SuperRobotics Limited — Interim / Quarterly Report 2016

Nov 11, 2016

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THIRD QUARTERLY REPORT FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2016

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 of the Stock Exchange 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 of Hong Kong Limited 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 ” and each, a “ Director ”) of SkyNet Group Limited (the “ Company ”, together with its subsidiaries, the “ Group ”) collectively and individually accept responsibility, includes particulars given in compliance with the Rules Governing the Listing of Securities on GEM (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.

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THIRD QUARTERLY RESULTS (UNAUDITED)

The board of Directors (the “ Board ”) is pleased to announce the unaudited condensed consolidated third quarterly results of the Group for the nine months ended 30 September 2016 together with the comparative unaudited figures for the corresponding period in 2015 as follows:

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Notes Turnover 3 Cost of sales Gross (loss)/profit Other revenue Other losses 4 Selling and distribution costs Administrative expenses Loss from operations 5 Finance costs 6 Loss before taxation Income tax (expense)/credit 7 Loss for the period Other comprehensive income/(expenses) for the period Item that may be subsequently reclassified to profit or loss: Exchange differences on translating foreign operations Total comprehensive expenses for the period	For the three months ended 30 September 2016 2015 HK$’000 (unaudited) HK$’000 (unaudited) 11,734 11,667 (22,899) (8,277) (11,165) 3,390 103 84 (490) — (1,137) (552) (8,663) (12,468) (21,352) (9,546) (30) (272) (21,382) (9,818) 62 (286) (21,320) (10,104) (940) (87) (22,260) (10,191)	For the nine months ended 30 September 2016 2015 HK$’000 (unaudited) HK$’000 (unaudited) 36,435 32,370 (67,402) (23,639) (30,967) 8,731 162 226 (490) — (2,793) (1,457) (27,094) (23,694) (61,182) (16,194) (323) (734) (61,505) (16,928) (353) (634) (61,858) (17,562) (950) (72) (62,808) (17,634)

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Notes Loss for the period attributable to Owners of the Company Non-controlling interests Total comprehensive expenses for the period attributable to: Owners of the Company Non-controlling interests Loss per share 9 — Basic and diluted	For the three months ended 30 September 2016 2015 HK$’000 (unaudited) HK$’000 (unaudited) (21,148) (10,629) (172) 525 (21,320) (10,104) (22,088) (10,716) (172) 525 (22,260) (10,191) (26.3) cents (14.2)cents	For the nine months ended 30 September 2016 2015 HK$’000 (unaudited) HK$’000 (unaudited) (63,281) (18,989) 1,423 1,427 (61,858) (17,562) (64,231) (19,061) 1,423 1,427 (62,808) (17,634) (15.1) cents (25.4)cents

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL INFORMATION

The Company was incorporated in the Cayman Islands and with effect from 22 April 2014, the Company was deregistered in the Cayman Islands and continued in Bermuda as an exempted company with limited liability and its shares are listed on GEM. Its ultimate holding company is Xing Hang Limited (“ Xing Hang ”), a company incorporated in the British Virgin Islands. The Company’s addresses of the registered office and the principal place of business in Hong Kong are Clarendon House, 2 Church Street, Hamilton HM 11, Bermuda and Unit 3811, 38/F., Shun Tak Centre, West Tower, 168-200 Connaught Road Central, Hong Kong respectively.

The unaudited condensed consolidated financial statements are presented in units of thousands of Hong Kong dollars (HK$’000), unless otherwise stated, which is the same as the functional currency of the Company.

The Company’s principal activity is investment holding and the principal activities of its principal subsidiaries are the sales of beauty products and provision of therapy services and provision of in-flight WLAN and WIFI engineering and services.

2. BASIS OF PREPARATION

The unaudited condensed consolidated financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (“ HKFRSs ”), which is a collective term that includes all applicable HKFRSs, Hong Kong Accounting Standards (“ HKASs ”) and Interpretations (“ Int ”) issued by the Hong Kong Institute of Certified Public Accountants (the “ HKICPA ”), and accounting principles generally accepted in Hong Kong. In addition, the unaudited condensed consolidated financial statements include applicable disclosures required by the GEM Listing Rules and the disclosure requirements of the Companies Ordinance (Chapter 622 of the Laws of Hong Kong).

The unaudited condensed consolidated financial statements have been prepared on the historical cost basis. The accounting policies and basis of preparation adopted in the preparation of the unaudited condensed consolidated financial statements are consistent with those adopted in the audited consolidated financial statements for year ended 31 December 2015.

The HKICPA has issued a number of new and revised standards, amendments to standards and Int (collectively referred to as “ new and revised HKFRSs ”). The Group has adopted the new and revised HKFRSs which are relevant to the Group’s operations and are mandatory for the financial year beginning on 1 January 2016. The adoption of these new and revised HKFRSs does not have any significant financial effect on the Group’s unaudited results of operations and financial position.

The Group has not early adopted the new and revised HKFRSs that have been issued but are not yet effective for the nine months ended 30 September 2016.

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3. REVENUE

Sale of beauty products Provision of therapy services 4. OTHER LOSSES Change in fair value of assets held for trading	For the three months ended 30 September 2016 2015 HK$’000 (unaudited) HK$’000 (unaudited) 1,065 1,068 10,669 10,599 11,734 11,667 For the three months ended 30 September 2016 2015 HK$’000 (unaudited) HK$’000 (unaudited) — —	For the nine months ended 30 September 2016 2015 HK$’000 (unaudited) HK$’000 (unaudited) 3,211 3,192 33,224 29,178 36,435 32,370 For the nine months ended 30 September 2016 2015 HK$’000 (unaudited) HK$’000 (unaudited) 490 —

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5. LOSS FROM OPERATIONS

	For the three months	For the three months	For the nine months	For the nine months
	ended 30 September		ended 30 September
	2016	2015	2016	2015
	HK$’000	HK$’000	HK$’000	HK$’000
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Loss from operations has been
arrived at after charging:
Depreciation on property, plant
and equipment	3,565	1,160	8,237	3,570
Operating lease rentals in respect
of rented premises	1,378	1,580	4,665	5,137
Staff costs including directors’
emoluments	8,218	3,882	20,402	22,272

6. FINANCE COSTS

	For the three months	For the three months	For the nine months	For the nine months
	ended 30 September		ended 30 September
	2016	2015	2016	2015
	HK$’000	HK$’000	HK$’000	HK$’000
	(unaudited)	(unaudited)	(unaudited)	(unaudited)
Imputed interest on
promissory notes	—	—	—	351
Interest on finance leases	30	22	200	65
Interest on other borrowings wholly
payable within 5 years	—	250	123	318
	30	272	323	734

7. INCOME TAX EXPENSE

• Hong Kong Profits Tax has been provided at the rate of 16.5% (2015: 16.5%) on the estimated assessable profits for the nine months ended 30 September 2016.

• No provision for overseas income tax was made as the Company’s overseas subsidiaries did not have taxable income for the nine months ended 30 September 2016 (2015: Nil).

• The Group had no significant unprovided deferred tax assets and liabilities at 30 September 2016 (2015: Nil).

8. DIVIDEND

The Board does not recommend the payment of any dividend for the nine months ended 30 September 2016 (2015: Nil).

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9. LOSS PER SHARE

The calculation of the basic loss per share for the nine months ended 30 September 2016 is based on the loss for the period of approximately HK$63,281,000 (2015: loss of approximately HK$18,989,000) and on the weighted average of 419,803,000 shares in issue during the nine months ended 30 September 2016 (2015: 74,803,000 shares).

For the nine months ended 30 September 2016, the computation of diluted loss per share does not assume the conversion of the Company’s outstanding preferred shares since their exercise would result in a decrease in loss per share.

Diluted loss per share for the nine months ended 30 September 2015 was the same as the basic loss per share as there was no diluting event.

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10. RESERVES

Attributable to owners of the Company

Share capital- ordinary Shares HK$’000 At 1 January 2016 (audited) 41,980 (Loss)/profit for the period — Other comprehensive income for the period: Exchange differences on translating foreign operations — Total comprehensive expenses for the period — Dividends paid to non- controlling interest — At 30 September 2016 (unaudited) 41,980 At 1 January 2015 (audited) 7,480 (Loss)/profit for the period — Other comprehensive expenses for the period: Exchange differences on translating foreign operations — Total comprehensive expenses for the period — Dividends paid to non- controlling interest — At 30 September 2015 (unaudited) 7,480	Share capital- ordinary Shares HK$’000 41,980 — —	Share capital- preferred Shares HK$’000 3,000 — —	Share premium HK$’000 196,380 — —	Merger reserve HK$’000 — — —	Contributed surplus HK$’000 27,141 — —	Translation reserve HK$’000 192 — (950)	Acc- umulated losses HK$’000 (129,341) (63,281) —	Sub-total HK$’000 139,352 (63,281) (950)	Non- controlling interests HK$’000 825 1,423 —	Total equity HK$’000 140,177 (61,858) (950)
		—	—	—	—	(950)	(63,281)	(64,231)	1,423	(62,808)
	—	—	—	—	—	—	—	—	(1,715)	(1,715)
	41,980	3,000	196,380	—	27,141	(758)	(192,622)	75,121	533	75,654
	7,480 — —	— — —	97,922 — —	— — —	27,141 — —	11 — (72)	(87,255) (18,989) —	45,299 (18,989) 1	3,757 1,427 —	49,056 (17,562) 1
		—	—	—	—	(72)	(18,989)	(19,061)	1,427	(17,634)
	—	—	—	—	—	—	—	—	(3,871)	(3,871)
	7,480	—	97,922	—	27,141	(61)	(106,244)	26,238	1,313	27,551

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MANAGEMENT DISCUSSION AND ANALYSIS

Business Review

The Group is principally engaged in the sales of beauty products and provision of therapy services (collectively, the “ Beauty Business ”), as well as the provision of in-flight WLAN and WIFI engineering and services (the “ WIFI Business ”). For the sales 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 medical skincare centre under the trade name “COLLAGEN +” at Soundwill Plaza in Causeway Bay, Hong Kong. For the WIFI Business, the Group has planned to source and enters into contracts with airline companies to provide them with in-flight WLAN and WIFI engineering and services, including the provision of WLAN and WIFI equipment and technical support for installation. Depending on the mode of cooperation with the airline companies, the Group may or may not charge the airline companies for the provision of WLAN or WIFI equipment to them but may earn/share any income from the use of the WLAN or WIFI systems for advertising or shopping on the airplanes. In addition to the People’s Republic of China (the “ PRC ”), the Group has also appointed a sales representative in Singapore which will target airline companies in South-East Asia.

The Group entered into a cooperation agreement (the “2015 Cooperation Agreement”) with an airline company (the “ Airline ”) on 3 December 2015, pursuant to which the Group has agreed to provide and install in-flight WLAN and WIFI connection equipment in an agreed number of the Airline’s aircraft in return for sharing certain income generated from the use of the in-flight WLAN and WIFI connection equipment by passengers with a guaranteed minimum payment to the Airline. As the Group is still in the process of developing its own software platform and applying for certifications and approvals which are necessary for the Group to engage in in-flight WLAN and WIFI communication equipment design and manufacturing business in the PRC, a gross loss of HK$41.8 million have been recognised for the nine months ended 30 September 2016. On 28 January 2016, the Central of Southern Regional Administration of the Civil Aviation Administration of China (the “ CAAC ”) granted the Parts Manufacturers Approval for in-flight WLAN equipment to Donica Connectivity Technology Co. Ltd., an indirect wholly-owned subsidiary of the Company.

Despite facing adverse macro-economic conditions in Hong Kong, the performance of the Beauty Business as a whole has met the expectation of the Board. During the period under review, the Group continued to provide deep retail discounts and focused on high volume but low cost wholesales for the beauty products under the brand name “Evidens de Beauté”. Furthermore, the Group adhered to the measure of reducing fixed overheads and did not renew the tenancy agreement of the beauty centre at Lyndhust Terrace upon its expiration on 31 March 2016. Consequently, comparing with the corresponding period in 2015, the gross loss and net loss incurred from the operation under the brand name “Evidens de Beauté” has been reduced by 87.3% and 26.4% respectively for the nine months ended 30 September 2016.

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Financial Review

During the period under review, the Group recorded a turnover of approximately HK$36.4 million, representing an increase of approximately 12.6% as compared with the corresponding period in 2015, of which approximately HK$3.2 million (2015: approximately HK$3.2 million) and approximately HK$33.2 million (2015: approximately HK$29.2 million) were generated from the sales of beauty products and provision of therapy services respectively. China Honest Enterprises Limited (“ China Honest ”), a 51% owned subsidiary of the Company, was the major revenue contributor of the Group.

During the period under review, China Honest contributed approximately HK$34.5 million (2015: approximately HK$29.7 million) to the turnover of the Group, representing approximately 94.8% of the total turnover, of which approximately HK$1.3 million (2015: approximately HK$1.1 million) and HK$33.2 million (2015: approximately HK$28.6 million) were generated from the sales of beauty products and provision of therapy services respectively. The revenue generated from the sales of beauty products under the brand name “Evidens de Beauté” were approximately HK$1.9 million (2015: approximately HK$2.1 million) and the Group did not provide any therapy services under the brand name “Evidens de Beauté” during the nine months ended 30 September 2016 (2015: approximately HK$0.6 million).

The negative gross margin was approximately 85.0% (2015: positive gross margin of approximately 27.0%). China Honest contributed gross profit of approximately HK$10.9 million to the Group, while the operations under the brand name “Evidens de Beauté” recorded a gross loss of approximately HK$0.1 million. The negative gross margin is mainly due to the cost of sales of approximately HK$41.8 million incurred by the WIFI Business as the Group is still in the process of developing its own software platform.

Other income of approximately HK$162,000 (2015: approximately HK$226,000) was mainly contributed by the interest income on bank deposits and other sundry income.

Other losses related to change in fair value of assets held for trading as the Group has invested in share securities trading on the Stock Exchange during the third quarter of the year.

The selling and distribution costs was approximately HK$2.8 million for the nine months ended 30 September 2016 (2015: approximately HK$1.5 million), representing an increase of 86.7% over that of the corresponding period in 2015. Such increase was mainly attributed to the advertising and promotion expenses of approximately HK$0.3 million and approximately HK$1.0 million incurred by the Beauty Business and the WIFI Business respectively during the period under review.

The administrative expenses was approximately HK$27.1 million for the nine months ended 30 September 2016 (2015: approximately HK$23.7 million), representing an increase of 14.3% over that of the corresponding period in 2015. Such increase was mainly attributed to (i) increase in legal and professional fee of approximately HK$2.9 million; (ii) increase in staff recruitment cost

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of approximately HK$0.9 million; and (iii) increase in the value of fixed assets written off of approximately HK$1.7 million. However, the increment is offset by (i) decrease in staff cost and director’s remuneration of approximately HK$1.5 million; and (ii) decrease in depreciation and amortization expenses of approximately HK$0.6 million.

The finance costs for the nine months ended 30 September 2016 of approximately HK$0.3 million (2015: approximately HK$0.7 million) was mainly attributed to (i) the loan interest expenses paid to Koffman Investment Limited of approximately HK$50,000; (ii) the loan interest expenses paid to Pure Profit Holdings Limited of approximately HK$80,000; and (iii) the finance lease interest of approximately HK$0.2 million.

The consolidated loss attributable to owners of the Company amounted to approximately HK$63.3 million for the nine months ended 30 September 2016 (2015: approximately HK$19.0 million). Such loss was mainly attributed to the loss incurred by the WIFI Business.

OUTLOOK

The Directors do not expect any significant growth in the Group’s Beauty Business in 2016. As disclosed in the circular of the Company dated 7 October 2015 (the “ Circular ”) in relation to, among other things, the Subscription (as defined in the Circular), the Directors believed that the WIFI Business would provide the Group with a good opportunity to improve its financial position and liquidity and the development of the WIFI Business in a segment different from the then existing business of the Group would diversify and broaden its revenue sources and improve its profitability in the long run.

With the increasing number of flights and internet users in the PRC, the Company believes that there will be a considerable demand of in-flight WIFI services. In addition, WIFI connection and telecommunication have become a trend in ground-air connectivity for European and American airlines in recent years, and the European Union has already approved in-flight cell phone calls, SMS, and email services in its airspace. With regard to the growth in the air travel industry, based on the statistics issued by the CAAC, there were approximately 232 million passengers having chosen to travel by air during the first half of 2016, representing a 10.8% increase as compared with the same period in 2015.

In view of the increasingly fierce global competition of the civil aviation market, the Company understands that Chinese airline companies are also considering to provide internet access services as what their foreign counterparts are currently doing. To date, certain state-owned Chinese airlines have started in-flight WIFI service trials, indicating that the Chinese civil aviation industry has realised the demand for ground-air connectivity and the inconvenience that information isolation during flights may bring. The Company has noted that some airline companies have announced their future plans for the provision of in-flight WIFI services to their passengers, especially passengers travelling on international flights. Most of the in-flight WIFI services provided by airline companies are free of charge, which would bring challenges to third party service operators, such as the Company, to generate revenue from value added service as well as commercial advertisement.

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However, as the majority of the PRC’s air passengers are now frequent flyers, the Company believes that in-flight WIFI services will become an increasingly influential factor for many passengers when choosing airlines and therefore it is expected that Chinese airline companies will allocate more resources to introduce innovative services, such as in-flight shopping, through in-flight WIFI services that enhance passengers’ travel experience. As such, the Company believes that there are good opportunities to develop the Group’s WIFI Business in the PRC which will facilitate the provision of in-flight WLAN and WIFI connections.

In addition, in order to improve the profitability and preserve of value of the Group over the longer term, the Group will look for suitable investment opportunities characterized by stable cash inflows and steady revenue stream.

CONTINGENT LIABILITY

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 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; 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 Judgment;

• (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 High Court Action No. 200 of 2015 to claim against the Company for: (i) the Summary Judgement be set aside; (ii) the loss and damages suffered by Mr. Shum as a result of the Summary Judgement against him; (iii) an order for discovery upon oath of all matters

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relating to the Summary Judgement; (iv) an order for payment of all sums found due to Mr. Shum together with interest thereon; and (v) costs. On 14 May 2015, the Company filed a defence to refute the statement of claim in that action on the basis, among others, that (i) Mr. Shum was bound by the Summary Judgement; and (ii) the Company denied the allegations raised against the Company by Mr. Shum in the statement of claim. Furthermore, on 10 December 2015, the Company filed an inter parties summons for an application to strike out the writ of Summons and statement of claim filed by Mr. Shum in that action. A substantive hearing of such application was held on 8 June 2016 (the “ Hearing ”). During the Hearing, the court allowed the Company’s application and struck out Mr. Shum’s action with an order for costs and a certificate for two counsel. The court further ordered that the amount of HK$47,767,709.60, being the outstanding indebtedness (inclusive of interest) up to 8 June 2015 under the Summary Judgment paid into court by Mr. Shum on 5 November 2015, be paid out to the Company’s solicitors (the “ 8 June 2016 Order ”).

On 16 June 2016, the Company received a notice of appeal filed by Mr. Shum as appellant in the Court of Appeal of the High Court of Hong Kong (the “ Court of Appeal ”) (on appeal from High Court Action No. 200 of 2015), pursuant to which Mr. Shum requested: (i) to appeal against the 8 June 2016 Order; (ii) the Court of Appeal to order that the 8 June 2016 Order be set aside and that the Company’s solicitors pay back the amount of HK$47,767,709.60 into court; and (iii) the Court of Appeal to order that the Company pay Mr. Shum the costs of the appeal. A substantive hearing of such appeal has been fixed to be held on 10 January 2017.

On 26 October 2016, a consent order was made by the Court of First Instance of the High Court of the Hong Kong Special Administrative Region that, among others, (a) the charging order absolute dated 14 January 2015 imposing a charge on Mr. Shum’s beneficial interest in the estate right title benefit and interest of certain companies wholly-owned by Mr. Shum be discharged; and (b) the charging order absolute dated 14 January 2015 imposing a charge on Mr. Shum’s beneficial interest in the estate right title benefit and interest of certain properties be discharged, upon the settlement of all the outstanding interest under the Summary Judgment dated 6 September 2013.

On 7 November 2016, the Company announced that the Group has received a sum of approximately HK$3.2 million from Mr. Shum’s solicitors to settle the outstanding interest under the Summary Judgment dated 6 September 2013.

EVENTS AFTER THE REPORTING PERIOD

On 24 October 2016, the Board announced that Shenzhen Donica Networking Technology Co. Ltd. (“ Shenzhen Donica ”), an indirect wholly-owned subsidiary of the Company, entered into another cooperation agreement (the “ 2016 Cooperation Agreement ”) with the Airline, pursuant to which the 2015 Cooperation Agreement and all other relevant arrangements contemplated thereunder have been superseded by the 2016 Cooperation Agreement. The arrangements under the 2016 Cooperation Agreement are more favourable to Shenzhen Donica as compared to those under the 2015 Cooperation Agreement. Pursuant to the 2016 Cooperation Agreement, the annual guaranteed minimum payment from Shenzhen Donica to the Airline has been substantially reduced and Shenzhen Donica is entitled to a higher profit sharing ratio for revenue generated by the in-flight WLAN and

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WIFI connection equipment business introduced by Shenzhen Donica. In addition, the Airline agreed to forgo all of the unpaid annual guaranteed minimum payment owed by Shenzhen Donica to the Airline under the 2015 Cooperation Agreement.

In return of the above, Shenzhen Donica agreed to transfer to the Airline the right of use of a specified number of in-flight WLAN and WIFI equipment and in the event that Shenzhen Donica breaches the 2016 Cooperation Agreement, the ownerships of such in-flight WLAN and WIFI equipment will be transferred to the Airline. The term of the 2016 Cooperation Agreement is three years commencing from 24 October 2016. For details, please refer to the announcement of the Company dated 24 October 2016.

DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES OF THE COMPANY OR ANY ASSOCIATED CORPORATIONS

As at 30 September 2016, the interests and short positions of the Directors or the chief executive of the Company 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 and Futures Ordinance (the “ SFO ”)), which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which 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 to 5.68 of the GEM Listing Rules were as follows:

Long and short positions in the ordinary shares and underlying shares of the Company

				Interest in		Approximate
Name of Director/			Interest in	underlying	Total interest	percentage of
chief executive	Nature of interests		shares	shares	in shares	shareholding
		Notes	(Note 1)	(Note 1)	(Note 1)	(Notes 1 and 3)
Mr. Cai Zhaoyang	Interest of controlled	2, 3 and 4	397,504,349 (L)	30,000,000 (L)	427,504,349 (L)	101.83% (L)
	corporation		179,921,200 (S)		179,921,200 (S)	42.86% (S)

Notes:

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

2. 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, which in turn directly holds long positions in 427,504,349 shares of the Company and short positions in 179,921,200 shares of the Company. Accordingly, Mr. Cai Zhaoyang is deemed to be interested in the long positions in 427,504,349 shares and short positions in 179,921,200 shares of the Company.

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1. As at 30 September 2016, Xing Hang held 179,925,549 shares of the Company and was deemed to be interested in an aggregate of 247,578,800 shares of the Company (comprising 217,578,800 ordinary shares and 30,000,000 preferred shares of the Company) held by High Aim Global Limited (“ High Aim ”), Goldenland Mining & Investment Limited (“ Goldenland ”) Silver Empire Holding Limited (“ Silver Empire ”), Truly Elite Limited (“ Truly Elite ”), First Bonus International Limited (“ First Bonus ”) and Eternity Investment Limited (“ Eternity ”) under Sections 317 and 318 of the SFO. Accordingly, Mr. Cai Zhaoyang is deemed to be interested in the long positions in 427,504,349 shares of the Company.

2. Pursuant to a term loan agreement (the “ Term Loan Agreement ”) entered into between Xing Hang (as borrower) and Success Far Holdings Limited (“ Success Far ”) (as lender) on 17 February 2015, a deed of charge and assignment in relation to the 179,921,200 shares of the Company had been executed by Xing Hang (as charger) in favour of Success Far (as chargee, pursuant to which 179,921,200 shares of the Company have been charged by Xing Hang to Success Far as security under the Term Loan Agreement). Accordingly, Xing Hang acquired short positions in respect of such 179,921,200 shares of the Company.

3. The percentage is calculated on the basis of 419,803,000 shares of the Company in issue as at 30 September 2016.

Save as disclosed above, as at 30 September 2016, so far as is known to any Directors or chief executive of the Company, none of the Directors and the chief executive of the Company had any interests or short positions in any shares, underlying shares and debenture of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) which would have to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they were taken or deemed to have under such provisions of the SFO), or which were recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or which were required, pursuant to Rules 5.46 to 5.68 of the GEM Listing Rules, to be notified to the Company and the Stock Exchange.

SUBSTANTIAL SHAREHOLDER’S INTERESTS AND SHORT POSITIONS IN SHARES AND UNDERLYING SHARES OF THE COMPANY

As at 30 September 2016, so far as is known to the Directors, 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.

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

				Interest in
			Interest in	underlying	Total interest	Approximate
Name of			shares of the	shares of the	in shares of	percentage of
shareholder	Nature of interests		Company	Company	the Company	shareholding
		Notes	(Note 1)	(Note 1)	(Note 1)	(Notes 1 and 13)
Eternity	Interest of controlled corporation and	5	397,500,000(L)	30,000,000(L)	427,500,000(L)	101.83%(L)
	concert party agreement
Xing Hang	Beneficial owner and concert party	6	397,504,349(L)	30,000,000(L)	427,504,349(L)	101.83%(L)
	agreement
			179,921,200(S)		179,921,200(S)	42.86%(S)
Success Far	Security interest	7	179,921,200(L)	—	179,921,200(L)	42.86%(L)
Goldenland	Beneficial owner and concert party	8	397,500,000(L)	30,000,000(L)	427,500,000(L)	101.83%(L)
	agreement
Liu Jin	Interest of controlled corporation and	8	397,500,000(L)	30,000,000(L)	427,500,000(L)	101.83%(L)
	concert party agreement
Xue Siman	Interest of controlled corporation and	8	397,500,000(L)	30,000,000(L)	427,500,000(L)	101.83%(L)
	concert party agreement
Silver Empire	Beneficial owner and concert party	9	397,500,000(L)	30,000,000(L)	427,500,000(L)	101.83%(L)
	agreement
Genius Earn	Interest of controlled corporation and	9	397,500,000(L)	30,000,000(L)	427,500,000(L)	101.83%(L)
	concert party agreement
Liu Xiaolin	Interest of controlled corporation and	9	397,500,000(L)	30,000,000(L)	427,500,000(L)	101.83%(L)
	concert party agreement
Truly Elite	Beneficial owner and concert party	10	397,500,000(L)	30,000,000(L)	427,500,000(L)	101.83%(L)
	agreement
Yeung Heung	Interest of controlled corporation and	10	397,500,000(L)	30,000,000(L)	427,500,000(L)	101.83%(L)
Yeung	concert party agreement
High Aim	Beneficial owner and concert party	11	397,500,000(L)	30,000,000(L)	427,500,000(L)	101.83%(L)
	agreement
Ko Chun Shun,	Interest of controlled corporation and	11	397,500,000(L)	30,000,000(L)	427,500,000(L)	101.83%(L)
Johnson	concert party agreement
First Bonus	Beneficial owner and concert party	12	397,500,000(L)	30,000,000(L)	427,500,000(L)	101.83%(L)
	agreement
Reorient Limited	Interest of controlled corporation and	12	397,500,000(L)	30,000,000(L)	427,500,000(L)	101.83%(L)
	concert party agreement
REORIENT Group	Interest of controlled corporation and	12	397,500,000(L)	30,000,000(L)	427,500,000(L)	101.83%(L)
Limited	concert party agreement

Notes:

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

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1. On 17 February 2015, the Company and the Subscribers, namely Xing Hang, Goldenland, Silver Empire, Truly Elite, High Aim and First Bonus entered into the Subscription Agreement pursuant to which the Subscribers conditionally agreed to subscribe for, and the Company conditionally agreed to allot and issue, a total of 375,000,000 Subscription Shares of the Company, comprising 345,000,000 Ordinary Subscription Shares and 30,000,000 Preferred Shares to the Subscribers, at an issue price of HK$0.4 per Subscription Share.

2. Upon completion of the Subscription on 6 November 2015, Xing Hang became the controlling shareholder (as defined under the GEM Listing Rules) of the Company. Pursuant to Rule 26.1 of the Takeovers Code, Xing Hang made an unconditional mandatory cash offer (the “ Offer ”). Kingston Securities Limited (“ Kingston Securities ”) made the Offer on behalf of Xing Hang to acquire all the issued shares of the Company at an offer price of HK$4.07 per offer share (other than the Excluded Shares (as defined below)). The Offer was closed on 11 December 2015 and Xing Hang had received valid acceptances in respect of a total of 4,349 offer shares under the Offer.

3. Goldenland, Silver Empire, Truly Elite, High Aim and First Bonus are considered concert parties with Xing Hang. Eternity, being the controlling shareholder (as defined under the GEM Listing Rules) of the Company prior to the completion of the Subscription, has undertaken to Xing Hang not to accept the Offer in respect of the 36,500,000 shares of the Company held by Eternity (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 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 shares in issue)) or more (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 concert party with the Subscribers.

4. 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 a concert party 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 all the shares of the Company in which each of the Subscribers is or is deemed to be interested.

5. 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 subscribed for 179,921,200 Ordinary Subscription Shares. Pursuant to the Term Loan Agreement, a share charge has been given by Xing Hang in favour of Success Far over the 179,921,200 Ordinary Subscription Shares issued to Xing Hang under the Subscription. Accordingly, Xing Hang acquired a short position in respect of such 179,921,200 shares. Subsequently on 11 December 2015, Xing Hang further acquired a total of 4,349 shares of the Company upon completion of the Offer. As Xing Hang is a controlled corporation (as defined in Part XV of the SFO) of Mr. Cai Zhaoyang, Mr. Cai Zhaoyang is deemed to have acquired a short position in such 179,921,200 shares and is also deemed to be interested all the shares in which Xing Hang is or is deemed to be interested. Further, as Xing Hang is a concert party with the other Subscribers and with Eternity under Section 317 of the SFO in view of the Subscribers’ Lock-Up Undertaking, Xing Hang is deemed to be interested in all the shares of the Company in which each of the other Subscribers and Eternity is or is deemed to be interested.

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1. In accordance with the Term Loan Agreement entered into between Xing Hang and 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 provided a facility to Xing Hang and Xing Hang gave a share charge in favour of Success Far over the 179,921,200 Ordinary Subscription Shares issued to Xing Hang under the Subscription. As such, Success Far is deemed to be interested in the 179,921,200 shares of the Company.

2. Goldenland is ultimately owned as to 50% by Mr. Liu Jin and 50% by Ms. Xue Siman. Accordingly, each of Mr. Liu Jin and Ms. Xue Siman is deemed to be interested in all the shares of the Company in which Goldenland is or is deemed to be interested. Pursuant to the Subscription Agreement, Goldenland subscribed for 45,396,178 Ordinary Subscription Shares. As Goldenland is a concert party with the other Subscribers and with Eternity under Section 317 of the SFO in view of the Subscribers’ Lock-Up Undertaking, Goldenland is deemed to be interested in all the shares of the Company in which each of the other Subscribers and Eternity is or is deemed to be interested.

3. Silver Empire is wholly-owned by Genius Earn Limited (“ Genius Earn ”) which is in turn whollyowned by Mr. Liu Xiaolin. Accordingly, Genius Earn is deemed to be interested in all the shares of the Company in which Silver Empire is or is deemed to be interested. Further, Mr. Liu Xiaolin is deemed to be interested in all the shares of the Company in which Genius Earn is or is deemed to be interested. Pursuant to the Subscription Agreement, Silver Empire subscribed for 37,861,665 Ordinary Subscription Shares. As Silver Empire is a concert party with the other Subscribers and with Eternity under Section 317 of the SFO in view of the Subscribers’ Lock-Up Undertaking, Silver Empire is deemed to be interested in all the shares of the Company in which each of the other Subscribers and Eternity is or is deemed to be interested.

4. Truly Elite is wholly-owned by Mr. Yeung Heung Yeung. Accordingly, Mr. Yeung Heung Yeung is deemed to be interested in all the shares of the Company in which Truly Elite is or is deemed to be interested. Pursuant to the Subscription Agreement, Truly Elite subscribed for 41,628,921 Ordinary Subscription Shares. As Truly Elite is a concert party with the other Subscribers and with Eternity under Section 317 of the SFO in view of the Subscribers’ Lock-Up Undertaking, Truly Elite is deemed to be interested in all the shares of the Company in which each of the other Subscribers and Eternity is or is deemed to be interested.

5. High Aim is wholly-owned by Mr. Ko Chun Shun, Johnson. Accordingly, Mr. Ko Chun Shun, Johnson is deemed to be interested in all the shares of the Company in which High Aim is or is deemed to be interested. Pursuant to the Subscription Agreement, High Aim subscribed for 26,697,946 Ordinary Subscription Shares and 30,000,000 Preferred Shares. As High Aim is a concert party with the other Subscribers and with Eternity under Section 317 of the SFO in view of the Subscribers’ Lock-Up Undertaking, High Aim is deemed to be interested in all the shares of the Company in which each of the other Subscribers and Eternity is or is deemed to be interested.

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. Accordingly, Reorient Limited is deemed to be interested in all the shares of the Company in which First Bonus is or is deemed to be interested. Further, REORIENT Group Limited is deemed to be interested in all the shares of the Company in which Reorient Limited is or is deemed to be interested. Mr. Ko Chun Shun, Johnson is an executive director and the controlling shareholder of REORIENT Group Limited. Accordingly, he is deemed to be interested in all the shares of the Company in which REORIENT Group Limited is or is deemed to be interested. Pursuant to the Subscription

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Agreement, First Bonus subscribed for 13,494,090 Ordinary Subscription Shares. As First Bonus is a concert party with the other Subscribers and with Eternity under Section 317 of the SFO in view of the Subscribers’ lock-Up Undertaking, First Bonus is deemed to be interested in all the shares of the Company in which each of the other Subscribers and Eternity is or is deemed to be interested.

1. The percentage is calculated on the basis of 419,803,000 Shares in issue as at 30 September 2016.

Save as disclosed above, as at 30 September 2016, so far as is known to the Directors, 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) had 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.

COMPETING INTERESTS

As at 30 September 2016, none of the Directors, substantial shareholders of the Company nor any of their respective close associates (as defined in the GEM Listing Rules) had any interest in a business which causes or may cause any significant competition 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.

DIVIDEND

The Board does not recommend the payment of any dividend for the nine months ended 30 September 2016 (for the nine months ended 30 September 2015: Nil).

AUDIT COMMITTEE

The Board 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 the date of this report, the Audit Committee comprises three independent non-executive Directors, namely, Mr. Chu Kin Wang, Peleus (chairman), Mr. Tam B Ray, Billy and Mr. Tse Joseph. The Audit Committee has reviewed the unaudited condensed consolidated third quarterly results of the Group for the nine months ended 30 September 2016 and has provided advice and comments thereon.

By Order of the Board

SkyNet Group Limited

Cai Zhaoyang

Executive Director, Chairman and Chief Executive Officer

Hong Kong, 11 November 2016

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As at the date of this report, the Board comprises three executive Directors, namely Mr. Cai Zhaoyang, 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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