SuperRobotics Limited — Interim / Quarterly Report 2015

Aug 14, 2015

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EDS Wellness Holdings Limited
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EDS Wellness Holdings Limited

(Incorporated in the Cayman Islands and continued in Bermuda with limited liability) (Stock Code: 8176)

IntErIm rEPOrt FOr tHE SIx mOntHS EnDED

30 JunE 2015

CHArACtErIStICS OF tHE GrOWtH EntErPrISE mArKEt (“GEm”) OF tHE StOCK ExCHAnGE OF HOnG KOnG LImItED (tHE “StOCK ExCHAnGE”)

GEm has been positioned as a market designed to accommodate companies to which a higher investment risk may be attached than other companies listed on the Stock Exchange. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. the greater risk profile and other characteristics of GEm mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEm, there is a risk that securities traded on GEm may be more susceptible to high market volatility than securities traded on the main Board and no assurance is given that there will be a liquid market in the securities traded on GEm.

Hong Kong Exchanges and Clearing Limited and the Stock Exchange take no responsibility for the contents of this report, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this report.

This report, for which the directors (the “Directors”) of EDS Wellness Holdings Limited (the “Company”) collectively and individually accept full responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on GEM of the Stock Exchange (the “GEM Listing Rules”) for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquires, confirm that to the best of their knowledge and belief the information contained in this report is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this report misleading.

This report will remain on the “Latest Company Announcements” page of the GEM website at www.hkgem.com for a minimum period of 7 days from the date of its publication and on the Company’s website at www.eds-wellness.com.

IntErIm rESuLtS

The board of Directors (the “ Board ”) of EDS Wellness Holdings Limited (the “ Company ”) announces the unaudited condensed consolidated results of the Company and its subsidiaries (the “ Group ”) for the six months ended 30 June 2015 together with the comparative figures for 2014 as follows:

COnDEnSED COnSOLIDAtED StAtEmEnt OF PrOFIt Or LOSS AnD OtHEr COmPrEHEnSIVE InCOmE

		For the three months	For the three months	For the six months	For the six months
		ended	30 June	ended 30 June
		2015	2014	2015	2014
	Notes	HK$’000	HK$’000	HK$’000	HK$’000
		(unaudited)	(Unaudited)	(unaudited)	(Unaudited)
Turnover	4	10,546	14,322	20,703	19,080
Cost of sales		(7,973)	(8,259)	(15,362)	(11,179)
Gross profit		2,573	6,063	5,341	7,901
Other revenue	5	100	975	142	1,752
Selling and distribution costs		(628)	(262)	(905)	(347)
Administrative expenses		(6,380)	(10,391)	(11,226)	(13,466)
Impairment loss recognised in
respect of deposits, prepayments
and other receivables		—	(74)	—	(80)
Loss from operations	6	(4,335)	(3,689)	(6,648)	(4,240)
Finance costs	7	(236)	(2,187)	(462)	(3,752)
Loss before taxation		(4,571)	(5,876)	(7,110)	(7,992)
Income tax expense	8	(160)	(487)	(348)	(487)
Loss for the period		(4,731)	(6,363)	(7,458)	(8,479)
Other comprehensive income/
(expenses) for the period
Item that may be subsequently
reclassified to profit or loss:
Exchange differences on
translating foreign operations		14	—	15	(6)
Total comprehensive expenses for
the period		(4,717)	(6,363)	(7,443)	(8,485)

— 1 —

COnDEnSED COnSOLIDAtED StAtEmEnt OF PrOFIt Or LOSS AnD OtHEr COmPrEHEnSIVE InCOmE (CONTINUED)

		For the three months	For the three months		For the	six months	six months
		ended	30 June		ended	30 June
		2015	2014		2015		2014
	Note	HK$’000	HK$’000		HK$’000		HK$’000
		(unaudited)	(Unaudited)		(unaudited)		(Unaudited)
Loss for the period
attributable to:
Owners of the Company		(5,006) (7,513)			(8,360)		(9,629)
non-controlling interests		275	1,150		902		1,150
		(4,731) (6,363)			(7,458)		(8,479)
total comprehensive expenses
for the period attributable to:
Owners of the Company		(4,992) (7,513)			(8,345)		(9,635)
non-controlling interests		275	1,150		902		1,150
		(4,717) (6,363)			(7,443)		(8,485)
Loss per share	10
— Basic and diluted		HK(6.69)cents	HK(57.25)cents		HK(11.18)cents		HK(73.38)cents

The accompanying notes form an integral part of these condensed consolidated financial statements.

— 2 —

COnDEnSED COnSOLIDAtED StAtEmEnt OF FInAnCIAL POSItIOn

Notes ASSEtS non-current assets Property, plant and equipment 11 Goodwill 12 Current assets Inventories Trade receivables 13 Deposits, prepayments and other receivables 14 Restricted bank deposits Cash and cash equivalents total assets EQuItY Capital and reserves attributable to owners of the Company Share capital 15 Reserves Equity attributable to owners of the Company Non-controlling interests total equity	At 30 June 2015 HK$’000 (unaudited) 11,251 18,266 29,517 3,166 4,347 6,695 19,759 93,604 127,571 157,088 7,480 29,474 36,954 4,659 41,613	At 31 December 2014 HK$’000 (Audited) 12,649 18,266 30,915 1,923 5,546 5,728 19,701 26,553 59,451 90,366 7,480 37,819 45,299 3,757 49,056

— 3 —

COnDEnSED COnSOLIDAtED StAtEmEnt OF FInAnCIAL POSItIOn (CONTINUED)

Notes LIABILItIES Current liabilities Amount due to a former director Trade payables 16 Accruals and other payables Receipt in advance 17 Other borrowings 18 Promissory notes 19 Tax payables Deposits from customers Deferred revenue Obligations under financial leases non-current liability Obligations under finance leases total liabilities total equity and liabilities net current assets total assets less current liabilities	At 30 June 2015 HK$’000 (unaudited) 64 111 5,024 72,634 10,117 — 1,851 79 25,435 153 115,468 7 115,475 157,088 12,103 41,620	At 31 December 2014 HK$’000 (Audited) 64 210 5,080 — 3,850 6,069 1,502 80 24,000 444 41,299 11 41,310 90,366 18,152 49,067

The accompanying notes form an integral part of these condensed consolidated financial statements.

— 4 —

COnDEnSED COnSOLIDAtED StAtEmEnt OF CHAnGES In EQuItY

For the six months ended 30 June 2015

At 1 January 2014 (unaudited) Loss for the period Other comprehensive expenses for the period: Exchange differences on translating foreign operations Total comprehensive expenses for the period Non-controlling interests arising on acquisition of a subsidiary_(note 20)_ Capital reduction Share premium cancellation Amount transfer from contributed surplus to accumulated losses Recognition of the equity component of convertible bonds Deferred tax on convertible bonds At 30 June 2014 (audited) At 1 January 2015 (audited) Loss for the period Other comprehensive income for the period: Exchange differences on translating foreign operations Total comprehensive expenses for the period At 30 June 2015 (unaudited)	Share capital HK$’000 131,220 — — — — (129,908) — — — — 1,312 7,480 — — — 7,480		Attributable to owners of the Company	Sub-total HK$’000 (218) (9,629) (6) (9,635) — — — — 10,699 (1,765) (919) 45,299 (8,360) 15 (8,345) 36,954	non- controlling interests HK$’000 — 1,150 — 1,150 711 — — — — — 1,861 3,757 902 — 902 4,659	total equity HK$’000 (218) (8,479) (6) (8,485) 711 — — — 10,699 (1,765) 942 49,056 (7,458) 15 (7,443) 41,613
		Share premium HK$’000 175,357 — — — — — (175,357) — — — — 97,922 — — — 97,922	Convertible merger Contributed bonds translation Accumulated reserve surplus reserve reserve losses HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 22,734 — — 16 (329,545) — — — — (9,629) — — — (6) — — — — (6) (9,629) — — — — — — 129,908 — — — — 175,357 — — — — (278,124) — — 278,124 — — 10,699 — — — — (1,765) — — 22,734 27,141 8,934 10 (61,050) — 27,141 — 11 (87,255) — — — — (8,360) — — — 15 — — — — 15 (8,360) — 27,141 — 26 (95,615)

— 5 —

COnDEnSED COnSOLIDAtED StAtEmEnt OF CASH FLOWS

net cash generated from/(used in) operating activities net cash used in investing activities net cash (used in)/generated from financing activities net increase in cash and cash equivalents Cash and cash equivalents at beginning of the period Effects of foreign exchange rate changes Cash and cash equivalents at end of the period Analysis of the balances of cash and cash equivalents Cash at bank and on hand Restricted bank deposits _Less:_restricted bank deposits Cash and cash equivalents

Six months ended 30 June 2015 2014 HK$’000 HK$’000 (unaudited) (Unaudited) 68,363 (4,045) (879) (15,209) (448) 48,171 67,036 28,917 26,553 1,722 15 (6) 93,604 30,633 93,604 30,633 19,759 19,663 113,363 50,296 (19,759) (19,663) 93,604 30,633

The accompanying notes form an integral part of these condensed consolidated financial statements.

— 6 —

nOtES tO tHE COnDEnSED COnSOLIDAtED FInAnCIAL StAtEmEntS

1. BASIS OF PrEPArAtIOn

The condensed consolidated financial statements for the six months ended 30 June 2015 have been prepared in accordance with Hong Kong Accounting Standard (“ HKAS ”) 34 Interim Financial Reporting issued by the Hong Kong Institute of Certified Public Accountants (the “ HKICPA ”) and the applicable disclosure requirements of the Rules Governing the Listing of Securities on the Growth Enterprise Market (“ GEm Listing rules ”) of The Stock Exchange of Hong Kong Limited.

The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Group for the six months ended 31 December 2014.

The condensed consolidated financial statements have been prepared on the historical cost basis, except for certain financial instruments, which are measured at fair value.

2. APPLICAtIOn OF nEW AnD rEVISED HOnG KOnG FInAnCIAL rEPOrtInG StAnDArDS (“HKFrSs”)

The accounting policies used in the condensed consolidated financial statements are consistent with those followed in the preparation of the audited consolidated financial statements of the Group for the six months ended 31 December 2014.

The Group has not early applied the following new and revised HKFRSs that have issued but are not yet effective:

HKFRSs (Amendments) Annual Improvements to HKFRSs 2012-2014 Cycle1 HKFRS 9 Financial Instruments3 HKFRS 10 and HKAS 28 Sale or Contribution of Assets Between an Investor and its (Amendments) Associate or Joint Venture1 HKFRS 10, HKFRS 12 and Investment entities: Applying the Consolidation Exceptions1 HKAS 28 (Amendments) HKFRS 11 (Amendments) Accounting for Acquisitions of Interests in Joint Operations1 HKFRS 14 Regulatory Deferral Accounts1 HKFRS 15 Revenue from Contracts with Customers2 HKAS 1 (Amendments) Disclosure Initiative1 HKAS 16 and HKAS 38 Clarification of Acceptable Methods of Depreciation and (Amendments) Amortisation1 HKAS 16 and HKAS 41 Agriculture: Bearer Plants1 (Amendments) HKAS 27 (Amendments) Equity Method in Separate Financial Statements1

• 1 Effective for annual periods beginning on or after 1 January 2016 2 Effective for annual periods beginning on or after 1 January 2017 3 Effective for annual periods beginning on or after 1 January 2018

— 7 —

3. OPErAtInG SEGmEntS

The Group’s reportable segments have been determined based on the information reported to the Chairman of the Board, being chief operating decision maker, that are used for performance assessment and to make strategic decisions. The Group’s operating businesses are structured and managed separately according to the nature of their operations and the products and services they provided. Each of the Group’s reportable segments represents a strategic business unit that offers products and provides services which are subject to risks and returns that are different from those of other reportable segments. The Group currently has the following reportable segments:

(a) Sale of beauty products

• (b) Provision of therapy services

An analysis of the Group’s reportable segment results, assets and liabilities and other selected financial information for the six months ended 30 June 2015 and 2014 by operating segments are as follows:

(a) Segment results, assets and liabilities

Six months ended 30 June 2015

revenue Segment revenue from external customers results Segment (loss)/profit Interest income on bank deposits Unallocated corporate income Unallocated corporate expenses Gain on disposal of property, plant and equipment Imputed interest on promissory notes Finance costs Loss before taxation Income tax expense Loss for the period	Sale of beauty products HK$’000 (Unaudited) 2,124 (126)	Provision of therapy services HK$’000 (Unaudited) 18,579 4,562	Consolidated HK$’000 (Unaudited) 20,703 4,436 129 1 (11,226) 12 (351) (111) (7,110) (348) (7,458)

— 8 —

At 30 June 2015

Assets Segment assets for reportable segments Unallocated corporate assets Consolidated total assets Liabilities Segment liabilities for reportable segments Unallocated corporate liabilities Consolidated total liabilities	Sale of beauty products HK$’000 (Unaudited) 1,728 (197)	Provision of therapy services HK$’000 (Unaudited) 15,982 (26,033)	Consolidated HK$’000 (Unaudited) 17,710 139,378 157,088 (26,230) (89,245) (115,475)

— 9 —

Six months ended 30 June 2014

revenue Segment revenue from external customers results Segment profit Interest income on bank deposits Gain on disposal of property, plant and equipment Unallocated corporate income Unallocated corporate expenses Imputed interest on convertible bonds Imputed interest on promissory notes Loss on disposal of property, plant and equipment Written down of property, plant and equipment Written off of deposits Written off of inventories Written off of trade receivables Impairment loss recognised in respect of deposits, prepayments and other receivables Finance costs Loss before taxation Income tax expense Loss for the period	Sale of beauty products HK$’000 (Unaudited) 9,184 3,652	Provision of therapy services HK$’000 (Unaudited) 9,896 3,902	Consolidated HK$’000 (Unaudited) 19,080 7,554 13 183 1,556 (11,639) (411) (326) (1,816) (2) (6) (1) (2) (80) (3,015) (7,992) (487) (8,479)

— 10 —

At 31 December 2014

Sale of beauty products HK$’000 (Audited) Assets Segment assets for reportable segments 751 Unallocated corporate assets Consolidated total assets Liabilities Segment liabilities for reportable segments (135) Unallocated corporate liabilities Consolidated total liabilities (b) Other segment information Six months ended 30 June 2015 Sale of Provision beauty of therapy products services HK$’000 HK$’000 (Unaudited) (Unaudited) Amounts included in the measure of segment (loss)/profit and segment assets Additions to property, plant and equipment — 533 Depreciation of property, plant and equipment — 960 Gain on disposal of property, plant and equipment — 12	Provision of therapy services HK$’000 (Audited) 17,602 (25,110) unallocated HK$’000 (Unaudited) 520 1,393 —	Consolidated HK$’000 (Audited) 18,353 72,013 90,366 (25,245) (16,065) (41,310) Consolidated HK$’000 (Unaudited) 1,053 2,353 12

— 11 —

Six months ended 30 June 2014

	Sale of	Provision
	beauty	of therapy
	products	services	Unallocated	Consolidated
	HK$’000	HK$’000	HK$’000	HK$’000
	(Unaudited)	(Unaudited)	(Unaudited)	(Unaudited)
Amounts included in the measure
of segment profit and segment
assets
Additions to property, plant and
equipment	—	3,557	6,740	10,297
Depreciation of property, plant
and equipment	—	500	1,128	1,628
Gain on disposal of property,
plant and equipment	—	94	89	183
Loss on disposal of property,
plant and equipment	—	—	1,816	1,816
Written down of property,
plant and equipment	—	—	2	2

(c) Geographical segments — turnover

The Group mainly operates in Hong Kong.

4. turnOVEr

Sale of beauty products Provision of therapy services	For the three months ended 30 June 2015 2014 HK$’000 HK$’000 (unaudited) (Unaudited) 1,436 4,904 9,110 9,418 10,546 14,322	For the six months ended 30 June 2015 2014 HK$’000 HK$’000 (unaudited) (Unaudited) 2,124 9,184 18,579 9,896 20,703 19,080	For the six months ended 30 June 2015 2014 HK$’000 HK$’000 (unaudited) (Unaudited) 2,124 9,184 18,579 9,896 20,703 19,080
			19,080

— 12 —

5. OtHEr rEVEnuE

Gain on disposal of property, plant and equipment Interest income on bank deposits Other interest income Sundry income 6. LOSS FrOm OPErAtIOnS Loss from operations has been arrived at after charging: Depreciation on property, plant and equipment Impairment loss recognised in respect of deposits, prepayments and other receivables Operating lease rentals in respect of rented premises Staff costs including directors’ emoluments: — salaries and other allowances — contributions to retirement benefits scheme Loss on disposal of property, plant and equipment Written down of property, plant and equipment Written off of deposits Written off of inventories Written off of trade receivables		For the three months ended 30 June 2015 2014 HK$’000 HK$’000 (unaudited) (Unaudited) — 183 99 12 — 780 1 — 100 975 For the three months ended 30 June 2015 2014 HK$’000 HK$’000 (unaudited) (Unaudited) 1,181 1,097 — 74 1,644 1,845	For the three months ended 30 June 2015 2014 HK$’000 HK$’000 (unaudited) (Unaudited) — 183 99 12 — 780 1 — 100 975 For the three months ended 30 June 2015 2014 HK$’000 HK$’000 (unaudited) (Unaudited) 1,181 1,097 — 74 1,644 1,845	For the six months ended 30 June 2015 2014 HK$’000 HK$’000 (unaudited) (Unaudited) 12 183 129 13 — 1,552 1 4 142 1,752 For the six months ended 30 June 2015 2014 HK$’000 HK$’000 (unaudited) (Unaudited) 2,353 1,628 — 80 3,148 2,814	For the six months ended 30 June 2015 2014 HK$’000 HK$’000 (unaudited) (Unaudited) 12 183 129 13 — 1,552 1 4 142 1,752 For the six months ended 30 June 2015 2014 HK$’000 HK$’000 (unaudited) (Unaudited) 2,353 1,628 — 80 3,148 2,814
		6,030 772 6,802	3,750 131 3,881	10,750 913 11,663	5,188 190 5,378
		— — — — —	1,800 2 — — 2	— — — — —	1,816 2 6 1 2

— 13 —

7. FInAnCE COStS

Imputed interest on convertible bonds Imputed interest on promissory notes Interest on finance leases Interest on other borrowings wholly payable within 5 years InCOmE tAx ExPEnSE Current tax expense — Hong Kong Profits Tax Deferred tax credit	For the three months ended 30 June 2015 2014 HK$’000 HK$’000 (unaudited) (Unaudited) — 411 176 326 21 19 39 1,431 236 2,187 For the three months ended 30 June 2015 2014 HK$’000 HK$’000 (unaudited) (Unaudited) (160) (555) — 68 (160) (487)	For the six months ended 30 June 2015 2014 HK$’000 HK$’000 (unaudited) (Unaudited) — 411 351 326 43 24 68 2,991 462 3,752 For the six months ended 30 June 2015 2014 HK$’000 HK$’000 (unaudited) (Unaudited) (348) (555) — 68 (348) (487)

8. InCOmE tAx ExPEnSE

Hong Kong Profits Tax is calculated at 16.5% of the estimated assessable profit for the six months ended 30 June 2015 (six months ended 30 June 2014: 16.5%).

The Group’s subsidiaries set up in the People’s Republic of China (the “ PrC ”) are subjected to the PRC Enterprise Income Tax at 25% for the six months ended 30 June 2015 (six months ended 30 June 2014: 25%). No provision for the PRC Enterprise Income Tax has been made for the six months ended 30 June 2015 as the PRC subsidiaries have no assessable profit (six months ended 30 June 2014: Nil).

9. IntErIm DIVIDEnD

The Board does not recommend the payment of an interim dividend for the six months ended 30 June 2015 (six months ended 30 June 2014: Nil).

— 14 —

10. LOSS PEr SHArE

Loss for the period attributable to owners of the Company Weighted average number of ordinary shares for the purpose of basic and diluted loss per shares	For the three months ended 30 June For the six months ended 30 June 2015 2014 2015 2014 HK$’000 HK$’000 HK$’000 HK$’000 (unaudited) (Unaudited) (unaudited) (Unaudited) 5,006 7,513 8,360 9,629 number of ordinary shares ’000 ’000 ’000 _’_000 (unaudited) (Unaudited) (unaudited) (Unaudited) 74,803 13,122 74,803 13,122	For the three months ended 30 June For the six months ended 30 June 2015 2014 2015 2014 HK$’000 HK$’000 HK$’000 HK$’000 (unaudited) (Unaudited) (unaudited) (Unaudited) 5,006 7,513 8,360 9,629 number of ordinary shares ’000 ’000 ’000 _’_000 (unaudited) (Unaudited) (unaudited) (Unaudited) 74,803 13,122 74,803 13,122
		_’_000 (Unaudited) 13,122

Diluted loss per share for the three months ended and six months ended 30 June 2015 were the same as the basic loss per share as there were no dilutive event.

Diluted loss per share for the three months ended and six months ended 30 June 2014 were the same as the basic loss per share as the Company’s outstanding convertible bonds were anti-dilutive and had no dilutive effect.

11. PrOPErtY, PLAnt AnD EQuIPmEnt

During the six months ended 30 June 2015, the Group acquired certain items of property, plant and equipment in an aggregate cost of approximately HK$1,053,000 (six months ended 31 December 2014: HK$467,000). Items of certain depreciated property, plant and equipment with a carrying amount of approximately HK$98,000 were disposed of during the six months ended 30 June 2015 (six months ended 31 December 2014: HK$21,000), resulting a gain on disposal of approximately HK$12,000 (six months ended 31 December 2014: HK$9,000).

12. GOODWILL

At beginning of the period _Less:_impairment loss recognised At end of the period	At 30 June 2015 HK$’000 (unaudited) 18,266 — 18,266	At 31 December 2014 HK$’000 (Audited) 18,266 —
		18,266

— 15 —

Impairment test of goodwill

Goodwill acquired through business combination has been allocated to the cash generating units in respect of sale of beauty products and provision of therapy services (the “ Group of CGus ”), which are reportable segments, for impairment testing.

For the six months ended 30 June 2015, no impairment loss was recognised in respect of goodwill as its recoverable amount exceeds the carrying amount of which, the recoverable amount of the Group of CGUs is determined based on a value-in-use calculation which uses cash flow projection based on financial budgets approved by the directors of the Company covering a five-year period, and a pre tax discount rate of 17.55% per annum (at 31 December 2014: 17.51% per annum).

Cash flow projects during the budget period are based on the financial budget approved by the management covering a five-year period and assumed growth rate are sued to extrapolate the cash flows in the following years. The financial budgets are prepared based on a five-year business plan which is appropriate after considering the sustainability of business growth, stability of core business developments and achievement of business targets. The financial model assumes an average growth rate of 3.5% per annum beyond the five-year period taking into account of long term gross domestic product growth, inflation rate and other relevant economic factors.

13. trADE rECEIVABLES

0 – 30 days 31 – 60 days 61 – 90 days 91 – 120 days Over 120 days	At 30 June 2015 HK$’000 (unaudited) 2,984 1,134 211 18 — 4,347	At 31 December 2014 HK$’000 (Audited) 3,979 1,057 428 82 —
		5,546

The Group allows an average credit period of 0 day to 120 days to its customers.

14. DEPOSItS, PrEPAYmEntS AnD OtHEr rECEIVABLES

Deposits Prepayments Other receivables, net of impairment_(Note)_	At 30 June 2015 HK$’000 (unaudited) 2,951 1,517 2,227 6,695	At 31 December 2014 HK$’000 (Audited) 2,238 871 2,619
		5,728

— 16 —

Note:

On 30 April 2010, Blu Spa Hong Kong Limited (“ BSHK ”) entered into a sale and purchase agreement with Mr. Shum Yeung (“ mr. Shum ”), pursuant to which BSHK had agreed to acquire (a) 70% of the entire issued share capital of an entity and (b) a shareholder’s loan to such entity at a total consideration of HK$80,000,000.

The acquisition did not proceed and the Group has entered into various deed of termination and deeds of settlement with Mr. Shum and a deed of guarantee with Dutfield International Group Company Limited (“ Dutfield ”) in relation to the repayment of the refundable deposit. As Mr. Shum defaulted in the full repayment of the refundable deposit and the accrued contractual interest despite repeated demands and requests, the Company had obtained a judgment against Mr. Shum pursuant to which it was adjudged, inter alia, that Mr. Shum shall pay to the Company the sum of HK$39,127,500 (being the amount of the outstanding and unpaid refundable deposit) together with contractual interest at the rate of 30% per annum from 1 May 2013 to 6 September 2013 and thereafter at judgment rate pursuant to s.48 of the High Court Ordinance until payment. As at 31 December 2014, the aggregate amount of the outstanding and unpaid refundable deposit and the accrued interest was approximately HK$46,500,000. Since (i) Mr. Shum failed to settle the judgment debt and the accrued interest and commenced various legal actions to prevent the Company from recovering the judgment debt and the accrued interest including a fresh legal action as announced by the Company in its announcement dated 23 January 2015; (ii) it was unclear whether and when the Company would be able to receive the judgment debt and the accrued interest in full from selling (1) the charged shares in Mr. Shum’s companies; and (2) the charged properties as those properties were held by Mr. Shum and another individual as joint tenants and subject to mortgages given that the Company did not have the information of the financial status of Mr. Shum and his companies, the amount of Mr. Shum’s interest in the charged properties and the outstanding loan amounts under the mortgages; and (iii) the ability of Dutfield to fulfil its obligations under the guarantee depended on the outcome of the legal proceedings for, inter alia, its claim for the sum of HK$141,360,000 under a loan agreement but Dutfield failed to obtain a summary judgment against the debtor and the outcome of the legal proceedings was uncertain, the Company decided to recognise an impairment on the judgment debt and the accrued interest in the aggregate amount of approximately HK$46,500,000. For further details, please refer to the Company’s announcements dated 5 April 2012, 4 July 2012, 24 July 2012, 3 August 2012, 21 August 2012, 28 September 2012, 26 October 2012, 1 November 2012, 21 December 2012, 29 January 2013, 25 April 2013, 3 May 2013, 12 January 2015, 23 January 2015, 1 April 2015, 19 May 2015 and 9 June 2015 and the sub-section headed “Litigations” under the section headed “Management Discussion and Analysis” of the interim report dated 11 August 2015 for the six months ended 30 June 2015 of the Company.

— 17 —

15. SHArE CAPItAL

Ordinary shares of HK$0.10 each (2014: HK$0.10 each) Authorised: At 1 July 2014 and 31 December 2014, 1 January 2015 and 30 June 2015 Issued and fully paid: At 1 July 2014 Conversion of convertible bonds_(note a) Open offer of new shares(note b) Placing of new shares(note c)_ At 31 December 2014, 1 January 2015 and 30 June 2015	number of shares ’000 5,000,000 13,122 40,000 19,061 2,620 74,803	Share capital HK$’000 500,000
		1,312 4,000 1,906 262
		7,480

Notes:

• (a) On 2 July 2014 and 30 September 2014, New Cove Limited, a wholly-owned subsidiary of Eternity Investment Limited (“ Eternity ”), converted the principal amounts of HK$25,000,000 and HK$15,000,000 of the convertible bonds of the Company into 25,000,000 and 15,000,000 ordinary shares of HK$0.10 each at the initial conversion price of HK$1.00 per ordinary share respectively.

• (b) On 11 August 2014, 19,061,000 new ordinary shares of HK$0.10 each were allotted and issued at a subscription price of HK$3.00 per ordinary share by way of open offer to the qualifying shareholders of the Company on the basis of one new ordinary share for every two existing ordinary shares held on 16 July 2014. The net proceeds of approximately HK$54,000,000 were used for the repayment of the outstanding loan indebted to Hong Kong Builders Finance Limited (“ Hong Kong Builders ”), a wholly-owned subsidiary of Eternity.

• (c) On 28 August 2014, 2,620,000 new ordinary shares of HK$0.10 each were allotted and issued at a price of HK$3.15 per ordinary share by way of placing of new shares under general mandate, raising approximately HK$7,860,000 (net of expenses), of which approximately HK$7,540,000 was used for the repayment of all outstanding loan indebted to Hong Kong Builders and approximately HK$320,000 was used for general working capital of the Group.

— 18 —

16. trADE PAYABLES

0 – 30 days 31 – 60 days 61 – 90 days 91 – 120 days Over 120 days	At 30 June 2015 HK$’000 (unaudited) 110 — 1 — — 111	At 31 December 2014 HK$’000 (Audited) 177 — — — 33
		210

17. rECEIPt In ADVAnCE

On 17 February 2015, the Company as issuer and Xing Hang Limited, Goldenland Mining & Investment Limited, Silver Empire Holding Limited, Truly Elite Limited, High Aim Global Limited and First Bonus International Limited (collectively referred to as the “ Subscribers ”) entered into a subscription agreement. Pursuant to which, the Subscribers have conditionally agreed to subscribe for, and the Company has conditionally agreed to allot and issue to the Subscribers a total of 345,000,000 new ordinary shares of the Company and 30,000,000 new convertible preferred shares of par value of HK$0.10 each in the share capital of the Company at a subscription price of HK$0.40 per new ordinary share/new convertible preferred share.

The Company has received a sum of approximately HK$72,634,000 from four of the Subscribers on 14 April 2015.

18. OtHEr BOrrOWInGS

Interest bearing other borrowings_(Note a) Non-interest bearing other borrowings(Note b)_	At 30 June 2015 HK$’000 (unaudited) 10,117 — 10,117	At 31 December 2014 HK$’000 (Audited) 2,450 1,400
		3,850

— 19 —

Notes:

• (a) At 30 June 2015, the Group had the following outstanding borrowings:

• (i) a loan of HK$7,500,000 granted to the Company by an independent third party, which is interest bearing at 10.00% per annum, unsecured and maturing on 10 June 2016; and

• (ii) a loan of approximately HK$2,617,000 (31 December 2014: HK$2,450,000) advanced by Koffman Investment Limited (“ Koffman Investment ”), a company which is 50% owned by Mr. Yu Zhen Hua, Johnny (the former chairman of the board of directors of the Company), to the Group, which is interest bearing at 5% per annum, unsecured and maturing on 25 August 2015.

• (b) At 31 December 2014, the outstanding loan of HK$1,400,000 granted to the Group by an independent third party, which is non-interest bearing, unsecured and repayable on demand. The amount of the outstanding loan was fully repaid on 12 March 2015.

19. PrOmISSOrY nOtES

At beginning of the period Imputed interest on promissory notes Repayment of promissory notes	At 30 June 2015 HK$’000 (unaudited) 6,069 351 (6,420) —	At 31 December 2014 HK$’000 (Audited) 12,718 351 (7,000) 6,069

On 11 April 2014, the Company issued four promissory notes in the aggregate principal amount of HK$13,420,000 to two independent third parties (the “ Vendors ”) as part of the consideration for the acquisition (the “ Acquisition ”) of 51% equity interest in China Honest Enterprises Limited (“ China Honest ”) by the Group. The four promissory notes are interest-free and unsecured. Two of the promissory notes in the principal amounts of HK$2,608,000 and HK$4,392,000 (collectively, the “ Pns I ”) were maturing on 30 June 2014. The remaining two promissory notes in the principal amounts of HK$4,028,000 and HK$2,392,000 (collectively, the “ Pns II ”) were maturing on 30 June 2015.

Pursuant to the terms of the Acquisition, the Vendors have irrevocably and unconditionally warranted and guaranteed to the Company the profits before taxation and extraordinary items of China Honest for the years ending 31 March 2014 and 2015 will not be less than HK$4,000,000 (the “ 2014 Guaranteed Profit ”) and HK$9,000,000 (the “ 2015 Guaranteed Profit ”) respectively. In the event of the 2014 Guaranteed Profit or 2015 Guaranteed Profit is not fulfilled, the Vendors shall compensate the Group an amount equivalent to the shortfall by way of setting off the shortfall against the face value of the PNs I (for the shortfall in respect of the year ending 31 March 2014) or the PNs II (for the shortfall in respect of the year ending 31 March 2015) on a dollar to dollar basis.

The 2014 Guaranteed Profit and 2015 Guaranteed Profits were fulfilled, the PNs I and the PNs II were fully repaid on 27 July 2014 and 30 June 2015 respectively.

— 20 —

20. BuSInESS COmBInAtIOn

On 11 April 2014, the Group completed the acquisition of 51% equity interest in China Honest, which was satisfied by (i) the deposit and partial payment of the consideration of HK$2,000,000; (ii) cash in the amount of HK$6,000,000; and (iii) the issuance of the promissory notes with an aggregate principal amount of HK$13,420,000, which comprise of PNs I with an aggregate principal amount of HK$7,000,000 and PNs II with an aggregate principal amount of HK$6,420,000.

China Honest is principally engaged in provision of beauty and wellness services. The Acquisition enables the Group to continue the expansion of its operation.

The following table summarises the consideration paid for China Honest, the provisional fair value of assets acquired, liabilities assumed and the non-controlling interests at 11 April 2014.

Consideration: — Cash paid — PNs I — PNs II Total consideration recognised amounts of identifiable assets acquired and liabilities assumed Property, plant and equipment Restricted bank deposits Inventories Trade receivables Deposits and prepayments Bank balances and cash Amount due to a director Trade payables Deposits from customers Deferred revenue Accruals and other payables Obligation under finance leases Other borrowing_(note 18) Tax payable total identifiable net assets at fair value Non-controlling interests (49% of China Honest) Sale loan Goodwill(note 12)_

HK$’000 (Audited) 8,000 6,824 5,568 20,392 7,528 7,147 629 3,423 3,151 5,337 (1,387) (163) (3) (21,010) (892) (852) (1,400) (58) 1,450 (711) 1,387 18,266 20,392

— 21 —

HK$’000 (Audited)

net cash outflow on acquisition of a subsidiary: Consideration paid in cash _Less:_cash and cash equivalents acquired	8,000 (5,337
	2,663

21. COmmItmEntS

The Group as lessee

At the end of the reporting periods, the Group had commitments for future minimum lease payments under non-cancellable operating leases in respect of rented premises which fall due as follows:

Within one year In the second to fifth year inclusive	At 30 June 2015 HK$’000 (unaudited) 6,047 8,343 14,390	At 31 December 2014 HK$’000 (Audited) 4,096 415
		4,511

Operating lease payments represent rentals paid or payable by the Group for its office and retail shops premises. Leases are mainly negotiated for an average terms of one to three years.

22. mAtErIAL rELAtED PArtY trAnSACtIOnS

Save as disclosed elsewhere in the condensed consolidated financial statements, the Group had entered into the following material related party transactions:

		For the six months	For the six months
		ended 30 June
		2015		2014
		HK$’000	HK$’000
name of parties	nature of transactions	(unaudited)	(Unaudited)
BSHK_(Note a)_	Legal and professional fee paid
	on behalf of	—		80
Koffman Investment_(Note b)_	Interest on other borrowings	53		2,558
Koffman Corporate Service Ltd	Rental expenses
(“Koffman Corporate”)
(Note c)		240		240

— 22 —

Notes:

• (a) BSHK was de-consolidated on 1 July 2011. Upon disposal of Blu Spa Group Limited during the six months ended 31 December 2014, BSHK has been reclassified from amounts due from unconsolidated subsidiaries to other receivables.

• (b) The issued share of Koffman Investment is 50% owned by Mr Yu Zhen Hua, Johnny, the former chairman of the board of directors of the Company.

• (c) Mr. Yu Zhen Hua, Johnny, the former chairman of the board of directors of the Company, is an ultimate beneficial owner of Koffman Corporate.

Compensation for key management personnel

Remuneration for key management personnel, including amounts paid to the Company’s directors and certain of the highest paid employees for the six months ended 30 June 2015 and 2014, is as follows:

Salaries and allowances Contributions to retirement benefits scheme	For the six months ended 30 June 2015 2014 HK$’000 HK$’000 (unaudited) (Unaudited) 850 373 9 3 859 376	For the six months ended 30 June 2015 2014 HK$’000 HK$’000 (unaudited) (Unaudited) 850 373 9 3 859 376
		376

23. COntInGEnt LIABILItIES

• (a) On 23 January 2015, the Company received a writ of summons in High Court Action No. 200 of 2015 issued by Mr. Shum Yeung (“ mr. Shum ”) as plaintiff against the Company as defendant for the following claims:

• (i) the Judgment in High Court Action No. 1775 of 2012 dated 6 September 2013 (the “ Summary Judgement ”), pursuant to which the Court of First Instance of the High Court of Hong Kong (the “Court of First Instance”) adjudged that Mr. Shum (1) do pay the Company the sum of HK$39,128,000 together with contractual interest thereon calculated from day to day at the rate of 30% per annum from 1 May 2013 to 6 September 2013, and thereafter at judgment rate pursuant to s.48 of High Court Ordinance until payment; and (2) shall pay the Company the costs of the action including the costs of and occasioned by the Company’s application for the Summary Judgment to be taxed if not agreed, entered against Mr. Shum be set aside;

• (ii) loss and damages suffered by Mr. Shum as a result of the Summary Judgement being obtained against him;

• (iii) an order for discovery upon oath of all matters relating to the Summary Judgement;

— 23 —

• (iv) an order for payment of all sums found due to Mr. Shum together with the interest thereon at such rate and for such period as the High Court may deem just pursuant to the High Court Ordinance;

• (v) the costs; and

• (vi) further or other relief.

• (b) On 30 March 2015, the Company received a statement of claim in the High Court of Hong Kong filed by Mr. Shum in relation to High Court Action No. 200 of 2015.

24. EVEntS AFtEr rEPOrtInG PErIOD

The Group had no material events took place subsequent to 30 June 2015 and up to the date of the condensed consolidated financial statements.

mAnAGEmEnt DISCuSSIOn AnD AnALYSIS

Business review

The Group is principally engaged in the sale of beauty products and provision of therapy services. For the sale of beauty products, the Group offers a variety of beauty products under the brand name “Evidens de Beauté”, and a variety of medical skincare products, including the brand “Activa”. For the provision of therapy services, the Group operates a beauty centre with the brand “La Spa Evidens de Beauté” to offer facial sahos, body treatments and wellness messages services at Lyndhurst Terrace in Central and a medical skincare centre under the trade name “COLLAGEN+” at Soundwill Plaza in Causeway Bay.

During the period under review, the performance of the sale of beauty products was not satisfactory. As the decline in growth of the number of Mainland visitors to Hong Kong and their spending power has affected the whole retail sector in Hong Kong since last year, the revenue derived from the sale of beauty products and provision of therapy services under the brand name “Evidens de Beauté” recorded a substantial decrease as compared with that of the last corresponding period.

On 15 April 2015, a joint announcement (the “ Joint Announcement ”) was published by the Company, Xing Hang Limited (“ xing Hang ”) and Eternity Investment Limited in respect of, among other things, the subscription of 345,000,000 new ordinary shares of the Company and 30,000,000 new convertible preferred shares of par value of HK$0.10 each in the share capital of the Company (the “ Subscription ”) under the subscription agreement dated 17 February 2015 (the “ Subscription Agreement ”) entered into between the Company and six subscribers (the “ Subscribers ”), the master supply agreement (the “ master Supply Agreement ”) to be entered into between the Company and Shenzhen Donica Electronic Technology Co., Ltd upon completion of the Subscription in accordance with the terms and conditions of the Subscription Agreement, the transaction and the proposed annual caps as contemplated in the Master Supply Agreement, the unconditional mandatory cash offer to be made by Kingston Securities Limited on behalf of Xing Hang to acquire all the issued ordinary shares of the Company (other than the ordinary shares of the Company owned or agreed to be acquired by Xing Hang and parties acting in concert with it), the reclassification and

— 24 —

redesignation of the existing authorised share capital of the Company and the amendment to the bye-laws of the Company (the “ transactions ”). The Transactions are subject to the approval of the independent shareholders of the Company. As at the date of this report, the Company is in the process of preparing the circular in relation to the Transactions. Details of the Transactions were set out in the Joint Announcement dated 15 April 2015.

On 13 April 2015, the Group set up a wholly-foreign-owned enterprise (the “ WFOE ”) in Shenzhen, the PRC, namely 深圳多尼卡互聯技術有限公司 (Shenzhen Donica Networking Technology Co. Ltd.#), with a registered share capital of RMB5 million (equivalent to HK$6.3 million), for the development of new business in in-flight WLAN and WIFI engineering and service business. The management believes that by the set up of the WFOE, the Group will develop such business more efficiently.

On 11 June 2015, the Company as borrower entered into a loan agreement (the “ Loan Agreement ”) with Pure Profit Holdings Limited, an independent third party (the “ Lender ”), pursuant to which the Lender agreed to grant a loan to the Company in the principle amount of up to HK$10 million (the “ Loan ”). The Loan is unsecured, with an interest rate of 10% per annum and maturing on 10 June 2016. The proceeds from the Loan will be utilized for developing a new business in the provision of inflight WLAN and WIFI engineering and services to airline companies in the PRC as mentioned in the Joint Announcement. Details of the Loan were set out in the Company’s announcement dated 11 June 2015.

On 19 June 2015, a supplemental agreement was entered into by the Company and the Subscribers to extend the long stop date of the Subscription Agreement from 19 June 2015 to 31 August 2015 or such other date as may be agreed by the parties to the Subscription Agreement in writing. Save for the aforesaid, no other amendments were made to the Subscription Agreement. Details of the supplemental agreement were set out in the Company’s announcement dated 19 June 2015.

On 6 July 2015, the Company announced that according to the guarantee certificate received on 30 June 2015, the profit guarantee of China Honest Enterprises Limited (“ China Honest ”) for the year ended 31 March 2015 has been fulfilled and the promissory notes, due payable on 30 June 2015, issued by the Company as part of the consideration for the acquisition of China Honest, were fully repaid on 30 June 2015 pursuant to the terms of the sale and purchase agreement dated 18 October 2013. Details of the profit guarantee were set out in the Company’s announcement dated 4 November 2013 and the circular of the Company dated 21 March 2014.

Financial review

During the period under review, the Group recorded a turnover of approximately HK$20.7 million, representing an increase of approximately 8.5% as compared with last corresponding period, of which approximately HK$2.1 million (2014: approximately HK$9.2 million) and approximately HK$18.6 million (2014: approximately HK$9.9 million) were generated from the sale of beauty products and the provision of therapy services respectively.

The English translation of the Chinese name in this report, where indicated, is for information purpose only, and shall not be recognised as the official English name of such Chinese name.

— 25 —

During the period under review, the revenue generated from the sale of beauty products and provision of therapy services by China Honest, a 51% owned subsidiary, was approximately HK$0.8 million (2014: approximately HK$0.3 million) and HK$18.2 million (2014: approximately HK$8.9 million) respectively. The revenue generated from the sale of beauty products and the provision of therapy services under the brand name “Evidens de Beauté” was approximately HK$1.3 million (2014: approximately HK$8.6 million) and HK$0.4 million (2014: approximately HK$0.9 million) respectively.

The gross profit margin was approximately 25.8% (2014: approximately 41.4%). China Honest contributed approximately HK$5.8 million to the gross profit of the Group, while the operations under the brand name “Evidens de Beauté” recorded a gross loss of approximately HK$0.4 million.

Other revenue of approximately HK$0.1 million (2014: approximately HK$1.8 million) was mainly contributed by the interest income on bank deposits. The decrease in other revenue was mainly attributed to the absence of interest income on other receivable, which was impaired in December 2014, of approximately HK$1.55 million.

The selling and distribution costs was approximately HK$0.9 million (2014: approximately HK$0.3 million), representing an increase of approximately 160.1% over the last corresponding period. Such increase was mainly attributed to advertising expenses incurred by China Honest, which is acquired by the Group in April 2014 during the period under review. China Honest accounted for approximately 79.6% or HK$0.7 million of the total selling and distribution costs.

The administrative expenses was approximately HK$11.2 million (2014: approximately HK$13.5 million), representing a decrease of 16.6% over the last corresponding period. Such decrease was mainly contributed by the absence of the loss on disposal of fixed assets incurred in the relocation of the spa centre in June 2014 and the legal and professional fees incurred in the second quarter of 2014 for the resumption of trading in the Company’s shares on the Stock Exchange. China Honest accounted for approximately 25.5% or HK$2.9 million of the total administrative expenses during the period under review.

The finance costs of approximately HK$0.5 million (2014: approximately HK$3.8 million) was mainly attributed to the imputed interest on the promissory notes of approximately HK$0.4 million during the period under review. The decrease was mainly contributed by the decrease in interest on other borrowings from approximately HK$3.0 million in the last corresponding period to approximately HK$0.1 million in the current period, due to the full repayment of the borrowing from Koffman Investment by the Company in June 2014.

The consolidated loss attributable to owners of the Company amounted to approximately HK$8.4 million for the six months ended 30 June 2015 (2014: approximately HK$9.6 million). The improvement of the results was mainly contributed by (i) the decrease in finance costs and (ii) the absence of the legal and professional fees for resumption incurred in 2014 and the loss on disposal of fixed assets in 2014.

— 26 —

LIQuIDItY AnD FInAnCIAL rESOurCES

At 30 June 2015, the Group had total assets of approximately HK$157.1 million (31 December 2014: approximately HK$90.4 million), including cash and cash equivalents of approximately HK$93.6 million (31 December 2014: approximately HK$26.6 million).

During the period under review, the Group financed its operation with internally generated cash flows and borrowings.

BOrrOWInGS

At 30 June 2015, the total borrowings and other financial liabilities of the Group amounted to approximately HK$10.3 million (31 December 2014: approximately HK$10.4 million), representing:

• (i) a loan of HK$7.5 million granted by the Lender which is bearing at 10.0% per annum, unsecured and maturing on 10 June 2016;

• (ii) a loan of approximately HK$2.6 million advanced by Koffman Investment Limited, a company which is 50% owned by Mr. Yu Zhen Hua, Johnny (the former chairman of the board of directors of the Company), which is interest bearing at 5.00% per annum, unsecured and maturing on 25 August 2015; and

• (iii) the obligations under finance leases of approximately HK$0.2 million of which (a) HK$145,000 is interest bearing at 3.00% per annum and secured by a guarantee from Hong Kong Government, a joint and several guarantee from a director of a subsidiary and an independent third party and the Group’s title to the leased assets, and (b) HK$15,000 is non-interest bearing and secured by the Group’s title to the leased assets.

uSE OF PrOCEEDS FrOm FunD rAISInG ACtIVItIES

(a) Convertible Bonds

• (i) On 22 May 2014, the Company issued convertible bonds (the “ Convertible Bonds ”) in the principal amount of HK$40.0 million. The issuance of the Convertible Bonds raised approximately HK$39.0 million (net of expenses), of which (a) HK$20.0 million were intended to be used for the acquisition of a business similar to the existing business of the Group; (b) HK$4.0 million were intended to be used for the settlement of the professional fees; and (c) HK$15.0 million were intended to be used for the general working capital of the Group including the capital required for the development of the “Evidens de Beauté” distribution business.

• (ii) As disclosed in the Company’s 2014 annual report dated 27 March 2014 (the “ 2014 Annual report ”), at 31 December 2014, (a) HK$15.0 million had been utilized for the acquisition of China Honest; (b) HK$4.0 million had been utilized for the settlement of

— 27 —

professional fees; (c) HK$15.0 million had been utilized for general working capital of the Group including the capital required for the development of the “Evidens de Beauté” distribution business; and (d) HK$5.0 million remained unutilized.

• (iii) At 30 June 2015, the remaining net proceeds of HK$5.0 million had been fully utilized for the repayment of the promissory notes, due payable on 30 June 2015, issued by the Company as part of the consideration for the acquisition of China Honest.

(b) Placing

• (i) On 28 August 2014, the Company raised HK$8.25 million by way of placing of 2,620,000 new shares under general mandate at a price of HK$3.15 per share. The net proceeds from the placing of HK$7.86 million of which HK$7.54 million and HK$0.32 million were intended to be used for the repayment of the outstanding debt indebted to Hong Kong Builders Finance Limited by the Company and general working capital of the Group respectively.

• (ii) As disclosed in the 2014 Annual Report, at 31 December 2014, HK$7.54 million had been utilized for the repayment of the outstanding debt indebted to Hong Kong Builders Finance Limited by the Company and HK$0.32 million remained unutilized.

• (iii) At 30 June 2015, the remaining net proceeds of HK$0.32 million had been fully utilized as general working capital of the Group.

SHArE CAPItAL

During the six months ended 30 June 2015, there was no movement in the Company’s issued share capital.

GEArInG rAtIO

The gearing ratio, expressed as percentage of total borrowings over total assets, was approximately 6.6% (31 December 2014: approximately 11.5%). The improvement in gearing ratio was mainly contributed to the increase in cash and cash equivalents from the receipt in advance of approximately HK$72.6 million.

PLEDGED OF ASSEtS

At 30 June 2015, the Group’s restricted bank deposits of approximately HK$19.8 million (31 December 2014: approximately HK$19.7 million) were deposits held at banks in respect of credit card and instalment sales arrangement of its sale of beauty products and provision of therapy services business. In addition, certain assets with carrying amounts of approximately HK$28,000 and HK$15,000 were held under finance leases which were secured by a guarantee from Hong Kong

— 28 —

Government, a joint and several guarantee from a director of a subsidiary and an independent third party and the Group’s title to the leased assets and secured by the Group’s title to the leased assets respectively.

FOrEIGn ExCHAnGE rISK

The Group has not used any foreign currency derivative instruments to hedge its exposure to foreign exchange risk. However, the management monitors closely the exposures and will consider hedging the exposures should the need arise.

COmmItmEntS

At 30 June 2015, the Group had operating lease commitments of approximately HK$14.3 million (31 December 2014: approximately HK$4.5 million).

COntInGEnt LIABILItIES

At 30 June 2015, save as disclosed in note (a) under the section headed “Litigations” below, the Group had no other material contingent liabilities.

EmPLOYEES

At 30 June 2015, the Group had 92 employees. Their remuneration, promotion and salary review are assessed based on job responsibilities, work performance, professional experiences and the prevailing industry practices. The employees in Hong Kong joined the mandatory provident fund scheme.

SIGnIFICAnt InVEStmEnt

The Group did not enter into any new significant investment during the six months ended 30 June 2015.

mAtErIAL ACQuISItIOn AnD DISPOSAL OF SuBSIDIArIES AnD AFFILIAtED COmPAnIES

Save as the set up of the WFOE as disclosed in the paragraphs under the section headed “Business Review” above, the Group did not make any material acquisitions and disposal of subsidiaries and affiliated companies during the six months ended 30 June 2015.

FuturE PLAn FOr mAtErIAL InVEStmEntS AnD CAPItAL ASSEtS

Save as the Transactions disclosed in the paragraphs under the section headed “Business Review” above, the Group does not have any concrete plan for material investments or capital assets for the coming year.

— 29 —

OutLOOK

The Board believes that the entering into of the Subscription Agreement represents a good opportunity to improve its financial position and liquidity and the possible development of certain new business in a segment different from the existing business of the Group will diversify and broaden its revenue sources and improve its profitability in the long run.

The Hong Kong retail market has been in decline since last year and official figures are showing no signs of improvement. According to the Census and Statistic Department, the total retail sales in Hong Kong for the first quarter of 2015 were down by 2.3% year-on-year. With the implementation of a tightened policy on Chinese tourists in response to mounting concern on capacity constraints, the directors do not expect any growth in the Group’s sale of beauty products and provision of therapy services in 2015. The management will cautiously monitor the market, adopt appropriate measures and business strategies in response to changing market conditions.

OCCurrEnCE OF EVEntS tHAt mAY HAVE nEGAtIVE ImPACt On tHE PrOFIt FOrECASt FOr tHE 12-mOntH PErIOD EnDInG 30 JunE 2015

On 11 November 2014, the Company announced that due to the occurrence of certain events, it was anticipated that there may be a possible negative impact on the profit forecast for the 12-month period ending 30 June 2015 (the “ 2015 Profit Forecast ”) which was stated in the Appendix VI to the circular of the Company dated 21 March 2014 in relation to the acquisition of 51% equity interest in and the shareholders’ loan due by China Honest. The 2015 Profit Forecast was made based on certain basis and assumptions. Taking into account of the deviations of basis and assumptions due to the occurrence of these events, the Board considered that, in an overall view, there may be a possible negative impact on the 2015 Profit Forecast. Detailed information were set out in the Company’s announcement dated 11 November 2014.

For the six months ended 30 June 2015, the Group recorded a loss after tax of the Group of approximately HK$7.5 million as compared to the forecast profit after tax of the Group of approximately HK$5.1 million in the same period as estimated in the 2015 Profit Forecast (the “ Deviation ”). The Deviation was mainly due to (i) a substantial decrease in the revenue derived from the sale of beauty products and provision of therapy services under the brand name “Evidens de Beauté” for the six months ended 30 June 2015; (ii) a substantial increase in legal and professional fees; and (iii) the substantial increase in staff costs incurred for the six months ended 30 June 2015.

The actual revenue derived from the sale of beauty products under the brand name “Evidens de Beauté” for the six months ended 30 June 2015 was approximately HK$1.3 million, accounting for approximately 10.7% of the forecast revenue for the same period of approximately HK$12.6 million. The actual revenue derived from the provision of the therapy services under the brand name “Evidens de Beauté” for the six months ended 30 June 2015 was approximately HK$0.4 million, accounting for approximately 11.9% of the forecast revenue for the same period of approximately HK$3.2 million. In addition, for the six months ended 30 June 2015, the Group incurred legal and professional fees of approximately HK$2.2 million, accounting for 909.1% of the forecast legal and professional fees for the same period of approximately HK$0.2 million. The reason for such

— 30 —

deviation was mainly attributed to the legal and professional fees incurred for the Transactions. Furthermore, for the six months ended 30 June 2015, the Group incurred staff costs including directors’ emoluments of approximately HK$11.7 million, accounting for 156.9% of the forecast staff costs for the same period of approximately HK$7.4 million. The reason for such deviation was mainly attributed to the staff costs incurred by the WFOE.

LItIGAtIOnS

• (a) On 23 January 2015, the Company received a writ of summons in the High Court Action No. 200 of 2015 issued by Mr. Shum Yeung (“ mr. Shum ”) as the plaintiff against the Company as the defendant for the following claims:

• (i) the judgment in High Court Action No. 1775 of 2012 dated 6 September 2013 (the “ Summary Judgment ”), is relating to which the Court of First Instance of the High Court of Hong Kong (the “ Court ”) adjudged that Mr. Shum (a) do pay the Company the sum of HK$39,127,500 together with contractual interest thereon calculated from day to day at the rate of 30% per annum from 1 May 2013 to 6 September 2013, and thereafter at judgment rate pursuant to s.48 of High Court Ordinance until payment (the “ Judgement Debt ”); and (b) shall pay the Company the costs of this action including the costs of and occasioned by the Company’s application for Summary Judgment to be taxed if not agreed, entered against Mr. Shum be set aside;

• (ii) loss and damages suffered by Mr. Shum as a result of the Summary Judgment being obtained against him;

• (iii) an order for discovery upon oath of all matters relating to the Summary Judgement;

• (iv) an order for payment of all sums found due to Mr. Shum together with the interest thereon at such rate and for such period as the High Court may deem just pursuant to the High Court Ordinance;

• (v) the cost; and

• (vi) further or other relief.

On 30 March 2015, the Company received a statement of claim in the High Court of Hong Kong filed by Mr. Shum in relation to the High Court Action No. 200 of 2015. On 14 May 2015, the Company filed a defence in that action.

• (b) On 19 May 2015, the Board announced that the Company commenced legal proceedings (the “ may Proceedings ”) in the Court against Mr. Shum as the 1st Defendant, E IN International Group Limited as the 2nd Defendant, E IN Properties Limited as the 3rd Defendant and

— 31 —

Grand Fill Enterprise Limited as the 4th Defendant (“ High Court Action no. 1234 of 2015 ”) for, amongst others, the following reliefs to recover the Judgment Debt under the Summary Judgment:

• (i) Mr. Shum’s interest in all the shares or shareholdings in the 2nd Defendant, 3rd Defendant and 4th Defendant (the “ Shares ”) which have been charged in favour of the Company be sold without further reference to the Court by way of tender or public auction at the best price reasonably obtainable;

• (ii) the solicitors for the Company shall have the conduct of the sale of the Shares by appointing an agent, to sell the Shares by way of tender or public action;

• (iii) the execution of the requisite deeds or documents to effect the sale stated in paragraphs (i) and (ii) above by Mr. Shum or by the Registrar of the Court;

• (iv) the Company shall apply the sale proceeds from the sale of the Shares to (a) pay the costs and expenses of effecting the above sale; (b) pay the costs of the May Proceedings; (c) pay the Judgment Debt (together with interest) under the Summary Judgment; and (d) pay the balance (if any) to Mr. Shum or into the Court or as the Court shall direct;

• (v) further or alternative to paragraphs (i), (ii) and (iii) above, a receiver be appointed to (a) receive Mr. Shum’s profits, income, benefits, interest and/or assets deriving and/or arising from the Shares; and/or (b) to take over and/or realize the Shares for the purpose of defraying the Judgment Debt (together with interest) under the Summary Judgment; and

• (vi) the costs of the May Proceedings to the Company.

The hearing of the May Proceedings had originally been fixed on 25 June 2015. On 19 June 2015, the Company was served with a summons taken out by Mr. Shum seeking to stay the May Proceedings pending the determination of HCA No. 200 of 2015 (the “ Application for stay of the may Proceedings ”). Upon the consent of the parties, the court ordered that the May Proceeding and the Application for stay of the May Proceedings be adjourned to be heard together on 23 September 2015.

• (c) On 9 June 2015, the Board announced that the Company commenced legal proceedings (the “ June Proceedings ”) in the Court against Mr. Shum as the 1st Defendant, Wing Lung Bank Limited as the 2nd Defendant and Hang Seng Bank Limited as the 3rd Defendant for, amongst others, the following reliefs to recover the Judgment Debt under the Summary Judgment:

• (i) Mr. Shum’s interest in the properties and/or lands situate at (i) House 4, The Baroque, Nos.1-7 Kau To Shan Road, Shatin, New Territories (the “ First Property ”); (ii) Ground Floor, No. 1 Kau To Path, Lot No. 838 in DD171, Shatin, New Territories (the “ Second Property ”); and (iii) Ground Floor, No. 1 Kau To Path, Lot No. 839 in DD171, Shatin,

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New Territories (the “ third Property ”) (collectively as the “ Properties ”) which have been charged in favour of the Company be sold without further reference to the Court by way of tender or public auction at the best price reasonably obtainable;

• (ii) the solicitors for the Company shall have the conduct of the sale of the Properties by appointing an agent, to sell the Properties by way of tender or public auction;

• (iii) the execution of the requisite deeds or documents to effect the sale stated in paragraphs (i) and (ii) above by Mr. Shum or by the Registrar of the Court;

• (iv) the Company shall apply the sale proceeds from the sale of the First Property to (a) pay the costs and expenses of effecting the above sale; (b) pay the costs of the June Proceedings; (c) pay the outstanding indebtedness owed to Hang Seng Bank Limited as secured by a mortgage over the First Property; (d) pay the judgment debt (together with interest) owed to the Company under the Summary Judgment; and (e) pay the balance (if any) to Mr. Shum or into the Court or as the Court shall direct;

• (v) the Company shall apply the sale proceeds from the sale of the Second Property and Third Property to (a) pay the costs and expenses of effecting the above sale; (b) pay the costs of the June Proceedings; (c) pay the outstanding indebtedness owed to Wing Lung Bank Limited as secured by a mortgage and a second legal charge over the Second Property and the Third Property; (d) pay the judgment debt (together with interest) owed to the Company under the Summary Judgment; and (e) pay the balance (if any) to Mr. Shum or into the Court or as the Court shall direct;

• (vi) further or alternative to paragraphs (i), (ii) and (iii) above, a receiver be appointed to receive Mr. Shum’s share of any rents, income and/or profits arising from the Properties;

• (vii) Such further and/or other directions as the Court shall deem fit; and

• (viii) the costs of the June Proceedings to the Company.

The hearing of the June Proceedings had been fixed on 9 July 2015. On 2 July 2015, the Company was served with a summons taken out by Mr. Shum seeking to stay the June Proceedings pending the determination of HCA No. 200 of 2015 (the “ Application for stay of the June Proceedings ”). At the hearing held on 9 July 2015, the Court ordered that the June Proceedings and the Application for stay of the June Proceedings be adjourned to be heard together on 23 September 2015.

DIrECtOrS’ AnD CHIEF ExECutIVE’S IntErEStS AnD SHOrt POSItIOnS In SHArES, unDErLYInG SHArES AnD DEBEnturES OF tHE COmPAnY Or AnY ASSOCIAtED COrPOrAtIOnS

At 30 June 2015, none of the Directors or the chief executive of the Company nor their respective associates had any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities

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and Future Ordinance (the “ SFO ”)), which were required to be notified to the Company and the Stock Exchange pursuant to Division 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO); or were required, pursuant to Section 352 of the SFO, to be recorded in the register referred to therein, or as otherwise were required to be notified to the Company and the Stock Exchange pursuant to Rules 5.46 of the GEM Listing Rules.

SuBStAntIAL SHArEHOLDEr’S IntErEStS AnD SHOrt POSItIOnS In SHArES AnD unDErLYInG SHArES OF tHE COmPAnY

At 30 June 2015, so far as is known to the Directors and the chief executive of the Company, the interests and shorts positions of the persons or corporations (other than the Directors and the chief executive of the Company) in the shares and underlying shares of the Company as recorded in the register to be kept by the Company pursuant to Section 336 of the SFO; or who was directly or indirectly, to be interested in 5% or more of the nominal value of any class of the share capital carrying rights to vote in all circumstances at general meetings of the Company or any other members of the Group, were as follows:

Interests and short positions in the ordinary shares or underlying ordinary shares of the Company

				Interest in	total interest
			Interest in	underlying	in ordinary	Approximate
			ordinary shares	ordinary shares	shares	percentage of
			of the Company	of the Company	of the Company	shareholding
name of shareholder	nature of interests	Notes	(Note 1)	(Note 1)	(Note 1)	(Notes 1 and 13)
Eternity	Interest of controlled	5	52,500,000(L)	375,000,000(L)	427,500,000(L)	571.50% (L)
	corporation and party
	acting in concert
Cai Zhaoyang	Interest of controlled	6	—	427,500,000(L)	427,500,000(L)	571.50% (L)
	corporation and party			179,921,200(S)	179,921,200(S)	240.53% (S)
	acting in concert
Xing Hang	Beneficial owner and	6	—	427,500,000(L)	427,500,000(L)	571.50% (L)
	party acting in concert			179,921,200(S)	179,921,200(S)	240.53% (S)
Success Far	Security Interest	7	—	179,921,200(L)	179,921,200(L)	240.53% (L)
Goldenland	Beneficial owner and	8	—	427,500,000(L)	427,500,000(L)	571.50% (L)
	party acting in concert
Liu Jin	Interest of controlled	8	—	427,500,000(L)	427,500,000(L)	571.50% (L)
	corporation and party
	acting in concert

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				Interest in	total interest
			Interest in	underlying	in ordinary	Approximate
			ordinary shares	ordinary shares	shares	percentage of
			of the Company	of the Company	of the Company	shareholding
name of shareholder	nature of interests	Notes	(Note 1)	(Note 1)	(Note 1)	(Notes 1 and 13)
Xue Siman	Interest of controlled	8	—	427,500,000(L)	427,500,000(L)	571.50% (L)
	corporation and party
	acting in concert
Silver Empire	Beneficial owner and	9	—	427,500,000(L)	427,500,000(L)	571.50% (L)
	party acting in concert
Genius Earn	Interest of controlled	9	—	427,500,000(L)	427,500,000(L)	571.50% (L)
	corporation and party
	acting in concert
Liu Xiaolin	Interest of controlled	9	—	427,500,000(L)	427,500,000(L)	571.50% (L)
	corporation and party
	acting in concert
Truly Elite	Beneficial owner and	10	—	427,500,000(L)	427,500,000(L)	571.50% (L)
	party acting in concert
Yeung Heung Yeung	Interest of controlled	10	—	427,500,000(L)	427,500,000(L)	571.50% (L)
	corporation and party
	acting in concert
High Aim	Beneficial owner and	11	—	427,500,000(L)	427,500,000(L)	571.50% (L)
	party acting in concert
Ko Chun Shun Johnson	Interest of controlled	11	—	427,500,000(L)	427,500,000(L)	571.50% (L)
	corporation and party
	acting in concert
First Bonus	Beneficial owner and	12	—	427,500,000(L)	427,500,000(L)	571.50% (L)
	party acting in concert
Reorient Limited	Interest of controlled	12	—	427,500,000(L)	427,500,000(L)	571.50% (L)
	corporation and party
	acting in concert
Reorient Group Limited	Interest of controlled	12	—	427,500,000(L)	427,500,000(L)	571.50% (L)
	corporation and party
	acting in concert
Gainhigh	Interest of controlled	12	—	427,500,000(L)	427,500,000(L)	571.50% (L)
	corporation and party
	acting in concert
Insula	Interest of controlled	12	—	427,500,000(L)	427,500,000(L)	571.50% (L)
	corporation and party
	acting in concert

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Notes:

1. “ L ” represents long position in ordinary shares/underlying ordinary shares of the Company and “ S ” represents short position in ordinary shares/underlying ordinary shares of the Company.

2. On 17 February 2015, the Company and the Subscribers, namely Xing Hang Limited (“ xing Hang ”), Goldenland Mining & Investment Limited (“ Goldenland ”), Silver Empire Holding Limited (“ Silver Empire ”), Truly Elite Limited (“ truly Elite ”), High Aim Global Limited (“ High Aim ”) and First Bonus International Limited (“ First Bonus ”) entered into the Subscription Agreement pursuant to which the Subscribers have conditionally agreed to subscribe for, and the Company has conditionally agreed to allot and issue a total of 375,000,000 shares of the company (the “ Subscription Shares ”), comprising 345,000,000 ordinary shares of the Company (the “ Ordinary Subscription Shares ”) and 30,000,000 convertible preferred shares of the Company (the “ Preferred Shares ”) to the Subscribers, at an issue price of convertible HK$0.4 per Subscription Share (the “ Subscription ”).

3. Upon completion of the Subscription Agreement, Xing Hang will become the controlling shareholder of the Company. Pursuant to Rule 26.1 of the Takeovers Code, Xing Hang will make the unconditional mandatory cash offer (the “ Offer ”). Kingston Securities Limited (“ Kingston Securities ”) will make the Offer on behalf of Xing Hang to acquire all the issued ordinary shares of the Company at an offer price of HK$4.07 per offer share (other than the Excluded Shares (as defined below)).

4. Goldenland, Silver Empire, Truly Elite, High Aim and First Bonus are considered as parties acting in concert with Xing Hang, Eternity Investment Limited (“ Eternity ”), being the controlling shareholder (as defined under the GEM Listing Rules) of the Company, has undertaken to Xing Hang not to accept the Offer in respect of the 36,500,000 ordinary shares of the Company held by the Eternity Group (the “ Excluded Shares ”) (the “ Lock-up undertaking ”) and the Subscribers have undertaken to Eternity, among other things, not to sell their respective holdings in the Subscription Shares within one year after completion of the Subscription or during the period which Eternity remains directly or indirectly interested in 22,490,150 ordinary shares of the Company (representing 5.0% of the issued share capital of the Company as enlarged by the allotment and issue of the Subscription Shares (assuming that there is no adjustment to the conversion price of the Conversion Shares in accordance with the terms of the Preferred Shares and that there is no other change in the number of ordinary shares of the Company in issue)) (whichever period is shorter) (the “ Subscribers’ Lock-up undertaking ”). In view of these undertakings entered into between Eternity and the Subscribers, Eternity is regarded as a party acting in concert with the Subscribers. Kingston Securities, being an agent to make the Offer, is also regarded as a party acting in concert with Xing Hang.

5. New Cove Limited (“ new Cove ”) is interested in 52,500,000 shares of the Company. As New Cove is an indirect wholly-owned subsidiary of Eternity, Eternity is deemed to be interested in such 52,500,000 shares. In addition, as Eternity is considered as party acting in concert with the Subscribers under section 317 of the SFO in view of the Subscribers’ Lock-Up Undertaking. Eternity is deemed to be interested in the Subscription Shares. As such, Eternity is deemed to be interested in an aggregate of 427,500,000 ordinary shares of the Company.

6. Xing Hang is ultimately owned as to 82.5% by Mr. Cai Zhaoyang, 7.5% by Mr. Lin Fan, 3.75% by Ms. Xu Yaping, 3.75% by Mr. Guo Pengcheng and 2.5% by Mr. Chen Jie. Pursuant to the Subscription Agreement, Xing Hang will subscribe for 179,921,200 Ordinary Subscription Shares. Pursuant to the term loan agreement entered into between Xing Hang and Success Far (as defined below), a share charge will be given by Xing Hang in favour of Success Far over the 179,921,000 Ordinary Subscription Shares to be issued to Xing Hang under the Subscription. Accordingly, Xing Hang acquires a short position in

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respect of such 179,921,000 ordinary shares of the Company. As Xing Hang is a controlled corporation of Mr. Cai Zhaoyang, Mr. Cai is deemed to have acquired a short position in such 179.921,200 ordinary shares of the Company. Further, as Xing Hang is party acting in concert with other Subscribers and with Eternity under section 317 of the SFO in view of the Subscribers’ Lock-Up Undertaking, each of Xing Hang and Mr. Cai Zhaoyang is deemed to be interested in an aggregate of 427,500,000 ordinary shares of the Company.

1. In accordance with the term loan agreement entered into between Xing Hang and Success Far Holdings Limited (“ Success Far ”) which is owned as to approximately 20.85% by Silver Empire, 22.93% by Truly Elite, 25% by Goldenland and 31.22% by High Aim, pursuant to which Success Far shall provide a facility to Xing Hang and Xing Hang give a share charge in favour of Success Far over 179,921,200 Ordinary Subscription Shares to be issued to Xing Hang under the Subscription. As such, Success Far is deemed to be interested in 179,921,200 ordinary shares of the Company.

2. Goldenland is ultimately owned as to 50% by Mr. Liu Jin and 50% by Ms. Xue Siman. Pursuant to the Subscription Agreement, Goldenland will subscribe for 45,396,178 Ordinary Subscription Shares. As Goldenland is a party acting in concert with the other Subscribers and with Eternity under section 317 of the SFO in view of the Subscribers’ Lock-Up Undertaking, each of Goldenland, Mr. Liu Jin and Ms. Xue Siman is deemed to be interested in aggregate of 427,500,000 ordinary shares of the Company.

3. Silver Empire is wholly-owned by Genius Earn Limited which is in turn wholly-owned by Mr. Liu Xiao Lin. Pursuant to the Subscription Agreement, Silver Empire will subscribe for 37,861,665 Ordinary Subscription Shares. As Silver Empire is a party acting in concert with the other Subscribers and with Eternity under section 317 of the SFO in view of the Subscribers’ Lock-Up Undertaking, each of Silver Empire, Genius Earn Limited and Mr. Liu Xiao Lin is deemed to be interested in an aggregate of 427,500,000 ordinary shares of the Company.

4. Truly Elite is wholly-owned by Mr. Yeung Heung Yeung. Pursuant to the Subscription Agreement, Truly Elite will subscribe for 41,628,921 Ordinary Subscription Shares. As Truly Elite is a party acting in concert with the other Subscribers and with Eternity under section 317 of the SFO in view of the Subscribers’ Lock-Up Undertaking, each of Truly Elite and Mr. Yeung Heung Yeung is deemed to be interested in an aggregate of 427,500,000 ordinary shares of the Company.

5. High Aim is wholly-owned by Mr. Ko Chun Shun, Johnson. Pursuant to the Subscription Agreement, High Aim will subscribe for 26,697,946 Ordinary Subscription Shares and 30,000,000 Preferred Shares. As High Aim is a party acting in concert with other Subscribers and with Eternity under section 317 of the SFO in view of the Subscribers’ Lock-Up Undertaking, each of High Aim and Mr. Ko Chun Shun, Johnson is deemed to be interested in an aggregate of 427,500,000 ordinary shares of the Company.

6. First Bonus is a wholly-owned subsidiary of Reorient Limited, a company incorporated in the British Virgin Islands with limited liability and is wholly-owned by Reorient Group Limited, a company incorporated in Hong Kong with limited liability and the shares of which are listed on the Main Board of the Stock Exchange. Reorient Group Limited is a subsidiary of Gainhigh Holdings Limited (“ Gainhigh ”) which in turn is a subsidiary of Insula Holdings Limited (“ Insula ”). Mr Ko Chun Shun, Johnson is an executive director and the controlling shareholder (as defined under the Listing Rules) of Reorient Group Limited. Pursuant to the Subscription Agreement, First Bonus will subscribe for 13,494,090 Ordinary Subscription Shares. As First Bonus is a party acting in concert with the other Subscribers and with Eternity under section 317 of the SFO in view of the Subscribers’ Lock-Up Undertaking, each of First Bonus, Reorient Limited, Reorient Group Limited, Gainhigh, Insula and Mr. Ko Chun Shun, Johnson is deemed to be interested in an aggregate of 427,500,000 ordinary shares of the Company.

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1. The percentage is calculated on the basis of 74,803,000 ordinary shares of the Company in issue as at 30 June 2015.

Save as disclosed above, as at 30 June 2015, so far as is known to the Directors and the chief executive of the Company, and based on the public records filed on the website of the Stock Exchange and records kept by the Company, no other persons or corporations (other than the Directors and the chief executive of the Company) has interests or short positions in the shares or underlying shares of the Company as recorded in the register required to be kept by the Company pursuant to Section 336 of the SFO, or, were directly or indirectly, interests 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 any other members of the Group.

SECurItIES trAnSACtIOnS BY DIrECtOrS

During the period under review, the Company has adopted a code of conduct regarding Director’s securities transactions on terms no less exacting than the required standard of dealings as set out in Rules 5.48 to 5.67 of the GEM Listing Rules. Having made specific enquiry of all the Directors, all Directors have confirmed that they have complied with such code of conduct and the required standard of dealings on Directors’ securities transactions.

COmPEtInG IntErEStS

At 30 June 2015, none of the Directors, substantial shareholders of the Company nor any of their respective associates (as defined in the GEM Listing Rules) has any interest in a business which causes or may cause any significant completion with the business of the Group.

PurCHASE, SALE Or rEDEmPtIOn OF tHE COmPAnY’S LIStED SECurItIES

During the period under review, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities.

AuDIt COmmIttEE

The Company has established an audit committee (the “ Audit Committee ”) with written terms of reference in compliance with Rules 5.28 to 5.29 of the GEM Listing Rules. As at 30 June 2015, the Audit Committee comprised three independent non-executive Directors, namely, Mr. Tam B Ray, Billy, Mr. Chu Kin Wang, Peleus and Mr. Tse Joseph. The Audit Committee has reviewed the unaudited condensed consolidated interim results for the six months ended 30 June 2015 and has provided advice and comments thereon.

CODE On COrPOrAtE GOVErnAnCE PrACtICES

During the period under review, the Company had applied the principles as set out in the code provisions in the Corporate Governance Code and Corporate Governance Report (the “ CG Code and report ”) contained in Appendix 15 to the GEM Listing Rules save for certain deviations as stated below.

— 38 —

Insurance for potential legal actions against the Directors

Code provision A.1.8 of the CG Code and Report stipulates that the Company should arrange appropriate insurance to cover potential legal actions against its Directors. During the period under review, the Company is still arranging for appropriate liability insurance for the Directors for indemnifying their liabilities arising from corporate activities.

Chairman and Chief Executive

Code provision A.2.1 of the CG Code and Report stipulates that the roles of chairman and chief executive should be separate and should not be performed by the same individual. Due to practical necessity of the Group’s corporate operating structure, the roles of the chairman and the chief executive officer are both performed by Mr. Chan Kin Wah, Billy who is the Chairman overseeing the operation and management of the Group. The Board believes that this structure will not impair the balance of power and authority between the Board and the management of the Company. The Company is looking for a suitable candidate to fill the vacancy in order to comply with the CG Code and Report.

DISCLOSurE OF InFOrmAtIOn On DIrECtOrS PurSuAnt tO ruLE 17.50A(1) OF tHE GEm LIStInG ruLES

The change in information on Directors subsequent to the date of the 2014 annual report of the Company, which is required to be disclosed pursuant to Rule 17.50A(1) of the GEM Listing Rules, is set out below:

name of Director

Details of changes

Mr. Chu Kin Wang, Peleus	—	appointed as an independent non-executive director of National
		Agricultural Holdings Limited, a company listed on the main
		board of the Stock Exchange (Stock Code: 1236) with effect from
		25 June 2015

SHArE OPtIOn SCHEmE

Pursuant to an ordinary resolution passed at the annual general meeting held on 7 November 2014, a new share option scheme (“ Option Scheme ”) was adopted for the purpose of providing incentives or rewards to eligible participants for their contribution to the success of the Group’s operation. Unless otherwise cancelled or amended, the expiry date of the Option Scheme will be on 6 November 2024.

The total number of shares in respect of which options may be granted under the Option Scheme is not permitted to exceed 10% of the shares of the Company in issue, or if such 10% limit is refreshed, the maximum aggregate number of shares which may be issued upon the exercise of all outstanding options grant and yet to be exercised under the Option Scheme must not exceed 30% of the total number of the shares of the Company in issue from time to time. The number of shares in respect of which options may be granted to any eligible participant in any one year is not permitted to exceed 1% of the shares of the Company in issue. Any further grant of options in excess of the 1% limit shall be subject to approval by the Company’s shareholders in general meeting with such

— 39 —

eligible participant and his, her or its associates abstaining from voting. Each grant of options to any director, chief executive or substantial shareholder of the Company, or any of their respective associates must be approved by the independent non-executive directors of the Company. Where any grant of options to a substantial shareholder or an independent non-executive director of the Company or any of their respective associates would result in the shares of the Company issued or to be issued upon exercise of all options already granted or to be granted to such person in the 12 month period up to and including the date of such grant: (i) representing in aggregate over 0.1% of the shares of the Company in issue; and (ii) having an aggregate value, based on the closing price of the shares of the Company at the date of each grant, in excess of HK$5 million, then such further grant of options must be approved by the Company’s shareholders in general meeting.

A non-refundable nominal consideration of HK$1.00 shall be paid to the Company upon acceptance of the grant. Options may be exercised in accordance with the terms of the Option Scheme at any time during the period to be determined and notified by the directors of the Company to the eligible participant. Such period shall not exceed the period of 10 years from the date of grant of the particular option but subject to the provisions for early termination of the Option Scheme. The subscription price is determined by the directors of the Company, and will not be less than the higher of closing price of the Company’s shares on the date of grant, and the average closing price of the Company’s shares for the five business days immediately preceding the date of grant.

Details of the Option Scheme were set out in the circular of the Company dated 7 October 2014. Under the Option Scheme, the maximum number of shares which may be issued upon the exercise of all options was 7,480,300 shares of the Company, representing 10% of the share capital of the Company in issue as at the date of passing the ordinary resolution of approving the adoption of the Option Scheme on 7 November 2014 and as at the date of this report. Since the Option Scheme has become effective, no options were granted, exercised, lapsed or cancelled under the Option Scheme during the period under review and there were no outstanding options under the Option Scheme at the beginning and at the end of the six month period ended 30 June 2015.

By Order of the Board EDS Wellness Holdings Limited Chan Kin Wah, Billy Chairman

Hong Kong, 11 August 2015

As at the date of this report, the Board comprises two executive Directors, namely Mr. Chan Kin Wah, Billy and Mr. Lee Chan Wah; and three independent non-executive Directors, namely Mr. Tam B Ray, Billy, Mr. Chu Kin Wang, Peleus and Mr. Tse Joseph.

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