Advisor, the Registrar or the company secretary of the Company or any of their respective directors or professional advisers or any other parties involved in the Offer or any of their respective agents accepts any responsibility for any taxation effects on, or liabilities of, any persons as a result of their acceptance or rejection of the Offer.

11. ACCEPTANCE AND SETTLEMENT

Your attention is drawn to the further details regarding the procedures for acceptance and settlement and acceptance period as set out in Appendix I to this Composite Document and the accompanying Form of Acceptance.

12. GENERAL

To ensure equality of treatment of all Independent Shareholders, those registered Independent Shareholders who hold the Shares as nominee for more than one beneficial owner should, as far as practicable, treat the holding of each beneficial owner separately. It is essential for the beneficial owner of the Offer Shares whose investments are registered in the name of a nominee to provide instructions to their nominee of their intentions with regards to the Offer.

None of the Offeror, its beneficial owners and parties acting in concert with any of them, the Company, Oceanwide Securities, Oceanwide Capital, CCB International, the Independent Financial Adviser, the Registrar or the company secretary of the Company or any of their respective directors or professional advisers or any other parties involved in the Offer will be responsible for any loss or delay in transmission or any other liabilities that may arise as a result thereof or in connection therewith.

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LETTER FROM OCEANWIDE SECURITIES

13. ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendices to this Composite Document and the accompanying Form of Acceptance, which form part of this Composite Document. You are reminded to carefully read the ‘‘Letter from the Board’’, the ‘‘Letter from the Independent Board Committee’’, the ‘‘Letter from Vinco Capital’’ and other information about the Group, which are set out in this Composite Document before deciding whether or not to accept the Offer.

Yours faithfully,

For and on behalf of Oceanwide Securities Company Limited Mr. Calvin Chiu

Deputy Chief Executive Officer

– 21 –

LETTER FROM THE BOARD

==> picture [69 x 69] intentionally omitted <==

FOOD WISE HOLDINGS LIMITED 膳源控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1632)

Executive Directors: Mr. Wong Che Kin Ms. Wong Chui Ha Iris

Non-executive Director: Mr. Cheung Wai Chi

Independent non-executive Directors Mr. Cheung Yui Kai Warren Prof. Lai Kin Keung Mr. Lui Hong Peace

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: Room 904, 9/F Join-in Hang Sing Centre 2-16 Kwai Fung Crescent 71-75 Container Port Road Kwai Chung, New Territories Hong Kong

15 June 2018

To the Independent Shareholders

Dear Sir or Madam,

MANDATORY UNCONDITIONAL CASH OFFER BY OCEANWIDE SECURITIES COMPANY LIMITED FOR AND ON BEHALF OF MSEC HOLDINGS LIMITED TO ACQUIRE ALL THE ISSUED SHARES OF FOOD WISE HOLDINGS LIMITED (OTHER THAN THOSE ALREADY OWNED BY OR AGREED TO BE ACQUIRED BY MSEC HOLDINGS LIMITED AND THE PARTIES ACTING IN CONCERT WITH IT)

INTRODUCTION

Reference is made to the Joint Announcement. On 25 April 2018 (after trading hours), the Vendors and the Offeror entered into the SPA, pursuant to which the Vendors conditionally agreed to sell and the Offeror agreed to purchase the Sale Shares, being 149,998,000 Shares in aggregate, representing approximately 75% of the entire issued share capital of the Company as at the Latest Practicable Date, for a consideration of HK$4.115 per Sale Share, equivalent to HK$617,241,770 in total.

– 22 –

LETTER FROM THE BOARD

The purchase price per Sale Share under the SPA was arrived at after arm’s length negotiations between the Purchaser and the Vendors with reference to, (i) the financial performance of the Group for the year ended 31 March 2017 and for the six months ended 30 September 2017; (ii) the consolidated net asset value of the Group as at 30 September 2017; and (iii) the historical price performance of the Shares. Completion took place on 15 May 2018.

Immediately prior to Completion, the Offeror and parties acting in concert with it did not hold any Shares in the share capital or voting rights of the Company. Immediately upon Completion and as at the Latest Practicable Date, the Offeror and parties acting in concert with it became interested in a total of 149,998,000 Shares, representing approximately 75% of the issued share capital of the Company. Pursuant to Rule 26.1 of the Takeovers Code, the Offeror is required to make an unconditional mandatory cash offer for all the issued Shares (other than those already owned and/or agreed to be acquired by the Offeror or parties acting in concert with it).

As at the Latest Practicable Date, the Company had 200,000,000 Shares in issue. The Company did not have any outstanding options, derivatives, warrants or securities which are convertible or exchangeable into Shares and has not entered into any agreement for the issue of such options, derivatives, warrants or securities which are convertible or exchangeable into Shares, as at the Latest Practicable Date.

The purpose of this Composite Document is to provide you with, among other things, (i) information relating to the Group, the Offeror and the Offer; (ii) the recommendation of the Independent Board Committee to the Independent Shareholders in respect of the terms of the Offer and as to acceptance of the Offer; and (iii) the letter from Vinco Capital containing its advice and recommendation to the Independent Board Committee in relation to the Offer.

INDEPENDENT BOARD COMMITTEE AND APPOINTMENT OF INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee comprising Mr. Cheung Wai Chi (a non-executive Director), Mr. Cheung Yui Kai Warren, Prof. Lai Kin Keung and Mr. Lui Hong Peace (being all of the three independent non-executive Directors) has been established by the Company, to advise the Independent Shareholders in relation to the terms and conditions of the Offer, in particular as to whether the terms of the Offer are fair and reasonable and as to the acceptance of the Offer. The above-named non-executive Director and independent non-executive Directors have no direct or indirect interest or involvement in the Offer. It is considered appropriate for them to be members of the Independent Board Committee in this regard.

– 23 –

LETTER FROM THE BOARD

Vinco Capital has been appointed as the Independent Financial Adviser to advise the Independent Board Committee in respect of the Offer and, in particular, as to whether the Offer is fair and reasonable and as to acceptance. The appointment of Vinco Capital as the Independent Financial Adviser has been approved by the Independent Board Committee in accordance with Rule 2.1 of the Takeovers Code.

You are advised to read the ‘‘Letter from the Independent Board Committee’’ addressed to the Independent Shareholders, the ‘‘Letter from Vinco Capital’’ and the additional information contained in the appendices to this Composite Document before taking any action in respect of the Offer.

THE OFFER

Principal terms of the Offer

The terms of the Offer as set out in the ‘‘Letter from Oceanwide Securities’’ are extracted below. You are recommended to refer to the ‘‘Letter from Oceanwide Securities’’ and the accompanying Form of Acceptance for further details.

Oceanwide Securities, on behalf of the Offeror, is making the Offer on the following terms in accordance with Rule 26.1 of the Takeovers Code:

For each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . HK$4.115 in cash

The Offer Price of HK$4.115 per Offer Share is the same as the purchase price per Sale Share under the SPA which was arrived at after arm’s length negotiations between the Purchaser and the Vendors.

The Offer is unconditional in all respects. The Offer extends to all Independent Shareholders in accordance with the Takeovers Code.

Further details regarding the Offer, including the terms and procedures for acceptance of the Offer are set out in the ‘‘Letter from Oceanwide Securities’’ and appendix I to this Composite Document and the accompanying Form of Acceptance.

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LETTER FROM THE BOARD

Information on the Group

The Group is principally engaged in the operation of restaurants under the Viet’s choice brands in Hong Kong.

Set out below is a summary of the audited consolidated results of the Group for each of the two financial years ended 31 March 2016 and 2017 respectively:

Revenue (Loss)/profit before taxation Income tax expense (Loss)/profit and total comprehensive (loss)/income for the year Attributable to: Shareholders of the Company Net assets	Year ended 2017 (audited) HK$’000 189,830 (6,146) (1,782) (7,928) (7,928) As at 31 March 2017 (audited) HK$’000 136,444	31 March 2016 (audited) HK$’000 200,915 28,743 (4,838) 23,905 23,905 As at 31 March 2016 (audited) HK$’000 54,402

– 25 –

LETTER FROM THE BOARD

As disclosed in the Profit Warning Announcement dated 24 May 2018, based on the information then available and the preliminary assessment of the unaudited consolidated financial statements of the Group for the year ended 31 March 2018 (‘‘FY2018’’), net loss for the year ended 31 March 2018 is expected to be decreased as compared with the net loss for the year ended 31 March 2017 (‘‘FY2017’’). The decrease in loss was attributable to no listing expenses incurred for the FY2018. Excluding the non-recurring listing expenses for the FY2017, the Group would have recorded a net profit for FY2017 as compared to a net loss for FY2018. The net loss for FY2018 was mainly due to:

• (i) the increase in staff costs to support the Group’s business expansion;

• (ii) the increase in monthly rental of the Group’s leased properties upon renewal of the relevant leases and new properties leased; and

• (iii) the increase in legal and professional expenses for compliance of the Listing Rules and other applicable laws and requirements, covering the full financial year (the ‘‘Statement’’).

The Statement is regarded as a profit forecast under Rule 10 of the Takeovers Code and the Company is required to comply with the reporting requirement set out in Rule 10.4 of the Takeovers Code in respect of the Statement. In this regard, the Statement has been reported on by PricewaterhouseCoopers and Vinco Capital respectively in accordance with the Takeovers Code. PricewaterhouseCoopers is of the opinion that, so far as the accounting policies and calculations are concerned, the estimate of the consolidated loss of the Group for the year ended 31 March 2018 for the purpose of the Statement has been properly compiled in accordance with the bases adopted by the Directors and is presented on a basis consistent in all material respects with the accounting policies normally adopted by the Group as set out in the annual report of the Company for the year ended 31 March 2017. No assumptions were involved in the making of the Statement as the estimated loss for the year ended relates to a year already ended. Vinco Capital is satisfied that the Statement has been prepared by the Directors with due care and consideration. Your attention is drawn to the letter from PricewaterhouseCoopers and the report from Vinco Capital as set out in section (a) and section (b) of appendix III to this Composite Document.

Your attention is drawn to the further details of the information of the Group as set out in appendices II and V to this Composite Document.

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LETTER FROM THE BOARD

SHAREHOLDING STRUCTURE

The table below sets out the shareholding structure of the Company (i) immediately prior to Completion; and (ii) immediately upon Completion and as at the Latest Practicable Date:

Mr. Wong Mrs. Wong The Offeror Public Shareholders Total	Immediately prior to Completion Number of Shares Approximate % of issued Shares 127,500,000 (Note 1) 63.75% 22,500,000 (Note 2) 11.25% – – 50,000,000 25.00% 200,000,000 100.00%	Immediately upon Completion and as at the Latest Practicable Date Number of Shares Approximate % of issued Shares 2,000 (Note 3) 0% – – 149,998,000 75.00% 50,000,000 25.00% 200,000,000 100.00%	Immediately upon Completion and as at the Latest Practicable Date Number of Shares Approximate % of issued Shares 2,000 (Note 3) 0% – – 149,998,000 75.00% 50,000,000 25.00% 200,000,000 100.00%
			100.00%

Notes:

• (1) These 127,500,000 Shares are held by Pioneer Vantage, a company solely owned by Mr. Wong. Mr. Wong is therefore deemed to be interested in all the 127,500,000 Shares owned by Pioneer Vantage by virtue of the SFO. Mr. Wong is the spouse of Mrs. Wong. Under the SFO, Mr. Wong is deemed to be interested in all the 22,500,000 Shares owned by Mrs. Wong through Blaze Forum.

• (2) These 22,500,000 Shares are held by Blaze Forum, a company solely owned by Mrs. Wong. Mrs. Wong is therefore deemed to be interested in all the 22,500,000 Shares owned by Blaze Forum by virtue of the SFO. Mrs. Wong is the spouse of Mr. Wong. Under the SFO, Mrs. Wong is deemed to be interested in all the 127,500,000 Shares owned by Mr. Wong through Pioneer Vantage.

• (3) These 2,000 Shares are indirectly held by Mr. Wong through Pioneer Vantage.

• (4) Certain percentage figures included in the above table are subject to rounding adjustments.

INFORMATION ON THE OFFEROR

Your attention is drawn to the section headed ‘‘4. Information on the Offeror’’ in the ‘‘Letter from Oceanwide Securities’’ as set out in this Composite Document.

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LETTER FROM THE BOARD

FUTURE INTENTIONS OF THE OFFEROR REGARDING THE GROUP

Your attention is drawn to the section headed ‘‘5. Intention of the Offeror in relation to the Group’’ in the ‘‘Letter from Oceanwide Securities’’ as set out in this Composite Document. The Board is pleased to note that the Offeror intends to continue the existing principal business of the Group. As at the Latest Practicable Date, the Offeror had no intention to terminate the employment of any employee of the Group (save for the proposed changes to the composition of the Board as set forth in the section headed ‘‘6. Change of Board composition’’ in the ‘‘Letter from Oceanwide Securities’’ as set out in the Composite Document). Further, no major changes are expected in respect of the redeployment of the assets of the Group other than those in its ordinary course of business.

The Offeror intends to maintain the listing of the Shares on the Stock Exchange after the close of the Offer.

The Stock Exchange has stated that if, at the close of the Offer, less than the minimum prescribed percentage applicable to the listed issuer, being 25% of the issued Shares, are held by the public, or if the Stock Exchange believes that:

• a. a false market exists or may exist in the trading of the Shares; or

• b. there is insufficient Shares in public hands to maintain an orderly market,

then the Stock Exchange may exercise its discretion to suspend dealings in the Shares.

The new directors to be appointed to the Board and the director of the Offeror have jointly and severally undertaken to the Stock Exchange to take appropriate steps to ensure that sufficient public float exists in the Shares.

RECOMMENDATION

Your attention is drawn to the ‘‘Letter from the Independent Board Committee’’ of this Composite Document which contains its recommendation to the Independent Shareholders in respect of the Offer, and the ‘‘Letter from Vinco Capital’’ of this Composite Document containing its advice to the Independent Board Committee in respect of the Offer.

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LETTER FROM THE BOARD

ADDITIONAL INFORMATION

Your attention is drawn to the additional information contained in the appendices to this Composite Document. You are also recommended to read carefully appendix I to this Composite Document and the accompanying Form of Acceptance for further details in respect of the procedures for acceptance of the Offer.

Yours faithfully, By the order of the Board FOOD WISE HOLDINGS LIMITED Wong Che Kin

Chairman, Executive Director and Chief Executive Officer

– 29 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Set out below is the text of the letter of recommendation from the Independent Board Committee in respect of the Offer.

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FOOD WISE HOLDINGS LIMITED

膳源控股有限公司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 1632)

15 June 2018

To the Independent Shareholders

Dear Sir or Madam,

MANDATORY UNCONDITIONAL CASH OFFER BY OCEANWIDE SECURITIES COMPANY LIMITED FOR AND ON BEHALF OF MSEC HOLDINGS LIMITED TO ACQUIRE ALL THE ISSUED SHARES OF FOOD WISE HOLDINGS LIMITED (OTHER THAN THOSE ALREADY OWNED BY OR AGREED TO BE ACQUIRED BY MSEC HOLDINGS LIMITED AND THE PARTIES ACTING IN CONCERT WITH IT)

We refer to the composite offer and response document dated 15 June 2018 jointly issued by the Offeror and the Company (the ‘‘Composite Document’’), of which this letter forms part. Unless the context otherwise requires, terms used in this letter shall have the same meanings as those defined in the Composite Document.

We have been appointed to constitute the Independent Board Committee to consider the terms of the Offer and to advise you as to whether, in our opinion, the terms of the Offer are fair and reasonable and as to the acceptance of the Offer. Vinco Capital has been appointed as the independent financial adviser to advise us in this respect. Details of its advice and the principal factors taken into consideration in arriving at its recommendation are set out in the ‘‘Letter from Vinco Capital’’ on pages 32 to 52 of the Composite Document.

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LETTER FROM THE INDEPENDENT BOARD COMMITTEE

We also wish to draw your attention to the ‘‘Letter from the Board’’, the ‘‘Letter from Oceanwide Securities’’ and the additional information set out in the appendices to this Composite Document.

Taking into account the terms of the Offer and the advice from Vinco Capital, we consider that the terms of the Offer are fair and reasonable so far as the Independent Shareholders are concerned and recommend the Independent Shareholders to accept the Offer.

The Independent Shareholders, in particular those who intend to accept the Offer, are reminded to note the recent fluctuation in the price of the Shares. Since the PostAnnouncement Period (as defined in the Letter from the Independent Financial Adviser), the Share price are higher than the Offer Price. As such, we would like to remind the Independent Shareholders to closely monitor the market price and liquidity of the Shares during the Offer Period, and consider selling their Shares in the open market, if the net proceeds from the sale of such Shares in the market would exceed the net proceeds receivable under the Offer. Nevertheless, given that the trading volume of the Shares has been thin during the Review Period (as defined in the Letter from the Independent Financial Adviser), the Independent Shareholders should be mindful as to whether there will be sufficient liquidity in the Shares for the Independent Shareholders who wish to realise part or all of their investment in the Company at the prevailing market price of the Shares and whether their disposal of the Shares will exert a downward pressure on the market price of the Shares.

In any case, the Independent Shareholders are strongly advised that the decision to realise or to hold their investment is subject to individual circumstances and investment objectives. If in doubt, the Independent Shareholders should consult their own professional advisers for advice. The Independent Shareholders are recommended to read the full text of the ‘‘Letter from the Independent Financial Adviser’’ in the Composite Document. Furthermore, the Independent Shareholders who wish to accept the Offer are recommended to read carefully the procedures for accepting the Offer as detailed in this Composite Document and the Form of Acceptance.

Yours faithfully,

Independent Board Committee of

Food Wise Holdings Limited

Mr. Cheung Wai Chi Non-executive Director

Mr. Cheung Yui Kai Warren

Prof. Lai Kin Keung

Mr. Lui Hong Peace

Independent non-executive Directors

– 31 –

LETTER FROM VINCO CAPITAL

15 June 2018

The following is the full text of a letter of advice from Vinco Capital to the Independent Board Committee in respect of the terms of the Offer which has been prepared for the purpose of incorporation in this Composite Document:

Vinco Capital Limited Units 4909-4910, 49/F., The Center 99 Queen’s Road Central, Hong Kong

To the Independent Board Committee and the Independent Shareholders of Food Wise Holdings Limited

Dear Sirs,

THE MANDATORY UNCONDITIONAL CASH OFFER BY OCEANWIDE SECURITIES COMPANY LIMITED FOR AND ON BEHALF OF MSEC HOLDINGS LIMITED

TO ACQUIRE ALL THE ISSUED SHARES IN THE CAPITAL OF FOOD WISE HOLDINGS LIMITED (OTHER THAN THOSE ALREADY OWNED BY OR AGREED TO BE ACQUIRED BY MSEC HOLDINGS LIMITED

AND THE PARTIES ACTING IN CONCERT WITH IT)

A. INTRODUCTION

We refer to our appointment as the Independent Financial Adviser to advise the Independent Board Committee in respect of the terms of the Offer and as to acceptance, details of which are set out in the Composite Document jointly issued by the Offeror and the Company to the Shareholders dated 15 June 2018 of which this letter forms part. Capitalised terms used in this letter shall have the same meanings ascribed to them in the Composite Document unless the context otherwise requires.

As mentioned in the Joint Announcement, on 25 April 2018 (after trading hours), the Vendors and the Offeror entered into the SPA, pursuant to which the Vendors conditionally agreed to sell and the Offeror agreed to purchase the Sale Shares, being 149,998,000 Shares in aggregate, representing approximately 75% of the entire issued share capital of the Company as at the Latest Practicable Date, for a consideration of HK$4.115 per Sale Share, equivalent to HK$617,241,770 in total. The Completion took place on 15 May 2018.

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LETTER FROM VINCO CAPITAL

The Independent Board Committee, comprising Mr. Cheung Wai Chi (a non-executive Director), Mr. Cheung Yui Kai Warren, Prof. Lai Kin Keung and Mr. Lui Hong Peace (being all of the three independent non-executive Directors) has been established to make a recommendation to the Independent Shareholders as to whether the Offer is, or is not, fair and reasonable and as to its acceptance. We have been appointed as the Independent Financial Adviser to advise the Independent Board Committee in respect of the Offer. In our capacity as the Independent Financial Adviser, our role is to give an independent opinion to the Independent Board Committee as to whether the terms of the Offer are fair and reasonable and as to acceptance so far as the Independent Shareholders are concerned and such appointment has been approved by the Independent Board Committee.

As at the Latest Practicable Date, we are not connected with the directors, chief executive and substantial shareholders of the Company and the Offeror or any of their respective subsidiaries or their respective associates or any party acting, or presumed to be acting, in concert with any of them and accordingly, and, as at the Latest Practicable Date, did not have any shareholding, directly or indirectly, in any of their respective subsidiaries or their respective associates and, as at the Latest Practicable Date, did not have any shareholding, directly or indirectly, in any member of the Group or the Offeror 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 and Offeror. We are not aware of any relationships or interest between us and the Company and the Offeror or any other parties that could be reasonably be regarded as hindrance to our independence as defined under Rule 13.84 of the Listing Rules and Rule 2 of the Takeovers Code to act as the Independent Financial Adviser to the Independent Board Committee in respect of the Offer. We are eligible to give independent advice and recommendations on the terms of the Offer and as to acceptance. Apart from normal professional fees payable to us in connection with this appointment as the Independent Financial Adviser to the Independent Board Committee, no arrangement exists whereby we will receive any fees from the Company, its subsidiaries, its associates or their respective substantial shareholders or associates. We have not acted as the financial adviser or the independent financial adviser for the Company’s other transactions during the past two years. We are not aware of the existence of or change in any circumstances that would affect our independence. Accordingly, we consider that we are eligible to give independent advice on the Offer.

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LETTER FROM VINCO CAPITAL

B. BASIS OF OUR OPINION AND RECOMMENDATION

In formulating our opinion and recommendation, we have relied on the accuracy of the information and facts contained or referred to in the Composite Document and provided to us by the Company, the Directors and the management of the Company. We have assumed that all information and representations contained or referred to in the Composite Document were true and accurate at the time when they were made and continue to be true, accurate and up to date throughout the Offer Period. Shareholders will be notified of any material changes as soon as possible. We have also assumed that all statements of belief, opinion and intention made by the Directors and the Offeror in the Composite Document were reasonably made after due enquiries and considerations. We have no reasons to doubt that any relevant information has been withheld, nor are we aware of any fact or circumstance which would render the information provided and representations made to us untrue, inaccurate or misleading. We consider that we have reviewed sufficient information to enable us to reach an informed view and to justify reliance on the accuracy of the information contained in the Composite Document and to provide a reasonable basis for our opinions and recommendations. All Directors have declared in a responsibility statement set out in the Appendix V to the Composite Document that they jointly and severally accept full responsibility for the accuracy of the information contained in the Composite Document (other than information relating to the Offeror and its intention in respect of the Group and the terms of the Offer). We have not, however, carried out any independent verification of the information provided by the Company, the Directors and the management of the Company, nor have we conducted an independent investigation into the business and affairs, financial condition and future prospects of the Group and/or the Offeror.

In formulating our opinions, we have not considered the tax implications on the Independent Shareholders arising from acceptances or non-acceptances of the Offer as these are particular to their individual circumstances. It is emphasised that we will not accept responsibility for any tax effect on or liability of any person resulting from his or her acceptance or non-acceptance of the Offer. In particular, the Independent Shareholders who are residents outside Hong Kong or subject to overseas tax or Hong Kong taxation on securities dealings should consider their own tax position, and if in any doubt, should consult their own professional advisers.

In formulating our opinions, our opinions are necessarily based upon the financial, economic, market, regulatory and other conditions as they existed on, and the facts, information, representations, and opinions made available to us as of the Latest Practicable Date. Should there be any subsequent material changes in such information during the Offer Period, the Company will inform the Shareholders as soon as practicable in accordance with Rule 9.1 of the Takeovers Code. We disclaim any undertaking or obligation to advise any person of any change in any fact or matter affecting the opinions expressed herein which may come or be brought to our attention after the end of the period for the acceptance of the Offer. Based on the foregoing, we confirm that we have taken all reasonable steps, which are applicable to the Offer, as referred to in Rule 13.80 of the Listing Rules (including the notes thereto).

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LETTER FROM VINCO CAPITAL

This letter is issued for the Independent Board Committee solely in respect of the Offer and, except for its inclusion in the Composite Document, is not to be quoted or referred to, in whole or in part, nor shall this letter be used for any other purposes, without our prior written consent.

C. PRINCIPAL FACTORS AND REASONS CONSIDERED

In arriving at our opinion and recommendation to the Independent Board Committee in relation to the terms of the Offer and as to acceptance, we have considered the principal factors and reasons set out below:

1. Business of the Group

The Company was incorporated in the Cayman Islands as an exempted company with limited liability, shares of which have been listed on Stock Exchange since 29 November 2016. The Group is a food and beverage group operating restaurant chains in Hong Kong under ‘‘Viet’s Choice（越棧）’’, ‘‘Five Spice（5越）’’ and ‘‘Tasca LoPo’’（6葡）brands. As at Latest Practicable Date, the Group operated 21 restaurants under ‘‘Viet’s Choice’’（越棧） brand, one restaurant under ‘‘Five Spice’’（5越）brand and one restaurant under ‘‘Tasca LoPo’’（6葡）brand.

2. Historical financial performance of the Group

Set out below are (i) the audited consolidated financial information of the Group for the two years ended 31 March 2017 extracted from the annual report of the Company for the year ended 31 March 2017 (the ‘‘2016/17 Annual Report’’); and (ii) the unaudited consolidated financial information of the Group for the six months ended 30 September 2017 extracted from the interim report of the Company for the six months ended 30 September 2017 (the ‘‘2017/18 Interim Report’’):

	For the year ended	For the year ended	For the six months	For the six months
Consolidated income statement and statement	31 March		ended 30 September
of comprehensive income	2016	2017	2016	2017
	(audited)	(audited)	(unaudited)	(unaudited)
	HK$’000	HK$’000	HK$’000	HK$’000
Revenue	200,915	189,830	102,631	101,456
Profit (loss) attributable
to owner of the Company	23,905	(7,928)	(3,632)	3,565

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LETTER FROM VINCO CAPITAL

			As at
	As at 31	March	30 September
Consolidated statement of financial position	2016	2017	2017
	(audited)	(audited)	(unaudited)
	HK$’000	HK$’000	HK$’000
Total assets	78,147	162,108	162,716
Total liabilities	23,745	25,664	22,707
Equity attributable to owner of the Company	54,402	136,444	140,009

Source: 2017 Annual Report and 2017 Interim Report

Audited consolidated results for the two years ended 31 March 2017

As disclosed in the 2016/17 Annual Report, the Group recorded a decrease in turnover of approximately 5.5%, from approximately HK$200.9 million for the year ended 31 March 2016 to approximately HK$189.8 million for the year ended 31 March 2017. The Group’s revenue was derived from restaurants operation. The decrease in revenue was primarily due to (i) the downturn in Hong Kong retail and tourism sectors, and (ii) the decrease in aggregate number of operating days of the restaurants being the net effect of opening and closing of the restaurants during the two years ended 31 March 2017.

The Group has recorded a loss (mainly due to incur of a non-recurring listing expenses) that attributable to owner of the Company of approximately HK$7.9 million for the year ended 31 March 2017 from a profit of approximately HK$23.9 million for the year ended 31 March 2016. Such loss was mainly attributable to the inclusion of non-recurring listing expenses of HK$17.6 million. Excluding the effect of the listing expenses, loss for the year ended 31 March 2017 would turn to a profit of approximately HK$9.7 million for the year ended 31 March 2017 and the profit for the year ended 31 March 2016 would increase to approximately HK$25.4 million. If that was the case, the net profit for the year ended 31 March 2017 would then drop by approximately HK$15.7 million or approximately 61.9%. The reasons for such decrease was mainly contributed by the following: (i) decrease in other income and gains by approximately HK$2.1 million with the absence of gain on disposal of land and buildings of approximately HK$2.4 million for the year ended 31 March 2016, (ii) increase in staff cost by HK$2.7 million, and (iii) increase in property rentals and related expenses by approximately HK$3.2 million.

As at 31 March 2017, the Group recorded total assets, total liabilities and equity attributable to owners of the Company of approximately HK$162.1 million, HK$25.7 million and HK$136.4 million, respectively.

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LETTER FROM VINCO CAPITAL

Unaudited consolidated results for the six months ended 30 September 2017

As disclosed in the 2017/18 Interim Report, for the six months ended 30 September 2017, the Group recorded revenue of approximately HK$101.5 million, represented a decrease of approximately 1.1% as compared with HK$102.6 million for the six months ended 30 September 2016. The decrease in the Group’s turnover was mainly due to (i) intense competition among food and beverage industry, and (ii) decrease in the aggregate number of operating days of the restaurants which was the net effect of the opening and closing of the restaurants during the six months ended 30 September 2016 and 2017 respectively.

The Group recorded a profit attributable to owners of the Company of approximately HK$3.6 million for the six months ended 30 September 2017 as compared to a loss attributable to owners approximately HK$3.6 million as the Group had incurred a listing expenses of approximately HK$14.7 million for the six months ended 30 September 2016. In fact if we excluding the effect of the abovementioned listing expenses, loss for the six months ended 30 September 2016 would turn to a profit of approximately HK$11.0 million for the six months ended 30 September 2016. The net profit for the six months ended 30 September 2017 would then drop by approximately HK$7.5 million or approximately 67.7% as compared to the same period in 2016. The reasons for such decrease was mainly due to the increase of operating costs including (i) increase in staff costs by approximately HK$2.5 million, (ii) increase in property rentals and related expenses by approximately HK$1.0 million, and (iii) increase in other operating expenses by approximately HK$3.6 million.

As at 30 September 2017, the Group recorded total assets, total liabilities and equity attributable to owners of the Company of approximately HK$162.7 million, HK$22.7 million and HK$140.0 million, respectively.

Profit Warning Announcement

As disclosed in the Profit Warning Announcement, based on the information then available and the preliminary assessment of the unaudited consolidated financial statements of the Group for the year ended 31 March 2018, net loss for the year ended 31 March 2018 is expected to be decreased as compared with the net loss for the year ended 31 March 2017. The decrease in loss was attributable to no listing expenses incurred for the FY2018. Excluding the non-recurring listing expenses for the FY2017, the Group would have recorded a net profit for FY2017 as compared to a net loss for FY2018. The net loss for FY2018 was mainly due to: (i) the increase in staff costs to support the Group’s business expansion; (ii) the increase in monthly rental of the Group’s leased properties upon renewal of the relevant leases and new properties leased; and (iii) the increase in legal and professional expenses for compliance of the Listing Rules and other applicable laws and requirements, covering the full financial year (the ‘‘Statement’’).

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LETTER FROM VINCO CAPITAL

3. Business prospect of the Group

According to the 2017 Interim Report, the Group’s strategic objective is to become a leading full-service casual dining restaurant chain operator in Hong Kong. One of the Group’s strategies was to maintain the Group’s market share and continuing to expand its network of Vietnamese-style casual dining restaurants in Hong Kong by the replacement of restaurants which the Group has plan to close, opening of new Vietnamese-style casual dining restaurants as well as further refurbishment of existing restaurants. This would incur large amount of transaction costs. The new brand restaurant would not guarantee the generation of new source of income while the old restaurants were replaced and therefore the revenue would remain uncertainty.

Catering industry is one of the industries with the largest number of practitioners in Hong Kong. Due to its labour-intensive nature, restaurants have different job positions with conditions and modes of employment which are diversified for meeting operational needs. According to the press releases titled ‘‘Employment situation of catering industry’’ by the Hong Kong Government, the majority of restaurants are operating with great difficulties. The introduction of the Statutory Minimum Wage (the ‘‘SMW’’) in 2011 and its two subsequent upward adjustments, as well as high shop rents have resulted in the operating costs of the catering industry rising incessantly, and difficulties in recruitment have led to a continuous decline in the service standards of the industry. In face of manpower shortage, some restaurants have to shift to operate in less labour-intensive modes, such as takeaway or customer self-service.

According to the Report on Quarterly Survey of Restaurant Receipts and Purchases published by the Census and Statistics Department of the Hong Kong Government (the ‘‘C&SD’’) published in May 2018, the total receipts of non-Chinese restaurants increased by 11.2% in the Q1 2018, compared with the last corresponding period.

However, it is noted that the number of establishments[1] in accommodation and food services increased by 1.1% from March 2016 to March 2017 and by 1.5% from December 2016 to December 2017, as disclosed by the C&SD, which would lead to more intense competition in this industry. Moreover, a survey has been done by the C&SD to conduct the views on expected changes in business situation. The net balance[2] was -7 in the Q2 2018 as compared with Q1 2018 while it was -3 in Q1 2018 as compared with Q4 2017. This reflected the industry was not optimistic about the current or foreseeable business situation.

1 Establishment is defined as an economic unit which engages, under a single ownership or control, in one or predominantly one kind of economic activity at a single physical location, e.g. an individual factory, workshop, retail shop or office.

2 Net balance = Difference between the % of establishments choosing ‘‘better’’ and that choosing ‘‘worse’’. The magnitude of the ‘‘net balance’’ reflects only the prevalence of optimism or pessimism, but not the magnitude of expected change.

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LETTER FROM VINCO CAPITAL

According to Quarterly Report of Wage and Payroll Statistics issued by the C&SD published in March 2018, the Nominal Wage Index increased by 3.8% in December 2017 over a year earlier. In the section of Accommodation and food service activities[3] , the Nominal Wage Index increased by 4.7%. In addition to Nominal Wage Index, the SMW rate has raised to HK$34.5 per hour with effect from 1 May 2017 from HK$32.5 per hour. We expected that the SMW will be reviewed and revised in a specific period. As the catering industry was labour intensive, with the increase in SMW, the Group’s labour costs are expected to raise.

Rental expenses is one of the key components of cost of services for all the participants in the catering industry. As disclosed by the Rating and Valuation Department of the Hong Kong Government, the average rents in Hong Kong, Kowloon and New Territories has increased to HK$1,839/m[2] , HK$1,550/m[2] and HK$1,477/m[2] per month in March 2018[4] from HK$1,599/m[2] , HK$1,455/m[2] and HK$1,372/m[2] per month in March 2017. It changed to HK$1,489/m[2] , HK$1,380/m[2] and HK$1,282/m[2] per month in December 2017[5] from HK$1,381/m[2] , HK$1,233/m[2] and HK$1,383/m[2] per month in December 2016. It is expected the increasing trend of rents would increase the operating costs of the Group in 2018.

Taking into consideration the factors as mentioned above, we are of the opinion that the future performance of the Group remains uncertainty.

4. Information on the Offeror

Reference is made to the section headed ‘‘4. Information of the Offeror’’ in the ‘‘Letter from Oceanwide Securities’’ of the Composite Document.

3 Accommodation and food service activities includes Hotels, Chinese restaurants, Restaurants other than Chinese restaurants and Fast food shops.

4 Provisional figures

5 Provisional figures

– 39 –

LETTER FROM VINCO CAPITAL

The Offeror was incorporated in the BVI with limited liability on 21 October 2014. It is an investment holding company. Its assets are cash and the Sale Shares. As at the Latest Practicable Date, its ordinary share capital was wholly owned by RUNMING International Limited which in turn is wholly owned by Shanghai Yingzhao Investment Management Company Limited（ 上海盈昭投資管理有限公司）. Shanghai Yingzhao Investment Management Company Limited（上海盈昭投資管理有限公司）is wholly owned by Beijing Ruitao Technology Company Limited（北京睿韜科技有限責任公司）which is in turn owned by Minsheng E-Commerce Holdings. As at the date of the Latest Practicable Date, Minsheng E-Commerce had 13 shareholders which are PRC established corporations and organisations. The single largest shareholder, Minsheng Royal Asset Management Co., Ltd （民生加銀資產管理有限公司）(‘‘Minsheng Royal’’), a subsidiary of China Minsheng Bank （民生銀行）, holds approximately 21.69% of the shareholding of Minsheng E-Commerce Holdings. The second largest shareholders, South Hope Industry Co., Limited （南方希望 實業有限公司）(‘‘South Hope’’) and Orient Group Commercial Investment Co., Ltd（東方集 團商業投資有限公司）(‘‘Orient Commercial’’), each holds approximately 18.94% of the shareholding of Minsheng E-Commerce, respectively. South Hope is a subsidiary of New Hope Group Limited（新希望集團有限公司）which mainly engages in modern agricultural and food production. Orient Commercial is wholly owned by Orient Group Co., Ltd（東方集 團股份有限公司）, a company listed on the Shanghai Stock Exchange which is involved in finance, trading, ports, industrial businesses.

As at Latest Practicable Date, the Offeror did not have any subsidiary save for the Company. Despite the Offeror and its ultimate beneficial shareholders has extensive management experience in various industries in PRC, the Offeror group does not possess previous experience in the full-service casual dining restaurant chain business in Hong Kong in which the Group is engaged, and therefore we are of the view that there remains uncertainty on the future performance of the Group under the management of new controlling Shareholder (i.e. the Offeror).

5. Intention of the offeror in relation to the group

(i) Business

Reference is made to section headed ‘‘5. Intention of the offeror in relation to the Group’’ in the ‘‘Letter from Oceanwide Securities’’ of the Composite Document. Upon Completion, the Offeror became the controlling shareholder of the Company. After the close of the Offer, the Offeror intends to continue the existing principal business of the Group.

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LETTER FROM VINCO CAPITAL

Offeror had no intention to (i) terminate the employment of any employee of the Group (save for the proposed changes to the composition of the Board as set forth in the section headed ‘‘6. Change of Board Composition’’ in the ‘‘Letter from Oceanwide Securities’’ as set out in this Composite Document); or (ii) redeploy the assets of the Group other than those in its ordinary and usual course of business.

Moreover, as stated in the ‘‘Letter from the Board’’, the Board is pleased to learn about the intentions of the Offeror. The Board will cooperate and provide support to the Offeror as regards to the Offeror’s intention regarding the Group and will continue to act in the best interests of the Group and the Shareholders as a whole.

(ii) Maintain listing of the Group

Reference is made to section headed ‘‘8. Maintaining the Listing Status of the Company’’ in the ‘‘Letter from Oceanwide Securities’’ of the Composite Document.

The Offeror does not intend to avail itself of any powers of compulsory acquisition in respect of the Company. The Offeror will, together with the Company, use reasonable endeavours to maintain the listing status of the Shares on the Stock Exchange and procure that not less than 25% of the entire issued share capital in the Company be held by the public in compliance with the Listing Rules. The new directors to be appointed to the Board and the director of the Offeror have jointly and severally undertaken to the Stock Exchange to take appropriate steps following the close of the Offer to ensure that such number of Shares as may be required by the Stock Exchange are held by the public within the prescribed time frame.

As a requirement under the terms of the Short Term Facility granted by Oceanwide Securities, the Offeror has entered into a placing agreement with a placing agent, under which the placing agent shall place Shares up to 50,000,000 Shares (representing up to 25% of the total issued share capital of the Company) held by the Offeror to independent placees (failing which the placing agent shall acquire the relevant Shares) in order to restore the Company’s public float if the Company shall have insufficient public float after the close of the Offer. The Offeror shall inform the placing agent of the maximum number of Shares to be sold by the placing agent on behalf of the Offeror after the close of the Offer.

According to the Listing Rules, if, upon the close of the Offer, less than the minimum prescribed percentage applicable to the Company, being 25%, of the issued Shares are held by the public or if the Stock Exchange believes that (i) a false market exists or may exist in the trading of the Shares; or (ii) there are insufficient Shares in public hands to maintain an orderly market, then the Stock Exchange may exercise its discretion to suspend trading in the Shares. The Offeror will take appropriate steps to ensure that sufficient public float exists in the Shares after the close of the Offer.

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LETTER FROM VINCO CAPITAL

6. Proposed change to the Board composition

The Board is currently made up of two executive Directors, one non-executive Director and three independent non-executive Directors. All of the existing Directors have tendered resignation to take effect from a date which is no earlier than such date as permitted under Rule 7 of the Takeovers Code (i.e. after the close of the Offer).

As set out in the ‘‘6. Change of Board Composition’’ of the Composite Document, the Offeror has nominated Mr. Wu Jiangtao, Mr. Lu Sheng Hong, Ms. Li Jia. Mr. Wat Tat Fei, Mr. Wong Stacey Martin, Mr. Ko Po Ming, Mr. Choi Tze Kit, Sammy, Mr. Cheung Miu and Mr. Cheung Pak To Patrick to be new Directors. The appointment of the new Directors will take effect on the close of the Offers. Any changes to the composition of the Board will be made in compliance with the Takeovers Code and the Listing Rules.

Further details on the new Directors’ biographies are set out in the above-mentioned sub-section in the ‘‘Letter from Oceanwide Securities’’ of the Composite Document. There could be uncertainties with the direction and strategies the Offeror will take after its review considering that the new Directors do not have previous experience in the current principal businesses of the Company (i.e., full-service casual dining restaurant chain operator) as their occupation were mainly involved in banking or finance services. Further, given that all the current Directors tendered resignation, there could be uncertainties in how such change will affect the current employees as well as the operations of the Group going forward.

In light of the above-mentioned, we are of the view that there could be uncertainties in the management which could directly affect the operation of the Company.

7. Principal terms of the Offer

Oceanwide Securities, on behalf of the Offeror, is making the Offer to acquire all the issued Shares other than those Shares already owned by the Offeror in accordance with the Takeover Code on the following terms:

(i) Consideration of the Offer

For each Offer Share . . . . . . . . . . . . . . . . . . . . . . . . . HK$4.115 in cash

The Offer Shares to be acquired under the Offer shall be fully paid and free from all liens, charges, claims, equities, encumbrances, rights of pre-emption and any other third-party rights of any nature and together with all rights attaching to them, including the right to receive all dividends and other distributions, if any, declared, made or paid by the Company on or after the date on which the Offer is made, being the date of this Composite Document.

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LETTER FROM VINCO CAPITAL

(ii) Comparisons of value

The Offer Price of HK$4.115 per Offer Share represents:

• (i) a discount of approximately 34.68% to the closing price of HK$6.3 per Share as quoted on the Stock Exchange on 25 April 2018, being the Last Trading Day;

• (ii) a discount of approximately 46.36% to the average closing price of approximately HK$7.6720 per Share as quoted on the Stock Exchange for the last five consecutive days up to and including the Last Trading Day;

• (iii) a discount of approximately 52.64% to the average closing price of approximately HK$8.6890 per Share as quoted on the Stock Exchange for the last ten consecutive trading days up to and including the Last Trading Day;

• (iv) a discount of approximately of 40.45% to the average closing price of approximately HK$6.9097 per Share as quoted on the Stock Exchange for the last 30 consecutive trading days up to and including the Last Trading Day;

• (v) a premium of approximately 503.18% over the audited consolidated net asset value of the Company of approximately HK$0.6822 per Share (based on 200,000,000 Shares in issue) as at 31 March 2017 (being the date to which the latest audited financial results of the Group were made up);

• (vi) a premium of approximately 487.82% over the unaudited consolidated net assets of the Company of approximately HK$0.7 per Share (based on 200,000,000 Shares in issue) as at 30 September 2017;

• (vii) a discount of approximately 47.58% to the closing price of HK$7.85 per Share as quoted on the Stock Exchange on 18 April 2018 (being the last trading day prior to commencement of the Offer Period); and

• (viii) a discount of approximately of 59.26% to the closing price of approximately HK$10.1 per Share as quoted on the Stock Exchange on the Latest Practicable Date.

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LETTER FROM VINCO CAPITAL

8. Historical price performance of the Shares

The chart below illustrates the closing price levels of the Shares as quoted on the Stock Exchange from the twelve-month period preceding the closing date of the Offer, being the period of 25 April 2017 to Latest Practicable Date (the ‘‘Review Period’’):

==> picture [356 x 177] intentionally omitted <==

Source: website of the Stock Exchange (http://www.hkex.com.hk)

As shown in the chart above, the highest and lowest closing prices of the Shares during the Review Period were HK$24.6 on 16 May 2017 and HK$4.53 on 6 February 2018. The Offer Price therefore represents a discount of approximately 83.23% to the highest closing price of the Shares and a discount of approximately 9.16% over the lowest closing price of the Shares during the Review Period.

During the Review Period, the closing price of the Share was on a decreasing trend. After rising to HK$24.6, being the highest closing price of the Review Period on 16 May 2017, the stock price continued to drop to HK$9.59 on 17 July 2017. As informed by the Company, such reason might be due to investors expecting the annual results of the Company for the year ended 31 March 2017 which may show an adverse change according to the profit warning announcement published by the Company in 1 June 2017.

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LETTER FROM VINCO CAPITAL

It is noted that the decreasing trend continued and hit the lowest closing price of HK$4.53 on 6 February 2018, but during the Review Period, the closing price has never dropped below or touched the Offer Price of HK$4.115. Following the lowest closing price, it fluctuated between HK$4.85 to HK$5.97 before it jumped to HK$11.2 in 13 trading days on 16 April 2018 from 27 March 2018. Then the closing price was dropping until 25 April 2018 (the ‘‘Last Trading Day’’) to HK$6.3. Save as the announcement of the Company dated 1 June 2017 regarding the profit warning for the year ended 31 March 2017, the Directors advised us that they are not aware of any affirmative reasons for the aforesaid movements in the closing price of the Shares.

We noted that the Offer Price had been lower than the daily closing prices during the Review Period. The Offer Price of HK$4.115 represents (i) a discount of approximately 9.16% over the lowest closing price; and (ii) a discount of approximately 83.23% to the highest closing price during the Review Period. Despite that the Offer Price has never dropped below or touched the Offer Price of HK$4.115, the Offer Price represents a premium of approximately 487.82% over the unaudited consolidated net asset value of the Company of approximately HK$0.70 per Share as at 30 September 2017, based on the Company’s unaudited consolidated net assets of the Company of approximately HK$140,009,000 as at 30 September 2017 and 200,000,000 Shares in issue. As such, we consider the Offer Price is fair and reasonable.

Since the publication of the Joint Announcement and up to the trading day immediately preceding the Latest Practicable Date (the ‘‘Post-Announcement Period’’), we noted that the closing prices of the Shares have increased and ranged from HK$7.35 to HK$10.72 per share, representing a premium of approximately 78.6% and 160.5% respectively over the Offer Price. After having enquired with the Company, it was unaware of any reasons for the surge in the prices of the Shares during the Post-Announcement Period. Given that the surge in the prices of the Share happened during the PostAnnouncement Period after the publication of the Joint Announcement and the Company also did not announce any other significant news during the Post-Announcement Period, we are of the view that such surge in the prices of the Shares in the Post-Announcement Period was highly likely due to the news and market reaction of the Offer as disclosed in the Joint Announcement. In this connection, we consider that in the absence of any significant positive events and the Offer, there is no assurance that the closing prices of the Shares will continue to rise or maintain at a level equal to or above the Share Offer Price after the Latest Practicable Date or after closing of the Offer. Accordingly, we also consider the price trend prior to the publication of the Joint Announcement in the Pre-Announcement Period more appropriately reflects the general price trend of the Company.

Independent Shareholders who wish to realise their investment in the Group are reminded that they should carefully and closely monitor the market price of the Group during the Offer Period and consider selling their Shares in the open market during the Offer Period, rather than accepting the Offer, if the net proceeds from the sale of such Shares in the open market would exceed the net amount receivable under the Offer.

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LETTER FROM VINCO CAPITAL

9. Liquidity of the Shares

The table below sets out the average daily trading volume of the Shares during the Review Period, and the percentage as represented by such average daily trading volume to the total number of Shares in issue at the corresponding month.

					Approximately %	Approximately %
				Approximately %	of average daily
				of average	trading volume
				daily trading	to total number
				volume to total		of Shares
	Total trading	Number of	Average Daily	number of	held by public
	volume	trading days	Volume	issued Shares	Shareholders
	(Note 2)		(Note 1)	(Note 3)		(Note 4)
	(Thousands		(Thousands
	Shares)		Shares)
2017
April (commencing from 25 April 2017)	4,827	4	1,207	0.60%		2.41
May	63,022	20	3,151	1.58%		6.30%
June	71,687	22	3,259	1.63%		6.52%
July	36,260	21	1,727	0.86%		3.45%
August	35,797	22	1,627	0.81%		3.25%
September	56,308	21	2,681	1.34%		5.36%
October	41,645	20	2,082	1.04%		4.16%
November	49,419	22	2,246	1.12%		4.49%
December	8,086	19	426	0.21%		0.85%
2018
January	11,126	22	506	0.25%		1.01%
February	6,712	18	373	0.19%		0.75%
March	23,387	21	1,114	0.56%		2.23%
April	94,662	15	6,311	3.16%		12.62%
May	63,055	18	3,503	1.75%		7.01%
June (up to the Latest Practicable Date)	10,463	8	1,308	0.65%		2.62%

Source: website of the Stock Exchange (http://www.hkex.com.hk)

Notes:

• (1) Average daily trading volume is calculated by dividing the total trading volume for the month/period by the number of trading days during the month/period which excludes any trading day on which trading in the Shares on the Stock Exchange was suspended for the whole trading day.

• (2) Total trading volume for the month/period is sourced from the website of the Stock Exchange.

• (3) Percentage of the average daily trading volume of the Share is calculated by divided by the number of Shares held by the public Shareholders as at the Latest Practicable Date. In the content of this section, the number of Shares held by public Shareholders means the total issued share capital of the Company less the Shares held by the controlling shareholders.

• (4) The total number of Shares held by Public is calculated based on the number of the total issued Shares.

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LETTER FROM VINCO CAPITAL

As illustrated from the above table, the average daily trading volume of the Shares during the Review Period ranged from approximately 372,889 Shares to approximately 6,310,783 Shares, representing approximately 0.19% and approximately 3.16% of the total number of Shares in issue as at the corresponding month respectively, and approximately 0.75% and 12.62% of the total number of Shares held by the public Shareholders. The average daily trading volume of Shares during the Review Period was generally thin.

Given the thin historical average daily trading volume of the Shares, it is uncertain that the overall liquidity of the Shares could be maintained and that there would be sufficient liquidity in the Shares for the Independent Shareholders to dispose of a significant number of Shares in the open market without exerting a downward pressure on the Share price. We, therefore, consider that the Offer provides the Independent Shareholders with an assured exit if they wish to realise their investments in the Shares.

10. Comparable analysis

The Group is engaged in operation of restaurant chains in Hong Kong.

In order to access the fairness and reasonableness of the Offer Price, we have considered using the equity value multiples, namely, price-to-earnings ratio (‘‘P/E Ratio’’) and price to book ratio (the ‘‘P/B Ratio’’), which are the most commonly used benchmarks in assessing the financial valuation of a company to compare the Offer Price against the market valuation of other comparable companies as the data for calculating the ratios can be obtained fairly and directly from publicly available information. However, the P/E Ratio would not be applicable to the analysis when the Group had incurred negative profit for the year ended 31 March 2017. Therefore, the non-recurring listing expenses of approximately HK$17.6 million was excluded in order to calculate an illustrative P/E Ratio implied by the Offer Price (the ‘‘Implied P/E’’) for comparison. The Implied P/E Ratio was approximately 85.2 times. Given that the P/B Ratio is mainly used in evaluating capital intensive business, since the cash and cash equivalents represented approximately 64.3% as at 30 September 2017 in the 2017/18 Interim Report, we consider the business model of the Company is asset-light and P/B Ratio is not applicable for comparison purpose in accessing the fairness and reasonableness of the Offer.

Apart from equity value multiples as mentioned above, we have adopted the enterprise value (‘‘EV’’) to earnings before interest, taxes, depreciation and amortisation (‘‘EBITDA’’) multiple (‘‘EV/EBITDA’’) approach. EV is implied by the Offer Price (the ‘‘Implied EV’’).

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LETTER FROM VINCO CAPITAL

We have attempted to identify the companies and have set certain criteria in choosing the companies which they are (i) listed on the Stock Exchange; (ii) engaged in the food and beverage industry in Hong Kong; (iii) all revenue of restaurant operations was generated over 60% of the revenue in restaurant operations; and (iv) operated as casual or full-service restaurant.

In this regard, 8 comparable companies (the ‘‘Comparable Companies’’) are identified based on our research on the website of the Stock Exchange in accordance with the above criteria which we consider to be exhaustive. However, by reviewing the Comparable Companies, we have identified the P/E Ratio and the EV/EBITDA of Royal Catering Group Holdings Company Limited (8300.HK) (‘‘Royal Catering’’) are significantly higher than Comparable Companies. Based on the information disclosed on the website of the Stock Exchange, we note that the P/E Ratio and the EV/EBITDA as at Latest Practicable Date was approximately 454.60 times and approximately 62.68 times respectively, which was significantly higher than the average P/E Ratio of approximately 18.53 times and average EV/EBITDA of approximately 9.95 times of Comparable Companies excluding Royal Catering. Without any insight of such abnormally high P/E Ratio and EV/EBITDA, we have excluded Royal Catering from the list of the Comparable Companies. Whilst the scale of operations, financial position, market capitalisation and future prospects of the Comparable Companies are not exactly the same as the Company, given that we have included all available Comparable Companies listed on the Stock Exchange based on our selection criteria (the Comparable Companies are mainly engaged in the operation and management of restaurants in Hong Kong and thus are in general affected by similar factors, including, but not limited to, the outlook of the catering industry in Hong Kong), we are of the view that the Comparable Companies serve as a reference in assessing the fairness and reasonableness of the Offer Price and also that the list of Comparable Companies is fair, sufficient and representative sample.

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LETTER FROM VINCO CAPITAL

		Market	Profit/(loss)
		capitalisation	Attributable to	Net Assets
		as at the	shareholders	according to
		Latest	for the	relevant
Company name		Practicable	preceding	annual/interim
(Stock Code)	Principal business	Date	financial year	results	P/E Ratio	EV/EBITDA
		(HK$ million)	(HK$ million)	(HK$ million)	(times)	(times)
		(i)	(ii)	(iii)	(iv)=(i)/(ii)	(note 4)
Dining Concepts Holding Limited	Operation of restaurants and the	287.64	(17.8)	140.6	N/A	17.51
(8056)	provision of catering management		(note 5)		(note 6)
	and design services
Classified Group (Holdings)	Operation of restaurants and the	463.84	(36.0)	116.9	N/A	N/A
Limited (8232)	production and sales of bakery				(note 6)	(note 6)
	products
Jia Group Holdings Limited (8519)	Operation of restaurants	122.40	5.3	38.8	22.96	7.50
			(note 5)
1957&Co (Hospitality) Limited	Operation of full-service restaurants	139.20	5.2	91.0	26.66	5.31
(8495)			(note 5)
Tonking New Energy Group	Engaged in operation and	298.57	25.9	211.9	11.52	12.41
Holdings Limited (8326)	management of restaurants and
	cake shops in Hong Kong; and
	renewable energy businesses in
	PRC
Li Bao Ge Group Limited (8102)	Operation of restaurant chains in	324.00	23.2	136.4	13.97	7.46
	Hong Kong
Simplicity Holding Limited (8367)	Mainly engaged in	140.80	8.0	45.4	17.55	9.52
	the operation of restaurants		(note 5)
	Average				18.53	9.95
	Maximum				26.66	17.51
	Minimum				11.52	5.31
The Group	Operation of restaurant chains in	823.00	9.7	140.0	85.17	39.30
	Hong Kong	(Note 1)	(Note 2)	(Note 3)		(note 7)

Source: website of the Stock Exchange (http://www.hkex.com.hk)

Notes:

1. Calculated by the Offer Price of HK$4.115 per Offer Share multiplied by the total number of issued Shares of 200,000,000 as at the Latest Practicable Date.

2. Excluding the listing expenses of approximately of HK$17.6 million for the year ended 31 March 2017.

3. Based on the latest interim report (unaudited) announced at 13 December 2017.

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LETTER FROM VINCO CAPITAL

1. EV is calculated by taking the sum of the market capitalization of the relevant company at the Latest Practicable Date, and non-controlling interests and total liabilities, less cash and bank deposits, extracted from the Comparable Companies’ latest published full year audited financial statements.

EBITDA represents the earnings before interest, taxation, depreciation and amortization. It measures gross funds generated by a business.

EV/EBITDA is calculated by dividing the EV by the EBITDA of the Comparable Companies.

1. Excluding non-recurring listing expenses which were disclosed in their published full year audited latest financial statements.

2. P/E Ratio of these Comparable Companies are not calculated since they recorded net losses based on their latest financial report.

3. Calculated by dividing the EV by the EBITDA of the Group. The Implied EV of approximately HK$741 million is based on the sum of the market capitalization of the Group of approximately HK$823 million and total liabilities of approximately HK$23 million less cash and bank deposits of approximately HK$105 million. The EBITDA of approximately HK$19 million represents earnings before finance income of approximately HK$0.1 million, taxation of approximately HK$2 million, depreciation and amortization of approximately HK$8 million, excluding non-recurring listing expenses of approximately HK$18 million.

P/E Ratio

As illustrated in the table set out above, the P/E Ratio of the Comparable Companies ranged from approximately 11.52 times to approximately 26.66 times, with an average of approximately 18.53 times. Accordingly, the Implied P/E Ratio of approximately 85.17 times is higher than the average P/E Ratio of approximately 18.53 times and the highest among Comparable Companies.

EV/EBITDA

As illustrated in the table set out above, the EV/EBITDA of the Comparable Companies ranged from approximately 5.31 times to approximately 17.51 times, with an average of approximately 9.95 times. Accordingly, the Implied EV/EBITDA of approximately 39.30 times is higher than the average EV/EBITDA and the highest among Comparable Companies.

In light of the above, we are of the view that the Offer price is fair and reasonable so far as the Independent Shareholders are concerned.

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LETTER FROM VINCO CAPITAL

11. Recommendation

Taking into consideration the abovementioned factors and reasons for the Offer, in particular:

• (i) When compared to the corresponding periods in 2016, the Group’s net profit (excluding the listing expenses) for the year ended 31 March 2017 decreased by approximately 61.9% and the net profit (excluding the listing expenses) for the six months ended 30 September 2017 has decreased by approximately 67.7% mainly due to (a) decreasing in revenue; (b) the making of new brand of restaurants; and (c) the increase operating costs of the Group including staff cost and rental expenses;

• (ii) there could be uncertainties in the management of the Group given that the proposed new Directors of the Group do not have any previous experience in the current principal business of the Group and all current Directors have tendered resignation.

• (iii) Based on our research on the industry and business prospect, we noted that unfavourable factors including increase of operating cost and historical business environment as mentioned above in the ‘‘Business prospect of the Group’’. We have also reviewed the Group’s internal documents in relation to the Profit Warning Announcement and noted that the financial status of the Group was deteriorating mainly due to the increase in rental expenses and staff cost which cause obsolete to the companies of the same business nature. The Group is facing uncertainties and severe competitive business environment in the nearing future;

• (iv) the Offer represents an opportunity for Shareholders to realise their investment since Shareholders may not be able to dispose large quantities of Shares without exerting downward pressure on the price of Shares in the open market given the low liquidity of the Shares;

• (v) the implied P/E ratio and the EV/EBITDA of the Company as implied by the Offer Price are higher than the average P/E ratio and EV/EBITDA and the highest among the Comparable Companies; and

• (vi) as disclosed on the profit warning announcement of the Company dated 24 May 2018, the net loss for the year ended 31 March 2018 is expected to be decreased as compared with the net loss for the year ended 31 March 2017, which was attributable to no listing expenses incurred for the year ended 31 March 2018.

– 51 –

LETTER FROM VINCO CAPITAL

We are of the view that the terms of the Offer are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to accept the Offer.

The Independent Shareholders, in particular those who intend to accept the Offer, are reminded to note the recent fluctuation in the price of the Shares. Since Post- Announcement Period, the Share price are higher than the Offer Price. As such, we would like to remind the Independent Shareholders to closely monitor the market price and liquidity of the Shares during the Offer Period, and consider selling their Shares in the open market, if the net proceeds from the sale of such Shares in the market would exceed the net proceeds receivable under the Offer. Nevertheless, given that the trading volume of the Shares has been thin during the Review Period, Independent Shareholders should be mindful as to whether there will be sufficient liquidity in the Shares for the Independent Shareholders who wish to realise part or all of their investment in the Company at the prevailing market price of the Shares and whether their disposal of the Shares will exert a downward pressure on the market price of the Shares.

The Independent Shareholders are also reminded that their decisions to dispose or hold their investment in the Shares are subject to their individual circumstances and investment objectives and they are reminded to carefully (i) monitor the stock market and the trading price and liquidity of the Shares before the end of the Offer and consider selling their Shares in the open market, where possible, rather than accepting the Offer if the net proceeds from the market sale of their Shares after deducting all transaction costs are more than the net amount to be received under the Offer; and (ii) evaluate the future prospects of the Group. The Independent Shareholders should read carefully the procedures for accepting the Offer as detailed in the Composite Document, the appendices to the Composite Document and the Form of Acceptance, if they wish to accept the Offer.

Yours faithfully, For and on behalf of Vinco Capital Limited Alister Chung Managing Director

Note: Mr. Alister Chung is a licensed person registered with the Securities and Future Commission of Hong Kong and a responsible officer of Vinco Capital Limited to carry out type 1 (dealing in securities) and type 6 (advising on corporate finance) regulated activities under the SFO and has participated in and completed various advisory transactions involving companies listed in Hong Kong in respect of the Takeovers Code for over 10 years.

– 52 –

FURTHER TERMS OF THE OFFER

APPENDIX I

1. PROCEDURES FOR ACCEPTANCE OF THE OFFER

To accept the Offer, you should complete and sign the Form of Acceptance in accordance with the instructions printed thereon, which instructions form part of the Offer.

• (a) If the share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Shares is/are in your name, and you wish to accept the Offer, you must send the Form of Acceptance duly completed and signed together with the relevant share certificate(s) and/or transfer receipt(s) and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Registrar, Tricor Investor Services Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong, by post or by hand, marked ‘‘Food Wise Holdings Limited Offer’’ on the envelope, in any event not later than 4:00 p.m., on the Closing Date.

• (b) If the share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Shares is/are in the name of a nominee company or a name other than your own, and you wish to accept the Offer whether in full or in part of your Shares, you must either:

• (i) lodge your share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) with the nominee company, or other nominee, with instructions authorising it to accept the Offer on your behalf and requesting it to deliver in an envelope marked ‘‘Food Wise Holdings Limited Offer’’ the duly completed and signed Form of Acceptance together with the relevant share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Registrar; or

• (ii) arrange for the Shares to be registered in your name by the Company through the Registrar, and deliver in an envelope marked ‘‘Food Wise Holdings Limited Offer’’ the duly completed and signed Form of Acceptance together with the relevant share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) to the Registrar; or

I – 1

FURTHER TERMS OF THE OFFER

APPENDIX I

• (iii) if your Shares have been lodged with your licensed securities dealer/registered institution in securities/custodian bank through CCASS, instruct your licensed securities dealer/registered institution in securities/custodian bank to authorise HKSCC Nominees Limited to accept the Offer on your behalf on or before the deadline set by HKSCC Nominees Limited. In order to meet the deadline set by HKSCC Nominees Limited, you should check with your licensed securities dealer/registered institution in securities/custodian bank for the timing on the processing of your instruction, and submit your instruction to your licensed securities dealer/registered institution in securities/custodian bank as required by them; or

• (iv) if your Shares have been lodged with your investor participant’s account maintained with CCASS, authorise your instruction via the CCASS Phone System or CCASS Internet System on or before the deadline set by HKSCC Nominees Limited.

• (c) If the share certificate(s) and/or transfer receipts and/or other document(s) of title (and/ or any satisfactory indemnity or indemnities required in respect thereof) in respect of your Shares is/are not readily available and/or is/are lost and you wish to accept the Offer in respect of your Shares, the Form of Acceptance should nevertheless be duly completed and signed and delivered in an envelope marked ‘‘Food Wise Holdings Limited Offer’’ to the Registrar together with a letter stating that you have lost one or more of your share certificate(s) and/or transfer receipts and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) or that it/they is/are not readily available. If you find such document(s) or if it/they become(s) available, it/they should be forwarded to the Registrar as soon as possible thereafter. If you have lost your share certificate(s), you should also write to the Registrar for a letter of indemnity which, when completed in accordance with the instructions given, should be returned to the Registrar.

• (d) If you have lodged transfer(s) of any of your Shares for registration in your name and have not yet received your share certificate(s), and you wish to accept the Offer in respect of your Shares, you should nevertheless complete and sign the Form of Acceptance and deliver it in an envelope marked ‘‘Food Wise Holdings Limited Offer’’ to the Registrar together with the transfer receipt(s) duly signed by yourself. Such action will be deemed to be an irrevocable instruction and authority to each of Oceanwide Securities and/or the Offeror and/or any of their respective agent(s) to collect from the Company or the Registrar on your behalf the relevant share certificate(s) when issued and to deliver such certificate(s) to the Registrar and to authorise and instruct the Registrar to hold such share certificate(s), subject to the terms and conditions of the Offer, as if it was/they were delivered to the Registrar with the Form of Acceptance.

I – 2

FURTHER TERMS OF THE OFFER

APPENDIX I

• (e) Acceptance of the Offer will be treated as valid only if the duly completed and signed Form of Acceptance is received by the Registrar by no later than 4:00 p.m. on the Closing Date and the Registrar has recorded that the Form of Acceptance and any relevant documents have been so received, and is:

• (i) accompanied by the relevant Share certificate(s) and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) and, if those Share certificate(s) is/are not in your name, such other documents (e.g. a duly stamped transfer of the relevant Share(s) in blank or in your favour executed by the registered holder) in order to establish your right to become the registered holder of the relevant Shares; or

• (ii) inserted in the Form of Acceptance, the total number of Shares equal to that represented by the certificates for Shares tendered for acceptance of the Offer. If no number is inserted or a number inserted is greater or smaller than that represented by the certificates for Shares tendered for acceptance of the Offer, the Form of Acceptance will be returned to you for correction and resubmission. Any corrected Form of Acceptance must be resubmitted and received by the Registrar on or before the latest time of acceptance of the Offer; or

• (iii) from a registered Shareholder or his personal representative (but only up to the amount of the registered holding and only to the extent that the acceptance relates to the Shares which are not taken into account under the other subparagraph of this paragraph (e)); or

• (iv) certified by the Registrar or the Stock Exchange. If the Form of Acceptance is executed by a person other than the registered Shareholder, appropriate documentary evidence of authority (such as grant of probate or certified copy of power of attorney) to the satisfaction of the Registrar must be produced.

• (f) In Hong Kong, seller’s ad valorem stamp duty arising in connection with acceptances of the Offer will be payable by relevant Independent Shareholders at a rate of 0.1% of the market value of the Offer Shares or consideration payable by the Offeror in respect of the relevant acceptances of the Offer, whichever is higher, will be deducted from the cash amount payable by the Offeror to the relevant Independent Shareholder accepting the Offer (where the amount of stamp duty is a fraction of a dollar, the stamp duty will be rounded up to the nearest dollar). The Offeror will arrange for payment of the seller’s ad valorem stamp duty on behalf of relevant Independent Shareholders accepting the Offer and will pay the buyer’s ad valorem stamp duty in connection with the acceptance of the Offer and the transfer of the Shares.

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FURTHER TERMS OF THE OFFER

APPENDIX I

• (g) No acknowledgement of receipt of any Form of Acceptance, share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) will be given.

• (h) The address of the Registrar is Level 22 Hopewell Centre, 183 Queen’s Road East, Hong Kong.

2. SETTLEMENT OF THE OFFER

• (a) Provided that a valid Form of Acceptance and the relevant share certificate(s) and/or transfer receipt(s) and/or any other document(s) of title and/or transfer receipt(s) (and/ or any satisfactory indemnity or indemnities required in respect thereof) have been received by the Registrar no later than the latest time for acceptance, a cheque for the amount due to each accepting Independent Shareholder, less the seller’s ad valorem stamp duty payable by him, will be despatched to such Independent Shareholder by ordinary post at his own risk as soon as possible but in any event within seven (7) Business Days following the date on which all the relevant documents are received by the Registrar to render such acceptance complete and valid.

• (b) Settlement of the consideration to which any Independent Shareholders are entitled under the Offer will be implemented in full in accordance with the terms of the Offer (save with respect of the payment of seller’s ad valorem stamp duty), without regard to any lien, right of set-off, counterclaim or other analogous right to which the Offeror may otherwise be, or claim to be, entitled against such Independent Shareholders.

• (c) No fractions of a cent will be payable and the amount of cash consideration payable to an Independent Shareholder who accepts the Offer will be rounded up to the nearest cent.

3. ACCEPTANCE PERIOD AND REVISIONS

• (a) Unless the Offer has previously been revised or extended with the consent of the Executive, all acceptances of the Offer must be received by the Registrar by 4:00 p.m. on Friday, 6 July 2018, being the Closing Date. The Offer is unconditional.

• (b) If the Offer is extended or revised, the announcement of such extension or revision shall state the next Closing Date or that the Offer will remain open until further notice. For the latter case, at least 14 days’ notice in writing will be given to the Shareholders who have not accepted the Offer before the Offer is closed, and an announcement in respect thereof shall be released. If the Offeror revises the terms of the Offer, all Independent Shareholders, whether or not they have already accepted the Offer, will be entitled to accept the revised Offer under the revised terms.

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FURTHER TERMS OF THE OFFER

APPENDIX I

• (c) If the Closing Date is extended, any reference in this Composite Document and in the Form of Acceptance to the Closing Date shall, except where the context otherwise requires, be deemed to refer to the Closing Date so extended.

4. NOMINEE REGISTRATION

To ensure equality of treatment of all Independent Shareholders, those registered Independent Shareholders who hold the Shares as nominees for more than one beneficial owner should, as far as practicable, treat the holding of each beneficial owner separately. It is essential for the beneficial owner of the Shares whose investments are registered in the names of a nominee to provide instructions to their nominee of their intentions with regards to the Offer.

5. ANNOUNCEMENTS

• (a) By 6:00 p.m. on 6 July 2018 (or such later time and/or date as the Executive may in exceptional circumstances permit) which is the Closing Date, the Offeror must inform the Executive and the Stock Exchange of its decision in relation to the expiry, revision or extension of the Offer. The Offeror must post an announcement on the Stock Exchange’s website by 7:00 p.m. on the Closing Date stating the results of the Offer and whether the Offer has been revised or extended.

The announcement must state the following:

• (i) for which acceptances of the Offer has been received;

• (ii) held, controlled or directed by the Offeror or persons acting in concert with it before the Offer Period;

• (iii) acquired or agreed to be acquired during the Offer Period by the Offeror or persons acting in concert with it.

• (b) The announcement must also include details of any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in the Company which the Offeror or any person acting in concert with it has borrowed or lent (save for any borrowed Shares which have been either on-lent or sold) and specify the percentages of the issued share capital of the Company and the percentages of voting rights of the Company represented by these numbers.

• (c) In computing the total number of Shares represented by acceptances, only valid acceptances that have been received by the Registrar no later than 4:00 p.m. on the Closing Date shall be included.

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FURTHER TERMS OF THE OFFER

APPENDIX I

• (d) As required under the Takeovers Code, all announcements in respect of the Offer must be made in accordance with the requirements of the Takeovers Code and the Listing Rules.

6. RIGHT OF WITHDRAWAL

• (a) Acceptance of the Offer tendered by any Independent Shareholders shall be irrevocable and cannot be withdrawn, except in the circumstances set out below.

• (b) If the Offeror is unable to comply with the requirements set out in the paragraph headed ‘‘5. Announcements’’ above, as set out in Rule 19.2 of the Takeovers Code, the Executive may require that the Independent Shareholders who have tendered acceptances to the Offer be granted a right of withdrawal on terms that are acceptable to the Executive until the requirements set out in that rule are met.

• (c) In such case, if the Independent Shareholders withdraw their acceptances, the Offeror and Registrar shall, as soon as possible but in any event within ten (10) days thereof, return by ordinary post the share certificate(s),and/or transfer receipt(s) and/or other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) in respect of the Shares lodged with the Form of Acceptance to the relevant Independent Shareholders.

• GENERAL

• (a) All communications, notices, Form of Acceptance, share certificate(s), transfer receipts(s), other document(s) of title (and/or any satisfactory indemnity or indemnities required in respect thereof) and remittances to settle the consideration payable under the Offer to be delivered by or sent to or from the Independent Shareholders will be delivered by or sent to or from them, or their designated agents by post at their own risk, and the Offeror, its beneficial owners, the Company, Oceanwide Securities, Oceanwide Capital, CCB International, the Independent Financial Adviser, the Registrar or the company secretary of the Company, any of their respective directors and professional advisers and any other parties involved in the Offer and any of their respective agents do not accept any liability for any loss or delay in postage or any other liabilities that may arise as a result thereof.

• (b) The provisions set out in the Form of Acceptance form part of the terms and conditions of the Offer.

• (c) The accidental omission to despatch this Composite Document and/or Form of Acceptance or any of them to any person to whom the Offer is made will not invalidate either the Offer in any way.

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FURTHER TERMS OF THE OFFER

APPENDIX I

• (d) The Offer is, and all acceptances will be, governed by and construed in accordance with the laws of Hong Kong.

• (e) Due execution of the Form of Acceptance will constitute an irrevocable authority to the Offeror, Oceanwide Securities, Oceanwide Capital, CCB International, or such person or persons as the Offeror may direct to complete, amend and execute any document on behalf of the person or persons accepting the Offer and to do any other act that may be necessary or expedient for the purposes of vesting in the Offeror, or such person or persons as it may direct, the Offer Shares in respect of which such person or persons has/have accepted the Offer.

• (f) Acceptance of the Offer by any Independent Shareholders will be deemed to constitute a warranty by such person or persons to the Offeror and the Company that their Offer Shares under the Offer are free from all third party rights and Encumbrances whatsoever and together with all rights accruing or attaching thereto including the right to receive in full all dividends and distributions recommended, declared, made or paid on or after the date of this Composite Document.

• (g) References to the Offer in this Composite Document and the Form of Acceptance shall include any revision and/or extension thereof.

• (h) The making of the Offer to the Overseas Shareholders may be prohibited or affected by the laws of the relevant jurisdictions. The Overseas Shareholders should inform themselves about and observe any applicable legal or regulatory requirements. It is the responsibility of each Overseas Shareholder who wishes to accept the Offer to satisfy himself/herself/itself as to the full observance of the laws and regulations of all relevant jurisdictions in connection therewith, including, but not limited to the obtaining of any governmental, exchange control or other consents and any registration or filing which may be required and the compliance with all necessary formalities, regulatory and/or legal requirements. Such Overseas Shareholders shall be fully responsible for the payment of any transfer or cancellation or other taxes and duties due by such Overseas Shareholders in respect of the relevant jurisdictions. The Overseas Shareholders are recommended to seek professional advice on deciding whether or not to accept the Offer.

• (i) Acceptances of the Offer by any nominee will be deemed to constitute a warranty by such nominee to the Company that the number of the Shares in respect of which as indicated in the Form of Acceptance is the aggregate number of Shares held by such nominee for such beneficial owner who is accepting the Offer.

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FURTHER TERMS OF THE OFFER

APPENDIX I

• (j) Subject to the Takeovers Code, the Offeror reserves the right to notify any matter (including the making of the Offer) to all or any Independent Shareholders and with registered address(es) outside Hong Kong or whom the Offeror, Oceanwide Securities, Oceanwide Capital, CCB International knows to be nominees, trustees or custodians for such persons by announcement in which case such notice shall be deemed to have been sufficiently given notwithstanding any failure by any such Independent Shareholders to receive or see such notice, and all references in this Composite Document to notice in writing shall be construed accordingly.

• (k) In making their decision, the Independent Shareholders must rely on their own examination of the Offeror, the Group and the terms of the Offer, including the merits and risks involved. The contents of this Composite Document, including any general advice or recommendation contained herein together with the Form of Acceptance shall not be construed as any legal or business advice on the part of the Offeror, its beneficial owners, the Company, Oceanwide Securities, Oceanwide Capital, CCB International or the Independent Financial Adviser or their respective professional advisers. The Independent Shareholders should consult their own professional advisers for professional advice.

• (l) The English texts of this Composite Document and the Form of Acceptance shall prevail over their respective Chinese texts for the purpose of interpretation in case of inconsistency.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

1. FINANCIAL SUMMARY

Set out below is a summary of the audited consolidated financial information of the Group for each of the three financial years ended 31 March 2015, 2016 and 2017 and the unaudited condensed consolidated financial results of the Group for the six months ended 30 September 2017, as extracted from the prospectus of the Company dated 17 November 2016, the annual report of the Group for the year ended 31 March 2017, and the interim report of the Group for the six months ended 30 September 2017.

Results

Revenue (Loss)/profit before taxation Income tax expense (Loss)/profit and total comprehensive (loss)/income for the year Attributable to: Shareholders of the Company	Year ended 31 March 2017 2016 2015 HK$’000 HK$’000 HK$’000 189,830 200,915 210,078 (6,146) 28,743 22,416 (1,782) (4,838) (3,611) (7,928) 23,905 18,805 (7,928) 23,905 18,805	Six months ended 30 September 2017 HK$’000 101,456 4,161 (596)
		3,565
		3,565

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Assets and liabilities

Assets Non-current assets Current assets Total assets Equity and liabilities Total equity Non-current liabilities Current liabilities Total liabilities Total equity and liabilities (Loss)/earning per share – Basic & diluted Dividend Dividend per share	As at 31 March 2017 2016 HK$’000 HK$’000 38,709 25,727 123,399 52,420 162,108 78,147 136,444 54,402 3,414 2,218 22,250 21,527 25,664 23,745 162,108 78,147 (4.75) cents 15.94 cents – N/A(1) – N/A(1)	2015 HK$’000 29,973 61,525 91,498 60,211 2,554 28,733 31,287 91,498 N/A N/A(1) N/A(1)	Six months ended 30 September 2017 HK$’000 43,836 118,880
			162,716
			140,009
			3,662 19,045
			22,707
			162,716
			1.78 cent – –

The consolidated financial information of the Group for three financial years ended 31 March 2015, 2016 and 2017 were audited by PricewaterhouseCoopers and did not contain any qualifications. The Company had no non-controlling interests and there were no items which are exceptional because of size, nature or incidence for each of the financial years ended 31 March 2015, 2016 and 2017.

Note (1) Dividends of $29,714,000 and $10,000,000 during the year ended 31 March 2016 and 2015 respectively represent dividends declared and paid or payable by the subsidiaries of the Group to the then equity holders of such subsidiaries, which is prior to the completion of the Group’s reorganisation on 7 November 2016.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

2. FINANCIAL INFORMATION OF THE COMPANY FOR THE YEAR ENDED 31 MARCH 2017

The following is the full text of the audited consolidated financial statements of the Group for the year ended 2017 extracted from the annual report of the Company for the year ended 31 March 2017:

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 March 2017

Note Revenue 5 Other income and gains 6 Cost of food and beverages Staff costs Depreciation and amortisation Property rentals and related expenses Fuel and utility expenses Advertising and marketing expenses Other operating expenses Listing expenses Finance income/(costs), net 7 (Loss)/profit before taxation 8 Income tax expense 10 (Loss)/profit and total comprehensive (loss)/income for the year Attributable to: Shareholders of the Company Basic and diluted (loss)/earnings per share (HK cents) 12	2017 HK$’000 189,830 280 (44,066) (57,121) (7,550) (51,382) (5,737) (481) (12,466) (17,591) 138 (6,146) (1,782) (7,928) (7,928) (4.75)	2016 HK$’000 200,915 2,390 (47,427) (54,416) (8,394) (48,169) (5,862) (501) (8,264) (1,478) (51) 28,743 (4,838) 23,905 23,905 15.94

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 March 2017

Note NON-CURRENT ASSETS Property, plant and equipment 13 Intangible assets Investment in an associate 14 Rental and utilities deposits 16 Prepayments for property, plant and equipment 16 Deferred income tax assets 22 CURRENT ASSETS Inventories 15 Prepayments, deposits and other receivables 16 Current income tax recoverable Bank deposits with maturity over three months 18 Restricted cash 18 Cash and cash equivalents 18 Total assets EQUITY Equity attributable to shareholders of the Company Share capital 23 Other reserves 24 Total equity	2017 HK$’000 18,682 14 – 15,815 826 3,372 38,709 2,005 8,883 2,103 – 2,049 108,359 123,399 162,108 2,000 134,444 136,444	2016 HK$’000 15,325 16 – 8,216 31 2,139
		25,727
		2,889 12,978 943 524 2,424 32,662
		52,420
		78,147
		– 54,402
		54,402

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Note NON-CURRENT LIABILITIES Other payables 20 Finance lease payables Deferred income tax liabilities 22 CURRENT LIABILITIES Trade payables 19 Other payables and accruals 20 Bank borrowings 21 Finance lease payables Current income tax liabilities Total liabilities Total equity and liabilities	2017 HK$’000 3,115 – 299 3,414 3,857 18,085 – – 308 22,250 25,664 162,108	2016 HK$’000 1,961 37 220
		2,218
		3,780 12,876 3,428 53 1,390
		21,527
		23,745
		78,147

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 March 2017

Note Cash flows from operating activities Cash generated from operations 26(a) Interest received Hong Kong profits tax paid, net Net cash flows (used in)/generated from operating activities Cash flows from investing activities Purchases of property, plant and equipment (Increase)/decrease in prepayments for property, plant and equipment Increase in amount due from a related company Decrease in restricted cash Decrease in bank deposits with maturity over three months Net cash flows used in investing activities Cash flows from financing activities Repayment of bank loans Proceeds from bank loans Listing expenses paid Capital element of finance lease rental payments Interests paid Repayment to shareholders Advances from shareholders Proceeds from issue of ordinary shares Net cash flows generated from/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year	2017 HK$’000 4,641 170 (5,178) (367) (10,905) (795) – 375 524 (10,801) (3,428) – (9,585) (90) (32) – – 100,000 86,865 75,697 32,662 108,359	2016 HK$’000 34,214 33 (4,781) 29,466 (9,147) 244 (724) 1,263 1,037 (7,327) (2,439) 4,000 (445) (50) (84) (25,280) 1,694 – (22,604) (465) 33,127 32,662

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Non-cash transaction:

Interim dividends of HK$29,714,000 were declared during the year ended 31 March 2016 which was settled through the current account with the shareholders.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 March 2017

At 1 April 2015 Profit and total comprehensive income for the year Transactions with shareholders Dividends (Note 11) At 31 March 2016 and 1 April 2016 Loss and total comprehensive loss for the year Transactions with shareholders Issuance of share at the date of incorporation (Note 1.2d) Issuance of shares pursuant to the Reorganisation (Note 1.2e) Capitalisation issue of shares (Note 23(a)) Shares issued pursuant to the global offering (Note 23(b)) Transaction costs attributable to the global offering (Note 23(b)) Total transactions with shareholders At 31 March 2017	Attributable to	Attributable to	shareholders of the Company	shareholders of the Company
	Share capital (Note 23) HK$’000 – – – – – – – 1,500 500 – 2,000 2,000	Share premium (Note 24) HK$’000 – – – – – – – (1,500) 99,500 (10,030) 87,970 87,970	Capital reserve (Note 24) HK$’000 342 – – 342 – – – – – – – 342	Retained earnings HK$’000 59,869 23,905 (29,714) 54,060 (7,928) – – – – – – 46,132	Total HK$’000 60,211 23,905 (29,714)
					54,402 (7,928) – – – 100,000 (10,030)
					89,970
					136,444

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1 General information, reorganisation and basis of presentation

1.1 General information

The Company was incorporated in the Cayman Islands on 14 April 2016 as an exempted company with limited liability under the Companies Law (Cap. 22, Law 3 of 1961 as consolidated and revised) of the Cayman Islands. The address of the Company’s registered office is Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman, KY1-1111, Cayman Islands.

The Company is an investment holding company and its subsidiaries are principally engaged in the operation of restaurant chains in Hong Kong (the ‘‘Business’’).

The Company has listed its shares on the Main Board of the Stock Exchange since 29 November 2016.

The consolidated financial statements are presented in Hong Kong dollar (‘‘HK$’’), unless otherwise stated.

1.2 Reorganisation and basis of presentation

Prior to the incorporation of the Company and the completion of the reorganisation (the ‘‘Reorganisation’’) as described below, the Business was primarily carried out by 111 Limited, 333 Limited, Goody Limited, Aero Tech Limited, Prosino Limited, Unlimit Limited, Dotco Limited, Hotex Limited, Sydney Limited, Printech Corporation Limited, Tri-pros Limited, 555 Limited and Richfield Development Limited (collectively the ‘‘Operating Subsidiaries’’). The Business was collectively controlled by Mr. Wong and Mrs. Wong, who is the spouse of Mr. Wong.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

In preparation for the initial listing of the Company’s shares on the Main Board of the Stock Exchange, the Group underwent the Reorganisation, which principally involved the following steps:

• a. On 24 November 2015, Blaze Forum Limited was incorporated in the British Virgin Islands (‘‘BVI’’) with limited liability. On 6 April 2016, 1 share of Blaze Forum Limited was allotted and issued to Mrs. Wong at par value of US$1. Since then, Mrs. Wong is the sole shareholder of Blaze Forum Limited.

• b. On 11 March 2016, Pioneer Vantage Global Limited was incorporated in the BVI with limited liability. On 6 April 2016, 1 share of Pioneer Vantage Global Limited was allotted and issued to Mr. Wong at par value of US$1. Since then, Mr. Wong is the sole shareholder of Pioneer Vantage Global Limited.

• c. On 15 March 2016, Prosperity One Limited was incorporated in the BVI with limited liability. On 6 April 2016, 85 shares and 15 shares of Prosperity One Limited were allotted and issued at a par value of US$1 each to Pioneer Vantage Global Limited and Blaze Forum Limited, respectively. In return, on 13 June 2016, all the entire issued share capital in each of the Operating Subsidiaries held by Mr. Wong and Mrs. Wong were transferred to Prosperity One Limited. Since then, Prosperity One Limited was ultimately owned as to 85% by Mr. Wong and 15% by Mrs. Wong, respectively.

• d. On 14 April 2016, the Company was incorporated in the Cayman Islands with limited liability. On the date of incorporation, 1 share of the Company was allotted and issued at par value of HK$0.01 to a first subscriber which was subsequently transferred to Pioneer Vantage Global Limited on the same day.

• e. On 7 November 2016, the Company acquired all the issued share capital in Prosperity One Limited held by Pioneer Vantage Global Limited and Blaze Forum Limited for a consideration of allotting and issuing 84 and 15 shares in the Company to Pioneer Vantage Global Limited and Blaze Forum Limited, respectively. Since then, the Operating Subsidiaries became wholly-owned subsidiaries of the Company through Prosperity One Limited and the Company was ultimately owned as to 85% by Mr. Wong and 15% by Mrs. Wong, respectively.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Upon completion of the Reorganisation, the Company became the holding company of the subsidiaries now comprising the Group.

Immediately prior to and after the Reorganisation, the Business was held by Mr. Wong and Mrs. Wong. The Business was conducted through the Operating Subsidiaries which were owned as to 85% and 15% by Mr. Wong and Mrs. Wong, respectively.

Pursuant to the Reorganisation, the Business was transferred to the Company and is being held by the Company since 7 November 2016. The Company has not been involved in any other business prior to the Reorganisation and does not meet the definition of a business. The Reorganisation is merely a reorganisation of the Business with no change in management of such business and the ultimate owners of the Business remain the same. Accordingly, the Group resulting from the Reorganisation is regarded as a continuation of the Business and the consolidated financial statements of the Company and the Business are prepared in accordance with HKFRS 10, ‘‘Consolidated Financial Statements’’, issued by the HKICPA, using the carrying values of assets and liabilities of the Business as if the group structure after the Reorganisation had been in existence throughout the years presented.

2 Summary of significant accounting policies

The principal accounting policies applied in the preparation of the consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1 Basis of preparation

The consolidated financial statements of the Group have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (‘‘HKFRSs’’) and the disclosure requirements of the Hong Kong Companies Ordinance Cap. 622. The consolidated financial statements have been prepared under the historical cost convention.

The preparation of consolidated financial statements in conformity with HKFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

• (a) New standards and amendments to standards adopted by the Group

The following new standards and amendments to standards have been adopted by the Group for the first time for the financial year beginning on or after 1 April 2016:

Annual Improvements Project Annual Improvements to HKFRSs 2012-2014 Cycle HKFRS 10 and HKFRS 12 Investment Entities: Applying the and HKAS 28 (Amendments) Consolidation Exception HKFRS 11 (Amendment) Accounting for Acquisitions of Interests in Joint Operations HKFRS 14 Regulatory Deferral Accounts HKAS 1 (Amendment) Disclosure Initiative HKAS 16 and HKAS 38 Clarification of Acceptable Methods of (Amendments) Depreciation and Amortisation HKAS 16 and HKAS 41 Agriculture: Bearer Plants (Amendments) HKAS 27 (Amendment) Equity Method in Separate Financial Statements

The adoption of these new standards and amendments to standards did not have any significant impact on the current period or any prior period.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

• (b) New standards and amendments to standards not yet adopted

A number of new standards and amendments to standards are effective for annual periods beginning after 1 April 2016 and have not been applied in preparing these consolidated financial statements:

Effective for annual periods beginning on or after

HKFRS 10 and HKAS 28	Sale or Contribution of Assets	To be determined
(Amendments)	between an Investor and its
	Associate or Joint Venture
HKAS 7 (Amendment)	Statement of Cash Flows	1 January 2017
HKAS 12 (Amendment)	Income Taxes	1 January 2017
HKFRS 2 (Amendment)	Classification and Measurement	1 January 2018
	of Share-Based Payment
	Transactions
HKFRS 9	Financial Instruments	1 January 2018
HKFRS 15	Revenue from Contracts with	1 January 2018
	Customers
HKFRS 16	Leases	1 January 2019

HKFRS 9, ‘Financial Instruments’, addresses the classification, measurement and recognition of financial assets and financial liabilities. It replaces the guidance in HKAS 39 that relates to the classification and measurement of financial instruments. HKFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income and fair value through profit or loss. For financial liabilities, there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. The Group assesses that adopting HKFRS 9 will not have a material impact to the Group’s consolidated financial statements.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

HKFRS 15, ‘Revenue from contracts with customers’, deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces HKAS 18 ‘Revenue’ and HKAS 11 ‘Construction contracts’ and related interpretations. The Group assesses that adopting HKFRS 15 will not have a material impact to the Group’s consolidated financial statements.

HKFRS 16, ‘Leases’, addresses the definition of a lease, recognition and measurement of leases. The standard replaces HKAS 17 ‘Leases’ and related interpretations. The Group is a lessee of office premises, various restaurants and warehouses, the leases of which are currently classified as operating leases. The Group’s current accounting policy for such leases is set out in Note 2.23. The Group had total future minimum lease payments under non-cancellable operating leases, which are not reflected in the consolidated statement of financial position, falling due as follows:

As lessees Within one year In the second to fifth years, inclusive Beyond five years	2017 HK$’000 40,108 48,858 – 88,966	2016 HK$’000 33,579 32,882 1,315
		67,776

HKFRS 16 provides new provisions for the accounting treatment of leases and will in the future no longer allow lessees to recognise certain leases outside of the consolidated statement of financial position. Instead, all non-current leases must be recognised in the form of an asset (for the right of use) and a financial liability (for the payment obligation). Thus each lease will be mapped in the Group’s consolidated statement of financial position. Short-term leases of less than twelve months and leases of low-value assets are exempt from the reporting obligation. The new standard will therefore result in an increase in right-of-use asset and an increase in financial liability in the consolidated statement of financial position. In the consolidated statement of comprehensive income, leases will be recognised in the future as depreciation and amortisation and will no longer be recorded as property rental and related expenses. Interest expense on

II – 13

APPENDIX II

FINANCIAL INFORMATION OF THE GROUP

the lease liability will be presented separately from depreciation and amortisation under finance costs. As a result, the property rental and related expenses under otherwise identical circumstances will decrease, while depreciation and amortisation and the interest expense will increase. The combination of a straight-line depreciation of the right-of-use asset and the effective interest rate method applied to the lease liability will result in a higher total charge to profit or loss in the initial year of the lease, and decreasing expenses during the latter part of the lease term. The new standard is not expected to apply until the financial year 2019, including the adjustment of prior years. The Group assesses that adopting HKFRS 16 may have a material impact to the Group’s consolidated financial statements.

There are no other new standards and amendments to standards and interpretations that are not yet effective that would be expected to have a material impact on the Group.

2.2 Subsidiaries

A subsidiary is an entity (including a structured entity) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

2.2.1 Business combination

Except for the Reorganisation set out in Note 1.2 to the consolidated financial statements, the Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

Intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group’s accounting policies.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

2.2.2 Separate financial statements

In the Company’s statement of financial position, investment in a subsidiary is accounted for at cost less impairment. Cost includes direct attributable costs of investment. The results of the subsidiary are accounted for by the Company on the basis of dividend received and receivable.

Impairment testing of the investment in a subsidiary is required upon receiving a dividend from the investment if the dividend exceeds the total comprehensive income of the subsidiary in the period the dividend is declared or if the carrying amount of the investment in the separate financial statements exceeds the carrying amount in the consolidated financial statements of the investee’s net assets including goodwill.

2.3 Associate

An associate is an entity over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investment in an associate is accounted for using the equity method of accounting. Under the equity method, the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investor’s share of the profit or loss of the investee after the date of acquisition.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.

The Group’s share of post-acquisition profit or loss is recognised in the profit or loss, and its share of post-acquisition movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount adjacent to ‘share of profit of investments accounted for using equity method’ in the profit or loss.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

Profits and losses resulting from upstream and downstream transactions between the Group and its associate are recognised in the Group’s financial statements only to the extent of unrelated investor’s interest in the associate. Unrealised losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the associate have been changed where necessary to ensure consistency with the policies adopted by the Group.

Gains or losses on dilution of equity interest in the associate are recognised in the profit or loss.

2.4 Foreign currency translation

(a) Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘‘the functional currency’’). The consolidated financial statements are presented in HK$, which is the Company’s functional and the Group’s presentation currency.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the profit or loss, except when deferred in other comprehensive income as qualifying cash flow hedges and qualifying net investment hedges.

Foreign exchange gains and losses that relate to cash and cash equivalents are presented in the consolidated statement of comprehensive income within ‘other operating expenses’.

2.5 Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker (the ‘‘CODM’’). The CODM, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Company’s Executive Directors, who make strategic decisions.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

2.6 Property, plant and equipment

Land and buildings comprise mainly factories and offices. Leasehold land classified as finance lease and all other property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged to the consolidated statement of comprehensive income during the financial period in which they are incurred.

Depreciation of property, plant and equipment is calculated using the straight-line method to allocate their costs to their residual values over their estimated useful lives, as follows:

–	Leasehold land classified as	Lease term of 35 years
	finance lease
–	Buildings	Lease term of 35 years
–	Leasehold improvements	Shorter of lease term or 10 years
–	Restaurants and kitchen equipment	Shorter of lease term or 5 years
–	Computer equipment	Shorter of lease term or 5 years
–	Furniture and fixtures	Shorter of lease term or 5 years
–	Office equipment	5 years
–	Motor vehicles	5 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (Note 2.8).

Gains and losses on disposals of land and buildings and other property plant and equipment are determined by comparing the proceeds with the carrying amount and are recognised within ‘other income and gains’ and ‘other operating expenses’, respectively, in the consolidated statement of comprehensive income.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

2.7 Intangible assets

Trademarks

Separately acquired trademarks are shown at historical cost. Trademarks have a finite useful life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the cost of trademarks over their estimated useful lives of 10 years.

2.8 Impairment of non-financial assets

Property, plant and equipment subject to depreciation are tested annually for impairment. Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.

2.9 Financial assets

2.9.1 Classification

The Group classifies its financial assets as loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for the amounts that are settled or expected to be settled more than 12 months after the end of the reporting period. These are classified as non-current assets. The Group’s loans and receivables comprise ‘deposits and other receivables’, ‘restricted cash’ and ‘cash and cash equivalents’ in the consolidated statement of financial position (Notes 2.13 and 2.14).

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2.9.2 Recognition and measurement

Regular way purchases and sales of financial assets are recognised on the trade-date, the date on which the Group commits to purchase or sell the asset. Loans and receivables are initially recognised at fair value plus transaction costs and subsequently carried at amortised cost using the effective interest method. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

2.10 Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the consolidated statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Company or the counterparty.

2.11 Impairment of financial assets

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘‘loss event’’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Evidence of impairment may include indications that a debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

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For loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the consolidated statement of comprehensive income. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value using an observable market price.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in the consolidated statement of comprehensive income.

2.12 Inventories

Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out (FIFO) method. The cost comprises invoiced cost less purchase rebates. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

2.13 Other receivables

If collection of other receivables is expected in one year or less (or in the normal operating cycle of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.

Other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for impairment.

2.14 Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.

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2.15 Share capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

2.16 Trade and other payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as noncurrent liabilities.

Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

2.17 Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the consolidated statement of comprehensive income over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.

2.18 Borrowing costs

General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

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2.19 Current and deferred income tax

The tax expense for the period comprises current and deferred tax. Tax is recognised in the profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

(a) Current income tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company’s subsidiaries and the associate operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

(b) Deferred income tax

Inside basis differences

Deferred income tax is recognised, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated statement of financial position. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised.

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Outside basis difference

Deferred income tax liabilities are provided on taxable temporary differences arising from investments in subsidiaries and an associate, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Generally the Group is unable to control the reversal of the temporary difference for the associate. Only when there is an agreement in place that gives the Group the ability to control the reversal of the temporary difference in the foreseeable future, deferred tax liability in relation to taxable temporary differences arising from the associate’s undistributed profits is not recognised.

Deferred income tax assets are recognised on deductible temporary differences arising from investments in subsidiaries and an associate only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be utilised.

(c) Offsetting

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

2.20 Employee benefits

(a) Pension obligations

In Hong Kong, the Group contributes to the mandatory provident fund scheme for eligible employees, the assets of which are held in a separate trusteeadministered funds. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

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(b) Employee leave entitlements

Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the end of the reporting period.

Employee entitlements to sick leave and maternity leave are not recognised until the time of leave.

(c) Long service payments

In Hong Kong, employees who have completed a required number of years of service to the Group are eligible for long service payments under the Hong Kong Employment Ordinance in the event of the termination of their employment, provided that such termination meet the circumstances specified in the Hong Kong Employment Ordinance.

(d) Provision for bonus plans

Bonus payments to employees are discretionary to management. Bonus payments are recognised in profit or loss in the period when the Group has formally announced the bonus payments to employees.

2.21 Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

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2.22 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group’s activities. The Group recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the Group’s activities as described below. The amount of revenue is not considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group bases its estimates on historical results, taking into consideration of the type of customer, the type of transaction and the specifics of each arrangement.

(i) Restaurants operation

The Group operates a chain of restaurants. Sales is recognised when catering services have been provided to the customers.

(ii) Sales of scrap materials

Sales is recognised on the transfer of risks and rewards of ownership, which general coincides with the time when the goods are delivered to customers and the titles are passed.

(iii) Interest income

Interest income is recognised using the effective interest method, on a timeproportion basis.

2.23 Leases (as the lessee for operating leases)

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the consolidated statement of comprehensive income on a straight-line basis over the period of the lease. Contingent rental arising under operating leases are recognised as an expense in the period in which they are incurred.

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2.24 Dividend distribution

Dividend distribution to the Company’s shareholders is recognised as a liability in the consolidated financial statements in the period in which the dividends are approved by the Company’s shareholders or directors, where appropriate.

Dividend proposed or declared after the reporting period but before the financial statements are authorised for issue, are disclosed as a non-adjusting event and are not recognised as a liability at the end of the reporting period.

3 Financial risk management

3.1 Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk and interest rate risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. Management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner. Because of the simplicity of the financial structure and the current operations of the Group, no hedging activities are undertaken by management.

(a) Foreign exchange risk

The Group holds assets denominated in Renminbi (‘‘RMB’’), including bank deposits with maturity over three months, restricted cash and cash and cash equivalents. Foreign exchange risk arises from such assets.

Should HK$ be strengthened/weakened by 5% (2016: 5%) for the year ended 31 March 2017 against the RMB, with all other variables held constant, the impact of the loss after taxation (2016：profit after taxation) for the year ended 31 March 2017 would have been approximately HK$102,000 higher/lower (2016: HK$164,000 lower/higher), mainly as a result of foreign exchange losses/ gains.

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(b) Interest rate risk

The Group’s interest rate risk arises from bank and other borrowings. Borrowings obtained at variable rates expose the Group to cash flow interest rate risk. Borrowings obtained at fixed rates expose the Group to fair value interest rate risk. Details of the Group’s borrowings have been disclosed in Note 21 to the consolidated financial statements. As the Group operates at a low gearing ratio, the interest rate risk is not significant.

The Group has no significant interest-bearing assets except for bank deposits, which are at variable interest rate and subject to cash flow interest rate risk.

For the year ended 31 March 2017, if interest rates on all interest bearing bank deposits and borrowings had been 100 basis-points higher/lower with all other variables held constant, loss after taxation (2016: profit after taxation) for the year ended 31 March 2017 would have approximately HK$380,000 lower/ higher (2016: HK$186,000 higher/lower).

(c) Credit risk

The credit risk of the Group mainly arises from other receivables and cash at banks.

For the other receivables, management makes periodic collective assessments as well as individual assessment on the recoverability of other receivables based on historical settlement records and past experience. There is no concentration of credit risk as the Group has over twenty counterparties for other receivables.

Management considers that the Group has limited credit risk with its banks which are reputable and are assessed as having low credit risk.

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(d) Liquidity risk

The Group’s policy is to maintain sufficient cash to meet its liquidity and working capital requirements.

Management monitors rolling forecasts of the Group’s liquidity reserve which comprises cash and cash equivalents (Note 18) on the basis of expected cash flows. The Group’s policy is to regularly monitor current and expected liquidity requirements, to ensure that it maintains sufficient reserves of cash to meet its liquidity requirements in the short and longer term.

The table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period at the end of the reporting period to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

At 31 March 2017 Trade and other payables and accruals At 31 March 2016 Trade and other payables and accruals Bank borrowings, including those subject to a repayment on demand clause (Note 21) Finance lease payables	Less than one year HK$’000 16,740 11,657 3,601 57 15,315	One to two years HK$’000 –
		– – 38
		38

3.2 Capital risk management

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

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In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The Group monitors its capital on the basis of the gearing ratio, which is expressed as a percentage of interest-bearing bank and other borrowings over equity. Equity represents total equity as shown on the consolidated statement of financial position.

The gearing ratio as at 31 March 2017 and 2016:

Bank borrowings (Note 21) Finance lease payables Total debts Total equity Gearing ratio	2017 HK$’000 – – – 136,444 N/A	2016 HK$’000 3,428 90
		3,518 54,402
		6.5%

3.3 Fair value estimation

The carrying values of the Group’s financial assets, including deposits and other receivables, bank deposits with maturity over three months, restricted cash and cash and cash equivalents, and financial liabilities, including trade and other payables, bank borrowings and finance lease payables, approximate to their fair values due to their short-term maturities. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments, unless the discounting effect is insignificant.

3.4 Offsetting financial assets and financial liabilities

There is no material offsetting, enforceable master netting arrangement and similar agreements as at 31 March 2017 and 2016.

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4 Critical accounting estimates and judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

4.1 Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

(a) Impairment of property, plant and equipment

Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. These calculations require the use of judgements and estimates.

Management judgement is required in the area of asset impairment particularly in assessing: (i) whether an event has occurred that may indicate that the related asset values may not be recoverable; (ii) whether the carrying value of an asset can be supported by the recoverable amount, being the higher of fair value less costs to sell or net present value of future cash flows which are estimated based upon the continued use of the asset in the business; and (iii) the appropriate key assumptions to be applied in preparing cash flow projections including whether these cash flow projections are discounted using an appropriate rate. Changing the assumptions selected by management in assessing impairment, including the discount rates or the growth rate assumptions in the cash flow projections, could materially affect the net present value used in the impairment test and as a result affect the Company’s financial position and results of operations.

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(b) Useful lives of property, plant and equipment

The Group’s management determines the estimated useful lives and related depreciation expense for its property, plant and equipment by reference to the estimated periods that the Group intends to derive future economic benefits from the use of these assets. These estimates are based on the historical experience of the actual useful lives of property, plant and equipment of similar nature and functions. Management will adjust the depreciation expense where useful lives are less than previously estimated. Actual economic lives may differ from estimated useful lives. Periodic review could result in a change in useful lives and therefore depreciation expense in the future periods.

(c) Current income taxes and deferred income taxes

Significant judgement is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

(d) Provision for reinstatement costs

Provision for reinstatement costs is estimated at the inception of leasing property with reinstatement clause and reassessed at the end of each reporting period with reference to the latest available quotation from independent contractors. Estimation based on current market information may vary over time and could differ from the actual reinstatement cost upon closures or relocation of existing premises occupied by the Group.

5 Revenue and segment information

The Executive Directors of the Company, who are the CODM of the Group, review the Group’s internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on reports reviewed by the Executive Directors of the Company that are used to make strategic decisions.

The Group is principally engaged in the operation of restaurant chains in Hong Kong. Management reviews the operating results of the business as one segment to make decisions about resources to be allocated. Therefore, the Executive Directors of the Company regard that there is only one segment which is used to make strategic decisions. Revenue and profit after income tax are the measures reported to the Executive Directors for the purpose of resources allocation and performance assessment.

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All of the Group’s revenue were derived in Hong Kong during the years ended 31 March 2017 and 2016.

As at 31 March 2017 and 2016, all of the non-current assets of the Group were located in Hong Kong.

Revenue, which is also the Group’s turnover, represents amounts received and receivable from the operation of restaurants in Hong Kong. An analysis of revenue is as follows:

Restaurants operation 6 Other income and gains Sales of scrap materials Sundry income Gain on disposal of land and buildings 7 Finance income/(costs), net Interest expense on bank loans wholly repayable within 5 years Interest expense on finance leases Interest income	2017 HK$’000 189,830 2017 HK$’000 59 221 – 280 2017 HK$’000 (29) (3) 170 138	2016 HK$’000 200,915 2016 HK$’000 67 607 1,716 2,390 2016 HK$’000 (77) (7) 33 (51)

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• 8 (Loss)/profit before taxation

• (Loss)/profit before taxation is stated after:

Note Cost of food and beverages Depreciation of property, plant and equipment 13 Amortisation of intangible assets Lease payments under operating leases in respect of land and buildings: – Minimum lease payments – Contingent rental Employee benefit expenses (excluding Directors’ remuneration (Note 9)): Wages and salaries Discretionary bonuses Retirement benefit scheme contributions Insurance expense Staff welfare Provision for/(reversal of) unutilised annual leave Provision for long service payment Auditors’ remuneration – Audit services – Non-audit services Loss on disposal of items of property, plant and equipment Foreign exchange differences, net Listing expenses	2017 HK$’000 44,066 7,548 2 42,778 299 43,077 46,742 1,356 2,104 1,473 1,247 106 157 53,185 1,885 839 – 169 17,591	2016 HK$’000 47,427 8,391 3 40,000 265 40,265 45,181 1,339 2,114 1,417 986 (105) 308 51,240 240 230 98 164 1,478

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• 9 Benefits and interests of directors and five highest paid individuals

(a) Benefits and interests of directors

The remuneration of every director for the years ended 31 March 2017 and 2016 is set out below:

Year ended 31 March 2017 Executive Directors Mr. WONG Che Kin Ms. WONG Chui Ha Iris Non-executive Director Mr. CHEUNG Wai Chi (ix) Independent non-executive Directors Mr. CHEUNG Yui Kai Warren (viii) Prof. LAI Kin Keung (viii) Mr. LUI Hong Peace (viii) Year ended 31 March 2016 Executive Directors Mr. WONG Che Kin Mrs. WONG Chui Ha Iris	Fees HK$’000 – – 61 61 61 61 244 Fees HK$’000 – – –	Salaries HK$’000 2,727 425 – – – – 3,152 Salaries HK$’000 2,452 300 2,752	Allowances and benefits in kind (iii) HK$’000 397 – – – – – 397 Allowances and benefits in kind (iii) HK$’000 355 – 355	Discretionary bonuses HK$’000 – – – – – – – Discretionary bonuses HK$’000 – – –	Employer’s retirement benefit scheme contributions HK$’000 127 16 – – – – 143 Employer’s retirement benefit scheme contributions HK$’000 54 15 69	Total HK$’000 3,251 441 61 61 61 61
						3,936
						Total HK$’000 2,861 315
						3,176

The remuneration for the year ended 31 March 2016 shown above represents remuneration received from the Group by these Directors in their capacity as employees to the Operating Subsidiaries.

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Notes

• (i) No Directors waived any emolument during the years ended 31 March 2017 and 2016.

• (ii) No emoluments paid or receivable in respect of a person accepting office as a Director are to be treated as emoluments paid or receivable in respect of that person’s services as a director.

• (iii) Other benefits included insurance premium.

• (iv) Directors’ retirement benefits and termination benefits

None of the Directors received or will receive any retirement benefits or termination benefits in respect of their services to the Company and its subsidiaries for the year ended 31 March 2017 (2016: Nil).

• (v) Consideration provided to third parties for making available directors’ services

During the year ended 31 March 2017, the Company did not pay any consideration to any third parties for making available Directors’ services to the Company (2016: Nil).

• (vi) Information about loans, quasi-loans and other dealings in favour of directors, controlled bodies corporate by and connected entities with such directors

There were no loans, quasi-loans and other dealings entered into by the Company or subsidiary undertaking of the Company, where applicable, in favour of the Directors, or body corporate controlled by or entities connected with any of the Directors at the end of the year or at any time during the year (2016: Nil).

• (vii) Directors’ material interests in transactions, arrangements or contracts

Save as disclosed in note 25 to the consolidated financial statements, no significant transactions, arrangements and contracts in relation to the Group’s business to which the Company was a party and in which a Director of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year (2016: Nil).

(viii) Mr. CHEUNG Yui Kai Warren, Prof. LAI Kin Keung and Mr. LUI Hong Peace were appointed as the Company’s independent non-executive Directors on 8 November 2016. During the year ended 31 March 2016, the independent non-executive directors have not yet been appointed and did not receive any remuneration.

• (ix) Mr. CHEUNG Wai Chi was appointed as the Company’s non-executive Director on 10 June 2016. During the year ended 31 March 2016, the non-executive Director has not yet been appointed and did not receive any remuneration.

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(b) Five highest paid individuals

One of the five highest paid individuals in the Group was a Director of the Company for the years ended 31 March 2017 and 2016.

Details of the remuneration of the remaining non-director highest paid individuals are analysed as follows:

Salaries, allowances and benefits in kind Retirement benefit scheme contributions	2017 HK$’000 2,496 72 2,568	2016 HK$’000 2,028 72
		2,100

The emoluments of the remaining individuals fell within the following bands:

Nil to HK$1,000,000	2017 HK$’000 4	2016 HK$’000 4

10 Income tax expense

Hong Kong profits tax has been provided at a rate of 16.5% (2016: 16.5%) on the estimated assessable profit for the year.

The amount of income tax charged to the consolidated statement of comprehensive income represents:

Hong Kong profits tax Current income tax Over-provision in prior year Deferred income tax (Note 22)	2017 HK$’000 3,000 (64) (1,154) 1,782	2016 HK$’000 4,553 – 285
		4,838

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The tax on the Group’s (loss)/profit before tax differs from the theoretical amount that would arise using the tax rate of Hong Kong as follows:

(Loss)/profit before taxation Calculated at the statutory tax rate of 16.5% (2016: 16.5%) Income not subject to taxation Over-provision in prior year Expenses not deductible for taxation purposes Income tax expense	2017 HK$’000 (6,146) (1,014) (28) (64) 2,888 1,782	2016 HK$’000 28,743 4,743 (268) – 363 4,838

The negative weighted average applicable tax rate for the year ended 31 March 2017 was -29% mainly due to the non-deductible listing expenses of HK$17,591,000.

11 Dividends

No dividend has been paid or declared by the Company since its incorporation.

At the board meeting held on 28 June 2017, the Board has resolved not to recommend the payment of any final dividend for the year ended 31 March 2017.

Dividends disclosed for the year ended 31 March 2016 represented dividends declared and paid or payable by the Operating Subsidiaries to their respective shareholders based on their then respective shareholdings. The rates for dividends and the number of shares ranking for dividends are not presented as such information is not considered meaningful for the purpose of this report.

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12 (Loss)/earnings per share

(a) Basic

Basic (loss)/earnings per share is calculated by dividing the (loss)/profit attributable to shareholders of the Company by the weighted average number of ordinary shares in issue during the year.

(Loss)/profit attributable to shareholders of the Company Weighted average number of ordinary shares in issue (thousands) (Note) Basic (loss)/earnings per share (HK cents)	2017 HK$’000 (7,928) 166,849 (4.75)	2016 HK$’000 23,905 150,000
		15.94

Note: The weighted average number of shares in issue for the years ended 31 March 2017 and 2016 for the purpose of (loss)/earnings per share computation has been retrospectively adjusted for the effect of the 1 share issued on 14 April 2016 (the date of incorporation), 99 shares issued on 7 November 2016 under the Reorganisation in preparation for listing and the 149,999,900 shares issued under the capitalisation issue on 29 November 2016 (Note 23(a)).

(b) Diluted

For the years ended 31 March 2017 and 2016, diluted (loss)/earnings per share equals basic (loss)/earnings per share as there was no dilutive potential share.

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FINANCIAL INFORMATION OF THE GROUP

13 Property, plant and equipment

At 1 April 2015 Cost Accumulated depreciation Net carrying amount Year ended 31 March 2016 Opening net carrying amount Additions Disposals Depreciation Closing net carrying amount At 31 March 2016 Cost Accumulated depreciation Net carrying amount Year ended 31 March 2017 Opening net carrying amount Additions Depreciation Closing net carrying amount At 31 March 2017 Cost Accumulated depreciation Net carrying amount	Land and buildings HK$’000 3,707 (283)	Leasehold improvements HK$’000 27,448 (19,524)	Restaurants and kitchen equipment HK$’000 11,003 (6,850)	Computer equipment HK$’000 1,417 (1,074)	Furniture and fixtures HK$’000 4,088 (2,685)	Office equipment HK$’000 86 (40)	Motor vehicles HK$’000 869 (699)	Total HK$’000 48,618 (31,155)
	3,424	7,924	4,153	343	1,403	46	170	17,463
	3,424 – (3,318) (106)	7,924 4,233 (93) (4,907)	4,153 1,893 (5) (2,163)	343 558 – (281)	1,403 2,960 – (857)	46 25 – (17)	170 – – (60)	17,463 9,669 (3,416) (8,391)
	–	7,157	3,878	620	3,506	54	110	15,325
	– –	25,990 (18,833)	11,243 (7,365)	1,624 (1,004)	6,567 (3,061)	111 (57)	869 (759)	46,404 (31,079)
	–	7,157	3,878	620	3,506	54	110	15,325
	– – –	7,157 3,900 (3,563)	3,878 2,359 (1,961)	620 1,005 (365)	3,506 3,473 (1,556)	54 168 (52)	110 – (51)	15,325 10,905 (7,548)
	–	7,494	4,276	1,260	5,423	170	59	18,682
	– –	24,689 (17,195)	12,044 (7,768)	2,344 (1,084)	9,517 (4,094)	279 (109)	869 (810)	49,742 (31,060)
	–	7,494	4,276	1,260	5,423	170	59	18,682

The Group had no property, plant and equipment held under finance leases as at 31 March 2017 (2016: HK$110,000).

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APPENDIX II

14 Investment in an associate

Investment, at cost Losses shared in previous years	2017 HK$’000 250 (250) –	2016 HK$’000 250 (250)
		–

Set out below is the associate of the Group as at 31 March 2017 and 2016 which, in the opinion of the directors, is immaterial to the Group. The associate as listed below has share capital consisting solely of ordinary shares, which are held directly by the Group; the country of incorporation or registration is also their principal place of business.

Nature of investment in associate as at 31 March 2017 and 2016

				Place of	Particulars of
				incorporation/	issued share	Interest held	Interest held	Principal
Name				operation	capital	directly	indirectly	activity
Kinetic	Warehouse	(HK)	Limited	Hong Kong	HK$10,000	25%	–	Inactive

Kinetic Warehouse (HK) Limited is a private company and there is no quoted market price available for its shares.

There are no contingent liabilities relating to the Group’s interest in the associate.

15 Inventories

Food and consumables for restaurant operations	2017 HK$’000 2,005	2016 HK$’000 2,889

The cost of inventories recognised as expense and included in ‘cost of food and beverages’ amounted to HK$44,066,000 (2016: HK$47,427,000).

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16 Prepayments, deposits and other receivables

Prepayments Prepaid listing expenses Rental and utilities deposits Other receivables Less: non-current portion – Rental and utilities deposits – Prepayments for property, plant and equipment Current portion	2017 HK$’000 3,945 – 21,386 193 25,524 (15,815) (826) 8,883	2016 HK$’000 2,606 490 18,104 25 21,225 (8,216) (31) 12,978

As at 31 March 2017, the balances of deposits and other receivables were neither past due nor impaired. Financial assets included in the above balances relate to receivables for which there was no recent history of default.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. The Group did not hold any collateral as security. The carrying amounts of prepayments, deposits and other receivables approximate to their fair values and are denominated in HK$.

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17 Subsidiaries

Particulars of the principal subsidiaries as at 31 March 2017 are shown as follows:

			Issued and
	Place of incorporation and	Date of	fully paid			Principal activities and
Name	kind of legal entity	incorporation	share capital	Effective interest	held	place of operation
				2017	2016
Directly held
subsidiaries:
Prosperity One Limited	British Virgin Islands,	15 March 2016	US$100	100%	100%	Investment holding
	limited liability company
Indirectly held
subsidiaries:
333 Limited	Hong Kong,	7 May 2004	HK$100	100%	100%	Ownership of trademark
	limited liability company
Goody Limited	Hong Kong,	5 June 2003	HK$100	100%	100%	Ownership of trademark
	limited liability company
111 Limited	Hong Kong,	29 November 2005	HK$1,000	100%	100%	Provision of catering
	limited liability company					management service in
						Hong Kong
Aero Tech Limited	Hong Kong,	3 February 2006	HK$100	100%	100%	Food factory
	limited liability company
Prosino Limited	Hong Kong,	15 June 2006	HK$100	100%	100%	Restaurants operation
	limited liability company					in Hong Kong
Unlimit Limited	Hong Kong,	15 March 2007	HK$10,000	100%	100%	Restaurants operation
	limited liability company					in Hong Kong
Dotco Limited	Hong Kong,	20 September 2006	HK$10,000	100%	100%	Restaurants operation
	limited liability company					in Hong Kong
Hotex Limited	Hong Kong,	27 June 2003	HK$100	100%	100%	Restaurants operation
	limited liability company					in Hong Kong
Sydney Limited	Hong Kong,	18 January 2007	HK$10,000	100%	100%	Restaurants operation
	limited liability company					in Hong Kong
Printech Corporation	Hong Kong,	24 January 2008	HK$10,000	100%	100%	Restaurants operation
Limited	limited liability company					in Hong Kong
Tri-pros Limited	Hong Kong,	24 February 2009	HK$300,000	100%	100%	Restaurants operation
	limited liability company					in Hong Kong
555 Limited	Hong Kong,	7 May 2004	HK$100	100%	100%	Restaurants operation
	limited liability company					in Hong Kong
Richfield Development	Hong Kong,	26 June 1998	HK$100	100%	100%	Trading of ingredients
Limited	limited liability company					in Hong Kong

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APPENDIX II

• 18 Cash and cash equivalents, bank deposits with maturity over three months and restricted cash

Cash on hand Cash at banks Time deposits with initial maturity period up to three months Cash and cash equivalents Time deposits with initial maturity period over three months Restricted Cash	2017 HK$’000 341 47,874 60,144 108,359 – 2,049 110,408	2016 HK$’000 358 31,971 333
		32,662 524 2,424
		35,610

Note:

As at 31 March 2017, the restricted cash of HK$2,049,000 (2016: HK$2,424,000) is restricted deposits held at banks pursuant to the Group’s obligations under certain operating leases.

As at 31 March 2017, the maximum exposure to credit risk of the Group is cash at banks amounting to HK$110,067,000 (2016: HK$35,252,000).

Cash and cash equivalents denominated in: HK$ RMB	2017 HK$’000 108,359 2,049 110,408	2016 HK$’000 32,329 3,281
		35,610

Cash at banks earn interest at floating rates based on daily bank deposit rates. The effective interest rate on time deposits is 0.96% for the year ended 31 March 2017 (2016: 0.73%). The bank balances are deposited with creditworthy banks with no recent history of default.

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19 Trade payables

An aging analysis of the trade payables as at 31 March 2017, based on the invoice date, is as follows:

Within 30 days	2017 HK$’000 3,857	2016 HK$’000 3,780

The trade payables are non-interest bearing with payment terms of 30 days in general.

The carrying amounts of the trade payables approximate to their fair values and are denominated in HK$.

20 Other payables and accruals

Rent payable Accrued employee benefit expenses Provision for long service payment Provision for unutilised annual leave Provision for reinstatement costs (Note (a)) Provision for effective rental Accrued listing expenses Others Less: non-current portion – Provision for reinstatement costs (Note (a)) Current portion	2017 HK$’000 – 5,408 905 764 3,976 2,672 2,200 5,275 21,200 (3,115) 18,085	2016 HK$’000 200 5,506 748 658 3,963 1,591 1,020 1,151
		14,837 (1,961)
		12,876

The carrying amounts of other payables and accruals approximate to their fair values and are mainly denominated in HK$.

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Note:

(a) Provision for reinstatement costs

Movements in the Group’s provision for reinstatement costs are as follows:

At the beginning of the year Additional provision during the year Settlements At the end of the year 21 Bank borrowings Bank loans – secured	2017 HK$’000 3,963 634 (621) 3,976 2017 HK$’000 –	2016 HK$’000 4,047 522 (606)
		3,963
		2016 HK$’000 3,428

Borrowings due for repayment after one year which contain a repayment on demand clause are classified as current liabilities.

Borrowings due for repayment, based on the scheduled repayment terms set out in the loan agreements and without taking into account the effect of any repayment on demand clause are as follows:

Within 1 year Between 1 and 2 years Between 2 and 5 years Over 5 years	2017 HK$’000 – – – – –	2016 HK$’000 778 795 1,855 –
		3,428

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APPENDIX II

The weighted average interest rates as at 31 March 2017 and 2016 were as follows:

				2017	2016
Bank	loans	–	secured	N/A	2.3%

The carrying amounts of the Group’s borrowings are denominated in HK$ and approximate to their fair values.

As at 31 March 2017, the Group had no banking facilities. As at 31 March 2016, the Group had aggregate banking facilities of HK$4,000,000 for loans. There were no unused facilities as at 31 March 2016 as all banking facilities were installment loans. The Group’s banking facilities as at 31 March 2016 were subject to annual review and secured or guaranteed by:

• (i) unlimited personal guarantee from Mr. Wong as at 31 March 2016 and was subsequently released upon the repayment of the bank borrowings; and

• (ii) mortgage over land and buildings held by Mr. Wong, Mrs. Wong and Eternal Prosper Pacific Limited as at 31 March 2016 and was subsequently released upon the repayment of the bank borrowings.

22 Deferred income tax

The movement in the deferred income tax account is as follows:

At the beginning of the year Credited/(charged) to the consolidated statement of comprehensive income (Note 10) At the end of the year	2017 HK$’000 1,919 1,154 3,073	2016 HK$’000 2,204 (285)
		1,919

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The movement in deferred income tax assets and liabilities for the year ended 31 March 2017 without taking into consideration the offsetting of balances within the same jurisdiction, is as follows:

Deferred income tax assets

	Decelerated
	tax
	depreciation	Tax losses	Total
	HK$’000	HK$’000	HK$’000
At 1 April 2015	2,048	350	2,398
Charged to the consolidated
statement of comprehensive
income	(114)	(145)	(259)
At 31 March 2016 and
1 April 2016	1,934	205	2,139
(Charged)/credited to the
consolidated statement of
comprehensive income	(655)	1,888	1,233
At 31 March 2017	1,279	2,093	3,372
Deferred income tax liabilities
			Accelerated tax
			depreciation
			HK$’000
At 1 April 2015			194
Charged to the consolidated statement	of comprehensive	income	26
At 31 March 2016 and 1 April 2016			220
Charged to the consolidated statement	of comprehensive	income	79
At 31 March 2017			299

As at 31 March 2017 and 2016, there was no significant unrecognised deferred income tax.

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APPENDIX II

23 Share capital

Authorised: Ordinary shares of HK$0.01 each At 14 April 2016 (date of incorporation) Increase in authorised share capital (Note (c)) At 31 March 2017 Issued and fully paid: Ordinary shares of HK$0.01 each At 14 April 2016 (date of incorporation) (Note 1.2d) Shares issued pursuant to the Reorganisation (Note 1.2e) Capitalisation issue of shares (Note (a)) Shares issued pursuant to the global offering (Note (b)) At 31 March 2017 Notes:	Number of shares 38,000,000 962,000,000 1,000,000,000 1 99 149,999,900 50,000,000 200,000,000	Nominal value HK$’000 380 9,620
		10,000
		– – 1,500 500
		2,000

• (a) Pursuant to the resolution passed by the shareholders of the Company on 8 November 2016 and conditional upon the share premium account of the Company being credited as a result of the issuance of new shares pursuant to the global offering of the Company’s shares, the Directors were authorised to capitalise an amount of HK$1,499,999 standing to the credit of the share premium account of the Company by applying such sum in paying up in full at par of 149,999,900 shares for allotment and issue to the persons whose names appear on the register of members of the Company at the close of business on 28 November 2016 in proportion to their then shareholdings in the Company so that the shares allotted and issued shall rank pari passu in all respects with the then existing issued shares.

• (b) On 29 November 2016, the Company listed its shares on the Main Board of the Stock Exchange with global offering of 50,000,000 shares at an issue price of HK$2 per share. The transaction costs attributable to issue of shares amounted to HK$10,030,000.

• (c) On 8 November 2016, the authorised share capital of the Company was increased from HK$380,000 divided into 38,000,000 shares of HK$0.01 each to HK$10,000,000 divided into 1,000,000,000 shares of HK$0.01 each by creation of an additional 962,000,000 shares, ranking pari passu in all respects with the then existing shares.

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24 Other reserves

At 1 April 2015 Profit and total comprehensive income for the year Dividends At 31 March 2016 and 1 April 2016 Loss and total comprehensive loss for the year Issuance of shares pursuant to the Reorganisation (Note 1.2e) Capitalisation issue of shares (Note 23(a)) Shares issued pursuant to the global offering (Note 23(b)) Transaction costs attributable to the global offering (Note 23(b)) At 31 March 2017	Share premium HK$’000 – – – – – – (1,500) 99,500 (10,030) 87,970	Capital reserve (Note) HK$’000 342 – – 342 – – – – – 342	Retained earnings HK$’000 59,869 23,905 (29,714) 54,060 (7,928) – – – – 46,132	Total HK$’000 60,211 23,905 (29,714)
				54,402 (7,928) – (1,500) 99,500 (10,030)
				134,444

Note: As at 31 March 2017, capital reserve of HK$341,699 represented the difference between the combined capital of Operating Subsidiaries acquired over the nominal value of the share capital of the Company issued in exchange thereof, please refer to Note 1.2. As at 31 March 2016, capital reserve of HK$341,700 represented the combined share capital of Operating Subsidiaries within the Group after elimination of intercompany investments.

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25 Related party transactions

(a) Transactions with related parties

In addition to the transactions and balances disclosed elsewhere in this report, the Group had the following transactions with related parties in the ordinary course of business:

Rental expenses paid and payable to – Eternal Prosper Pacific Limited (i) – Mr. Wong (i) – Mrs. Wong (i) Land and buildings sold to – Eternal Prosper Pacific Limited (ii)	2017 HK$’000 1,254 144 306 –	2016 HK$’000 630 90 180
		5,034

(i) Rental expenses are paid in accordance with the terms mutually agreed by relevant parties.

• (ii) Land and buildings were sold at market price which was determined with reference to recent market transactions for similar building.

(iii) Eternal Prosper Pacific Limited is wholly-owned and controlled by Mr. Wong and Mrs. Wong.

(b) Key management compensation

Key management includes executive directors and the senior management of the Group.

Compensation of key management personnel of the Group, including directors’ remuneration as disclosed in Note 9 to the consolidated financial statements, is as follows:

Salaries and other short term employee benefits Retirement benefit scheme contribution	2017 HK$’000 4,406 180 4,586	2016 HK$’000 4,062 101
		4,163

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FINANCIAL INFORMATION OF THE GROUP

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(c) Other arrangements with related parties

Save as disclosed in Note 21 and 25 to the consolidated financial statements, there are no other arrangements with related parties.

26 Notes to the consolidated statement of cash flows

(a) Cash generated from operations

Note (Loss)/profit before taxation Adjustments for: Depreciation of property, plant and equipment 13 Amortisation of intangible assets Loss on disposal of items of property, plant and equipment (Note 26(b)) Gain on disposal of land and buildings (Note 26(c)) 6 Finance (income)/costs, net 7 Changes in working capital Decrease/(increase) in inventories Increase in prepayments, deposits and other receivables Increase/(decrease) in trade payables Increase in other payables and accruals Cash generated from operations	2017 HK$’000 (6,146) 7,548 2 – – (138) 1,266 884 (3,949) 77 6,363 4,641	2016 HK$’000 28,743 8,391 3 98 (1,716) 51 35,570 (32) (1,619) (146) 441 34,214

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APPENDIX II

(b) Proceeds from sale of property, plant and equipment

In the consolidated statement of cash flows, proceeds from sale of property, plant and equipment comprise:

Net carrying amount (Note 13) Loss on disposal of property, plant and equipment Proceeds from disposal of property, plant and equipment	2017 HK$’000 – – –	2016 HK$’000 98 (98)
		–

(c) Proceed from sale of land and buildings

Proceed from sale of land and buildings was settled through the current account with a related company.

27 Operating lease and capital commitments

The Group leases certain of its restaurants, office premises and warehouses under operating lease arrangements. Leases for these properties are negotiated for terms ranging from one to six years.

The Group had total future minimum lease payments under non-cancellable operating leases falling due as follows:

As lessees Within one year In the second to fifth years, inclusive Beyond five years	2017 HK$’000 40,108 48,858 – 88,966	2016 HK$’000 33,579 32,882 1,315
		67,776

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APPENDIX II

In addition, the operating lease rentals for certain restaurants are based on the higher of a fixed rental and contingent rent based on the sales of these restaurants pursuant to the terms and conditions as set out in the respective rental agreements. As the future sales generated by these restaurants could not be reliably determined, the relevant contingent rent has not been included above and only the minimum lease commitments have been included in the above table.

In addition to the operating lease commitments detailed above, the Group had the following capital commitments:

Authorised, but not contracted for leasehold improvements and property, plant and equipment 28 Financial instruments by category Assets as per consolidated statement of financial position Loans and receivables: – Deposits and other receivables – Cash and cash equivalents, bank deposits with maturity over three months and restricted cash Total Liabilities as per consolidated statement of financial position Financial liabilities at amortised cost: – Bank borrowings – Finance lease payables Current Non-current – Trade and other payables and accruals Total	2017 HK$’000 826 2017 HK$’000 21,579 110,408 131,941 – – – 16,740 16,740	2016 HK$’000 –
		2016 HK$’000 18,129 35,610
		53,739
		3,428 53 37 11,657
		15,175

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29 Statement of financial position and reserve movement of the company

Statement of financial position of the company

NON-CURRENT ASSETS Investment in a subsidiary Amount due from a subsidiary CURRENT ASSETS Prepayments Cash and cash equivalents Total assets EQUITY AND LIABILITIES Equity attributable to shareholders of the Company Share capital Other reserves Total Equity CURRENT LIABILITIES Other payables and accruals Amount due to a subsidiary Total liabilities Total equity and liabilities	As at 31 March 2017 HK$’000 – 15,000
	15,000
	391 73,607
	73,998
	88,998
	2,000 69,042
	71,042
	2,605 15,351
	17,956
	88,998

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APPENDIX II

Reserve movement of the Company

At 14 April 2016 (date of incorporation) (Note 1.2d) Loss and total comprehensive loss for the year Issuance of shares pursuant to the Reorganisation (Note 1.2e) Capitalisation issue of shares (Note 23(a)) Shares issued pursuant to the global offering (Note 23(b)) Transaction costs attributable to the global offering (Note 23(b)) At 31 March 2017	Share premium HK$’000 – – – (1,500) 99,500 (10,030) 87,970	Accumulated losses HK$’000 – (18,928) – – – – (18,928)	Total HK$’000 – (18,928) – (1,500) 99,500 (10,030) 69,042

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

3. UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS OF THE GROUP

Set out below is financial information of the Group as extracted from the published unaudited condensed consolidated interim financial statements of the Group for the six months ended 30 September 2017.

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 September 2017

Note Revenue 6 Other income and gains 7 Cost of food and beverages Staff costs Depreciation and amortisation Property rentals and related expenses Fuel and utility expenses Advertising and marketing expenses Other operating expenses Listing expenses Finance income/(costs), net 8 Profit/(loss) before taxation 9 Income tax expense 10 Profit/(loss) and total comprehensive income/(loss) for the period Attributable to: Shareholders of the Company Basic and diluted earnings/(loss) per share (HK cents) 12

Six months ended 30 September 2017 2016 HK$’000 HK$’000 (Unaudited) (Unaudited) 101,456 102,631 175 184 (24,220) (23,713) (30,879) (28,418) (4,271) (4,100) (26,894) (25,925) (3,336) (3,047) (359) (240) (7,805) (4,246) – (14,677) 294 (16) 4,161 (1,567) (596) (2,065) 3,565 (3,632) 3,565 (3,632) 1.78 (2.42)

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APPENDIX II

FINANCIAL INFORMATION OF THE GROUP

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

As at 30 September 2017

Note ASSETS Non-current assets Property, plant and equipment 13 Intangible assets Investment in an associate 14 Rental and utilities deposits 15 Prepayments for property, plant and equipment 15 Deferred income tax assets Current assets Inventories Prepayments, deposits and other receivables 15 Current income tax recoverable Restricted cash Cash and cash equivalents Total assets EQUITY Equity attributable to shareholders of the Company Share capital 18 Other reserves Total equity	30 September 2017 HK$’000 (Unaudited) 20,174 12 – 17,387 2,622 3,641 43,836 1,992 9,087 2,103 1,051 104,647 118,880 162,716 2,000 138,009 140,009	31 March 2017 HK$’000 (Audited) 18,682 14 – 15,815 826 3,372
		38,709
		2,005 8,883 2,103 2,049 108,359
		123,399
		162,108
		2,000 134,444
		136,444

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APPENDIX II

Note LIABILITIES Non-current liabilities Other payables 17 Deferred income tax liabilities Current liabilities Trade payables 16 Other payables and accruals 17 Current income tax liabilities Total liabilities Total equity and liabilities	30 September 2017 HK$’000 (Unaudited) 3,358 304 3,662 4,008 13,869 1,168 19,045 22,707 162,716	31 March 2017 HK$’000 (Audited) 3,115 299
		3,414
		3,857 18,085 308
		22,250
		25,664
		162,108

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APPENDIX II

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY For the six months ended 30 September 2017

At 1 April 2017 Profit and total comprehensive income for the period At 30 September 2017 At 1 April 2016 Loss and total comprehensive loss for the period At 30 September 2016	Attributable to	Attributable to	(Unaudited) shareholders of the Company	(Unaudited) shareholders of the Company
	Share capital HK$’000 2,000 – 2,000 – – –	Share premium HK$’000 87,970 – 87,970 – – –	Capital reserve HK$’000 342 – 342 342 – 342	Retained earnings HK$’000 46,132 3,565 49,697 54,060 (3,632) 50,428	Total HK$’000 136,444 3,565
					140,009
					54,402 (3,632)
					50,770

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APPENDIX II

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS

For the six months ended 30 September 2017

Cash flows from operating activities Cash generated from operations Interest received Hong Kong profits tax paid, net Net cash flows generated from operating activities Cash flows from investing activities Purchases of property, plant and equipment (Increase)/decrease in prepayments for property, plant and equipment Decrease in restricted cash Decrease in bank deposits with maturity over three months Net cash flows used in investing activities Cash flows from financing activities Repayment of bank loans Listing expenses paid Capital element of finance lease rental payments Interests paid Net cash flows used in financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period

Six months ended 30 September 2017 2016 HK$’000 HK$’000 (Unaudited) (Unaudited) 2,192 5,416 294 16 – (76) 2,486 5,356 (5,400) (3,330) (1,796) 31 998 71 – 524 (6,198) (2,704) – (3,428) – (3,214) – (90) – (32) – (6,764) (3,712) (4,112) 108,359 32,662 104,647 28,550

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APPENDIX II

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

1 General information

The Company was incorporated in the Cayman Islands on 14 April 2016 as an exempted company with limited liability under the Companies Law (Cap. 22, Law 3 of 1961 as consolidated and revised) of the Cayman Islands. The address of the Company’s registered office is Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman, KY11111, Cayman Islands.

The Company is an investment holding company and its subsidiaries are principally engaged in the operation of restaurant chains in Hong Kong (the ‘‘Business’’).

The issued shares of the Company (the ‘‘Shares’’) were listed on the Main Board of The Stock Exchange of Hong Kong Limited (the ‘‘Stock Exchange’’) since 29 November 2016 (the ‘‘Listing Date’’ and the ‘‘Listing’’, respectively).

This condensed consolidated interim financial information is presented in Hong Kong dollar (‘‘HK$’’), unless otherwise stated.

This condensed consolidated interim financial information has not been audited.

2 Basis of preparation

This condensed consolidated interim financial information for the six months ended 30 September 2017 has been prepared in accordance with Hong Kong Accounting Standard (‘‘HKAS’’) 34, ‘‘Interim Financial Reporting’’ issued by the Hong Kong Institute of Certified Public Accountants (‘‘HKICPA’’). The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 March 2017, which have been prepared in accordance with Hong Kong Financial Reporting Standards (‘‘HKFRSs’’) and have been prepared under the historical cost convention.

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APPENDIX II

3 Accounting policies

The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 March 2017, as described in those annual financial statements, except for the estimation of income tax using the tax rate that would be applicable to expected total annual earnings and the adoption of amendments to HKFRSs effective for the financial year ending 31 March 2018.

Amendments to HKFRSs effective for the financial year ending 31 March 2018 do not have a material impact on the Group.

Impact of standards issued but not yet applied by the Group

(i) HKFRS 9, ‘‘Financial Instruments’’

HKFRS 9 Financial Instruments addresses the classification, measurement and derecognition of financial assets and financial liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets. The standard does not need to be applied until 1 January 2018 but is available for early adoption.

The Group does not expect the new guidance to have a significant impact on the classification and measurement of its financial assets.

There will be no impact on the Group’s accounting for financial liabilities, as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the Group does not have any such liabilities. The derecognition rules have been transferred from HKAS 39 Financial Instruments: Recognition and Measurement and have not been changed.

The new impairment model requires the recognition of impairment provisions based on expected credit losses (ECL) rather than only incurred credit losses as is the case under HKAS 39. It applies to financial assets classified at amortised cost, debt instruments measured at fair value through other comprehensive income, contract assets under HKFRS 15 Revenue from Contracts with Customers, lease receivables, loan commitments and certain financial guarantee contracts.

The new standard also introduces expanded disclosure requirements and changes in presentation. These are expected to change the nature and extent of the Group’s disclosures about its financial instruments particularly in the year of the adoption of the new standard.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

The Group does not plan to early adopt HKFRS 9 and assesses that adopting HKFRS 9 will not have a material impact to the Group’s condensed consolidated interim financial information.

(ii) HKFRS 15 Revenue from contracts with customers

The HKICPA has issued a new standard for the recognition of revenue. This will replace HKAS 18 which covers revenue arising from the sale of goods and the rendering of services and HKAS 11 which covers construction contracts.

The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer.

The standard permits either a full retrospective or a modified retrospective approach for the adoption. The new standard is effective for first interim periods within annual reporting periods beginning on or after 1 January 2018.

The Group does not plan to early adopt HKFRS 15 and assesses that adopting HKFRS 15 will not have a material impact to the Group’s condensed consolidated interim financial information.

(iii) HKFRS 16 Leases

HKFRS 16 was issued in January 2016. It will results in almost all leases being recognized on the consolidated statement of financial position, as the distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and a financial liability to pay rentals are recognized. The only exceptions are short-term and low-value leases.

The accounting for lessors will not significantly change.

The standard will affect primarily the accounting for the Group’s operating leases. As at 30 September 2017, the Group has non-cancellable operating lease commitments of approximately HK$88,774,000. However, the Group has not yet determined to what extent these commitments will result in the recognition of an asset and a liability for future payments and how this will affect the Group’s profit and classification of cash flows.

Some of the commitments may be covered by the exception for short-term and low-value leases and some commitments may relate to arrangements that will not qualify as leases under HKFRS 16.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

The standard is mandatory for first interim periods within annual reporting periods beginning on or after 1 January 2019. The Group does not plan to early adopt HKFRS 16 and assesses that adopting HKFRS 16 may have a material impact to the Group’s condensed consolidated interim financial information.

4 Estimates

The preparation of condensed consolidated interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing this condensed consolidated interim financial information, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 March 2017.

5 Financial risk management

5.1 Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk and interest rate risk), credit risk and liquidity risk.

The condensed consolidated interim financial information does not include all financial risk management information and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s annual financial statements for the financial year ended 31 March 2017.

There have been no changes in the risk management policies since year ended.

5.2 Fair value estimation

The carrying values of the Group’s financial assets, including deposits and other receivables, restricted cash and cash and cash equivalents, and financial liabilities, including trade and other payables, approximate to their fair values due to their shortterm maturities. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments, unless the discounting effect is insignificant.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

6 Revenue and segment information

The executive Directors, who are the chief operating decision-makers of the Group, review the Group’s internal reporting in order to assess performance and allocate resources. Management has determined the operating segments based on reports reviewed by the executive Directors that are used to make strategic decisions.

The Group is principally engaged in the operation of restaurant chains in Hong Kong. Management reviews the operating results of the business as one segment to make decisions about resources to be allocated. Therefore, the executive Directors regard that there is only one segment which is used to make strategic decisions. Revenue and profit after income tax are the measures reported to the executive Directors for the purpose of resources allocation and performance assessment.

All of the Group’s revenue are derived in Hong Kong during the Period and the Last Corresponding Period.

As at 30 September 2017 and 31 March 2017, all of the non-current assets of the Group are located in Hong Kong.

Revenue, which is also the Group’s turnover, represents amounts received and receivable from the operation of restaurants in Hong Kong. An analysis of revenue is as follows:

Restaurants operation	Six months ended 30 September 2017 2016 HK$’000 HK$’000 (Unaudited) (Unaudited) 101,456 102,631

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

• 7 Other income and gains

Sales of scrap materials Sundry income Finance income/(costs), net Interest expense on bank loans wholly repayable within 5 years Interest expense on finance leases Interest income	Six months ended 30 September 2017 2016 HK$’000 HK$’000 (Unaudited) (Unaudited) 36 26 139 158 175 184 Six months ended 30 September 2017 2016 HK$’000 HK$’000 (Unaudited) (Unaudited) – (29) – (3) 294 16 294 (16)

• 8 Finance income/(costs), net

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

• 9 Profit/(loss) before taxation

Profit/(loss) before taxation is stated after:

Cost of food and beverages Depreciation of property, plant and equipment Amortisation of intangible assets Lease payments under operating leases in respect of land and buildings: – Minimum lease payments – Contingent rental Employee benefit expenses (excluding directors’ remuneration): Wages and salaries Discretionary bonuses Retirement benefit scheme contributions Insurance expense Staff welfare Provision for unutilised annual leave Provision for long service payment Auditors’ remuneration – Audit services – Non-audit services Foreign exchange differences, net Listing expenses	Six months ended 30 September 2017 2016 HK$’000 HK$’000 (Unaudited) (Unaudited) 24,220 23,713 4,269 4,099 2 1 22,523 21,524 62 262 22,585 21,786 25,546 23,956 166 118 1,155 1,025 794 708 536 604 192 200 36 130 28,425 26,741 900 125 334 – (45) 104 – 14,677	Six months ended 30 September 2017 2016 HK$’000 HK$’000 (Unaudited) (Unaudited) 24,220 23,713 4,269 4,099 2 1 22,523 21,524 62 262 22,585 21,786 25,546 23,956 166 118 1,155 1,025 794 708 536 604 192 200 36 130 28,425 26,741 900 125 334 – (45) 104 – 14,677
		21,786 23,956 118 1,025 708 604 200 130
		26,741 125 – 104 14,677

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

10 Income tax expense

Hong Kong profits tax has been provided on the estimated assessable profits at a rate of 16.5% (the Last Corresponding Period: 16.5%).

The amount of income tax charged to the condensed consolidated interim statement of comprehensive income represents:

Hong Kong profits tax Current income tax Over-provision in prior year Deferred income tax	Six months ended 30 September 2017 2016 HK$’000 HK$’000 (Unaudited) (Unaudited) 860 2,253 – (120) (264) (68) 596 2,065

11 Dividends

The Board has resolved not to declare any interim dividend for the Period (the Last Corresponding Period: Nil).

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

12 Earnings/(loss) per share

(a) Basic

Basic earnings/(loss) per share is calculated by dividing the profit/(loss) attributable to shareholders of the Company by the weighted average number of ordinary shares in issue during the period.

Profit/(loss) attributable to shareholders of the Company Weighted average number of ordinary shares in issue (thousands) (Note) Basic earnings/(loss) per share (HK cents)	Six months ended 30 September 2017 2016 HK$’000 HK$’000 (Unaudited) (Unaudited) 3,565 (3,632) 200,000 150,000 1.78 (2.42)

• Note: The weighted average number of shares in issue for the six months ended 30 September 2016 for the purpose of earnings/(loss) per share computation has been retrospectively adjusted for the effect of the 1 share issued on 14 April 2016 (the date of incorporation), 99 shares issued on 7 November 2016 under the reorganisation in preparation for listing and the 149,999,900 shares issued under the capitalization issue on 29 November 2016, as if the shares had been in issue throughout the entire reporting period.

(b) Diluted

For six months ended 30 September 2017 and 2016, diluted earnings/(loss) per share equals basic earnings/(loss) per share as there was no dilutive potential share.

13 Property, plant and equipment

During the Period, the Group acquired items of property, plant and equipment with total costs of approximately HK$5,400,000 (the Last Corresponding Period: approximately HK$3,330,000).

II – 69

APPENDIX II

FINANCIAL INFORMATION OF THE GROUP

14 Investment in an associate

Investment, at cost Losses shared in previous years Prepayments, deposits and other receivables Prepayments Rental and utilities deposits Other receivables Less: non-current portion – Rental and utilities deposits – Prepayments for property, plant and equipment Current portion	As at 30 September 2017 HK$’000 (Unaudited) 250 (250) – As at 30 September 2017 HK$’000 (Unaudited) 6,268 22,431 397 29,096 (17,387) (2,622) 9,087	As at 31 March 2017 HK$’000 (Audited) 250 (250) – As at 31 March 2017 HK$’000 (Audited) 3,945 21,386 193 25,524 (15,815) (826) 8,883

15 Prepayments, deposits and other receivables

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

16 Trade payables

An aging analysis of the trade payables as at 30 September 2017 and 31 March 2017, based on the invoice date, is as follows:

Within 30 days 17 Other payables and accruals Accrued employee benefit expenses Provision for long service payment Provision for unutilised annual leave Provision for reinstatement costs Provision for effective rental Accrued listing expenses Others Less: non-current portion – Provision for reinstatement costs Current portion	As at 30 September 2017 HK$’000 (Unaudited) 4,008 As at 30 September 2017 HK$’000 (Unaudited) 4,369 941 956 3,758 2,802 – 4,401 17,227 (3,358) 13,869	As at 31 March 2017 HK$’000 (Audited) 3,857 As at 31 March 2017 HK$’000 (Audited) 5,408 905 764 3,976 2,672 2,200 5,275 21,200 (3,115) 18,085

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

18 Share capital Ordinary shares of HK$0.01 each Authorised: At 31 March 2017, 1 April 2017 and 30 September 2017 (Unaudited) Issued and fully paid: At 31 March 2017, 1 April 2017 and 30 September 2017 (Unaudited)	Number of shares 1,000,000,000 200,000,000	Nominal value HK$’000 10,000
		2,000

19 Related party transactions

(a) Transactions with related parties

In addition to the transactions and balances disclosed elsewhere in this report, the Group had the following transactions with related parties in the ordinary course of business:

Rental expenses paid and payable to – Eternal Prosper Pacific Limited (i) – Mr. Wong Che Kin (i) – Ms. Wong Chui Ha Iris (i)	Six months ended 30 September 2017 2016 HK$’000 HK$’000 (Unaudited) (Unaudited) 795 627 72 72 153 153

(i) Rental expenses are paid in accordance with the terms mutually agreed by relevant parties.

(ii) Eternal Prosper Pacific Limited is wholly-owned and controlled by Mr. Wong Che Kin and Ms. Wong Chui Ha Iris.

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FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

(b) Key management compensation

Key management includes executive directors and the senior management of the Group.

Compensation of key management personnel of the Group is as follows:

Salaries and other short term employee benefits Retirement benefit scheme contribution	Six months ended 30 September 2017 2016 HK$’000 HK$’000 (Unaudited) (Unaudited) 2,595 1,884 91 80 2,686 1,964	Six months ended 30 September 2017 2016 HK$’000 HK$’000 (Unaudited) (Unaudited) 2,595 1,884 91 80 2,686 1,964
		1,964

4. MATERIAL CHANGE

The Directors confirm that, save and except for the matters disclosed below, there has not been any material change in the financial and trading position or outlook of the Group since 31 March 2017, being the date to which the latest published audited consolidated financial statements of the Group were made up, and up to and including the Latest Practicable Date:

• The Interim Report for the six-months ended 30 September 2017 of the Company mentioned the Group recorded a profit attributable to the equity holders of the Company for the six months ended 30 September 2017 while this was a loss for the six months ended 30 September 2016, which was mainly due to the combined net effect of (i) no listing expenses incurred for the Period as compared to the listing expenses of HK$14.7 million incurred for the Last Corresponding Period, (ii) the inclusion of legal and professional expenses to maintain the listing status of the Company, (iii) the decrease of revenue by 1.1%; and (iv) the increase of operating expenses, including cost of food and beverages, staff costs and property rentals.

II – 73

FINANCIAL INFORMATION OF THE GROUP

APPENDIX II

• As set out in the paragraph headed ‘‘Information on the Group’’ in the ‘‘Letter from the Board’’ section of this Composite Document and in the Profit Warning Announcement, based on the information currently available and the preliminary assessment of the unaudited consolidated financial statements of the Group for the year ended 31 March 2018, the net loss for the year ended 31 March 2018 is expected to be decreased as compared with the net loss for the year ended 31 March 2017. The decrease in loss was attributable to no listing expenses incurred for the year ended 31 March 2018. When excluding the non-recurring listing expenses for the year ended 31 March 2017, the Group would have recorded a net profit for the year ended 31 March 2017 as compared to a net loss for the year ended 31 March 2018. The net loss for the year ended 31 March 2018 was mainly due to (i) increase in staff costs, (ii) increase in rental expenses, and (iii) increase in professional expenses (i.e. the Statement). Further details regarding the Statement are set out in the aforesaid section of this Composite Document. Please also refer to section (a) of appendix III to this Composite Document for the letter from PricewaterhouseCoopers, and section (b) of appendix III to this Composite Document for the report from Vinco Capital for further details.

5. INDEBTEDNESS

As at 31 March 2018, being the latest practicable date for the purpose of this indebtedness statement, we have no bank borrowings.

As at the close of business on 31 March 2018, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this Composite Document, apart from the intra-group liabilities, the Group did not have any loan capital issued and outstanding, or agreed to be issued, bank overdrafts, loans or other similar indebtedness, liabilities under acceptances or acceptance credits, debentures, mortgages, charges, hire purchase commitments, guarantees or contingent liabilities.

The Directors have confirmed that there had not been any material change in the indebtedness or contingent liabilities of the Group since 31 March 2018 and up to the Latest Practicable Date.

II – 74

LOSS ESTIMATE

APPENDIX III

The Statement in relation to the estimate of the consolidated loss of the Group for the year ended 31 March 2018 as disclosed in the Profit Warning Announcement and referred to in this Composite Document, which constitute a profit forecast of the Company for the purpose of Rule 10 of the Takeovers Code, is set out in the paragraph headed ‘‘Information on the Group’’ under the section headed ‘‘Letter from the Board’’ in this Composite Document.

1. BASES

The Directors have arrived at the Statement in the Profit Warning Announcement based on the unaudited management accounts of the Group for the year ended 31 March 2018 on a basis consistent in all material respects with the accounting policies normally adopted by the Group as set out in the annual report of the Company for the year ended 31 March 2017. No assumptions were involved in the making of the Statement as the estimated loss for the year ended relates to a year already ended.

2. LETTER/REPORT FROM AUDITORS AND INDEPENDENT FINANCIAL ADVISER

Set out below are the text of the letter/report received by the Directors from PricewaterhouseCoopers, the auditors of the Company, and from the Independent Financial Adviser in connection with the Statement for the purpose of inclusion in this Composite Document.

III – 1

LOSS ESTIMATE

APPENDIX III

A. AUDITOR’S LETTER ON THE LOSS ESTIMATE

The following is the full text of the letter for the sole purpose of incorporation in this Composite Document, received from PricewaterhouseCoopers, Certified Public Accountants, the independent auditor of the Company.

==> picture [66 x 47] intentionally omitted <==

The Board of Directors Food Wise Holdings Limited Workshop No.4, 9/F, Join-in Hang Sing Centre 2-16 Kwai Fung Crescent Kwai Chung, New Territories Hong Kong

15 June 2018

Dear Sirs,

Food Wise Holdings Limited (the ‘‘Company’’)

LOSS ESTIMATE FOR YEAR ENDED 31 MARCH 2018

We refer to the estimate of the consolidated loss attributable to owners of the Company for the year ended 31 March 2018 (the ‘‘Loss Estimate’’). The Loss Estimate has been prepared to enable the directors of the Company to issue the following statements set forth in the profit warning announcement of the Company dated 24 May 2018 (the ‘‘Profit Warning Announcement’’) and page 26 of the composite document of the Company dated 15 June 2018 (the ‘‘Composite Document’’).

III – 2

LOSS ESTIMATE

APPENDIX III

‘‘The board (the ‘‘Board’’) of directors (the ‘‘Directors’’) of the Company would like to inform the shareholders (the ‘‘Shareholders’’) and potential investors of the Company that, based on the information currently available and the preliminary assessment of the unaudited consolidated financial statements of the Group for the year ended 31 March 2018 (‘‘FY2018’’), the net loss for the year ended 31 March 2018 is expected to be decreased as compared with the net loss for the year ended 31 March 2017 (‘‘FY2017’’). The decrease in loss was attributable to no listing expenses incurred for the FY2018. When excluding the non-recurring listing expenses for the FY2017, the Group would have recorded a net profit for FY2017 as compared to a net loss for FY2018. The net loss for FY2018 was mainly due to:

• (i) the increase in staff costs to support the Group’s business expansion;

• (ii) the increase in monthly rental of the Group’s leased properties upon renewal of the relevant leases and new properties leased; and

• (iii) the increase in legal and professional expenses for compliance of the Listing Rules and other applicable laws and requirements, covering the full financial year (the ‘‘FY 2018 Profit Warning Statement’’).’’

DIRECTORS’ RESPONSIBILITIES

The Loss Estimate has been prepared by the directors of the Company based on the unaudited management accounts of the Company and its subsidiaries (the ‘‘Group’’) for the year ended 31 March 2018.

The Company’s directors are solely responsible for the Loss Estimate.

OUR INDEPENDENCE AND QUALITY CONTROL

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 (‘‘HKICPA’’), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.

Our firm applies Hong Kong Standard on Quality Control 1 issued by the HKICPA and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

III – 3

LOSS ESTIMATE

APPENDIX III

REPORTING ACCOUNTANT’S RESPONSIBILITIES

Our responsibility is to express an opinion on the accounting policies and calculations of the Loss Estimate based on our procedures.

We conducted our engagement in accordance with Hong Kong Standard on Investment Circular Reporting Engagements 500, Reporting on Profit Forecasts, Statements of Sufficiency of Working Capital and Statements of Indebtedness and with reference to Hong Kong Standard on Assurance Engagements 3000 (Revised), Assurance Engagements Other Than Audits or Reviews of Historical Financial Information issued by the HKICPA. Those standards require that we plan and perform our work to obtain reasonable assurance as to whether, so far as the accounting policies and calculations are concerned, the Company’s directors have properly compiled the Loss Estimate in accordance with the bases adopted by the directors and as to whether the Loss Estimate is presented on a basis consistent in all material respects with the accounting policies normally adopted by the Group. 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 accounting policies and calculations are concerned, the Loss Estimate has been properly compiled in accordance with the bases adopted by the directors as set out in the Profit Warning Announcement and the Composite Document and is presented on a basis consistent in all material respects with the accounting policies normally adopted by the Group as set out in the annual report of the Company for the year ended 31 March 2017.

Yours faithfully,

PricewaterhouseCoopers

Certified Public Accountants Hong Kong

III – 4

LOSS ESTIMATE

APPENDIX III

15 June 2018

B. INDEPENDENT FINANCIAL ADVISER’S REPORT ON THE LOSS ESTIMATE

The following is the text of a report prepared for the sole purpose of inclusion in this Composite Document, received from Vinco Capital.

Vinco Capital Limited

Units 4909-4910, 49/F., The Center 99 Queen’s Road Central, Hong Kong

To the Board of Directors of Food Wise Holdings Limited

Join-in Hang Sing Centre

2-16 Kwai Fung Crescent 71-75 Container Port Road Kwai Chung, New Territories Hong Kong

Dear Sirs,

Reference is made to the composite document jointly issued by MSEC Holdings Limited (the ‘‘Offeror’’) and Food Wise Holdings Limited (the ‘‘Company’’) dated 15 June 2018 (the ‘‘Composite Document’’), of which this letter forms part. Unless the context otherwise requires, all capitalized terms used herein shall have the same meanings as those defined in the Composite Document.

We refer to the profit warning announcement made by the Company in respect of the estimate of the Group’s loss for the year ended 31 March 2018 (the ‘‘Statement‘‘）dated 24 May 2018, for which the Directors are solely responsible. We note that the Statement is regarded as a profit forecast pursuant to Rule 10 of the Takeovers Code.

We have discussed with the Directors and the senior management of the Company the bases upon which the Statement has been made and reviewed the unaudited management accounts for the year ended 31 March 2018 and other relevant information and documents. In addition, we have considered, the Letter on the estimate of the consolidated loss attributable to owners of the Company for the year ended 31 March 2018 (the ‘‘Loss Estimate’’) by PricewaterhouseCoopers addressed to the Directors regarding the accounting policies adopted and calculations upon which the Statement has been made.

III – 5

LOSS ESTIMATE

APPENDIX III

Based on the above, we are satisfied that the Statement, for which the Directors are solely responsible, has been made with due care and consideration.

Yours faithfully, For the on behalf of Vinco Capital Limited Alister Chung Managing Director

III – 6

GENERAL INFORMATION OF THE OFFEROR

APPENDIX IV

1. RESPONSIBILITY STATEMENT

The information contained in this Composite Document relating to the Offeror and its intentions have been supplied by the Offeror.

The directors of the Offeror and Minsheng E-Commerce Holdings jointly and severally accept full responsibility for the accuracy of the information contained in this Composite Document (other than information relating to the Group, the Vendors and parties acting in concert with any of them), and confirm, having made all reasonable enquires, that to the best of their knowledge, opinions expressed in this Composite Document (other than opinions expressed by the Group, the Vendors and parties acting in concert with any of them) have been arrived at after due and careful consideration and there are no other facts not contained in this Composite Document, the omission of which would make any statement in this Composite Document misleading.

2. MARKET PRICES

The table below shows the closing price of the Shares quoted on the Stock Exchange on (i) the last trading day in each of the calendar months during the Relevant Period; (ii) the immediate business day before the date of commencement of the Offer Period; (iii) the Last Trading Day; and (iv) the Latest Practicable Date.

	Closing
	price per
Date	Share
	(HK$)
31 October 2017	11.20
30 November 2017	9.50
31 December 2017	8.20
31 January 2018	5.98
28 February 2018	5.11
31 March 2018	6.32
18 April 2018 (the day before start of the Offer Period)	7.85
25 April 2018(being the Last Trading Day)	6.30
30 April 20181	suspended
31 May 2018	10.00
12 June 2018 (being the Latest Practicable Date)	10.1

During the Relevant Period, the highest closing price of the Shares as quoted on the Stock Exchange was HK$12.58 per Share on 3 November 2017 and 6 November 2017 and the lowest closing price of the Shares as quoted on the Stock Exchange was HK$4.53 per Share on 6 February 2018.

Note 1: the trading of Shares was suspended from 26 April 2018 to 4 May 2018.

IV – 1

GENERAL INFORMATION OF THE OFFEROR

APPENDIX IV

1. INTERESTS IN THE COMPANY AND THE OFFEROR AND ARRANGEMENTS IN CONNECTION WITH THE OFFER

As at the Latest Practicable Date,

• (a) save for the Sale Shares owned by the Offeror, none of the Offeror, its parties acting in concert and directors had any interest in the relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of the Company;

• (b) there was no outstanding derivative in respect of securities in the Company which has been entered into by the Offeror and/or any person acting in concert with it;

• (c) save for the undertaking given by Pioneer Vantage in respect of the remaining 2,000 Shares held by it, none of the Offeror, its parties acting in concert and directors has received any irrevocable commitment to accept or reject the Offer;

• (d) no person had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Offeror or any person acting in concert with it (whether by way of option, indemnity or otherwise);

• (e) none of the Offeror or its party acting in concert has borrowed or lent any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code including shares, warrants, options, derivatives or convertible securities) in the Company;

• (f) save as disclosed in the paragraph headed ‘‘4. Dealings in securities and arrangements in relation to dealings’’ in this schedule, there was no agreement, arrangement, or understanding which may result in the Shares or securities of the Company to be acquired under the Offer being transferred, charged or pledged to any other persons;

• (g) there was no benefit given or to be given to any Director as compensation for loss of office or otherwise in connection with the Offer;

• (h) save as disclosed under the paragraph headed ‘‘6. Change of Board Composition’’ in the Letter from Oceanwide Securities, there was no agreement, arrangement or understanding (including any compensation arrangement) existing between the Offeror or any person acting in concert with it and any Directors, recent Directors, Shareholders or recent Shareholders having any connection with or dependent upon the Offer;

IV – 2

GENERAL INFORMATION OF THE OFFEROR

APPENDIX IV

• (i) there is no agreement or arrangement between the Vendors and parties acting in concert with them on the one hand and the Offeror and parties acting in concert with it on the other hand; and save for the aggregate consideration of HK$617,241,770 payable under the SPA, the Vendors and parties acting in concert with them have not and will not receive any other consideration or benefits in whatever form from the Offeror or parties acting in concert with it; and

• (j) there was no agreement or arrangement to which the Offeror was a party which related to the circumstances in which the Offeror may or may not invoke or seek to invoke a condition to the Offer.

4. DEALINGS IN SECURITIES AND ARRANGEMENTS IN RELATION TO DEALINGS

Under the terms of the redeemable preferred shares (the ‘‘Preferred Shares’’) issued by RUNMING International Limited, a company which owns the entire issued share capital of the Offeror, after the close of the Offer, certain Shares acquired by the Offeror under the SPA or the Offer may be used to redeem the Preferred Shares by the parent company of the Offeror at a price equal to the Offer Price, provided that the number of Shares to be used for redemption of the Preferred Shares shall not cause the Offeror to hold less than 51% of the total issued share capital of the Company at the relevant time. The Offeror agreed to execute a share charge over 42,000,000 Shares held by the Offeror in favour of Oceanwide Asset Management Limited for and on behalf of Oceanwide Kilmorey Guaranteed Return Segregated Portfolio and Li Li Hong being the preferred shareholders during the period from the second business day following the full repayment of the Short Term Facility granted to the Offeror to finance the acquisition of the Shares under the Offer and until such time as the preferred shareholders cease to hold any Preferred Shares. The holders of the Preferred Shares are not Shareholders.

As part of the arrangement relating to the loan granted by Oceanwide Securities for HK$300,000,000 to the Offeror, the Offeror has agreed to grant a call option to Oceanwide Securities pursuant to which Oceanwide Securities has the right to require the Offeror to transfer approximately 3% of the total issued share capital of the Company which will be acquired by the Offeror from the Transactions at a price per Share equal to the Offer Price for a certain period ending on the first anniversary of the Completion Date (the ‘‘Call Option’’). Oceanwide Securities is not a Shareholder.

Based on the existing redemption price of the Preferred Shares and assuming no change in the issued share capital of the Company, the exercise of the Call Option and the redemption of the Preferred Shares will not cause the Offeror to hold less than 51% of the total issued share capital of the Company.

IV – 3

APPENDIX IV

GENERAL INFORMATION OF THE OFFEROR

As a requirement under the terms of the Short Term Facility granted by Oceanwide Securities, the Offeror has entered into a placing agreement with a placing agent, under which the placing agent shall place Shares up to 50,000,000 Shares (representing up to 25% of the total issued share capital of the Company) held by the Offeror to independent placees (failing which the placing agent shall acquire the relevant Shares) in order to restore the Company’s public float if the Company shall have insufficient public float after the close of Offer. The Offeror shall inform the placing agent of the maximum number of Shares to be sold by the placing agent on behalf of the Offeror after the close of the Offer.

Save for the above, during the Relevant Period:

• (a) none of the Offeror nor parties acting in concert with it had dealt for value in any Shares, derivatives, warrants or convertible or exchangeable securities carrying rights to subscribe for, convert or exchange into the Shares;

• (b) no person had any arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code with the Offeror or any person acting in concert with it;

• (c) save for the undertaking given by Pioneer Vantage in respect of the remaining 2,000 Shares held by it, no person had irrevocably committed themselves to accept or reject the Offer;

• (d) save for the acquisition of the Sale Shares pursuant to the SPA and the dealings as disclosed in the paragraph headed ‘‘4. Dealings in Securities and Arrangements in relation to Dealings’’ in this appendix, none of the Offeror, its ultimate beneficial owners and directors, nor parties acting in concert with any of them has dealt in any Shares, options, derivatives, warrants or other securities convertible into Shares during the Relevant Period;

• (e) none of the Offeror or its concert parties had borrowed or lent the relevant securities (as defined pursuant to Note 4 to Rule 22 of the Takeovers Code) of the Company; and

as at the Latest Practicable Date

• (f) there was no arrangement of the kind referred to in the third paragraph of Note 8 to Rule 22 of the Takeovers Code between the Offeror, or any person acting in concert with the Offeror, and any other person; and

IV – 4

GENERAL INFORMATION OF THE OFFEROR

APPENDIX IV

• (g) save for the Sale Shares legally and beneficially owned by the Offeror immediately following Completion, the Offeror, its ultimate beneficial owners and directors and parties acting in concert with it do not hold, own or control any Shares, options, derivatives, warrants or other securities which may confer rights on the Offeror and parties acting in concert with it to subscribe for, convert or exchange into Shares.

5. CONSENTS AND QUALIFICATIONS OF PROFESSIONAL ADVISERS

The following parties are the professional advisers whose letter, opinions or advices are contained or referred to in this Composite Document:

Name Qualifications

CCB International a corporation licensed to carry on type 1 (dealing in securities), type 4 (advising on securities) and type 6 (advising on corporate finance) regulated activities under the SFO and one of the joint financial advisers to the Offeror

Oceanwide Capital

a corporation licensed to carry on type 6 (advising on corporate finance) regulated activity under the SFO, one of the joint financial advisers to the Offeror

Oceanwide Securities

a corporation licensed to carry on type 1 (dealing in securities), type 2 (dealing in futures contracts), type 4 (advising on securities), type 6 (advising on corporate finance) and type 9 (asset management) regulated activity under the SFO, the offer agent to the Offeror

Each of Oceanwide Securities, Oceanwide Capital and CCB International has given and has not withdrawn its written consent to the issue of this Composite Document with the inclusion herein of its letter, opinions or advice and references to its names in the form and context in which it appear.

As at the Latest Practicable Date, each of Oceanwide Securities, Oceanwide Capital and CCB International did not have any shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group.

IV – 5

GENERAL INFORMATION OF THE OFFEROR

APPENDIX IV

1. GENERAL

2. (a) The registered office of the Offeror is situated at NovaSage Chambers, P.I. Box 4389, Road Town, Tortola, British Virgin Islands.

3. (b) The address of Xu Lin, the sole director of the Offeror, is Room 11E, Tower 2, Huaao Centre, No. 31 Zizhuyuan Road, Haidian District, Beijing, the PRC.

4. (c) The registered office of Minsheng E-Commerce Holdings is situated at Room 101, 3/F, Building 1A, Qianhai Business Mansion, 63 Qianwanyi Road, Shenzhen, the PRC and the directors are Xiao Yi, Jiang Zhixiang, Liwen, Niu Xinzhuang, Sun Mingtao, Wu Jiangtao and Yang Ke.

5. (d) The registered office of Shanghai Yingzhao Investment Management Company Limited（上海盈昭投資管理有限公司） is No. 547, Section 5B, No. 155, Fute Xiyi Road, China (Shanghai) Pilot Free Trade Zone（中國（上海）自由貿易試驗區）, the PRC and the director is Zhu Qinghuai.

6. (e) The registered office of Beijing Ruitao Technology Company Limited*（北京睿韜科技 有限責任公司）is Room 206, 2nd Floor, East Building, No. 37, Chegongzhuang West Road, Haidian District, Beijing, the PRC and the director is Liang Di.

7. (f) The registered office of Oceanwide Securities is situated at 18/F, China Building, 29 Queen’s Road Central, Hong Kong.

8. (g) The registered office of Oceanwide Capital is situated at 19/F, China Building, 29 Queen’s Road Central, Hong Kong.

9. (h) The registered office of CCB International is situated at 12/F, CCB Tower, 3 Connaught Road Central, Central, Hong Kong.

10. (i) In the event of inconsistency, the English text of this Composite Document and the Form of Acceptance shall prevail over the Chinese text.

IV – 6

GENERAL INFORMATION OF THE GROUP

APPENDIX V

1. RESPONSIBILITY STATEMENT

This Composite Document includes particulars given in compliance with the Takeovers Code for the purpose of giving information with regard to the Offer, the Offeror and the Group.

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this Composite Document (other than that relating to the Offeror and parties acting in concert with it), and confirm, having made all reasonable inquiries, that to the best of their knowledge, opinions expressed in this Composite Document (other than those expressed by the Offeror and parties acting in concert with it) have been arrived at after due and careful consideration and there are no other facts not contained in this Composite Document, the omission of which would make any statement contained in this Composite Document misleading.

2. SHARE CAPITAL

The authorised and issued share capital of the Company of HK$0.01 each as at 31 March 2017 and the Latest Practicable Date were as follows:

Authorised 1,000,000,000 Shares Issued 200,000,000 Shares	HK$ 10,000,000
	2,000,000

As at the Latest Practicable Date, save for 200,000,000 Shares in issue, the Company did not have other class of securities, outstanding options, derivatives, warrants or other securities which are convertible or exchangeable into Shares.

All issued Shares rank pari passu in all respects with each other, including, in particular, as to dividends, voting rights and return of capital. The Company has not issued any Shares since 31 March 2017, the date to which the latest audited financial statements of the Group were made up.

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

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GENERAL INFORMATION OF THE GROUP

APPENDIX V

3. DISCLOSURE OF INTERESTS BY DIRECTORS OF THE COMPANY

As at the Latest Practicable Date, the interests and short positions of the Directors in the Shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were required (a) 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 they were deemed or taken to have under the provisions of the SFO); (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) pursuant to the Model Code for Securities Transaction by Directors of Listed Issuers had been notified to the Company and the Stock Exchange; or (d) to be disclosed in this Composite Document pursuant to the Takeovers Code, were as follows:

Long position in Shares

		Number of	Approximate%
	Capacity/Nature of	Shares held/	of the total
Name of Director	interest	interested	issued Shares
Mr. Wong(1)	Interest in a controlled	2,000	0
	corporation

Notes:

• (1) These 2,000 Shares are held by Pioneer Vantage, a company solely owned by Mr. Wong. Mr. Wong is therefore deemed to be interested in all the 2,000 Shares owned by Pioneer Vantage by virtue of the SFO. Further, Mrs. Wong, being the spouse of Mr. Wong, is deemed to be interested in the Shares indirectly held by Mr. Wong by virtue of the SFO.

• (2) Certain percentage figures included in the above table are subject to rounding adjustments.

Save as disclosed above, as at the Latest Practicable Date, none of the Director and their respective associates had any interests or short positions in the Shares, underlying Shares or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which are required (a) 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 they were deemed or taken to have under the provisions of the SFO); (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) pursuant to the Model Code for Securities Transaction by Directors of Listed Issuers to be notified to the Company and the Stock Exchange; or (d) to be disclosed in this Composite Document pursuant to the Takeovers Code.

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GENERAL INFORMATION OF THE GROUP

APPENDIX V

4. DISCLOSURE OF INTERESTS OF SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, according to the register kept by the Company pursuant to section 336 of the SFO and, so far as is known to the Directors, the persons or entities who had an interest or a short position in the Shares or the 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 which were, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the Company, or of any other company which is a member of the Group, or in any options in respect of such share capital were as follows:

		Number of	Approximate%
		Shares held/	of the total
Name	Capacity	interested	issued Shares
		(Note 1)
Minsheng E-Commerce Holdings	Interests in controlled	149,998,000 (L)	75.0%
	corporation
	Interest in controlled	98,000,000 (S)	49.0%
	corporation	(Note 2)
Xu Lingyan (Note 3)	Interest in controlled	50,000,000 (L)	25.0%
	corporation
	Interest in controlled	50,000,000 (S)	25.0%
	corporation
R. G Investment Limited (Note 3)	Interest in controlled	50,000,000 (L)	25.0%
	corporation
	Interest in controlled	50,000,000 (S)	25.0%
	corporation
Zhu Lina (Note 4)	Interest in controlled	50,000,000 (L)	25.0%
	corporation
Plenty Champion Limited (Note 4)	Interest in controlled	50,000,000 (L)	25.0%
	corporation
Kaiser Financial Group International Limited	Interest in controlled	50,000,000 (L)	25.0%
(Note 4)	corporation
Zhang Keqiang	Interest of spouse	50,000,000 (L)	25.0%
(Note 5)
Li Li Hong (Note 6)	Beneficial owner	24,301,337 (L)	12.15%
Kilmorey Asset Management Limited (Note 6)	Investment manager	17,698,663 (L)	8.85%
Oceanwide Asset Management Limited (Note 6)	Investment manager	17,698,663 (L)	8.85%
Oceanwide Funds SPC Limited – Oceanwide	Beneficial owner	17,698,663 (L)	8.85%
Kilmorey Guaranteed Return Segregated
Portfolio (Note 6)
Lam Kwan Hang Jonathan	Beneficial owner	13,080,000 (L)	6.54%

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GENERAL INFORMATION OF THE GROUP

APPENDIX V

Notes:

• (1) The letter ‘‘L’’ denotes the person’s long position in the relevant shares. The letter ‘‘S’’ denotes the person’s short position in the relevant shares.

• (2) The Offeror has entered into a placing agreement with a placing agent, under which the placing agent shall place Shares up to 50,000,000 Shares (representing up to 25% of the total issued share capital of the Company) held by the Offeror to independent placees. Please refer to the section headed ‘‘Letter from Oceanwide Securities – 8. Maintaining the listing status of the Company’’ for further details. As such, under the SFO, the indirect holding company of the Offeror, Minsheng E-Commerce Holdings, is deemed to have a short position in the 50,000,000 Shares.

As set forth in the section headed ‘‘4. Dealings in securities and arrangements in relation to dealings’’ of appendix IV to this Composite Document, the Offeror agreed to execute a share charge over 42,000,000 Shares held by the Offeror in favour of the preferred shareholders, and the Call Option (as defined in appendix IV) was granted from the Offeror to Oceanwide Securities, pursuant to which Oceanwide Securities has the right to require the Offeror to transfer approximately 3% of the total issued share capital of the Company (i.e. 6,000,000 Shares, based on 200,000,000 Shares in issue as at the Latest Practicable Date). As such, under the SFO, the indirect holding company of the Offeror, Minsheng E-Commerce Holdings, is deemed to have a short position in the 42,000,000 Shares and 6,000,000 Shares.

• (3) On 25 April 2018, Kilmorey Securities Limited entered into placing agreements to underwrite and appoint sub-placing agent to underwrite the 50,000,000 Shares on a fully-underwritten basis. As such, under the SFO, Kilmorey Securities Limited is deemed to have both long and short position over the 50,000,000 Shares.

Kilmorey Securities Limited is wholly-owned by Kilmorey International Holdings Limited, which is in turn wholly-owned by R. G Investment Limited. R. G Investment Limited is held as to 100% by Xu Lingyan. According to the SFO, each of R. G Investment Limited and Xu Lingyan is deemed to have the same long position and short position over the Shares as Kilmorey Securities Limited.

• (4) On 25 April 2018, Kaiser Securities Limited entered into a placing agreement to sub-underwrite 50,000,000 Shares on a fully-underwritten basis. As such, Kaiser Securities Limited is deemed to be interested in the 50,000,000 Shares.

• Kaiser Securities Limited is wholly-owned by Kaiser Financial Group Company Limited, which is in turn wholly-owned by Kaiser Financial Group International Limited. Kaiser Financial Group International Limited is held as to 83.32% by Plenty Champion Limited, a company wholly-owned by Zhu Lina. As such, each of Kaiser Financial Group International Limited, Plenty Champion Limited and Zhu Lina is deemed to have the same long position over the Shares as Kaiser Securities Limited.

• (5) Zhang Keqiang, being the spouse of Zhu Lina, is deemed to be interested in the Shares indirectly held by Zhu Lina.

• (6) These are derivatives interests in the underlying shares of the Company.

V – 4

APPENDIX V

GENERAL INFORMATION OF THE GROUP

Save as disclosed above, so far as is known to the Directors, as at the Latest Practicable Date, no person had an interest or a short position in the Shares or the underlying Shares which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or which were, directly or indirectly, interested in 5% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of the Company, or of any other company which is a member of the Group, or any options in respect of such share capital.

Save as disclosed above, as at the Latest Practicable Date, no other person had any interest or short position in the Shares or underlying shares of the Company as recorded in the register required to be kept by the Company under section 336 of the SFO.

5. DEALINGS IN SECURITIES OF THE COMPANY AND THE OFFEROR

During the Relevant Period,

• (a) save for the Sale Shares sold to the Offeror by Mr. Wong and Mrs. Wong, the Directors did not have any dealings in any Shares, warrants, share options, derivatives and securities carrying conversion or subscription rights into Shares;

• (b) no subsidiaries of the Company, pension funds of any member of the Group or any advisers to the Company as specified in class (2) of the definition of ‘‘associate’’ under the Takeovers Code had any dealings in any Shares, warrants, options, derivatives and securities carrying conversion or subscription rights into the Shares;

• (c) no fund managers connected with the Company had any dealings in any Shares, warrants, share options, derivatives and securities carrying conversion or subscription rights into Shares; and

• (d) none of the Company nor the Directors had any dealings in the shares, warrants, options, derivatives and securities carrying conversion or subscription rights into shares of the Offeror.

6. OTHER DISCLOSURE OF INTERESTS

As at the Latest Practicable Date:

• (a) neither the Company, any member of the Group nor any of the Director was interested in or owned or controlled any shares, convertible securities, warrants options or derivatives of the Offeror;

• (b) no Shares or any convertible securities, warrants, options or derivatives issued by the Company was owned or controlled by a subsidiary of the Company or by a pension fund (if any) of member of the Group or by an adviser to the Company as specified in class (2) of the definition of ‘‘associate’’ under the Takeovers Code;

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APPENDIX V

GENERAL INFORMATION OF THE GROUP

• (c) no arrangement of the kind referred to in Note 8 to Rule 22 of the Takeovers Code exists between a person who owned or controlled Shares or any convertible securities, warrants, options or derivatives issued by the Company and the Company or any person who is an associate of the Company by virtue of classes (1), (2), (3) and (4) of the definition of ‘‘associate’’ under the Takeovers Code;

• (d) no Shares, convertible securities, warrants, options or derivatives of the Company was managed on a discretionary basis by any fund managers connected with the Company;

• (e) no benefit (other than statutory compensation) was or would be given to any Director as compensation for loss of office or otherwise in connection with the Offer;

• (f) there was no agreement or arrangement between any Director and any other person which was conditional on or dependent upon the outcome of the Offer or otherwise connected with the Offer;

• (g) no material contracts had been entered into by any of the Offeror in which any Director had a material personal interest;

• (h) none of the Company or the Directors had borrowed or lent any Shares, convertible securities, warrants, options or derivatives in respect of any Shares; and

• (i) save as disclosed in the section headed ‘‘3. Disclosure of interests by Directors of the Company’’ in this appendix, none of the Directors held any beneficial shareholdings in the Company which would otherwise entitle them to accept or reject the Offer. Mr. Wong, the executive Director, held 2,000 Shares through Pioneer Vantage as at the Latest Practicable Date. Pioneer Vantage unconditionally and irrevocably undertakes to the Purchaser and Mr. Wong unconditionally and irrevocably undertakes to the Purchaser that he will procure Pioneer Vantage that in respect of the said 2,000 Shares held by Pioneer Vantage, Pioneer Vantage (i) will not accept the Offer; and (ii) will not, directly or indirectly, sell, give, transfer, assign or dispose of or otherwise create any Encumbrance on the remaining 2,000 Shares held by it in any manner during the period commencing on the date of the SPA and ending on the date on the close of Offer.

V – 6

GENERAL INFORMATION OF THE GROUP

APPENDIX V

7. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business carried on or intended to be carried on by the Group) were entered into by the members of the Group within two years immediately preceding the date on which the Offer Period commenced and up to the Latest Practicable Date, which are or may be material:

• (a) a sale and purchase agreement dated 13 June 2016 and entered into between Mr. Wong and Mrs. Wong as vendors and Prosperity One Limited as purchaser in respect of the sale and purchase of the entire issued share capital of 111 Limited, 333 Limited, Goody Limited, Aero Tech Limited, Dotco Limited, Hotex Limited, Prosino Limited, Printech Corporation Limited, Sydney Limited, Tri-Pros Limited, 555 Limited, Unlimit Limited and Richfield Development Limited in consideration of Prosperity One Limited (i) crediting the 85 nil paid shares held by Pioneer Vantage in the issued share capital of Prosperity One Limited as fully paid; and (ii) crediting the 15 nil paid shares held by Blaze Forum in the issued share capital of Prosperity One Limited as fully paid;

• (b) a sale and purchase agreement dated 7 November 2016 and entered into between Pioneer Vantage and Blaze Forum as vendors, the Company as purchaser and Mr. Wong and Mrs. Wong as warrantors in respect of the sale and purchase of 100 ordinary shares in Prosperity One Limited in consideration of: (i) the allotment and issuance of eighty-four (84) Shares by the Company to Pioneer Vantage ranking pari passu with the then existing Share and credited as fully paid; (ii) the allotment and issuance of fifteen (15) Shares by the Company to Blaze Forum ranking pari passu with the then existing Share and credited as fully paid; and (iii) credit as fully paid the one nil paid Share issued to Pioneer Vantage;

• (c) a deed of non-competition dated 8 November 2016 given by Mr. Wong, Mrs. Wong, Pioneer Vantage and Blaze Forum in favour of the Company (for itself and as trustee for each of its subsidiaries);

• (d) a deed of indemnity dated 10 June 2016 entered into by Mr. Wong, Mrs. Wong, Pioneer Vantage and Blaze Forum, as indemnifiers with and in favour of the Company in respect of, among other things, certain indemnities including taxation;

V – 7

GENERAL INFORMATION OF THE GROUP

APPENDIX V

• (e) the Hong Kong underwriting agreement dated 16 November 2016 relating to the offer for subscription of new shares of the Company and entered into by, among others, the Company, Cinda International Capital Limited as the sole sponsor, Huajin Securities (International) Limited as the sole global coordinator, the sole lead manager and the sole bookrunner, the Vendors and the Guarantors as the covenantors, Mr. Wong and Mrs. Wong as the executive Directors, and Huajin Securities (International) Limited as the Hong Kong underwriter, details of which are contained in the prospectus of the Company dated 17 November 2016; and

• (f) the underwriting agreement dated 23 November 2016 relating to the international offering and entered into by, among others, the Company, Cinda International Capital Limited as the sole sponsor, Huajin Securities (International) Limited as the sole global coordinator, the sole lead manager and the sole bookrunner, the Vendors and the Guarantors as the covenantors, Mr. Wong and Mrs. Wong as the executive Directors and Huajin Securities (International) Limited as the international underwriter, details of which are contained in the prospectus of the Company dated 17 November 2016.

8. GENERAL

• (a) The registered office of the Company is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Islands.

• (b) The principal place of business of the Company in Hong Kong is at Room 904, 9/F, Join-in Hang Sing Centre, 2-16 Kwai Fung Crescent, 71-75 Container Port Road, Kwai Chung, New Territories, Hong Kong.

• (c) The principal share registrar and transfer office of the Company is Conyers Trust Company (Cayman) Limited at Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands, the branch share registrar and transfer office of the Company in Hong Kong is Tricor Investor Services Limited at Level 22, Hopewell Centre, 183 Queen’s Road East, Hong Kong.

• (d) The registered office of Vinco Capital is situate at 4909-10 The Center, 99 Queen’s Road Central, Hong Kong.

• (e) The secretary of the Company is Mr. Tai Kwok Pan. Mr. Tai is a certified public accountant of the Hong Kong Institute of Certified Public Accountants.

• (f) The registered office of PricewaterhouseCoopers, the auditor of the Company, is at 22th Floor, Prince’s Building, Central, Hong Kong.

• (g) The English text of this Composite Document and the accompanying Form of Acceptance shall prevail over their Chinese text for the purpose of interpretation.

V – 8

GENERAL INFORMATION OF THE GROUP

APPENDIX V

9. MARKET PRICE

The table below shows the closing price of the Shares quoted on the Stock Exchange on (i) the Latest Practicable Date; (ii) 18 April 2018, being the last trading day prior to commence of the Offer Period; (iii) 25 April 2018, being the Last Trading Day; and (iv) the last trading day of each of the calendar months during the Relevant Period:

Date 31 October 2017 30 November 2017 29 December 2017 31 January 2018 28 February 2018 29 March 2018 18 April 2018 25 April 2018 (Last Trading Day) 30 April 2018 (Note) 31 May 2018 12 June 2018 (Latest Practicable Date)	Closing price per Share (HK$) 11.20 9.50 8.20 6.01 5.11 6.32 7.85 6.30 Suspended 10.00 10.10

Note: the trading of Shares was suspended from 26 April 2018 to 4 May 2018.

During the Relevant Period, the highest closing price of the Shares was HK$12.58 per Share as quoted on the Stock Exchange on 3 November 2017 and 6 November 2017 and the lowest closing price of the Shares was HK$4.53 per Share as quoted on the Stock Exchange on 6 February 2017.

10. DIRECTORS’ SERVICE CONTRACTS AND APPOINTMENT LETTERS

As at the Latest Practicable Date, the Company had entered into the following service agreements and letters of appointment with the Directors:

• (a) the service agreement dated 8 November 2016 entered into between the Company and Mr. Wong Che Kin, pursuant to which Mr. Wong Che Kin was appointed as an executive Director for a period of three years commencing from 29 November 2016 to 28 November 2019 and entitled to receive a salary of HK$3,000,000 per annum, and a discretionary year-end bonus and other non-cash benefits as may be determined by the Board with reference to his performance and the operating results of the Group;

V – 9

APPENDIX V

GENERAL INFORMATION OF THE GROUP

• (b) service agreement dated 8 November 2016 entered into between the Company and Ms. Wong Chui Ha Iris, pursuant to which Ms. Wong Chui Ha Iris was appointed as an executive Director for a period of three years commencing from 29 November 2016 to 28 November 2019 and entitled to receive a salary of HK$600,000 per annum, and a discretionary year-end bonus and other non-cash benefits as may be determined by the Board with reference to her performance and the operating results of the Group;

• (c) the letter of appointment dated 8 November 2016 entered into between the Company and Mr. Cheung Wai Chi, pursuant to which Mr. Cheung Wai Chi was appointed as an non-executive Director for a period of one year commencing from 29 November 2016 to 28 November 2017, which continued thereafter unless terminated by either party giving to the other at least one month’s notice in writing, and entitled to receive a director’s fee of HK$15,000 per month;

• (d) the letter of appointment dated 8 November 2016 entered into between the Company and Prof. Cheung Yui Kai Warren, pursuant to which Mr. Cheung Yui Kai Warren was appointed as an independent non-executive Director for a period of three years commencing from 29 November 2016 to 28 November 2019 and entitled to receive a director’s fee of HK$180,000 per annum;

• (e) the letter of appointment dated 8 November 2016 entered into between the Company and Prof. Lai Kin Keung, pursuant to which Prof. Lai Kin Keung was appointed as an independent non-executive Director for a period of three years commencing from 29 November 2016 to 28 November 2019 and entitled to receive a director’s fee of HK$180,000 per annum; and

• (f) the letter of appointment dated 8 November 2016 entered into between the Company and Mr. Lui Hong Peace, pursuant to which Mr. Lui Hong Peace was appointed as an independent non-executive Director for a period of three years commencing from 29 November 2016 to 28 November 2019 and entitled to receive a director’s fee of HK$180,000 per annum.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors had entered into any service contract with the Company or any of its subsidiaries or associated companies which (i) (including both continuous and fixed-term contracts) had been entered into or amended within six months before the date of commencement of the Offer Period; (ii) was a continuous contract with a notice period of 12 months or more; (iii) was a fixed term contract with more than 12 months to run irrespective of the notice period; or (iv) was not determinable by the employer within one year without payment of compensation (other than statutory compensation). Save as disclosed above, no other emolument is payable to the relevant Directors under the Directors’ service contracts and letters of appointment.

V – 10

GENERAL INFORMATION OF THE GROUP

APPENDIX V

11. EXPERT AND CONSENT

The following is the qualification of the expert whose letter or opinion is contained in this Composite Document:

Name Qualification PricewaterhouseCoopers Certified Public Accountants Vinco Capital a licenced corporations to carry on Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities as defined under the SFO

Each of PricewaterhouseCoopers and Vinco Capital has given and has not withdrawn its written consent to the issue of this Composite Document with the inclusion of the text of its letter or opinion and/or references to its name in the form and context in which they are respectively included.

As at the Latest Practicable Date, each of PricewaterhouseCoopers and Vinco Capital does not have any direct or indirect interest in any assets which have been, since 31 March 2017 (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 any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group.

12. LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration or claims which would materially and adversely affect the operations of the Company and no litigation, arbitration or claims which would materially and adversely affect the operations of the Company was known to the Directors to be pending or threatened by or against any members of the Group.

V – 11

GENERAL INFORMATION OF THE GROUP

APPENDIX V

13. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection (i) at the principal office of the Company at Room 904, 9/F, Join-in Hang Sing Centre, 2-16 Kwai Fung Crescent, 71-75 Container Port Road, Kwai Chung, New Territories, Hong Kong; (ii) on the website of the Company (www.foodwisehl.com); and (iii) on the website of the SFC (www.sfc.hk), during normal business hours from 9:00 a.m. to 5:00 p.m. (other than Saturdays, Sundays and public holidays) from the date of this Composite Document up to and including the Closing Date:

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

• (b) the prospectus of the Company dated 17 November 2016;

• (c) the annual report of the Company for the year ended 31 March 2017;

• (d) the interim report of the Company for the six months ended 30 September 2016;

• (e) the letter from Oceanwide Securities, the text of which is set out on pages 9 to 21 of this Composite Document;

• (f) the letter from the Board, the text of which is set out on pages 22 to 29 of this Composite Document;

• (g) the letter from the Independent Board Committee, the text of which is set out on pages 30 to 31 of this Composite Document;

• (h) the letter from Vinco Capital, the text of which is set out on pages 32 to 52 of this Composite Document;

• (i) the letter from PricewaterhouseCoopers, the text of which is set out in section (a) of appendix III to this Composite Document;

• (j) the report from Vinco Capital, the text of which is set out in section (b) of appendix III to this Composite Document;

• (k) the service contracts and letters of appointment referred to in the paragraph headed ‘‘10. Directors’ Service Contracts and Appointment Letters’’ in this appendix;

• (l) the written consents referred to under the paragraph headed ‘‘11. Expert and Consent’’ in this appendix and ‘‘5. Consents and Qualification of Professional Advisers’’ in Appendix IV to this Composite Document;

• (m) the material contracts referred to in the paragraph headed ‘‘7. Material Contracts’’ in this appendix;

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GENERAL INFORMATION OF THE GROUP

APPENDIX V

• (n) the SPA;

• (o) this Composite Document;

• (p) the articles of association of the Offeror; and

• (q) the short term facility entered into between the Offeror and Oceanwide Securities up to HK$206 million dated 25 April 2018.

V – 13