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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED...

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

SUMMARY

This summary aims to give you an overview of the information contained in this document. Since this is a summary, it does not contain all the information that may be important to you and is qualified in its entirety by, and should be read in conjunction with, the full text of this document. You should read the whole document including the appendices hereto, which constitute an integral part of this document, before you decide to invest in our [REDACTED]. There are risks associated with any investment. Some of the particular risks in investing in our [REDACTED] are set out in the section headed “Risk Factors”. You should read that section carefully before you decide to invest in our [REDACTED]. OVERVIEW We are an established operator of elderly residential care homes in Hong Kong providing comprehensive residential care home services to our elderly residents through our network of “Shui On 瑞安” and “Shui Hing 瑞興” branded elderly residential care homes across four districts in Hong Kong. Our revenue is primarily derived from: (i)

rendering of elderly home care services: including the provision of accommodation with dietician-managed meal plans, 24-hour nursing and caretaking assistance and professional services such as regular medical consultation, physiotherapy, occupational therapy, psychological and social care services;

(ii) sale of elderly related goods and provision of healthcare services: elderly related goods include adult nappies, nutritional milk, other medical consumable products and daily supplies; whereas healthcare services include customisable add-on healthcare services including medical and physiotherapy services that may be provided by external providers on an as-needed basis to suit their needs. During the Track Record Period and up to the Latest Practicable Date, we expanded our network of elderly residential care homes from four to five elderly residential care homes located in Kwun Tong, Shatin, Eastern and Kwai Tsing districts and were strategically situated in the vicinity of public housing estates and residential areas with a high density of potential customers nearby as well as shopping malls and public transport and other public facilities. During the Track Record Period, our Group primarily generated revenue from three categories of customers: (i) the Social Welfare Department (the “SWD”) that leased a fixed number of residential care places at two of our Enhanced Bought Place Scheme (“EBPS”) participating elderly residential care homes; where EBPS is a publicly funded welfare programme offered by the SWD that offers leased residential care places at a subsidised rate to eligible elderly citizens in Hong Kong; (ii) the individual customers which include both EBPS-subsidised and non-subsidised customers; and (iii) non-governmental organisations which leased a few residential care places at our elderly residential care homes. As at the Latest Practicable Date, we had a total of 549 elderly residents, out of which 0.9% were between 50 and 59 years old, 4.9% between 60 and 69 years old, 17.3% were between 70 and 79 years old, 46.8% were between 80 and 89 years old, 27.5% were between 90 and 99 years old and 2.6% were 100 years old or above. As at the Latest Practicable Date, the SWD leased a total of 193 residential cares from our two EBPS participating elderly residential care homes which are classified as class EA1, the highest classification rated by the SWD under the EBPS.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

SUMMARY The following table sets forth the revenue from (i) rendering of elderly home care services; and (ii) sales of elderly related goods and provision of healthcare services for the periods indicated: For the year ended 31 December

For the nine months ended 30 September

2015 HK$(’000)

Rendering of elderly home care services (Note) . . . . . . . . . . . . . . Sales of elderly related goods and provision of healthcare services (Note) . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . .

2015 %

2016

HK$(’000)

%

HK$(’000)

%

33,582

84.1

25,092

84.1

30,356

82.5

6,355

15.9

4,743

15.9

6,420

17.5

39,937

100.0

29,835

100.0

36,776

100.0

Note: The revenue generated by Wan Tsui was not included as part of our Group’s revenue generated during the Track Record Period as Wan Tsui was considered as our Joint Venture prior to the disposal of our entire shareholding interest in Wan Tsui on 28 June 2016. For details of its accounting treatment, please see the paragraph headed “Financial Information — Share of profits and losses/gain on disposal of associates and a joint venture” in this document and note 15 to the Accountants’ Report as set out in Appendix IA to this document and note 16 to Interim Financial Information as set out in Appendix IB to this document. Both of the acquisition of approximately 66.7% interest in Shui On (Kwai Shing E.) and the entire interests in Shui On (Sun Tin Wai) by our Group were completed by the end of August 2016 and September 2016, respectively. As such, the revenue generated by our Group from the rendering of elderly home care services for the nine months ended 30 September 2016 took into account the revenue generated from each of Shui On (Kwai Shing E.) and Shui On (Sun Tin Wai) elderly residential care homes from the date when they became our subsidiaries until 30 September 2016.

The table below sets forth details of the average monthly occupancy rate of each of our elderly residential care homes during the Track Record Period: Average for non-EBPS places (individual customers and non-governmental organisations)

Overall average For the year ended 31 December Elderly residential care home

Shui On (Shun On) . . . Shui Hing . . . . . . . . Shui On (Hing Wah) . . . Shui On (Sun Tin Wai) . Shui On (Kwai Shing E.)

Note:

. . . . .

For the nine months ended 30 September

For the year ended 31 December

For the nine months ended 30 September

2015

2015

2016

2015

2015

2016

%

%

%

%

%

%

95.8 96.7 98.6 – –

95.8 95.6 98.6 – –

95.8 95.6 98.6 98.9 94.5

94.9 96.7 98.6 – –

94.9 95.6 98.6 – –

93.2 95.6 98.6 98.9 87.2

Average for places under the EBPS For the year ended 31 December 2015

98.3 – – – –

For the nine months ended 30 September 2015

96.6 – – – –

2016

98.3 – – – 99.3

The monthly occupancy rate is calculated by dividing the number of elderly residents as at the month end of each elderly residential care home by the number of residential care places available at each elderly residential care home. The average monthly occupancy rate is the average of all the monthly occupancy rates over the financial year/period. The relevant periods for calculating the average monthly occupancy rates of Shui On (Sun Tin Wai) and Shui On (Kwai Shing E.) only cover the periods since they have been subsidiaries of our Company.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

SUMMARY OUR ELDERLY RESIDENTIAL CARE HOMES Through our principal Hong Kong subsidiaries including Shui On (Shun On), Shui Hing, Shui On (Hing Wah), Shui On (Sun Tin Wai) and Shui On (Kwai Shing E.), we owned and operated four “Shui On 瑞安” and one “Shui Hing 瑞興” branded elderly residential care homes across the Kwun Tong, Shatin, Eastern and Kwai Tsing districts in Hong Kong with a total of 589 residential care places as at the Latest Practicable Date. Our elderly residential care homes are strategically situated in the vicinity of public housing estates and residential areas with a high density of potential customers nearby as well as shopping malls and public transportation and other public facilities. As at the Latest Practicable Date, two of our elderly residential care homes, namely Shui On (Sun Tin Wai) and Shui On (Kwai Shing E.), participated in the EBPS, a publicly funded welfare programme offered by the SWD that leased residential care places and offered them at a subsidised rate to eligible elderly citizens in Hong Kong. As at the Latest Practicable Date, the SWD leased 193 residential care places, representing approximately 32.8% of our total residential care places, at our two participating elderly residential care homes, both of which were classified as class EA1, the highest classification rated by the SWD under the EBPS. The table below sets forth essential information about our elderly residential care homes as at the Latest Practicable Date: Average occupancy rate

Our elderly residential care homes

Location

Year of

Total number

Number of residential care

commencement of operation

of residential care places

places under the EBPS

Number of full-time employees

SFA

per month from

Range of

Classification

1 October 2016 to the Latest

residential care services fee

under the EBPS

Practicable Date

per month (non-EBPS customers)

(sq. m.)

Shui On (Shun On) . . . Shui Hing . . . . . . . Shui On (Hing Wah) . . Shui On (Sun Tin Wai) . Shui On (Kwai Shing E.)

. . . . .

. . . . .

. . . . .

Kwun Tong Kwun Tong Eastern Shatin Kwai Tsing

2007 2011 2008 2007 2007

Total . . . . . . . . . . . .

118 90 72 89 220

59 – – – 134

46 23 18 26 86

1,122.3 906.8 522.6 718.9 2,563.8

589

193

173

5,834.4

(%)

EA1 – – – EA1

94.1 95.6 100.0 97.8 91.4

(HK$)

7,100–13,200 7,000–14,150 7,500–13,050 7,500–9,500 5,425–14,900

OUR COMPETITIVE STRENGTHS We believe we possess the following competitive strengths which differentiate us from our fellow competitors: (i) we are an established operator of elderly residential care homes in Hong Kong with an experienced senior management team led by our Chairman with 23 years of industry experience; (ii) we possess an established brand of elderly residential care home and a balanced portfolio of three non-EBPS participating private elderly residential care homes and two EBPS participating private elderly residential care homes; (iii) we provide quality elderly home care services to our customers at our elderly residential care homes that are strategically located near residential areas of affordable private and public estates; (iv) our Group is supported by a management team with extensive experience in the elderly home care services industry and a team of nurses, physiotherapists, social workers, health workers and care workers who strive to provide quality and caring services to our elderly residents.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

SUMMARY OUR STRATEGIES We intend to achieve our objective in expanding market share in the residential care home market by implementing the following strategies: (i) expand the network of our elderly residential care homes in strategic locations in Hong Kong; (ii) strengthen our brand building effort by improving the quality of our services of our existing elderly residential care homes; (iii) enhance our information technology infrastructure and install and upgrade our information system which enhances our management’s understanding of the status of the business operations of our elderly residential care homes on a real-time basis as well as assist the daily work of the staff of our residential care homes. HIGHLIGHTS OF RISK FACTORS Our Group believes that our operation is subject to certain risks and uncertainties, which include (i) risks relating to our business; (ii) risks relating to the industry in which we operate; and (iii) risks relating to the [REDACTED]. The following highlights some of the risks which are considered material by our Directors: •

If we cannot renew or fail to obtain operating licences including the RCHE licenses, or if they are suspended or cancelled, we will not be able to operate elderly residential care homes.



We depend on our reputation within the RCHE industry and are subject to risks of negative publicity resulting from caretaking incidents or accidents and legal proceedings arising from our operations may harm our reputation.



Our insurance may not cover all potential losses and claims.



We have limited control over the quality and quantity of the pharmaceutical drugs, food, groceries and other supplies and we cannot guarantee that these supplies are free from defects.



The SWD was our largest customer during the Track Record Period and we expect that a portion of our revenue will continue to depend on the EBPS.



As we lease all our properties for operation of our elderly residential homes, there is no assurance that our leases and/or tenancy agreements will be successfully renewed or renewed on comparable terms or will not be early terminated and we are subject to risk of rental price fluctuation in the real estate market in Hong Kong.



We are the registered owner of the “Shui On 瑞安” and the “Shui Hing 瑞興” trademarks in Hong Kong and any disputes may affect the reputation, business and results of our Group.



Our success depends on our key personnel and our business may be hampered if we lose the services of our key personnel.



Our expansion plans may experience delay and we may not be successfully in implementation in time or at all.

Please see the section headed “Risk Factors” in this document for further details. Prospective investors should read the section headed “Risk Factors” in this document in its entirety before making any investment decision in the [REDACTED].

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

SUMMARY OUR CUSTOMERS AND SUPPLIERS Our customers During the Track Record Period, our Group primarily generated revenue from three types of customers: (i) the SWD which leased a fixed number of residential care places at two of our elderly residential care homes under the EBPS Agreements; (ii) the individual customers whether or not subsidised under the EBPS; and (iii) non-governmental organisations which leased a few residential care places at our elderly residential care homes. Our elderly residents As at the Latest Practicable Date, we had a total of 549 elderly residents, (i) of which 0.9% were between 50 and 59 years old, 4.9% were between 60 and 69 years old, 17.3% were between 70 and 79 years old, 46.8% were between 80 and 89 years old, 27.5% were between 90 and 99 years old and 2.6% were 100 years old or above; and (ii) in respect of these 549 residents who were assessed by our nurses and/or health workers based on the Barthel Index, of which 8.0% were assessed to be completely independent, 4.7% were assessed to be mildly dependent, 14.9% were assessed to be moderately dependent and 17.3% were assessed to be severely dependent and 55.1% were assessed to be completely dependent. Our elderly residents suffer from and require assistance because of dementia, loss of mobility, and other chronic illnesses such as diabetes, mellitus, hypertension and cerebrovascular disease. As at the Latest Practicable Date, the average period that our elderly residents had resided at our elderly residential care homes was approximately three years. For the year ended 31 December 2015 and the nine months ended 30 September 2016, the percentage of elderly residents that passed away out of the total number of elderly residents was approximately 23.8% and 15.2%, respectively. Our five largest customers during the Track Record Period were the SWD and four individuals customers. For the year ended 31 December 2015 and the nine months ended 30 September 2016, revenue from the five largest customers of our Group accounted for approximately 20.7% and 22.1% of our total revenue, respectively. For the same periods, revenue attributable to the SWD, our largest customer, accounted for approximately 18.3% and 20.0% of our total revenue, respectively. The five largest customers have been customers of our Group ranging from approximately one to six years. Our suppliers We primarily rely on our suppliers for healthcare services and medical consumable products, raw food materials, other general goods and groceries and referral service commission. We usually source from more than one supplier for each kind of supply to ensure that we maintain sufficient inventory level and bargaining power. We do not rely on any single supplier for any of our medical consumable products to maintain flexibility in our cost control and maintenance of product quality. The five largest suppliers have been suppliers of our Group ranging from approximately three to nine years and they include a wholesaler of medical consumable products and groceries, frozen meat store, a produce shop, a pharmaceutical goods wholesaler, a referral agency and a physiotherapy contractor. For the year ended 31 December 2015 and the nine months ended 30 September 2016, the above relevant expenses in aggregate accounted for 8.5% and 8.2% of our total revenue, respectively. During the Track Record Period, we were generally able to pass on the increase in cost of medical consumable products to our elderly residents and other customers. CONTROLLING SHAREHOLDERS Immediately following completion of the Capitalisation Issue and the [REDACTED], without taking into account any Shares which may be allotted and issued pursuant to the exercise of the [REDACTED] and any options which may be granted under the Share Option Scheme, our Company will be owned as to [REDACTED]% by Shui Wah, which is owned as to 89.11% by Lucky Expert and

–5–

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

SUMMARY 10.89% by Will Peace. Lucky Expert is owned as to 59.88% by Hang Chi (which is a wholly owned subsidiary of Multifield, a company wholly owned by Mr. TC Yik), 29.17% by Ms. WH Yik, 6.02% by Ms. Chung and 4.93% by Mr. Chung. Will Peace is wholly owned by seven relatives of Mr. TC Yik (comprising 26.15% by Ms. Wong, 21.68% by Ms. WJ Yi, 21.29% by Ms. Huang, 13.31% by Ms. Zhong, 6.99% by Mr. SG Yi, 6.99% by Mr. ST Yik and 3.59% by Mr. Zheng). As (i) Shui Wah is entitled to exercise 30% or more of the voting power at general meetings of our Company, (ii) Mr. TC Yik, Multifield, Hang Chi and Lucky Expert control Shui Wah and hence Shui Wah’s voting interests in our Company; (iii) Ms. WH Yik is a party acting in concert with Mr. TC Yik, Multifield, Hang Chi under the Acting In Concert Agreement; and (iv) Will Peace, Ms. Chung, Mr. Chung, Ms. Wong, Ms. WJ Yi, Ms. Huang, Ms. Zhong, Mr. SG Yi, Mr. ST Yik and Mr. Zheng have decided to hold their interests in our Company through a common investment holding company, namely Shui Wah, accordingly, Shui Wah, Mr. TC Yik, Multifield, Hang Chi, Lucky Expert, Ms. WH Yik, Will Peace, Ms. Chung, Mr. Chung, Ms. Wong, Ms. WJ Yi, Ms. Huang, Ms. Zhong, Mr. SG Yi, Mr. ST Yik and Mr. Zheng will be regarded as a group of our Controlling Shareholders upon [REDACTED]. Please refer to the section headed “Relationship with Controlling Shareholders” in this document for further details. SUMMARY FINANCIAL INFORMATION AND OPERATING DATA The following table summarises the selected items in our combined statements of profit or loss and other comprehensive income for the year ended 31 December 2015 and our consolidated statements of profit or loss and other comprehensive income for the nine months ended 30 September 2016, extracted from the Accountants’ Report in Appendix IA and the Interim Financial Information in Appendix IB to this document. Year ended 31 December 2015 HK$’000

Revenue . . . . . . . . . . . . . . . . . . . . Other income . . . . . . . . . . . . . . . . Staff costs . . . . . . . . . . . . . . . . . . Property rental and related expenses Depreciation and amortization . . . . Food . . . . . . . . . . . . . . . . . . . . . . Medical fees . . . . . . . . . . . . . . . . . Professional and legal fees . . . . . . Utility expenses . . . . . . . . . . . . . . Consumables . . . . . . . . . . . . . . . . Other operating expenses . . . . . . . [REDACTED] expenses . . . . . . . . Finance costs . . . . . . . . . . . . . . . . Share of profits and losses of Associates . . . . . . . . . . . . . . . . . A joint venture . . . . . . . . . . . . . Gain on disposal of associates . . . . Gain on disposal of joint venture . .

Nine months ended 30 September 2015

2016

HK$’000

HK$’000

(Unaudited)

(Unaudited)

.... .... .... ... .... .... .... .... .... .... .... .... ....

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

. . . . . . . . . . . . .

39,937 2,066 (13,283) (6,153) (3,752) (1,215) (1,241) (1,118) (1,109) (724) (2,184) [REDACTED] –

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

. . . .

1,106 (34) 26,812 –

1,106 67 26,812 –

– 206 – 2,024

Profit before tax . . . . . . . . . . . . . . . . . . . . . . . . Income tax expense . . . . . . . . . . . . . . . . . . . . . . .

38,333 (1,926)

36,086 (1,492)

8,677 (2,109)

Profit for the year/period . . . . . . . . . . . . . . . . .

36,407

34,594

6,568

. . . .

. . . .

. . . .

–6–

29,835 1,549 (9,945) (4,534) (2,864) (898) (906) (957) (865) (536) (1,778) – –

36,776 1,739 (13,395) (5,837) (1,568) (1,113) (1,160) (1,131) (1,060) (577) (1,961) [REDACTED] (353)

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

SUMMARY Selected items of combined statements of financial position as at 31 December 2015 and consolidated statements of financial position as at 30 September 2016

Non-current assets . . Current assets . . . . . Current liabilities . . . Non-current liabilities Net current assets . . .

.... .... .... ... ....

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

As at 31 December 2015

As at 30 September 2016

HK$’000

HK$’000 (Unaudited)

3,226 29,279 5,316 11,368 23,963

57,747 30,515 25,644 1,290 4,871

Selected items of combined statements of cash flow for the year ended 31 December 2015 and consolidated statements of cash flows for the nine months ended 2016

Cash Cash Cash Cash Cash

flows generated from operating activities . . . . . . . . . . . flows generated from/(used in) investing activities . . . . flows generated from/(used in) financing activities . . . . and cash equivalents at the beginning of the year/period and cash equivalents at the end of the year/period . . . .

. . . . .

. . . . .

. . . . .

. . . . .

. . . . .

Year ended 31 December

Nine months ended 30 September

2015

2016

HK$’000

HK$’000 (Unaudited)

10,566 2,270 4,527 7,712 25,075

8,795 (3,024) (6,313) 25,075 24,533

KEY FINANCIAL RATIOS The following table sets forth our key financial ratios as at each of the dates indicated: As at /year ended 31 December 2015

Profitability ratios Net profit margin (%) (1) . . . . . . . . . . . . . . . . . . . Return on equity (%) (2) . . . . . . . . . . . . . . . . . . . . Return on total assets (%) (3) . . . . . . . . . . . . . . . . .

As at /nine months ended 30 September 2015

91.2 238.0 112.0 As at /year ended 31 December 2015

2016

116.0 N/A N/A

17.9 15.0 9.9

As at /nine months ended 30 September 2015

2016

Liquidity ratio Current ratio (4) . . . . . . . . . . . . . . . . . . . . . . . . . .

5.5

N/A

1.2

Capital sufficiency ratio Interest coverage (times) (5) . . . . . . . . . . . . . . . . . Gearing ratio (%) (6) . . . . . . . . . . . . . . . . . . . . . . . Net debt to equity ratio (7) . . . . . . . . . . . . . . . . . .

N/A 71.3 Net cash

N/A N/A N/A

25.6 19.0 Net cash

–7–

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

SUMMARY

Notes: (1)

Net profit margin was calculated by dividing profit for the year/period by revenue and multiplying the resulting value by 100%. Please refer to the paragraph headed “Review of historical results of operations” in this section for more details on the fluctuations of our net profit margin.

(2)

For the year ended 31 December 2015, return on equity equals profit for the year divided by the equity attributable to owners of the parent at the end of relevant year and multiplied the resulting value by 100%. For the nine months ended 30 September 2016, the return on equity is calculated by dividing profit for the period by equity attributable to owners of the parent multiplying 365/273, and then multiplying the resulting value by 100%.

(3)

For the year ended 31 December 2015, return on total assets equals profit for the year divided by the total assets at the end of the relevant year and multiplied the resulting value by 100%. For the nine months ended 30 September 2016, return on total assets is calculated by dividing profit for the period by the total assets at 30 September 2016, multiplying 365/273, and then multiplying the resulting value by 100%.

(4)

Current ratio is calculated based on the total current assets at the end of the year/period divided by the total current liabilities at the end of the year/period.

(5)

Interest coverage equals profit before finance costs and tax divided by finance costs in the relevant year/period.

(6)

Gearing ratio is calculated as the total debt at the end of the year/period divided by total equity at the end of the respective year and multiplied by 100%. Total debts includes payables incurred not in ordinary course of business (being other liability).

(7)

Net debt to equity ratio is calculated as total debts (other liability) net of cash and cash equivalents and restricted cash, and at the end of the year/period divided by total equity at the end of the respective year and multiplied by 100%.

RECENT DEVELOPMENT AND NO MATERIAL ADVERSE CHANGE Subsequent to the Track Record Period and up to the Latest Practicable Date, there had not been material changes to our business model, revenue structure and cost structure. Our principal business continued to be in the provision of comprehensive residential care home services to our elderly residents including: (i) the provision of accommodation with dietician-managed meal plans, 24-hour nursing and caretaking assistance and professional services such as regular medical consultation, physiotherapy, occupational therapy, psychological and social care services; and (ii) the sale of healthcare and medical consumable products and the provision of customisable add-on healthcare services to our elderly residents. As far as we are aware, there had not been material changes in the overall economic and market conditions in the residential care home services industry that would otherwise have material and adverse effect on our business operations or financial conditions. From 1 October 2016 to the Latest Practicable Date, (i) our overall average monthly occupancy rate was approximately 94.6%, which is slightly lower when compared to that for the nine months ended 30 September 2016 of approximately 96.1%; (ii) our average monthly occupancy rates for residential care places leased by non-EBPS customers (i.e. individual customers and non-governmental organisations) was approximately 93.1%, which remained at a stable level as compared to that for the nine months ended 30 September 2016 of approximately 94.7%; and (iii) our average monthly occupancy rate in respect of residential care places purchased by the SWD under the EBPS was approximately 97.7% which remained at a stable level as compared to that for the nine months ended 30 September 2016 of approximately 98.8%. As at the Latest Practicable Date, we were in the process of renewing our operating licences for Shui Hing and Shui On (Kwai Shing E.) elderly residential care homes at the LORCHE of the SWD. Based on our preliminary understanding on the requirements of the SWD on the renewal of operating licence for the elderly residential care home, our Directors believe that there will be no major difficulty for the SWD to grant us the renewed licences for operating the Shui Hing and Shui On (Kwai Shing E.) elderly residential care homes. Our management expects that we will obtain such renewed licences before 31 March 2017 and 30 April 2017, respectively.

–8–

THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

SUMMARY Our Directors confirmed that, up to the date of this document, save as disclosed above, there has been no material adverse change in our financial or trading position or prospects since 30 September 2016 and there has been no event since 30 September 2016 which would materially affect the information in our consolidated financial statements included in the interim financial information set forth in Appendix IB to this document. STATISTICS OF THE [REDACTED] Based on the minimum

Based on the maximum

indicative [REDACTED] of HK$[REDACTED] per

indicative [REDACTED] of HK$[REDACTED] per

[REDACTED]

[REDACTED]

Market capitalisation of our Shares expected to be in issue following completion of the [REDACTED] and the Capitalisation Issue (Note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . Unaudited pro forma adjusted consolidated net tangible assets per Share (Note 2) . . . .

HK$[REDACTED]

HK$[REDACTED]

HK$[REDACTED]

HK$[REDACTED]

Notes: 1.

The calculation of market capitalisation is based on [REDACTED] Shares expected to be in issue immediately following the completion of the [REDACTED] and the [REDACTED].

2.

The unaudited pro forma adjusted consolidated net tangible assets per Share has been prepared after the adjustments referred to in “Appendix II — Unaudited pro forma Financial Information” in this document and on the basis of [REDACTED] Shares expected to be in issue assuming that the [REDACTED] and Capitalisation Issue had been completed.

DIVIDEND POLICY During the Track Record Period, an aggregate amount of a dividend of approximately HK$37.5 million was declared in the year ended 31 December 2015. As at the Latest Practicable Date, such dividend had been fully settled by our cash flow generated from operations and our proceeds from deemed contribution. Save for disclosed above, we have no plan to pay or declare any dividends prior to the [REDACTED]. We do not intend to pay or declare any dividends in relation to our accumulated profits as at 30 September 2016 and we also do not intend to determine any expected dividend payout ratio since our priority is to use our earnings for business development and expansion of customer base in the interest of our Shareholders as a whole. Our dividend distribution record in the past may not be used as a reference or basis to determine the level of dividends that may be declared or paid by us in the future. The recommendation of the payment of dividend is subject to the absolute discretion of our Board, and, after [REDACTED], any declaration of final dividend for the year will be subject to the approval of our Shareholders. Our Group does not have any future dividend policy. Our Directors may recommend a payment of dividend in the future after taking into account our operations, earnings, financial condition, cash requirements and availability, capital expenditure and future development requirements and other factors as it may deem relevant at such time. Any declaration and payment as well as the amount of the dividend will be subject to our constitutional documents and the Companies Law. Any distributable profits that are not distributed in any given year will be retained and available for distribution in subsequent years. To the extent profits are distributed as dividends, such portion of profits will not be available to be reinvested in our operations.

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

SUMMARY MATERIAL NON-COMPLIANCE INCIDENTS During the Track Record Period, we had been involved in certain non-compliance incidents such as non-compliance with RCH(EP)O, RCH(EP)R and RCHE Code of Practice, the WD(CW)(G)R and WDO. Please see the paragraph headed “Business — Legal Compliance” in this document for further details. [REDACTED] EXPENSES [REDACTED] expenses represent professional fees, [REDACTED] commission, [REDACTED] transaction levy and Stock Exchange trading fee incurred in connection with the [REDACTED] and the [REDACTED]. Assuming an [REDACTED] of HK$[REDACTED] per [REDACTED] (being the mid-point of the indicative [REDACTED] range) and that [REDACTED] is not exercised, our total [REDACTED] are estimated to be approximately HK$[REDACTED], of which HK$[REDACTED] is directly attributable to the issue of new Shares and to be accounted for as a deduction from the equity, and the remaining amount of HK$[REDACTED] will be reflected in our consolidated statements of profit or loss and other comprehensive income for the year ended 31 December 2016 and subsequent to the [REDACTED] of HK$[REDACTED] and HK$[REDACTED], in relation to services already performed by relevant parties, were recorded in our combined statements of profit or loss and other comprehensive income for the year ended 31 December 2015 and our consolidated statements of profit or loss and other comprehensive income for the nine months ended 30 September 2016 respectively, and an additional of HK$[REDACTED] is expected to be recognised in our consolidated statements of comprehensive income subsequent to the Track Record Period and upon [REDACTED]. As such, our results of operations for the year ending 31 December 2017 is expected to be adversely affected by the [REDACTED] to be incurred in the period. FUTURE PLANS AND NET PROCEEDS We estimate that the aggregate net [REDACTED] to us from the [REDACTED] (after deducting [REDACTED] fees and estimated expenses payable by us in connection with the [REDACTED]) (the “[REDACTED]”), assuming an [REDACTED] of HK$[REDACTED], being the mid-point of the [REDACTED] range, will be approximately HK$[REDACTED] assuming that the [REDACTED] is not exercised. We currently intend to apply the Net [REDACTED] in the following manner: (a)

approximately [REDACTED]% of the total estimated net [REDACTED], or HK$[REDACTED] million, will be used to acquire an operating elderly residential care home as part of our expansion strategy. As at the Latest Practicable Date, we had not yet identified any suitable target, nor have we formulated any specific acquisition plans or entered into any definitive agreements for any potential target;

(b)

approximately [REDACTED]% of the total estimated net [REDACTED], or HK$[REDACTED] million, will be used to establish a new elderly residential care home by locating a suitable location as part of the funding for our Group’s expansion of our network of elderly residential care homes in Hong Kong through acquisition of a suitable property to establish a new elderly residential care home. As at the Latest Practicable Date, we had not yet identified any site, nor have we formulated any specific acquisition plans or entered into any definitive agreements for any potential targets;

(c)

approximately [REDACTED]% of the total estimated net [REDACTED], or HK$[REDACTED] million, will be used to establish of our headquarters including a training centre;

(d)

approximately [REDACTED]% of the total estimated net [REDACTED], or HK$[REDACTED] million, will be used to renew and upgrade the facilities at our elderly residential care homes;

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THIS DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE. THE INFORMATION IN THIS DOCUMENT MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” ON THE COVER OF THIS DOCUMENT.

SUMMARY (e)

approximately [REDACTED]% of the total estimated net [REDACTED], or HK$[REDACTED] million, will be used to upgrade the information technology infrastructure; and

(f)

approximately [REDACTED]% of the total estimated net [REDACTED], or HK$[REDACTED] million, will be used for general working capital purposes.

To the extent that the Net [REDACTED] are not sufficient to fund the purposes of the [REDACTED] as set out above, we intend to fund the balance through a variety of means, including cash generated from operations, bank loans and other borrowings, as appropriate. To the extent that the Net [REDACTED] are not immediately required for the above purposes, it is the present intention of the Directors that such net [REDACTED] be placed in short-term interest bearing deposit accounts held with authorised financial institutions. Please see the paragraph headed “Business — Our Strategies” and “Business — Statement of Business Objectives and [REDACTED] — [REDACTED]” in this document for further details. REASONS FOR THE [REDACTED] Our Directors believe the estimated net [REDACTED] from the [REDACTED] of HK$[REDACTED] (after deducting the related [REDACTED] fees and expenses payable in relation to the [REDACTED] will help us to pursue our business objectives and implement our business strategies and plans. Our Group’s capital required for implementation plans as set out under the paragraph headed “Business — Our Strategies” and the section headed “Statement of Business Objectives and [REDACTED]” is expected to amount to approximately HK$[REDACTED], of which approximately HK$[REDACTED] or [REDACTED] is expected to be financed by the net [REDACTED] from the [REDACTED] and the remaining balance of HK$[REDACTED] or [REDACTED] is expected to be financed from our internal resources. We believe that we have sufficient internal resources, including our cash and cash equivalents and cash flows derived from operating activities, to utilise for such actual capital expenditure. As at 30 September 2016, we had HK$[REDACTED] in cash and cash equivalents available. We had net cash from operating activities of approximately HK$[REDACTED] and approximately HK$[REDACTED] for the year ended 31 December 2015 and the nine months ended 30 September 2016 respectively. Our Directors believe that the [REDACTED] of the [REDACTED] on [REDACTED] will facilitate the implementation of our business strategies as stated in the paragraph headed “Business — Business strategies” in this document. The net [REDACTED] from the [REDACTED] will provide financial resources to our Group to achieve such business strategies which will further strengthen our market position and expand our market share in the elderly residential care home market in Hong Kong. Moreover, a [REDACTED] will also enhance our corporate profile and assist us in reinforcing our brand awareness and market reputation. We believe that a [REDACTED] on [REDACTED] is a complementary advertising for our Group to potential investors and customers and can enhance our corporate profile and our credibility with the public and potential business partners. Furthermore, the [REDACTED] will also enable our Group to have access to capital market for raising funds both at the time of [REDACTED] and at later stages, which would in turn assist us in our future business development. A [REDACTED] on [REDACTED] may offer our Company a broader shareholder base which could potentially lead to a higher liquidity in the trading of the Shares. We also believe that our internal control and corporate governance practices could be further enhanced following the [REDACTED].

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