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The Stock Exchange of Hong Kong Limited and the Securities and Futures Commission take noresponsibility for the contents of this Application Proof, make no representation as to its accuracy orcompleteness and expressly disclaim any liability whatsoever for any loss howsoever arising from or inreliance upon the whole or any part of the contents of this Application Proof.

Application Proof of

Wang Hing Group Holdings Limited永興集團控股有限公司

(the “Company”)(Incorporated in the Cayman Islands with limited liability)

WARNING

The publication of this Application Proof is required by The Stock Exchange of Hong Kong Limited (the“Stock Exchange”) and the Securities and Futures Commission (the “SFC”) solely for the purpose ofproviding information to the public in Hong Kong.

This Application Proof is in draft form. The information contained in it is incomplete and is subject tochange which can be material. By viewing this document, you acknowledge, accept and agree with theCompany, its sponsor, advisers or members of the underwriting syndicate that:

(a) this document is only for the purpose of providing information about the Company to the public inHong Kong and not for any other purposes. No investment decision should be based on theinformation contained in this document;

(b) the publication of this document or supplemental, revised or replacement pages on the StockExchange’s website does not give rise to any obligation of the Company, its sponsor, advisers ormembers of the underwriting syndicate to proceed with an offering in Hong Kong or any otherjurisdiction. There is no assurance that the Company will proceed with the offering;

(c) the contents of this document or supplemental, revised or replacement pages may or may not bereplicated in full or in part in the actual final listing document;

(d) the Application Proof is not the final listing document and may be updated or revised by theCompany from time to time in accordance with the Rules Governing the Listing of Securities on theStock Exchange;

(e) this document does not constitute a prospectus, offering circular, notice, circular, brochure oradvertisement offering to sell any securities to the public in any jurisdiction, nor is it an invitation tothe public to make offers to subscribe for or purchase any securities, nor is it calculated to inviteoffers by the public to subscribe for or purchase any securities;

(f) this document must not be regarded as an inducement to subscribe for or purchase any securities, andno such inducement is intended;

(g) neither the Company nor any of its affiliates, advisers or underwriters is offering, or is solicitingoffers to buy, any securities in any jurisdiction through the publication of this document;

(h) no application for the securities mentioned in this document should be made by any person nor wouldsuch application be accepted;

(i) the Company has not and will not register the securities referred to in this document under the UnitedStates Securities Act of 1933, as amended, or any state securities laws of the United States;

(j) as there may be legal restrictions on the distribution of this document or dissemination of anyinformation contained in this document, you agree to inform yourself about and observe any suchrestrictions applicable to you; and

(k) the application to which this document relates has not been approved for listing and the StockExchange and the SFC may accept, return or reject the application for the subject public offering and/or listing.

If an offer or an invitation is made to the public in Hong Kong in due course, prospective investorsare reminded to make their investment decisions solely based on the Company’s prospectus registeredwith the Registrar of Companies in Hong Kong, copies of which will be distributed to the publicduring the offer period.

If you are in any doubt about any of the contents of this document, you should obtain independent professional advice.

Wang Hing Group Holdings Limited永興集團控股有限公司

(Incorporated in the Cayman Islands with limited liability)

[REDACTED]

Total number of [REDACTED] : [REDACTED] Shares (subject to the[REDACTED]

Number of [REDACTED] : [REDACTED] Shares (subject to re-allocation)Number of [REDACTED] : [REDACTED] Shares (subject to re-allocation

and the [REDACTED])[REDACTED] : not more than HK$[REDACTED] per

[REDACTED] and expected to be not lessthan HK$[REDACTED] per [REDACTED]plus brokerage of 1%, SFC transaction levyof 0.0027% and Stock Exchange trading feeof 0.005% (payable in full on application inHong Kong dollars and subject to refund)

Nominal value : HK$0.01 per Share[REDACTED] : [REDACTED]

Sole Sponsor

[REDACTED] and [REDACTED]

[REDACTED]

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

A copy of this document, having attached thereto the documents specified in the paragraph headed “Documents Delivered to the Registrar of Companies in HongKong” in Appendix V to this document, has been registered with the Registrar of Companies in Hong Kong as required under section 342C of the Companies(Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Securities and Futures Commission and the Registrar ofCompanies in Hong Kong take no responsibility as to the contents of this document or any other documents referred to above.

The [REDACTED] is expected to be determined by the [REDACTED] to be entered into between our Company and the [REDACTED] (for themselves and onbehalf of the [REDACTED]) on the [REDACTED], which is expected to be on or before [REDACTED] or such later date as the [REDACTED] (for themselvesand on behalf of the [REDACTED]) and our Company may agree, but in any event, no later than [REDACTED]. The [REDACTED] will be not more thanHK$[REDACTED] per [REDACTED] and is expected to be not less than HK$[REDACTED] per [REDACTED]. The [REDACTED] (for themselves and onbehalf of the [REDACTED]) may, with the consent of our Company, reduce the indicative [REDACTED] and/or the number of [REDACTED] stated in thisdocument at any time prior to the morning of the last day for lodging applications under the [REDACTED]. If this occurs, notice of reduction of the indicative[REDACTED] and/or the number of [REDACTED] will be published on the Stock Exchange’s website at www.hkexnews.hk and our website atwww.wanghinggroup.com. If the [REDACTED] (for themselves and on behalf of the [REDACTED]) and our Company are unable to reach an agreement on the[REDACTED] on or before the [REDACTED], the [REDACTED] will not become unconditional and will lapse immediately. In the case of such event, a noticewill be published on the Stock Exchange’s website at www.hkexnews.hk and our website at www.wanghinggroup.com.

Prior to making an investment decision, prospective investors should consider carefully all the information set out in this document, including, without limitation,the risk factors set out in the section headed “Risk Factors” in this document.

Prospective investors of the [REDACTED] should note that the Sole Sponsor and/or the [REDACTED] (for themselves and on behalf of the [REDACTED]) isentitled, in its/their sole and absolute discretion, to terminate the [REDACTED] with immediate effect by giving notice in writing to us if any of the events setforth under the paragraph headed “[REDACTED] — [REDACTED] arrangements and expenses — The [REDACTED] — Grounds for termination” in thisdocument occurs at any time prior to 8:00 a.m. (Hong Kong time) on the [REDACTED]. Should the Sole Sponsor and/or the [REDACTED] (for themselves andon behalf of the [REDACTED]) terminate the [REDACTED], the [REDACTED] will not proceed and will lapse. Further details of these termination provisionsare set out in the section headed “[REDACTED]” in this document. It is important that prospective investors refer to that section for further details.

The [REDACTED] have not been and will not be registered under the U.S. Securities Act or any state securities laws in the United States and may not beoffered, sold, pledged or transferred within the United States or to, or for the account or benefit of, U.S. persons, except in transactions exempt from, or notsubject to, the registration requirements of the U.S. Securities Act. The [REDACTED] are being offered and sold outside the United States in offshoretransactions in reliance on Regulation S.

ATTENTIONWe have adopted a fully electronic application process for the [REDACTED]. We will not provide printed copies of this document or printed copies of any[REDACTED] to the public in relation to the [REDACTED]. This document is available at the website of the Hong Kong Stock Exchange atwww.hkexnews.hk and our website at www.wanghinggroup.com. If you require a printed copy of this document, you may download and print from thewebsite addresses above.

IMPORTANT

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

[REDACTED]

[REDACTED]

IMPORTANT


[REDACTED]

EXPECTED TIMETABLE


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[REDACTED]

EXPECTED TIMETABLE


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[REDACTED]

EXPECTED TIMETABLE


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[REDACTED]

EXPECTED TIMETABLE


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This document is issued by our Company solely in connection with the[REDACTED] and does not constitute an offer to sell or a solicitation of an offer to buyany securities other than the [REDACTED]. This document may not be used for thepurpose of, and does not constitute, an offer to sell or a solicitation of an offer to buy inany other jurisdiction or in any other circumstances. No action has been taken to permita [REDACTED] of the [REDACTED] or the distribution of this document and the[REDACTED] and [REDACTED] of the [REDACTED] in other jurisdictions aresubject to restrictions and may not be made except as permitted under the applicablesecurities laws of such jurisdiction pursuant to registration with or authorisation by therelevant securities regulatory authorities or an exemption therefrom.

You should rely only on the information contained of this document and the[REDACTED] to make your [REDACTED]. Our Company, the Sole Sponsor, the[REDACTED] and the [REDACTED], any of their respective directors, advisers,officers, employees, agents or representatives or any other person or party involved inthe [REDACTED] have not authorised anyone to provide you with information that isdifferent from what is contained of this document. Any information or representation notcontained or made of this document must not be relied on by you as having beenauthorised by our Company, the Sole Sponsor, the [REDACTED], the [REDACTED],any of their respective directors, advisers, officers, employees, agents or representativesor any other person or party involved in the [REDACTED].

Page

EXPECTED TIMETABLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v

SUMMARY AND HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

GLOSSARY OF TECHNICAL TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED] . . . . . . . . 41

DIRECTORS AND PARTIES INVOLVED IN THE [REDACTED] . . . . . . . . . . . . . 46

CORPORATE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

INDUSTRY OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

REGULATORY OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

CONTENTS


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HISTORY, DEVELOPMENT AND REORGANISATION . . . . . . . . . . . . . . . . . . . . . 81

BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91

RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS . . . . . . . . . . . 156

CONNECTED TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163

DIRECTORS AND SENIOR MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167

SUBSTANTIAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 179

SHARE CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180

FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 184

FUTURE PLANS AND [REDACTED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 222

[REDACTED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 230

STRUCTURE AND CONDITIONS OF THE [REDACTED] . . . . . . . . . . . . . . . . . . 241

HOW TO APPLY FOR THE [REDACTED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251

APPENDIX I – ACCOUNTANTS’ REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

APPENDIX II – UNAUDITED PRO FORMA FINANCIAL INFORMATION . . . II-1

APPENDIX III – SUMMARY OF THE CONSTITUTION OFOUR COMPANY AND CAYMAN ISLANDSCOMPANY LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1

APPENDIX IV – STATUTORY AND GENERAL INFORMATION . . . . . . . . . . . . IV-1

APPENDIX V – DOCUMENTS DELIVERED TOTHE REGISTRAR OF COMPANIES INHONG KONG AND AVAILABLE FOR INSPECTION . . . . . . V-1

CONTENTS


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This summary and highlights aims to give you an overview of the informationcontained of this document and should be read in conjunction with the full text of thisdocument. As this is a summary, it does not contain all the information that may beimportant to you. You should read the whole document before you decide to invest in the[REDACTED]. There are risks associated with any investment. Some of the particularrisks in investing in our [REDACTED] are set out in the section headed “Risk Factors”in this document. You should read that section carefully before you decide to invest inour [REDACTED]. Various expressions used in this summary are defined in the sectionsheaded “Definitions” and “Glossary of Technical Terms” in this document.

OUR BUSINESS

We are an established contractor principally engaged in providing fitting-out services toour private sector customers in Hong Kong and Macau with over 30 years of operatingexperience. During the Track Record Period and up to the Latest Practicable Date, we havecompleted 54 fitting-out works projects in Hong Kong and Macau. According to the F&SReport, we accounted for a market share of approximately 0.06% and 5.4% in the fitting-outworks industries in Hong Kong and Macau, respectively, in terms of revenue in FY2021, inwhich we ranked the fifth in terms of market share in the fitting-out works industry inMacau. Please refer to the section headed “Industry Overview” in this document for furtherdetails.

For FY2019, FY2020 and FY2021, we recorded revenue of approximately HK$196.6million, HK$250.7 million and HK$294.2 million, respectively. The table below shows abreakdown of our revenue by geographical location during the Track Record Period:

FY2019 FY2020 FY2021

Revenue% of total

revenue Revenue% of total


revenueHK$’000 % HK$’000 % HK$’000 %

Hong Kong 79,304 40.3 72,196 28.8 39,333 13.4Macau 117,305 59.7 178,506 71.2 254,883 86.6

Total 196,609 100.0 250,702 100.0 294,216 100.0

During the Track Record Period, we mainly carried out our works as a fitting-outworks subcontractor. Depending on the scale of a project, the specific technicalities required,the required completion timeframe and our manpower availability, we may delegate works toour subcontractors under close supervision and management by our project managementteam to ensure their conformity to our customers’ requirements and that projects arecompleted timely and efficiently, and our main responsibilities include (i) projectmanagement; (ii) developing work programmes; (iii) procurement of major raw materials;(iv) coordinating with our customers or the main contractors; (v) quality and time control ofthe works carried out by our subcontractors; and (vi) ensuring the project is carried out in asafe manner.

During the Track Record Period, we principally provided services to private sectorcustomers including construction companies, hotel operators, casino operators, propertydevelopers and other commercial enterprises which require fitting-out services in Hong Kongand Macau, where we undertook projects in relation to various types of building. The tablebelow shows a breakdown of our revenue by types of buildings during the Track RecordPeriod:

SUMMARY AND HIGHLIGHTS


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FY2019 FY2020 FY2021

Revenue% of total



revenueHK$’000 % HK$’000 % HK$’000 %

Residential 30,158 15.3 51,104 20.4 126,578 43.0Non-residential (Note) 166,451 84.7 199,598 79.6 167,638 57.0

Total 196,609 100.0 250,702 100.0 294,216 100.0

Note: Non-residential buildings include, among others, casinos, hotels, offices and restaurants.

Movement of our backlog

The following table sets forth the movement of backlog of our fitting-out worksprojects in terms of the outstanding contract value of projects during the Track RecordPeriod and up to the Latest Practicable Date:

FY2019 FY2020 FY2021

From1 April 2021

up to theLatest

PracticableDate

HK$’000 HK$’000 HK$’000 HK$’000

Outstanding contract value ofprojects in our opening backlog 168,520 262,306 246,582 201,509

Add: Value of new projectsawarded in the financialyear/period 299,191 193,066(Note) 180,940 169,580

Add: Value of adjustment/variation orders received in thefinancial year/period (8,796) 41,912 65,329 6,017

Less: Revenue recognised in thefinancial year/period (196,609) (250,702) (291,342)(Note) (155,671)(Note)

Outstanding contract value ofprojects in our closing backlog 262,306 246,582 201,509 221,435

Note: This table excludes one term contract which was awarded to us by Customer B in FY2020, with acontract period from 1 April 2020 to 31 December 2021, pursuant to which our Group would providefitting-out works and maintenance services on certain worksites of Customer B in Hong Kong uponrequests by Customer B on an order-by-order basis (the “Term Contract”). The actual worksrequired to be performed by our Group are subject to Customer B’s work orders from time to timeduring the contract period, which are charged according to the agreed schedules of rates stated in theTerm Contract. Our revenue generated from the Term Contract during the three financial years ended31 March 2019, 2020 and 2021 were nil, nil and approximately HK$2.9 million, respectively,amounting to approximately nil, nil, and 1.0% of our Group’s total revenue during the same periods.

The following table sets forth the movement of backlog of our fitting-out worksprojects in terms of number of projects during the Track Record Period and up to the LatestPracticable Date:



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FY2019 FY2020 FY2021

From1 April

2021 up tothe Latest

PracticableDate

Outstanding number of projects in ouropening backlog 28 31 26 25

Add: Number of projects awarded to us 23 9(Note) 11 9Less: Number of projects completed (20) (14) (12) (8)

Outstanding number of projects in ourclosing backlog 31 26 25 26


Customers

During the Track Record Period, our customers primarily consist of private sectorcustomers including construction companies, hotel operators, casino operators, propertydevelopers and other commercial enterprises which require fitting-out services, some ofwhich are companies or subsidiaries of companies which are listed in Hong Kong. In linewith market practice, our customers generally award contracts to us on a project-by-projectbasis and are non-recurring in nature. During the Track Record Period, save for the TermContract, details of which are set out in note (4) in the paragraph headed “Business — OurProject — Completed and projects on hand — Projects on hand”, we did not enter into anylong-term contract with our customers. For FY2019, FY2020 and FY2021, revenue derivedfrom our five largest customers accounted for approximately 81.6%, 76.3% and 85.9% ofour total revenue, respectively. For the same periods, revenue derived from our largestcustomer accounted for approximately 51.7%, 24.6% and 30.1% of our total revenue,respectively. For further details, please refer to the paragraph headed “Business — Ourcustomers” in this document.

Suppliers

We mainly source raw materials for our fitting-out work projects such as wood, stone,metal, tiles, plastic laminates and acoustic materials from suppliers. We also source doors,furniture and accessories tailor-made according to the specifications of our customers.During the Track Record Period and up to the Latest Practicable Date, we had notexperienced any material disputes with our suppliers. For FY2019, FY2020 and FY2021,material costs attributable to our five largest suppliers in aggregate amounted toapproximately HK$7.3 million, HK$16.1 million and HK$65.0 million, representingapproximately 48.5%, 39.3% and 68.3% of our total material costs, respectively, whilematerial costs attributable to our largest supplier amounted to approximately HK$2.2million, HK$6.4 million and HK$29.1 million, representing approximately 15.0%, 15.5% and30.6% of our total material costs, respectively. For further details, please refer to theparagraph headed “Business — Procurement — Suppliers of materials” in this document.



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Subcontractors

We generally engage subcontractors for labour intensive works to obviate the need forkeeping a large number of workers under our permanent employment, thereby enabling us tofocus on our core management competencies and allowing us the flexibility to deploy ourresources more cost effectively without compromising our work quality. Subcontractingworks generally include, among other things, ceiling works, floor works, wall and windowworks, wet trade works, glass works, paint works, lighting works, electrical works andinstallation of decorative and furniture works. For FY2019, FY2020 and FY2021,subcontracting costs accounted for approximately 86.6%, 73.5% and 50.6% of our total costof sales respectively. For FY2019, FY2020 and FY2021, the subcontracting costs attributableto our five largest subcontractors in aggregate amounted to approximately HK$114.9 million,HK$82.7 million and HK$89.8 million, representing approximately 76.2%, 51.2% and 70.8%of our total subcontracting costs, respectively, while the subcontracting costs attributable toour largest subcontractor amounted to approximately HK$61.3 million, HK$47.7 million andHK$31.2 million, representing approximately 40.7%, 29.5% and 24.6% of our totalsubcontracting costs, respectively. For further details, please refer to the paragraph headed“Business — Procurement — Subcontractors” in this document.

Pricing policy

Based on the experience of our Directors and senior management, we will consider thepotential difficulty and risk factors in estimating the total cost of each project. We will thendetermine the tender price based on our estimated project costs (taking into account variousfactors including and not limited to subcontracting costs, material costs, availability of themanpower and resources required and complexity of the works involved) plus a mark-upmargin at the time when we submit our tenders or quotations to our potential customer.Depending on the complexity or scale of the project, sometimes we may obtain quotationsfrom our subcontractors prior to submitting a tender proposal and reflect the estimatedmaterial costs and subcontracting costs in our tender price.

Tendering

A majority of our projects awarded to us during the Track Record Period were obtainedthrough tendering while some of them were obtained through quotation invitations. Forfurther details, please refer to the paragraph headed “Business — Our operation flow —Business identification phase — Tender success rate” in this document.



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SUMMARY OF FINANCIAL INFORMATION

Selected information from combined statements of profit or loss and othercomprehensive income

The following table sets out the selected information from our combined statements ofprofit or loss for the Track Record Period:

FY2019 FY2020 FY2021HK$’000 HK$’000 HK$’000

Revenue 196,609 250,702 294,216Cost of sales (173,903) (219,886) (250,891)

Gross profit 22,706 30,816 43,325Other income 14 162 811Other loss (20) (9) (196)Impairment losses under expected credit loss model, net of

reversal (366) (19) (213)Administrative expenses (6,080) (6,706) (8,798)[REDACTED] [REDACTED] [REDACTED] [REDACTED]Finance costs (1,476) (2,023) (1,643)

Profit before taxation 14,778 22,221 29,933Income tax expenses (2,101) (2,610) (3,728)

Profit for the year and total comprehensive income forthe year 12,677 19,611 26,205

The following table sets out the breakdown of our cost of sales for the Track RecordPeriod:

FY2019 FY2020 FY2021HK$’000 % HK$’000 % HK$’000 %

Subcontracting costs 150,672 86.6 161,635 73.5 126,883 50.6Material costs 14,942 8.6 40,940 18.6 95,059 37.9Staff and labour costs 5,807 3.3 10,344 4.7 22,716 9.0Others 2,482 1.5 6,967 3.2 6,233 2.5

Total 173,903 100.0 219,886 100.0 250,891 100.0

Our cost of sales for the Track Record Period primarily consisted of subcontractingcosts, material costs, staff and labour costs and others. For FY2019, FY2020 and FY2021,our cost of sales was approximately HK$173.9 million, HK$219.9 million and HK$250.9million, respectively, representing approximately 88.5%, 87.7% and 85.3% of our revenue.The increase in our cost of sales was generally in line with the growth of our revenueduring the Track Record Period.



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For further analysis, please refer to the paragraphs headed “Financial Information —Description and analysis of principal items in the combined statements of profit or loss andother comprehensive income” and “Financial Information — Year-to-year comparison ofresults of operations” in this document.

Highlights of certain items of our combined statements of financial position

As at 31 March2019 2020 2021

HK$’000 HK$’000 HK$’000

Non-current assets 13,992 17,823 298Current assets 127,289 102,182 134,251Current liabilities 121,235 96,360 110,935Non-current liability – 22 –Net current assets 6,054 5,822 23,316Net assets 20,046 23,623 23,614

Our net current assets slightly decreased from approximately HK$6.1 million as at 31March 2019 to approximately HK$5.8 million as at 31 March 2020 but then increased fromapproximately HK$5.8 million as at 31 March 2020 to approximately HK$23.3 million as at31 March 2021. For further analysis, please refer to the paragraph headed “FinancialInformation — Net current assets” in this document.

Highlights of certain items of our combined statements of cash flows

FY2019 FY2020 FY2021HK$’000 HK$’000 HK$’000

Net cash from/(used in) operating activities 11,524 34,323 (11,392)Net cash used in investing activities (25,013) (7,746) (9,689)Net cash from/(used in) financing activities 18,168 (7,533) 1,857

Net increase/(decrease) in cash and cash equivalents 4,679 19,044 (19,224)Cash and cash equivalents at beginning of the year 1,084 5,763 24,807

Cash and cash equivalents at end of the year 5,763 24,807 5,583

For FY2019. FY2020 and FY2021, our Group had net cash generated from/(used in)operating activities of approximately HK$11.5 million, HK$34.3 million and HK$(11.4)million, respectively. During the Track Record Period, our Group derived its cash inflowsfrom operating activities primarily from the receipt of payments from contract works and ourcash used in operating activities mainly included payments of subcontracting costs, materialcosts, payments of staff costs and other operating expenses and income tax payments. Forfurther analysis, please refer to the paragraph headed “Financial Information — Liquidityand capital resources — Cash flows” in this document.



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Key financial ratios

FY2019 FY2020 FY2021

Net profit margin (%) (Note 1) 6.4 7.8 8.9Return on equity (%) (Note 2) 63.2 83.0 111.0Return on total assets (%) (Note 3) 9.0 16.3 19.5Interest coverage (times) (Note 4) 11.0 12.0 19.2

As at 31 March2019 2020 2021

Current ratio and quick ratio (times) (Note 5) 1.0 1.1 1.2Gearing ratio (%) (Note 6) 237.4 178.2 203.6Net debt-to-equity ratio (%) (Note 7) 208.6 73.2 179.9

Notes:

1. Net profit margin is calculated based on the net profit for the financial year divided by total revenuefor the financial year and multiplied by 100%.

2. Return on equity is calculated based on the net profit for the financial year divided by total equity atthe end of the financial year and multiplied by 100%.

3. Return on total assets is calculated based on the net profit for the financial year divided by totalassets at the end of the financial year and multiplied by 100%.

4. Interest coverage is calculated based on the profit before interest and tax for the financial yeardivided by interest expenses for the financial year.

5. Current ratio is calculated based on the total current assets at the end of the financial year divided bythe total current liabilities at the end of the financial year. Quick ratio is calculated based on the totalcurrent assets (excluding inventories) at the end of the financial year divided by the total currentliabilities at the end of the financial year.

6. Gearing ratio is calculated based on total debt at the end of the financial year divided by total equityat the end of the financial year and multiplied by 100%. Total debt of our Group comprised of bankborrowings, bank overdrafts and lease liability.

7. Net debt-to-equity ratio is calculated based on net debt at the end of the financial year divided bytotal equity at the end of the financial year and multiplied by 100%. Net debt is defined as totaldebts which comprised of bank borrowings, bank overdrafts and lease liability net of cash and cashequivalents.

RECENT DEVELOPMENT

Subsequent to the Track Record Period and up to the Latest Practicable Date, we havecontinued to focus on developing our fitting-out works business in Hong Kong and Macau.As at the Latest Practicable Date, we had 26 projects on hand with a total contract sum ofapproximately HK$850.4 million, in which approximately HK$372.8 million is expected tobe recognised as revenue after the Track Record Period. In particular, during the period from1 April 2021 up to the Latest Practicable Date, we had been awarded nine contracts with anaggregate original contract sum of approximately HK$169.6 million. For further details,please refer to the paragraph headed “Business — Our projects — Completed projects andprojects on hand — Projects on hand” in this document.



– 7 –

Our Directors are of the opinion that, taking into consideration our internal resources,cash generated from our operations, banking facilities as well as our existing cash and cashequivalents and the estimated [REDACTED] from the [REDACTED], after deducting therelated expenses in relation to the [REDACTED], our Group has sufficient working capitalfor our present requirements for at least 12 months from the date of this document.

RISK FACTORS

Potential investors are advised to carefully read the section headed “Risk Factors” inthis document before making any investment decision in the [REDACTED]. Some of thekey factors include:

� the outbreak of COVID-19 worldwide may result in the slowdown of globaleconomy, which may adversely impact our business operation and financialperformance;

� we derived most of our revenue from our five largest customers;

� most of our revenue is derived from contracts awarded through competitivetendering and the contracts are not recurring in nature;

� any deterioration in the prevailing market conditions in the fitting-out worksindustries in Hong Kong and Macau may affect our performance and financialcondition;

� the fitting-out works market in Hong Kong and Macau are competitive; and

� changes in existing laws, regulations and government policies, including thoserelating to environmental protection and labour safety, may cause us to incuradditional costs.

OUR CONTROLLING SHAREHOLDERS

Immediately after completion of the [REDACTED] and the [REDACTED] (withouttaking into account any [REDACTED] that may be allotted and issued upon the exercise ofthe [REDACTED] or any options which may be granted under the Share Option Scheme,Faithful Trinity, Mr. Y. W. Chan and Ms. Wan will be the Controlling Shareholders (withinthe meaning of the Listing Rules) of our Company. Faithful Trinity is an investment holdingcompany incorporated in the BVI owned as to 69% by Mr. Y. W. Chan and 31% by Ms.Wan.

DIVIDEND

During FY2019, FY2020 and FY2021, subsidiaries of our Company had declareddividends of approximately HK$8.3 million, HK$16.0 million and HK$26.2 million,respectively. All such relevant dividends had been settled through the current account withour Directors.

The declaration and payment of future dividends will be subject to the decision of theBoard having regard to various factors, including but not limited to our operation andfinancial performance, profitability, business development, prospects, capital requirementsand economic outlook. It is also subject to any applicable laws. The historical dividendpayments may not be indicative of future dividend trends. We do not have anypredetermined dividend payout ratio.



– 8 –

REASONS FOR THE [REDACTED]

Our Directors believe that the [REDACTED] will greatly benefit our Group for thefollowing reasons, among others: (i) we need a [REDACTED] status to enhance ourcompetitiveness to compete with our listed competitors; and (ii) our Group has genuinefunding needs for expansion of our business. For further details, please refer to theparagraph headed “Future Plans and [REDACTED] — Reasons for the [REDACTED]” inthis document.

FUTURE PLANS AND [REDACTED]

We estimate that the aggregate [REDACTED] to us from the [REDACTED], afterdeducting related [REDACTED] and estimated expenses in connection with the[REDACTED], assuming none of the [REDACTED] is exercised and assuming an[REDACTED] of HK$[REDACTED] per [REDACTED] (being the mid-point of the[REDACTED] range of HK$[REDACTED] to HK$[REDACTED]), will be approximatelyHK$[REDACTED] million. Our Directors intend to apply such [REDACTED] as follows:

� approximately HK$[REDACTED], representing approximately [REDACTED]%of the [REDACTED], will be used to finance our upfront costs (such assubcontracting costs, costs of raw materials, staff and labour costs, site utilitiesand other site set-up costs) and working capital requirements at the early stage ofthe projects we plan to secure in the future;

� approximately HK$[REDACTED], representing approximately [REDACTED]%of the [REDACTED], will be used to take out surety bonds in favour of therelevant customers to ensure our due performance and observance of the contractsfor the Potential Projects;

� approximately HK$[REDACTED], representing approximately [REDACTED]%of the [REDACTED], will be used for expansion of our manpower resources toensure we have sufficient project management personnel for our projects on handand other future projects; and

� approximately HK$[REDACTED], representing approximately [REDACTED]%of the [REDACTED], will be used as general working capital of our Group.

For details of our future plans and [REDACTED], please refer to the section headed“Future Plans and [REDACTED]” in this document.

[REDACTED]

The total [REDACTED] in relation to the [REDACTED], primarily consisting of feespaid or payable to professional parties and [REDACTED], are estimated to beapproximately HK$[REDACTED] (based on the mid-point of the [REDACTED] range ofHK$[REDACTED] per [REDACTED] and [REDACTED]). Among the estimated total[REDACTED], (i) approximately HK$[REDACTED] is expected to be accounted for as adeduction from equity upon [REDACTED]; and (ii) approximately HK$[REDACTED] isexpected to be recognised as expenses in our combined statements of profit or loss and othercomprehensive income, of which approximately HK$[REDACTED] had been recognisedduring FY2021 and the remaining of approximately HK$[REDACTED] are expected to berecognised during FY2022.



– 9 –

LITIGATION AND POTENTIAL CLAIMS

As at the Latest Practicable Date, save as disclosed in the paragraph headed “Business— Litigation and potential claims”, no member of our Group was engaged in any litigation,arbitration, administrative proceedings or claim of material importance and no litigation,arbitration, administrative proceedings or claim of material importance was known to ourDirectors to be pending or threatened by or against any member of our Group that wouldhave a material adverse effect on our business operations or financial position. For details ofour litigation and potential claims, please refer to the paragraph headed “Business —Litigation and potential claims” in this document.

COMPLIANCE

Our Directors confirm that during the Track Record Period and up to the LatestPracticable Date, our Group had not experienced any material non-compliance or systemicnon-compliance.

[REDACTED]

Based on the[REDACTED]

Based on the[REDACTED]

[REDACTED] (Note 1) HK$[REDACTED] HK$[REDACTED]Unaudited pro forma adjusted net

tangible assets per Share (Note 2)approximately

HK$[REDACTED]approximately

HK$[REDACTED]

Notes:

1. The calculation of the [REDACTED] of our Shares is based on [REDACTED] Shares in issueimmediately after completion of the [REDACTED] (without taking into account any Shares whichmay be issued upon the exercise of the [REDACTED] or any options which may be granted underthe Share Option Scheme).

2. The unaudited pro forma adjusted combined net tangible assets of our Group per Share has beenprepared with reference to certain estimation and adjustment. Please refer to Appendix II to thisdocument for further details.

NO MATERIAL ADVERSE CHANGE

Our Directors confirmed that, up to the date of this document, there had been nomaterial adverse change in the financial or trading positions of our Company or itssubsidiaries since 31 March 2021 (being the date of which our Group’s latest auditedcombined financial statements were made up as set out in the Accountants’ Report inAppendix I to this document) and there had been no event since 31 March 2021 whichwould materially affect the information shown in the Accountants’ Report in Appendix I tothis document.



– 10 –

In this document, unless the context otherwise requires, the following expressionshave the following meanings.

“Accountants’ Report” the Accountants’ report prepared by Deloitte ToucheTohmatsu, the text of which is set out in Appendix I tothis document

“Advent Corporate” or “SoleSponsor”

Advent Corporate Finance Limited, a licensedcorporation for carrying on Type 6 (advising oncorporate finance) regulated activity under the SFO,acting as the sponsor of the [REDACTED] and anIndependent Third Party

“affiliate” in relation to a body corporate, any subsidiaryundertaking or parent undertaking of such bodycorporate, and any subsidiary undertaking of any suchparent undertaking for the time being

“Air Pollution ControlOrdinance”

Air Pollution Control Ordinance (Chapter 311 of theLaws of Hong Kong), as amended, supplemented orotherwise modified from time to time

“Articles of Association” or“Articles”

the amended and restated articles of association of ourCompany conditionally adopted on [�] with effect fromthe [REDACTED], a summary of which is set out inAppendix III to this document, and as amended,supplemented or otherwise modified from time to time

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

“Audit Committee” the audit committee of our Company established by theBoard

“Beijing Yongxing” 北京永興環球建築工程有限公司, a company established inthe PRC on 30 July 2003 with limited liability and ourindirect wholly-owned subsidiary

“Board” or “Board of Directors” the board of Directors of our Company

“Buildings Department” the Buildings Department of the Hong KongGovernment

“Buildings Ordinance” the Buildings Ordinance (Chapter 123 of the Laws ofHong Kong), as amended, supplemented or otherwisemodified from time to time

DEFINITIONS


– 11 –

“Building (Minor Works)Regulation”

the Building (Minor Works) Regulations (Chapter 123Nof the Laws of Hong Kong) as amended, supplementedor otherwise modified from time to time

“Business Day” or “business day” any day (other than Saturday, Sunday or public holidayin Hong Kong) on which banks in Hong Kong aregenerally open for normal banking business

“BVI” the British Virgin Islands

[REDACTED] [REDACTED]

“CCASS” the Central Clearing and Settlement System establishedand operated by HKSCC

“CCASS Clearing Participant” a person admitted to participate in CCASS as a directclearing participant or general clearing participant

“CCASS Custodian Participant” a person admitted to participate in CCASS as acustodian participant

“CCASS Investor Participant” a person admitted to participate in CCASS as aninvestor participant who may be an individual or jointindividuals or a corporation

“CCASS Operational Procedures” the operational procedures of the HKSCC in relation toCCASS, containing the practices, procedures andadministrative requirements relating to the operationsand functions of CCASS, as from time to time in force

“CCASS Participant” a CCASS Clearing Participant, a CCASS CustodianParticipant or a CCASS Investor Participant

“close associate(s)” has the meaning ascribed to it under the Listing Rules

DEFINITIONS


– 12 –

“Companies Act” or “CaymanCompanies Act”

the Companies Act (as revised) of the Cayman Islands,as amended, modified and supplemented from time totime

“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws ofHong Kong) as amended, supplemented or otherwisemodified from time to time

“Companies (Winding Up andMiscellaneous Provisions)Ordinance”

the Companies (Winding Up and MiscellaneousProvisions) Ordinance (Chapter 32 of the Laws ofHong Kong) as amended, supplemented or otherwisemodified from time to time

“Company”, or “our”, “ourCompany”, “we” or “us”

Wang Hing Group Holdings Limited（永興集團控股有限公司）, a company incorporated in the Cayman Islandsas an exempted company with limited liability on 14May 2021 and registered as a non-Hong Kong companyunder Part 16 of the Companies Ordinance on 29 June2021

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

“connected transaction” has the meaning ascribed to it under the Listing Rules

“Construction Industry Council” the Construction Industry Council, a statutory bodycorporate established under the Construction IndustryCouncil Ordinance (Chapter 587 of the Laws of HongKong)

“Controlling Shareholder(s)” has the meaning ascribed to it under the Listing Rulesand in the case of our Company, refer to FaithfulTrinity, Mr. Y. W. Chan and Ms. Wan

“core connected person(s)” has the meaning ascribed to it under the Listing Rules

“Corporate Governance Code” the Corporate Governance Code as set out in Appendix14 to the Listing Rules as amended, supplemented orotherwise modified from time to time

“COVID-19” novel coronavirus (COVID-19), a coronavirus identifiedas the cause of an outbreak of respiratory illness

DEFINITIONS


– 13 –

“Deed of Indemnity” a deed of indemnity dated [�] and executed by each ofour Controlling Shareholders in favour of our Company(for ourselves and as trustee for our and on behalf ofsubsidiaries), the particulars of which are set out in theparagraph headed “Statutory and General Information— E. Other information — 1. Tax and otherindemnities” in Appendix IV to this document

“Deed of Non-competition” a non-competition deed dated [�] and executed by eachof our Controlling Shareholders in favour of ourCompany (for ourselves and as trustee for and onbehalf of subsidiaries), the particulars of which are setout in the paragraph headed “Relationship with OurControlling Shareholders — Non-competitionundertaking” in this document

“Director(s)” the director(s) of our Company

“DSAL” Labour Affairs Bureau of Macau (in Portuguese,Direcção dos Serviços para os Assuntos Laborais daRegião Administrativa Especial de Macau and inChinese, 澳門特別行政區勞工事務局)

“DSSOPT” Land, Public Works and Transport Bureau of Macau (inPortuguese, Direcção dos Serviços de Solos, ObrasPúblicas e Transportes da Região AdministrativaEspecial de Macau and in Chinese, 澳門特別行政區土地工務運輸局)

“Employees’ CompensationOrdinance”

the Employees’ Compensation Ordinance (Chapter 282of the Laws of Hong Kong), as amended, supplementedof otherwise modified from time to time

“Employment Ordinance” the Employment Ordinance (Chapter 57 of the Laws ofHong Kong), as amended, supplemented or otherwisemodified from time to time



DEFINITIONS


– 14 –

“F&S Report” a market research report commissioned by us andprepared by Frost & Sullivan on the overview of theindustries in which our Group operates

“Faithful Trinity” Faithful Trinity Limited, a company incorporated in theBVI with limited liability on 8 January 2021 andowned as to 69% and 31% by Mr. Y. W. Chan and Ms.Wan

“Frost & Sullivan” Frost & Sullivan Limited, independent market researchagency engaged by our Company

“FY2019” the financial year ended 31 March 2019



“FY2022” the financial year ending 31 March 2022

“General Mandate” a general unconditional mandate given to our Directorspursuant to the written resolutions of our soleShareholder passed on [�] regarding further allotmentof Shares, details of which are set out in the paragraphheaded “Statutory and General Information — A.Further information about our Group — 5. Writtenresolutions of our sole Shareholder passed on [�]” inAppendix IV to this document


“Grateful Luck” Grateful Luck Limited, a company incorporated in theBVI with limited liability on 18 September 2020 andowned as to 69% and 31% by Mr. Y. W. Chan and Ms.Wan and our direct wholly-owned subsidiary

“Group”, “we, “us” or “our” our Company and our subsidiaries at the relevant timeor, where the context otherwise requires, in respect ofthe period prior to our Company becoming the holdingcompany of our present subsidiaries pursuant to theReorganisation, our present subsidiaries and thebusinesses operated by such subsidiaries

DEFINITIONS


– 15 –

Hap Lei Wang Hing Hap Lei Wang Hing Interior Engineering CompanyLimited （合利永興室內裝飾工程有限公司）, a companyincorporated in Macau on 19 March 2005 with limitedliability

“HK dollars” or “HK$” and“cents”

Hong Kong dollars and cents respectively, the lawfulcurrency of Hong Kong

“HKFRS(s)” Hong Kong Financial Reporting Standards, whichinclude Hong Kong Financial Reporting Standards,Hong Kong Accounting Standards and Interpretationsissued by Hong Kong Institute of Certified PublicAccountants

“HKICPA” Hong Kong Institute of Certified Public Accountants

“HKSCC” Hong Kong Securities Clearing Company Limited

“HKSCC Nominees” HKSCC Nominees Limited, a wholly-owned subsidiaryof HKSCC

“Hong Kong” or “HKSAR” or“HK”

the Hong Kong Special Administrative Region of thePRC


“Hong Kong Government” the government of Hong Kong

“IFRS” International Financial Reporting Standards

“Independent Third Party(ies)” an individual(s) or a company(ies) who or which, tothe best of our Directors’ knowledge, information andbelief, having made all reasonable enquiries, is/areindependent of and not connected with (within themeaning of the Listing Rules) our Company and ourconnected persons

“Inland Revenue Ordinance” the Inland Revenue Ordinance (Chapter 112 of theLaws of Hong Kong), as amended, supplemented orotherwise modified from time to time

“IRD” the Inland Revenue Department of the Hong KongGovernment


DEFINITIONS


– 16 –

“L & F Interior Engineering” L & F Interior Engineering Company Limited（年豐室內裝飾工程有限公司）(formerly known as L & F

Equipment Supply and Engineering Company Limited（年豐設備工程服務有限公司）), a company incorporated in

Macau on 22 March 2007 and our indirectwholly-owned subsidiary

“Lain Fung Shanghai” 年豐建築裝飾（上海）有限公司, a company with limitedliability established in the PRC and a companyformerly owned by Mr. Y. W. Chan

“Latest Practicable Date” [20 September 2021], being the latest practicable dateprior to the printing of this document for the purposeof ascertaining certain information of this document

“Legal Counsel” Ms. Queenie W.S. Ng, barrister-at-law in Hong Kongand an Independent Third Party


“Listing Committee” the listing sub-committee of the directors of the StockExchange


“Listing Rules” the Rules Governing the Listing of Securities on theStock Exchange, as amended, modified andsupplemented from time to time

“Macau” the Macau Special Administrative Region of the PRC

“Macau Government” the government of Macau

“Main Board” the stock market (excluding the options market)operated by the Stock Exchange which is independentfrom and operated in parallel with GEM of the StockExchange

“Mandatory Provident FundSchemes Ordinance”

Mandatory Provident Fund Schemes Ordinance(Chapter 485 of the Laws of Hong Kong), as amendedsupplemented or otherwise modified from time to time

DEFINITIONS


– 17 –

“Memorandum” or “Memorandumof Association”

the amended and restated memorandum of associationof our Company adopted on [�] with effect from the[REDACTED], a summary of which is set out inAppendix III to this document, and as amended,supplemented or otherwise modified from time to time

“MOP” Macau Pataca, the lawful currency of Macau

“Mr. Y. W. Chan” Mr. Chan Yun Wun （陳潤宏先生）, our executiveDirector, the chairman of our Board and one of ourControlling Shareholders

“Ms. Wan” Ms. Wan Sau Mui（尹秀妹女士）, our executive Directorand one of our Controlling Shareholders

“Nomination Committee” the nomination committee of our Company establishedby the Board




DEFINITIONS


– 18 –





“PRC” or “China” the People’s Republic of China excluding, for thepurpose of this document, Hong Kong, Macau andTaiwan

“Predecessor CompaniesOrdinance”

the Companies Ordinance (Chapter 32 of the Laws ofHong Kong) as in force from time to time before 3March 2014



DEFINITIONS


– 19 –





“Regulation S” Regulation S under the U.S. Securities Act

“Reorganisation” the corporate reorganisation of our Group inpreparation for the [REDACTED], the particulars ofwhich are summarised in the paragraph headed“History, Development and Reorganisation —Reorganisation” in this document

“Repurchase Mandate” a general unconditional mandate given to our Directorspursuant to the written resolutions of our soleShareholder passed on [�] regarding the repurchase ofShares, details of which are set out in the paragraphheaded “Statutory and General Information — A.Further information about our Group — 6. Repurchaseby our Company of our own securities” in Appendix IVto this document

“RMB” or “Renminbi” Renminbi, the lawful currency of the PRC

“SFC” the Securities and Futures Commission of Hong Kong

DEFINITIONS


– 20 –

“SFO” the Securities and Futures Ordinance (Chapter 571 ofthe Laws of Hong Kong), as amended, supplemented orotherwise modified from time to time

“Share(s)” ordinary share(s) with a par value of HK$0.01 each inthe share capital of our Company, which are to betraded in Hong Kong dollars [REDACTED]


“Share Option Scheme” the share option scheme conditionally adopted by ourCompany on [�], the principal terms of which aresummarised in the paragraph headed “Statutory andGeneral Information — D. Share Option Scheme” inAppendix IV to this document

“Shareholder(s)” holder(s) of the Share(s)

“Stock Exchange” The Stock Exchange of Hong Kong Limited

“subsidiary(ies)” has the meaning ascribed to it under the Listing Rules

“substantial shareholder(s)” has the meaning ascribed to it under the Listing Rulesand details of our substantial shareholders are set outin the section headed “Substantial Shareholders” in thisdocument

“Takeovers Code” the Codes on Takeovers and Mergers and ShareBuy-backs of Hong Kong, as amended, supplementedor otherwise modified from time to time

“Track Record Period” the period comprising FY2019, FY2020 and FY2021



“United States” or “U.S.” the United States of America

“U.S. Securities Act” the United States Securities Act of 1933 (as amended,supplemented or otherwise modified from time to time)

“U.S. dollars” or “US$” United States dollars, the lawful currency of the UnitedStates

DEFINITIONS


– 21 –

“Wang Hing Interior Design” Wang Hing Interior Design Company Limited（永興室內裝飾設計有限公司）, a company incorporated in HongKong on 14 March 1989 with limited liability and ourindirect wholly-owned subsidiary

“Wang Hing Interior Engineering” Wang Hing Interior Engineering Company Limited（永興室內裝飾工程有限公司） (formerly known as OngloryCorporation Limited （安名有限公司）) , a companyincorporated in Hong Kong on 30 March 2006 withlimited liability and our indirect wholly-ownedsubsidiary

“Wang Hing Lain Fung” Wang Hing Lain Fung Interior Design EngineeringCompany Limited（永興年豐室內裝飾設計工程有限公司）,a company incorporated in Macau on 23 May 2016with limited liability and our indirect wholly-ownedsubsidiary

“Waste Disposal Ordinance” The Waste Disposal Ordinance (Chapter 354 of theLaws of Hong Kong), as amended, supplemented orotherwise modified from time to time

“sq.ft.” square foot

“sq. m.” or “m2” square metre(s)

“%” per cent.

All dates and times in this document refer to Hong Kong time unless otherwise stated.

No representation is made that any amounts in US$, HK$ or MOP can be or couldhave been converted at the relevant dates at the above rates or any other rates or at all.

Certain amounts and percentage figures included of this document have been subject torounding adjustments. Accordingly, totals of rows or columns of numbers in tables may notbe equal to the apparent total of individual items. Where information is presented inthousands or millions of units, amounts may have been rounded up or down.

DEFINITIONS


– 22 –

This glossary of technical terms contains explanations of certain terms used in thisdocument as they relate to our Company and as they are used in this document inconnection with our business or us. These terms and their given meanings may notcorrespond to standard industry definitions or usage of those terms.

“BIM” building information modelling, three-dimensional anddigital representation of building data for ease ofcommunications between architects, engineers, andconstruction companies for construction purpose

“CAGR” compound annual growth rate

“contract sum” the price payable to the party carrying out the works,which under some contracts may be subject toadjustment in accordance with their respective terms

“fitting-out works” fitting out and renovation works conducted in theinterior space of a property to make it suitable foroccupation or available to be handed over to the endusers

“main contractor” a contractor appointed by the project owner whichgenerally oversees the progress of the entire projectand delegate different contract works to othercontractors

“Registered Minor WorksContractor”

a person whose name is on the register of minor workscontractors maintained under section 8A of theBuildings Ordinance from time to time

“Registered Subcontractor” a person whose name is on the list of registeredsubcontractors maintained under the RegisteredSpecialist Trade Contractors Scheme by theConstruction Industry Council from time to time

“schedule of rates” a schedule setting out the agreed unit rates andestimated quantities of the work items and materialsrequired in relation to a building project

“subcontractor” a lower-tier contractor employed by the main contractoror another contractor to carry out part of the contractworks

“Registered Specialist TradeContractors Scheme”

a registration scheme for trade subcontractors takingpart in building and engineering works, implementedby the Construction Industry Council

“variation order(s)” such additional works, omissions or changes requestedby the customer as variations or supplements to thespecifications in the original contract

GLOSSARY OF TECHNICAL TERMS


– 23 –

This document contains forward-looking statements and information that are, by theirnature, subject to significant risks and uncertainties. In some cases the words such as “aim”,“anticipate”, “believe”, “could”, “estimate”, “expect”, “going forward”, “intend”, “may”,“ought to”, “plan”, “potential”, “predict”, “propose”, “seek”, “should”, “will”, “would” andother similar expressions, and the negative of these words, are used to identifyforward-looking statements. These forward-looking statements and information include,without limitation, statements relating to:

� our Group’s business and operating strategies and plans of operation;

� the amount and nature of, and potential for, future development of our Group’sbusiness;

� our future debt levels and capital needs;

� our future financial conditions and results of operations;

� our Company’s dividend distribution plans;

� the regulatory environment as well as the general industry outlook for theindustries in which our Group operates;

� future developments, trends and competition in the industries in which our Groupoperates; and

� the trend of the economy of Hong Kong, Macau, and the world in general.

These statements reflect the current views of our Directors with respect to futureevents, operations, liquidity and capital resources, and are based on several assumptions,including those regarding our Group’s present and future business strategies and theenvironment in which our Group will operate in the future.

Our Group’s future results could differ materially from those expressed or implied bysuch forward-looking statement. In addition, our Group’s future performance may beaffected by various factors including, without limitation, those discussed in the sectionsheaded “Risk Factors”, “Business”, “Financial Information” and “Future Plans and[REDACTED]” in this document, many of which are not within our Company’s control.

Subject to the requirements of the applicable laws, rules and regulations, our Companydoes not have any obligation to update or otherwise revise the forward-looking statements ofthis document, whether as a result of new information, future events or otherwise. As aresult of these and other risks, uncertainties and assumptions, the forward-looking events andcircumstances discussed of this document might not occur in the way our Company expects,or at all. Should one or more risks or uncertainties stated in the aforesaid sectionsmaterialise, or should any underlying assumptions to prove incorrect, actual outcomes mayvary materially from those indicated. Prospective investors should therefore not place undue

FORWARD-LOOKING STATEMENTS


– 24 –

reliance on any of the forward-looking statements. All forward-looking statements containedof this document are qualified by reference to the cautionary statements as set out in thissection.

In this document, statements of, or reference to, our Group’s intentions or those of anyof our Directors are made as at the date of this document. Any such intentions may changein light of future developments.

FORWARD-LOOKING STATEMENTS


– 25 –

You should carefully consider all of the information of this document including therisks and uncertainties described below before making an [REDACTED] in the[REDACTED]. The business, financial condition or results of operations of our Groupcould be materially and adversely affected by any of these risks and uncertainties. The[REDACTED] could decline due to any of these risks and uncertainties, and you maylose all or part of your [REDACTED].

RISKS RELATING TO OUR BUSINESS

The outbreak of COVID-19 worldwide may result in the slowdown of global economy,which may adversely impact our business operation and financial performance

The outbreak of COVID-19 in Hong Kong and Macau since late 2019 has increaseduncertainties to the economy in Hong Kong and Macau. Our Directors recognise that, if thedevelopment of COVID-19 persists or intensifies, the economy in Hong Kong and Macaumay be adversely affected. In such event, the unfavourable economic conditions of HongKong and Macau, dampened market sentiment and decreased purchasing power of thegeneral public could be a disincentive for property developers or other ultimate customers tocommence new construction projects, thus delaying or reducing the number of new projectsto be awarded to us. Health safety risks during the outbreak of COVID-19, most notably therisk of any personnel working in the project site tested positive for COVID-19, may alsolead to labour shortage, increase in wages of the workers, and interruption of our businessoperation, delaying the work progress of our projects as a result. However, if any of ouremployees, including our foreign workers, are affected by the spread of COVID-19 and areunable to duly execute their duties in providing any of our Group’s services, our Group’soperations and financial conditions may be adversely impacted.

In response to the COVID-19 outbreak emerged in late 2019, the Macau Governmenthas imposed various draconian precautionary measures including extensive travel restrictionsas well as a mandatory 15-day casino shutdown in Macau in early February 2020. Moreover,according to the F&S Report, the COVID-19 outbreak has adversely affected the economyof Macau in the first half of 2020. Any economic downturn or slowdown in Macau and/ornegative business sentiment could have an indirect potential impact on the fitting-out worksindustry in Macau and our business operations and financial performance may be adverselyaffected. In addition, there is no assurance that the workers or personnel of our Group, themain contractors or other subcontractors working at the project sites would not be infectedby COVID-19. In such event, the relevant workers or personnel would need to bequarantined and our projects handled by them may be suspended or delayed as a result.

On the other hand, while we are allowed to take into account time buffer in devisingthe relevant timetable for our existing projects, we had not taken into account the outbreakof COVID-19 in devising the duration of the time buffer at the material time. Hence, if anypersonnel working at the project site(s) are infected with COVID-19 from time to timewhereby the project site(s) have to be suspended from time to time correspondingly and ourworks would be held up during suspension, resulting in delay in our work progress, theoriginal time buffer for the existing projects may not be able to absorb the delay ordisruption to the project site(s). In such event, we may be liable to pay liquidated damagesand/or compensation for delay in work progress to our customers according to the terms of

RISK FACTORS


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the contracts with individual customers. Our business and financial condition will thereforebe adversely affected. Even if the spread of the current COVID-19 can be contained, there isno assurance that another outbreak of COVID-19 or other natural disaster, health epidemicor disease outbreak will not happen in the future. In such event, our business operation andfinancial performance may be adversely affected.

The spread of COVID-19 in Hong Kong, Macau and globally would adversely affectglobal economy as well as the operation and financial performance of our customers. As aresult, they may become unable to settle the payments due to us for our works renderedwithin the agreed schedule or at all. In such event, we may incur significant impairment lossfor the outstanding payments owed to us by our customers in segment of our works. Theseadverse impacts, if materialised and persist for a substantial period, may significantly andadversely affect our business operation and financial performance.

We derived most of our revenue from our five largest customers

For FY2019, FY2020 and FY2021, we derived revenue of approximately HK$160.5million, HK$191.4 million and HK$252.7 million from our five largest customers,representing approximately 81.6%, 76.3% and 85.9% of our total revenue, for thecorresponding years, respectively. During the Track Record Period, save for a fitting-outproject in which Customer B entered into a long-term service agreement with us for certainfitting-out works and maintenance services to be conducted on certain worksites of CustomerB, we generally do not enter into any long-term agreements with our major customers as thecontracts are generally awarded to us on a project-by-project basis through tendersubmission. We expect to continue to derive a significant amount of our revenue from ourmajor customers in the near future. We cannot assure you that we will be able to maintainour relationships with our major customers or secure new projects from them. Our results ofoperations and financial conditions may be materially and adversely affected if we areunable to secure new projects from our major customers or fail to procure similar level ofbusiness from new customers on comparable commercial terms to offset the loss of revenuefrom our major customers.

In addition, our business, financial condition and results of operations also depend onthe financial condition and commercial success of our major customers. We cannot assureyou that the financial position of our customers will remain solvent or that our customerswill settle our progress payments or release the retention money on time or that we will beable to recover our contract assets in full or at all in the future. If any of our majorcustomers shall become unwilling or unable to make payments, we are unable to receive ourprogress payments and retention money or recover our contract assets, our liquidity andfinancial position may be materially and adversely affected.

Most of our revenue is derived from contracts awarded through competitive tenderingand the contracts are not recurring in nature

During the Track Record Period, we derived most of our revenue from contractsawarded through a competitive tender process and is not recurring in nature. The growth ofour business depends on our ability to continue to secure tender and contract awards. ForFY2019, FY2020 and FY2021, our tender success rate was approximately 14.5%, 15.8% and

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14.5%, respectively. There is no assurance that our Group will be able to maintain orincrease our success rate for projects tendered and quoted in the future. Please refer to theparagraph headed “Business — Our operation flow — Business identification phase —Tender success rate” in this document for further details. Our existing customers are notunder the contracted obligation to give us first right for any future projects. Our existingcustomers are not obliged to enter into contracts with us or engage our services for theirsubsequent projects and we need to undergo tender process with them again. In addition,there is no assurance that we can be successful in tender process with new customers.

There is no assurance that (i) we would be able to meet the pre-requisite requirementsfor tendering; or (ii) we would be invited to or made aware of the tender process; or (iii) theterms and conditions of the new contracts would be comparable to the existing contracts orcommercially acceptable to us; or (iv) our tenders would ultimately be selected bycustomers. We may agree to contract prices which are lower than our proposed tender priceor offer more favourable terms to our customers to enhance our competitiveness in thetender process. If we are unable to reduce our costs to maintain our competitiveness orobtain new contracts continuously, our business, financial condition and results of operationsmay be materially and adversely affected. In addition, many customers have adopted anevaluation system or set selection criteria to select their service provider, which may coverthe standards of management, industrial expertise, financial capability, reputation andregulatory compliance of the candidate, and may change from time to time. There is noassurance that we will be selected in accordance with our customers’ evaluation standards,failing which may adversely affect our reputation, business, prospects, financial conditionand results of operations. If we are unable to secure new projects in the future, there wouldbe a decrease in the number of projects and our operations and financial results would beadversely affected.

There is no guarantee that we will receive progress payments or retention money in fullin time or at all

We normally receive progress payments with reference to the percentage of works doneor the reaching of specified milestones. The customers’ consultant team (which typicallyincludes our customers’ project managers, quantity surveyors, architects and building serviceconsultants) issues an interim payment certificate certifying the work progress upon ourpayment application. Please refer to the paragraph headed “Business — Our operation flow— Implementation phase — Certification, payment of works done and withholding ofretention money” in this document for details. Our customers generally withhold 10.0% ofeach progress payment, subject to a maximum retention of 5.0% of the total contract sum, asretention money, the first half of which is usually released after the issue of the certificateof practical completion and the remaining portion is usually released upon the issue of thecertificate of making good defects after the expiry of the defects liability period. Ourretention receivables amounted to approximately HK$17.0 million, HK$21.5 million andHK$26.2 million as at 31 March 2019, 2020 and 2021, respectively. There is no assurancethat the financial position of our customers will remain solvent or that our customers willpay us the progress payments or the retention money on time in full or at all in the future.We could be engaged in prolonged negotiation with our customers with respect to thesettlement of progress payments or of the final payment from time to time. Any failure by

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our customers to make any payment on time or in full may have a material adverse effect onour liquidity position. Any failure by our customers to eventually repay the amount to usmay have a material adverse effect on our operating results.

Our Group recorded net cash outflow from operating activities for FY2021

We recorded net cash outflow from operating activities of approximately HK$11.4million for FY2021 mainly due to (i) the increase in trade receivables of approximatelyHK$4.0 million; and (ii) the increase in contract assets of approximately HK$48.9 million.For details of our cash flows, please refer to the paragraph headed “Financial Information —Liquidity and capital resources — Cash flows” in this document.

We cannot assure that we will not experience negative cash flow from our operatingactivities or negative cash balance in the future. In the event that we are unable to generatepositive operating cash flow or have sufficient working capital to meet our present andfuture financial needs, we may be required to obtain external financing and such financingactivities may increase our finance costs, and we cannot guarantee that we will be able toobtain the financing on terms acceptable to us, or at all. If we are unable to do so, we willbe in default of our payment obligations and may be unable to execute our businessstrategies as planned. We may also be forced to abandon our development and expansionplans. As a result, our business, financial conditions and results of operations may bematerially adversely affected.

Our historical growth rate, revenue and profit margin may not be indicative of ourfuture growth rate, revenue and profit margin

For FY2019, FY2020 and FY2021, our revenue amounted to approximately HK$196.6million, HK$250.7 million and HK$294.2 million, respectively. For the same year, our netprofit amounted to approximately HK$12.7 million, HK$19.6 million and HK$26.2 million,respectively, whereas our net profit margin for the same year was approximately 6.4%, 7.8%and 8.9% respectively. For details, please refer to the paragraph headed “FinancialInformation — Description and analysis of principal items in the combined statements ofprofit or loss and other comprehensive income” in this document.

Our business is on a project-by-project and non-recurring basis, our revenue and profitmargin in respect of the projects depend on the pricing of our tenders or quotations andactual performance of our works. The inherent risk of using such historical financialinformation of us to project or estimate our financial performance in the future, is that theyonly reflect our past performance under particular conditions. We may not be able to sustainour historical growth rate, revenue and profit margins for various reasons, including,intensification of competition among the subcontractors, aggravation in labour shortage, andother unforeseen factors such as adverse weather conditions, any of which may delay thecompletion of our projects, reduce the number of projects awarded to us, and/or reduce theprofit margins of our projects.

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For instance, our operating costs and gross profits may vary substantially from ouroriginal estimates as a result of:

� our failure to accurately estimate the direct labour costs, material costs andsubcontracting costs;

� any unanticipated technical problems and/or uncontrollable factors requiring us toincur additional time and costs; and

� any exacerbation of any or most of the aforesaid factors alongside with thegrowth in the number of the projects in terms of both their size and complexity.

Hence, we may suffer losses if there is any underestimation or overrun, therefore ourtenders or quotations may have inherent risks, such as the risk of losses from underestimatedcosts, liquidated damages payable for delayed completion, unforeseen difficulties incompleting the projects or incidents that may cause an increase in any unexpected time orcost.

We cannot assure you that we will be able to achieve the same performance as we didduring the Track Record Period. Investors should not solely rely on our historical financialinformation as an indication of our future financial or operating performance.

Shortage of labour and increase of labour costs may affect our projects and ourperformance

According to the F&S Report, labour costs are one of the major expenses of fitting-outservices providers. There is no assurance that the supply of labour and average labour costswill be stable. All labour intensive projects are more susceptible to labour shortage. Shortageof labour may lead to a significant increase in the costs of labour as our Group or oursubcontractors may need to increase the wages in order to retain sufficient labour. We maynot be able to shift the increase in labour costs onto our customers. As such, our staff costand/or subcontracting costs, which include the labour costs of our subcontractors, willincrease and thus lower our profitability.

The labour costs have kept increasing in recent years. According to the F&S Report,the estimated average daily wage of workers engaging in the fitting-out works market inHong Kong had increased from HK$1,226 per day per worker in 2015 to HK$1,351 per dayper worker in 2020, representing a CAGR of approximately 2.0%. The average daily wagesare anticipated to increase from HK$1,359 in 2021 to HK$1,508 in 2025, with an anticipatedCAGR of approximately 2.6%. The average daily wages of fitting-out workers in Macau hasrisen from approximately MOP767.5 in 2015 to MOP852.0 in 2016, due to the prolongedlabour shortage and rising demand for fitting-out works. With the completion of key hotelsdevelopment projects in Macau, the average daily wages of fitting-out workers in Macaurecorded a slight decrease from MOP767.5 in 2015 to MOP734.5 in 2020 representing aCAGR of (0.9)%. The average daily wages of fitting-out workers in Macau are forecasted toreach approximately MOP908.0 in 2025 at the CAGR of approximately 4.6% from 2021 to2025. We cannot assure you that the labour supply and average labour costs will remainstable in the future. If we or our subcontractors fail to retain existing labour and/or recruit

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sufficient labour in a timely manner to cope with our existing or future projects, we may notbe able to complete our projects on schedule and may be subject to liquidated damagesclaims from our customers and/or incur loss.

There is no guarantee that we would not be subject to any claims in relation to defectsof our fitting-out works or breach of contract as a result of delay

As a fitting-out works service provider, we may be subject to claims in relation todefects of our works. In general, our customers require us to provide a defects liabilityperiod of approximately three to 24 months, during which we will remain responsible forremedying any defects or imperfections discovered in relation to our work done. In the eventthat substantive remedial actions are required to be taken during the defects liability period,we may have to incur significant time and costs or be subject to claims from our customersagainst us. If we fail to make good the defects as required, our customers may reduce orforfeit the retention money withheld from us and further claim damages from us.

In some projects, our contracts may set out that we have to complete each stage of ourwork following the schedule set by our customers. If we fail to complete the works on orbefore the due date as scheduled, we may be required to compensate our customersaccording to the mechanism stated in our contracts, unless they agree to grant us timeextension to complete the remaining works.

Our fitting-out works may also be delayed or disrupted due to unforeseencircumstances that are beyond our expectation or control, including: (i) inclement weatherconditions which may delay the project schedule; and/or (ii) other construction risks such aswork injuries and disputes with customers, suppliers, subcontractors and other projectparties.

As such, we cannot guarantee that we will be able to complete every project on time orat all, nor can we assure you that our customers would grant us sufficient time extensions tocomplete the outstanding works. If we fail to complete our fitting-out works on time,significant liquidated damages or other penalties may be imposed upon us, which would inturn adversely affect our profitability and operating results.

Any material litigation and disputes may adversely affect our Group’s performance

Owing to the nature of our business, we are exposed to the risks of getting intodisputes with our customers, subcontractors, workers and other parties concerned with ourprojects of various reasons. Such disputes may be in connection with the delivery ofsubstandard works, late completions of works, labour compensations or personal injuries inrelation to the works. For example, contractual claims may arise regarding the payment ofoutstanding contract fees with our subcontractors, and personal injuries compensation claimsmay arise in relation to any industrial accidents happened in our project sites.

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There is an inherent risk of accidents resulting in personal injuries, property damagesand/or fatalities in the project sites in general. We cannot guarantee that our employees, orthose of our subcontractors will follow our safety measures and/or will not breach anyapplicable rules, laws and regulations. If any such employees fail to follow safety measuresat our project sites, personal injuries, property damage or fatal accidents may be resultedand may lead to claims or other legal proceedings against our Group.

In the event that we are subject to any contractual disputes, litigation and other legalproceedings, our management’s attention and internal resources may be significantly divertedfor the handling of such cases, which can be both costly and time consuming. Regardless ofthe merits of the case, these disputes may damage our relationship with the relevantcustomers, suppliers, subcontractors or workers, and may affect our reputation in thefitting-out works markets, thus adversely affect our business operations, financial results andprofitability.

We provide surety bonds in the course of our business operations which could exposeour Group to liquidity risk and/or possible loss

For some projects undertaken by us, we are required to provide surety bonds in theamount of certain percentage, usually equivalent to 10%, of the original contract sum infavour of our customers to secure our performance under contracts. The requirement of cashcollaterals will adversely affect our liquidity position. If we fail to perform our obligationsunder contracts, the bank or insurance company will compensate our customers up to theamount of the surety bond on demand. We will then become liable to compensate the bankor insurance company, as applicable, and our collateral could be seized. In suchcircumstances, our business, financial condition and results of operations will be adverselyaffected.

Our business strategies and future plans may not be implemented successfully andtimely and may need additional funding

The successful implementation of our business strategies and plans mentioned in thesection headed “Future Plans and [REDACTED]” in this document depends on a number offactors including the availability of funds, competition and our ability to retain and recruitcompetent employees. Some of these factors are beyond the control of our Group and bynature, are subject to uncertainty. There is no assurance that such business strategies andplans can be implemented successfully. Any failure or delay in the implementation of any orall of these strategies and plans may have a material adverse effect on the profitability andprospects of our Group. In addition, we may come across other opportunities to expand ourbusiness and we may need to obtain additional financing to fund our future capital expenses.If we are unable to secure adequate funds for our business needs in a timely manner, wemay not be able to fully implement our future plans effectively and successfully.

We rely on key management personnel

Our success and growth are, to a large extent, attributable to the continued commitmentof our executive Directors and our senior management team and our capability to identify,hire, retain suitable and qualified employees, including management personnel with the

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necessary industry expertise as described in the section headed “Directors and SeniorManagement” in this document. Our Directors and members of senior management, inparticular, Mr. Y. W. Chan (our executive Director) and Mr. Ng Wing Cheong Stephen (ourchief executive officer), are important to us as they have extensive experience and businessconnections in the fitting-out works industries in Hong Kong and Macau. Any unanticipateddeparture of our Directors and/or our senior management team without appropriatereplacement may have a material adverse impact on our business operations and profitability.

Our current insurance coverage may not sufficiently protect us against all the risks weare exposed to

During the Track Record Period, our Group maintained insurance coverage against,among others, office safety insurance covering loss and damage to office content, publicliabilities and personal accidents, employees’ compensation insurance covering employees’compensation claims and personal injuries actions. Please refer to the paragraph headed“Business — Insurance” in this document for further details.

There can be no assurance that our current insurance will cover all our risks orpayments or adequately protect us against all liabilities arising from claims and litigationagainst our Group. We will have to bear any losses, damages or liabilities in the course ofour operations arising from events for which we do not have adequate insurance cover.Further, the insurance premium payable by our Group depends on various factors includingthe scope and contract sum of the projects undertaken by us and our insurance claim trackrecord. There is no assurance that the insurance premium payable by our Group will notincrease or the insurance coverage will not be reduced in the future. If we were held liablefor uninsured losses, or the amounts of claims for insured losses exceeding the limits of ourinsurance coverage, or the insurance premium payable by our Group increases significantly,our business and results of operations may be materially and adversely affected.

Non-performance, substandard and delayed performance, legal non-compliance andunavailability of our subcontractors may adversely affect our operation andprofitability

We generally engage subcontractors for labour intensive works for our projects. ForFY2019, FY2020 and FY2021, our subcontracting costs amounted to approximatelyHK$150.7 million, HK$161.6 million and HK$126.9 million, respectively. For details ourselection and control system over our subcontractors, please refer to the paragraph headed“Business — Procurement — Subcontractors” in this document.

We cannot assure you that the quality of works completed by our subcontractors canalways meet our customers’ requirements. Subcontractors exposes us to risks such asnon-performance, substandard and delayed performance by our subcontractors, for which wemay not be able to rectify the substandard works or engage another subcontractor in time orat all. Any material non-performance, substandard performance or delayed performance ofour subcontractors could result in deterioration of our service quality or unexpected delaysin our scheduled completion time, which could in turn damage our reputation, andpotentially expose us to liability under the main contracts with our customers.

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Our subcontractors are required to comply with the relevant laws, rules and regulations.If our subcontractors violate any laws, rules or regulations, we may be subject toprosecutions by the relevant authorities, our operations may be disturbed, and our financialposition may be adversely affected.

In addition, we cannot assure you that we can secure suitable subcontractors whenrequired or obtain acceptable fees and terms of service with our subcontractors, as these maybe affected by factors beyond our control, such as the number of available or on-goingprojects in the market or pricing policy and business strategies of our subcontractors. Insuch event, our operation and profitability may be adversely affected.

RISKS RELATING TO OUR INDUSTRY

Any deterioration in the prevailing market conditions in the fitting-out works industriesin Hong Kong and Macau may affect our performance and financial condition

All of our revenue was derived in Hong Kong and Macau during the Track RecordPeriod. The future growth and level of profitability of the fitting-out works industries inHong Kong and Macau depends primarily upon the continued availability of constructionand building activities, the nature, extent and timing of which will be determined by theinterplay of a variety of factors, in particular, the investment of enterprise owners, propertydevelopers and hotel operators and the general conditions and prospects of local economy.According to the F&S Report, the residential and commercial new building projects fromprivate property developers and the demand for fitting-out works projects of aged housingunits could affect the growth in the fitting-out works industry in Hong Kong; and thedemand for fitting-out works in relation to hotels, casinos and other hospitality facilitiescould affect the growth in the fitting-out works industry in Macau. There are also manyother factors affecting the fitting-out works industries in Hong Kong and Macau, includingbut not limited to (i) rising public and private housing supply in Hong Kong; (ii) largequantities of old buildings and the renovation cycle in Hong Kong; and (iii) surging demandfrom the development of non-gaming sector in Macau. Should there be a recurrence ofrecession in Hong Kong or Macau, deflation or any changes in the local currency policy, asa result of which the fitting-out works industry in Hong Kong or Macau start to decline, ouroperations and profits could be adversely affected.

The fitting-out works market in Hong Kong and Macau are competitive

According to the F&S Report, the overall fitting-out works market in Hong Kong ishighly fragmented and competitive; whereas, the fitting-out works market in Macau isconcentrated by certain major contractors, but competitive nevertheless. There were over2,000 and 200 market participants providing fitting-out services in Hong Kong and Macau,respectively, in 2020. According to the F&S Report, the industry players in Hong Kong andMacau generally compete with each other on industry expertise, industry reputation, trackrecord, relationship with the industry players, as well as financial capability. Some of ourcompetitors may have more manpower and resources, more qualifications entitling them toprovide a wider range of construction services, longer operating histories, stronger financialstrength, stronger relationship with customers, more established brand names and marketrecognition. When we price our tenders or fix contract price with our customers, we may

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face keen competition and significant downward pricing pressure, thereby reducing ourprofit margins. If such occurs, our profitability and results of operations will be adverselyaffected. If we fail to adapt effectively and efficiently to market conditions and customerpreferences or otherwise fail to provide a competitive bid as compared to our competitors,our potential customer may turn to our competitors and our business may in turn bematerially and adversely affected. In addition, new comers may enter the industry with therelevant licence and qualification required. If we fail to compete effectively, our businessand financial condition may be materially and adversely affected.

Changes in existing laws, regulations and government policies, including those relatingto environmental protection and labour safety, may cause us to incur additional costs

Many aspects of our business operations are governed by various laws, regulations andgovernment policies. The licensing requirements for contractor as well as environmentalprotection and labour safety requirements may change from time to time. We may not beable to comply with all these requirements in time or at all or we may need to incursubstantial costs to be compliant, which will adversely affect our business operations.

According to the F&S Report, apart from labour and materials costs, other indirectcosts such as management and administration costs, have increased in recent years in HongKong and Macau. Such costs may continue to increase due to pressures faced by contractorsor subcontractors to implement safety, environmental and health enhancements to maintain asafe work environment, to keep accident rate low, and to improve welfare requirements ofworkers. Our subcontractors may also pass on the increase in their costs to us by increasingtheir subcontracting fees. Changes in economic, environmental and government policy mayalso affect our labour and material costs, subcontracting costs and other costs. In the eventthat these costs continue to increase and we fail to pass on the cost to our customers, ourbusiness, financial conditions may be materially and adversely affected.

RISKS RELATING TO HONG KONG

Our future contracts may be subject to the proposed Security of Payment Legislation(“SOPL”) for the construction industry in Hong Kong

The Development Bureau of the Government issued a consultation document on theproposed SOPL for the construction industry in June 2015 with the aim to help maincontractors, subcontractors, consultants and suppliers in receiving payments on time for theirwork and provide a mechanism whereby disputes can be resolved quickly. In the privatesector, only construction contracts relating to a “new building” as defined in the BuildingsOrdinance of which the main contract has an original value in excess of HK$5 million willbe covered by the SOPL. Once the SOPL comes into effect, parties can agree paymentperiods between applications and payments, but not exceeding 60 calendar days for interimpayments or 120 days for final payments. Further, amounts due for construction works canbe claimed as statutory payment claims and parties may be granted the right to suspend theperformance of works until the relevant payment is made. For further details in relation tothe SOPL, please refer to the paragraph headed “Regulatory Overview — Hong Kong lawsand regulations — E. Laws expected to come into force which may impact our business” in

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this document. The proposed requirement under SOPL may create pressure on our cashflows and may adversely affect our liquidity position as well as affect our financial capacityto undertake new projects.

RISKS RELATING TO MACAU

The recent slowdown in the Macau gaming industry may adversely affect our business

Our performance and financial condition are dependent on the state of the economy inMacau. For FY2019, FY2020 and FY2021, approximately 59.7%, 71.2% and 86.6% of ourrevenue, respectively, was derived in Macau. The economy of Macau substantially relies onits gaming industry, which can be affected by various factors, including the number ofinbound travellers. According to the F&S Report, the COVID-19 had led to temporaryclosure of casinos and hotels in Macau and exposed the risks of Macau economy’sover-reliance on gaming and tourism industry. With the slowdown of the gaming sector inMacau, our business and our financial condition may be materially and adversely affected.

We may not be able to obtain and/or renew registration or comply with requirementsor changes in relevant rules and regulations governing the fitting-out works industry inMacau

In Macau, all fitting-out works contractors, including ourselves, are required by law toregister with the DSSOPT as a contractor. Please refer to the paragraph headed “Business —Licences and permits” in this document for further details. In the event our Group fails toobtain and/or our registration with DSSOPT, our business, financial condition may bematerially and adversely impacted. Further, in the event that there are any material changesin the existing regulatory regime that governs the fitting-out works industry in Macau, ourGroup may incur additional time and costs in complying with the new requirements or ourGroup may not be able to meet such requirements. This may also materially and adverselyaffect our Group’s business, financial conditions.

RISKS RELATING TO THE [REDACTED]

[REDACTED]

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[REDACTED]

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RISKS RELATING TO THIS DOCUMENT

Investors should read the entire document and should not rely on any informationcontained in press articles or other media coverage regarding us and [REDACTED]

We strongly caution our investors not to rely on any information contained in pressarticles or other media regarding us and [REDACTED] . Prior to the publication of thisdocument, there may be press and media coverage regarding the [REDACTED] and us.Such press and media coverage may include references to certain information that does notappear in this document, including certain operating and financial information andprojections, valuations and other information. We have not authorised the disclosure of anysuch information in the press or media and do not accept any responsibility for any suchpress or media coverage or the accuracy or completeness of any such information orpublication. We make no representation as to the appropriateness, accuracy, completeness orreliability of any such information or publication. To the extent that any such information isinconsistent or conflicts with the information contained in this document, we disclaimresponsibility for it and our investors should not rely on such information.

Certain facts, forecast and other statistics in this document obtained from publiclyavailable sources have not been independently verified and may not be reliable

Certain facts, forecast and other statistics in this document are derived from variousgovernment and official resources. However, our Directors cannot guarantee the quality orreliability of such source materials. We believe that the sources of the said information areappropriate sources for such information and have taken reasonable care in extracting andreproducing such information. We have no reason to believe that such information is false ormisleading or that any fact has been omitted that would render such information false ormisleading. Nevertheless, such information has not been independently verified by us, theSole Sponsor, the [REDACTED] or any of their respective affiliates or advisers and,therefore, we make no representation as to the accuracy of such facts and statistics. Further,we cannot assure our investors that they are stated or compiled on the same basis or withthe same degree of accuracy as similar statistics presented elsewhere. In all cases, ourinvestors should consider carefully how much weight or importance should be attached to orplaced on such facts or statistics.

Forward-looking statements contained in this document are subject to risks anduncertainties

This document contains forward-looking statements with respect to our businessstrategies, operating efficiencies, competitive positions, growth opportunities for existingoperations, plans and objectives of management, certain pro forma information and othermatters. The words “aim”, “anticipate”, “believe”, “could”, “predict”, “potential”,“continue”, “expect”, “intend”, “may”, “might”, “plan”, “seek”, “will”, “would”, “should”and the negative of these terms and other similar expressions identify a number of theseforward-looking statements. These forward looking statements, including, amongst others,those relating to our future business prospects, capital expenditure, cash flows, workingcapital, liquidity and capital resources are necessarily estimates reflecting the best judgmentof our Directors and management and involve a number of risks and uncertainties that could

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cause actual results to differ materially from those suggested by the forward-lookingstatements. As a consequence, these forward-looking statements should be considered inlight of various important factors, including those set out in the section headed “RiskFactors” in this document. Accordingly, such statements are not a guarantee of futureperformance and investors should not place undue reliance on any forward-lookinginformation. All forward-looking statements in this document are qualified by reference tothis cautionary statement.

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[REDACTED]

INFORMATION ABOUT THIS DOCUMENT AND THE [REDACTED]


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[REDACTED]



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[REDACTED]



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[REDACTED]



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[REDACTED]



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DIRECTORS

Name Residential address Nationality

Executive Directors

Mr. Chan Yun Wun（陳潤宏） Room 1, 18/F.Block A, Beverly Hill6 Broadwood RoadHong Kong

Chinese

Ms. Wan Sau Mui（尹秀妹） Room 1, 18/F.Block A, Beverly Hill6 Broadwood RoadHong Kong

Chinese/Canadian

Independent non-executiveDirectors

Ms. Cheng Ching Yee（鄭靖怡）(formerly known as

Cheng Lai Mui Jennifer（鄭麗妹）)

Flat E, 28/F(Yee Wan Court) Tower 15South Horizons Phase 2Ap Lei ChauHong Kong

Chinese

Mr. Lam Chi Wing（林至頴） Flat 1803, 18/F, Block AElizabeth House250 Gloucester RoadCauseway BayHong Kong

Chinese

Mr. Leung Hoi Ki（梁海祺） Flat 11, Floor 7Fook Lam HouseKwong Lam CourtShatinHong Kong

Chinese

Please refer to the section headed “Directors and Senior Management” in this documentfor further information of our Directors.

DIRECTOR AND PARTIES INVOLVED IN THE [REDACTED]


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PARTIES INVOLVED IN THE [REDACTED]

Sole Sponsor Advent Corporate Finance LimitedA corporation licensed under the SFO to carry ontype 6 (advising on corporate finance) regulatedactivity as defined in the SFOSuites 1008-08AOcean Centre, Harbour CityKowloonHong Kong



Legal advisers to our Company As to Hong Kong lawZM LawyersSolicitors, Hong Kong20/F, Central 88No. 88-98 Des Voeux Road CentralHong Kong

Ms. Queenie W. S. NgBarrister-at-lawRooms 2203 A & BFairmont House8 Cotton Tree DriveCentralHong Kong

As to Macau lawSTA-Advogados/STA-LawyersMacau lawyerAlameda Dr. Carlos D´Assumpção, n.ºs 322 a 362,Edifício Centro Comercial Cheng Feng,3.º andar “M”,Macau



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As to Cayman Islands lawApplebyCayman Islands legal advisersSuites 4201–03 & 12, 42/FOne Island East, Taikoo Place18 Westlands Road, Quarry BayHong Kong

Legal advisers to the SoleSponsor, the [REDACTED]and the [REDACTED]

As to Hong Kong lawD. S. Cheung & Co.Solicitors, Hong Kong29/F, Bank of East Asia Harbour View Centre56 Gloucester RoadWanchaiHong Kong

As to Macau lawFCLaw Lawyers & Private NotariesMacau lawyerAvenida de Almeida Ribeironº 61, Edifício Circle Square13º, B-EMacau

Reporting Accountants Deloitte Touche TohmatsuCertified Public AccountantsRegistered Public Interest Entity Auditors35/F, One Pacific Place88 QueenswayHong Kong

Property valuer Valplus Consulting LimitedRm 1801, 18/FRightful Centre12 Tak Hing StreetJordanHong Kong

Industry Consultant Frost & Sullivan Limited1706, One Exchange Square8 Connaught PlaceCentralHong Kong



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Internal Control Consultant Fan, Mitchell Risk Advisory Services Limited25/F, Tower 1, Tern Centre237 Queen’s Road CentralHong Kong

Compliance Adviser [Advent Corporate Finance LimitedA corporation licensed under the SFO to carry ontype 6 (advising on corporate finance) regulatedactivity as defined in the SFOSuites 1008-08A,Ocean Centre, Harbour CityKowloonHong Kong]




– 49 –

Registered office 71 Fort StreetPO Box 500George TownGrand Cayman KYI-1106Cayman Islands

Headquarters and principalplace of business in HongKong registered under Part16 of the CompaniesOrdinance

Unit C&D, 13/F.Max Share Centre373 King’s RoadNorth Point, Hong Kong

Headquarters in Macau Avienda Da Praia Grande No 283Ka Fai 1o Andar C.Macau

Company’s website www.wanghinggroup.com(Note: information contained in this website does not form part ofthis document)

Company secretary Ms. Chan Ying Yu(ACG, ACS)Room 1, 18/F.Block A, Beverly Hill6 Broadwood RoadHong Kong

Authorised representatives (forthe purposes of the ListingRules)

Mr. Chan Yun WunRoom 1, 18/F.Block A, Beverly Hill6 Broadwood RoadHong Kong

Ms. Chan Ying YuRoom 1, 18/F.Block A, Beverly Hill6 Broadwood RoadHong Kong

Audit Committee Mr. Leung Hoi Ki（梁海祺）(Chairperson)Ms. Cheng Ching Yee（鄭靖怡）Mr. Lam Chi Wing（林至頴）

CORPORATE INFORMATION


– 50 –

Remuneration Committee Ms. Cheng Ching Yee（鄭靖怡）(Chairperson)Mr. Chan Yun Wun（陳潤宏）Mr. Lam Chi Wing（林至頴）Mr. Leung Hoi Ki（梁海祺）

Nomination Committee Mr. Chan Yun Wun（陳潤宏）(Chairperson)Ms. Cheng Ching Yee（鄭靖怡）Mr. Lam Chi Wing（林至頴）



Principal banker DBS Bank (Hong Kong) Limited11th Floor, The Center99 Queen’s Road CentralCentral, Hong Kong

Industrial and Commercial Bank of China (Asia)Limited33rd Floor, ICBC Tower3 Garden RoadCentral, Hong Kong

Macau Chinese BankAvenida da PraiaGrande No. 101Macau

CORPORATE INFORMATION


– 51 –

This and other sections of this document contain information relating to the industry inwhich we operate. Certain information and statistics contained in this section have been derivedfrom various official and publicly available sources. In addition, certain information and statisticsset forth in this section have been extracted from a market research report commissioned by us andprepare by Frost & Sullivan, an independent market research agency. We believe that the sourcesof such information and statistics are appropriate and have taken reasonable care in extractingand reproducing such information and statistics. We have no reason to believe that suchinformation or statistics is false or misleading in any material respect of that any fact has beenomitted that would render such information or statistics false or misleading in any materialrespect. However, such information and statistics have not been independently verified by us, theSole Sponsor, the [REDACTED], [REDACTED], any of the [REDACTED], our or theirrespective directors and officers or any other parties involved in the [REDACTED] (which for thepurpose of this paragraph, excludes Frost & Sullivan). No representation is given as to theaccuracy or completeness of such information and statistics.

SOURCE AND RELIABILITY OF INFORMATION

Our Group commissioned Frost & Sullivan, an independent market search company to conductan analysis of, and to report on, the fitting-out works industry in Macau and Hong Kong. A total feeof HK$330,000 was charged by Frost & Sullivan for the preparation of the F&S Report. The F&SReport has been prepared by Frost & Sullivan independent of our Group’s influence. Except asotherwise noted, the information and statistics set forth in this section have been extracted from theF&S Report. The payment of such amount was not conditional on our Group’s successful[REDACTED] or on the results of the F&S Report.

Frost & Sullivan is an independent global consulting firm founded in 1961, and offers industryresearch, market strategies and provides growth consulting and corporate training on a variety ofindustries.

The F&S Report includes information on the fitting-out works industry in Macau and HongKong. The information contained in the F&S Report is derived by means of data and intelligencegathering which include: (i) desktop research; and (ii) primary research, including interviews with keystakeholders including but not limited to fitting-out works industry service providers and industryexperts in Macau and Hong Kong.

Information gathered by Frost & Sullivan has been analysed, assessed and validated using Frost& Sullivan in-house analysis models and techniques. According to Frost & Sullivan, this methodologyensures a full circle and multilevel information sourcing process, where information gathered can becross-referenced to ensure accuracy. All statistics are based on information available as at the date ofF&S Report. Other sources of information, including government, trade association or market placeparticipants, may have provided some of the information on which the analysis or data is based.

In compiling and preparing the research, save for the foreseeable impact resulted from theoutbreak of COVID-19 such as the impact of delay in the schedules of some construction projects as aresult of interruptions in the supply of raw materials and difficulty in labour deployment in the firstquarter of 2020 and the potential impact of COVID-19 on the global economy in the following years,Frost & Sullivan assumed that the social, economic and political environments in the relevant marketsare likely to remain stable in the forecast period. In preparation of the forecast data, Frost & Sullivanalso assumed that the outbreak of COVID-19 in Macau, Hong Kong and overseas markets are likelyunder effective control in the long run with a gradual resumption of economic performance thereafter,with reference to the same assumption taken by the International Monetary Fund in preparation of theworld economic outlook published in April 2020, June 2020 and October 2020.

INDUSTRY OVERVIEW


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INTRODUCTION OF FITTING-OUT WORKS INDUSTRY

Definition and Segmentation

Fitting-out works are undertaken with respect to the interior spaces of a property after suchproperty has been structurally completed but before it is suitable for occupation or available to behanded over to the end users. Types of works of a fitting-out works project generally include stoneand marble works, carpentry and joinery works, flooring and carpeting, tiling, ceiling works,plastering works, wall papering, mechanical and electrical works, waterproofing works, installation ofsanitary wares, metal hardware, furniture, fittings and lightings and other ancillary works. Thefitting-out works industry in Macau and Hong Kong consists of the commercial sector includingcasinos, hotels and related facilities as well as office, while the non-commercial sector mainly refersto residential buildings and related facilities.

Segment of Fitting-out by Application

Residential

Private Residential Flats

Public Housing

Shopping Malls and Retail Shops

Offices

Restaurants

Commercial

Casinos

Hotels

Others

Industrial Buildings

Government Buildings and Facilities

Community Facilities

Industry Value Chain

The fitting-out works projects are usually initiated by governments, property developers andmajor casino operators and are awarded to the main contractors through tendering. The maincontractors being awarded the fitting-out works project would then normally enter into contracts withone or more subcontractors.

The contractors would source fitting-out materials required for the fitting-out works projects,including tiles, carpets, wall coverings, marbles, ironmongeries, fabrics, and other general fitting-outmaterials. The contractors also provide solutions on project management, execution, projectcoordination, supervision and quality assurance.

Typically in the fitting-out works industry, the property owners would require the maincontractors, especially for those that are with limited past working relationship, to secure surety bondsin favor of them upon the award of the fitting-out works projects and these surety bonds would bereleased upon completion of the projects. The amount of surety bonds required for each fitting-outworks project generally would not exceed 10% of the total contract sum.

INDUSTRY OVERVIEW


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Contract Owners Main contractors

Property Developers

Fitting-outcontractors

Other specialised works subcontractors

GovernmentDepartments

Casino Operators

Hotels Operators

Material

Contract ownersinitiate projects andissuework orders to

main contractorsMain contractors

award work ordersto subcontractors

suppliers

Secondarysubcontractors

Subcontractorssource materials and

work service from material suppliers

Source: Frost & Sullivan

MACAU FITTING-OUT WORKS INDUSTRY OVERVIEW

Market Size

In Macau, the commercial segment projects refer to construction works performed for casinos,hotels, shopping malls, retail shops, offices and restaurants, while the non-commercial sector projectsrefer to the others.

The revenue of fitting-out works market in commercial segment decreased from approximatelyMOP3,838.2 million in 2015 to MOP2,714.9 million in 2020, representing a CAGR of -6.7%. Inparticular, it is estimated that revenue generated from hotel and casino resorts account for over 90%of the commercial segment of the fitting-out works market in Macau. The revenue of thenon-commercial segment also experienced a drop from MOP3,002.8 million in 2015 to MOP2,169.0million in 2020, at a CAGR of -6.3%. The slowdown of the commercial segment was primarily dueby the completion of key hotels development projects in Macau with substantial demand for fitting-outworks in buildings while the decline in non-commercial segment was resulted from the overalldownward trend of the overall construction market in Macau.

The sustained renovation works in urban renewal and upgrade of casinos, hotels and otherhospitality facilities serve as the driver to the fitting-out works in Macau. Following the completionsof a large number of casinos, hotels and other hospitality facilities in previous years, the number ofageing hospitality facilities is on the rise. With the public’s rising expectation on the quality ofbuildings and increased competition, the property lifecycle for hospitality facilities in Macau has beenshortening. The demand for fitting-out works would be driven by the strategy and planning of thecasinos and hotels. The commercial segment is forecasted to keep a steady growth. By the end of2025, the revenue of fitting-out works market in commercial segment is likely to reach MOP4,910.0million, with a CAGR of 12.3% from 2021 to 2025. With the development of the Hengqin New Areain Zhuhai city, increasing public housing supply and development of non-gaming sector, the demandfor fitting-out works in non-commercial segment is estimated to rise accordingly and reachapproximately MOP4,302.1million, at a CAGR of 11.1%% from 2021 to 2025.

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

Commercial

Revenue (MOP Million)

Revenue of Fitting-out works Market by Commercial and Non-commercial Segments (Macau), 2015-2025E

3,002.8

3,838.2

6,841.0

2,816.6

3,766.0

6,582.6

3,083.6

3,603.7

6,687.3

2,642.7

3,386.8

6,029.5

2,619.0

3,184.7

5,803.7

2,169.0

2,714.9

4,883.8

2,820.2

3,089.1

5,909.4

3,152.4

3,554.9

6,707.2

3,524.3

4,054.9

7,579.1

3,954.1

4,458.8

8,412.9

4,302.1

4,910.0

9,212.1

2015-2020CAGR

2021E-2025ECAGR

-6.7% 12.3%

-6.3% 11.1%

2015 2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E

Non-commercial

CAGR: -6.5%

CAGR: 11.7%


INDUSTRY OVERVIEW


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Market Drivers and Opportunities

Development of the Hengqin New Area in Zhuhai city – The fitting-out works industry isexpected to benefit from rising housing supply in the development of the Hengqin New Area inZhuhai city. A parcel of land of approximately 194,000 sq.m. located in the Hengqin New Area,Zhuhai city, the PRC was officially sold to Macau in 2020 to be used for the development of aresidential real estate project to cater for the accommodation needs for Macau local residents living inHengqin. The sale which amounted to approximately RMB5.35 billion further highlights the push fordeeper ties and integration between Macau, Hengqin and the Greater Bay Area in the PRC. Thedevelopment of a residential real estate project requires investment in infrastructure, buildings andpublic utilities. In particular, the construction of new buildings would increase the demand forfitting-out works. Accordingly, the deeper integration between Macau, Hengqin and the Greater BayArea would also create more growth opportunities for the property market in Macau, which would inturn drive the demands for construction and fitting-out works in the future.

Surging demand from the development of non-gaming sector – The Macau Governmentreleased Tourism Industry Development Master Plan Consultation Paper in 2016 to position Macau asthe World Centre of Tourism and Leisure, diversifying the overall development of the tourism industryand promoting new development of cultural tourism. Macau’s Master Plan for urban development hasnow gone through one of the initial design phases. According to the draft released by DSSOPT inSeptember 2020, the urban area zones C and D are targeted to become an urban waterfrontmasterpiece designed to attract tourism and businesses. A new tourism and leisure route specialising indifferent forms of entertainment could also be integrated, and would be located around Nam Van andBarra in urban area zone B. In addition, the area closest to the Hong Kong-Zhuhai-Macau Bridgecould become the go-to spot for conferences and exhibitions, capitalising on the area’s proximity tothe bridge and its link to the three significant hubs. The pace of upgrading of diversified developmentis expected to grow continuously, which in turn lead to an increase in demand for fitting-out works.

Redevelopment and renovation of hospitality facilities – The redevelopment plan includesrepairs, renovations, replacements and maintenance of casinos, hotels, retail shops and restaurants.Upgrade of facilities and addition of retails shops is shown in the redevelopment plans of majorlicensed gaming operators, namely extension of Galaxy Macao Phase 3 and Phase 4, the revamp ofthe Encore Tower at Wynn Macau, the ongoing renovation of Galaxy Macau and Star World Hotel onMacau peninsula, and Four Season’s tower. Fitting-out works are in high demand in theredevelopment plans. The expansion, renovation and rebranding of hospitality facilities are forecastedto translate into growth opportunities for the fitting-out works industry in Macau.

Market Trends

Emerging trend in integrated design and build – Design and build is the rising trend infitting-out works, from design planning, coordination, monitoring and supervision to completion,which could facilitate the delivery schedule by overlapping the design phase and construction phase ofa project. In addition, it is also increasingly common for project owners to engage a fitting-out workscontractor with design capability as it could (i) streamline the selection and appointment process forengaging multiple working parties for different fields of works throughout various stages of theprojects; and (ii) minimise the time lag in the communication among different working parties becausethe fitting-out works contractors would take charge of the co-ordination and supervision of associatedconstruction works. As such, the fitting-out works contractors who have integrated design and buildcapabilities enjoy a competitive edge in the industry and are preferred by the main contractors.

INDUSTRY OVERVIEW


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COMPETITIVE LANDSCAPE OF MACAU FITTING-OUT WORKS INDUSTRY

Overview of market competition

The fitting-out works market in Macau is competitive, with more than 200 market participants in2020. The fitting-out works market in Macau is relatively concentrated with the top five playerscontributing to approximately 66.8% of the entire market in terms of revenue. Our Group recorded therevenue of approximately MOP262.5 million for the provision of fitting-out services in Macau inFY2021, accounting for approximately 5.4% of the market share in Macau.

Ranking and market share of leading fitting-out market by revenue (Macau), FY2021

Rank Market participant Listing status Estimated revenue in FY2021 (MOP million)

Estimated market share in FY2021 (%)

1 Company A Listed 1,870.7 38.3%

2 Company B Listed 431.0 8.8%

3 Company C Listed 398.4 8.2%

4 Company D Listed 296.6 6.1%

5 Private 262.5 5.4%

Subtotal 3,259.2 66.8%

Total 4,883.8 100.0%

Our Group


Note:

Company A is an integrated fitting-out works contractor and has been providing fitting-out works for residentialproperties and hotel projects in Hong Kong and Macau since 1996.

Company B operates as a construction contractor in Macau, with the focus on fitting-out works, buildingmaintenance and repairing services, and other services.

Company C provides fitting-out services for casinos, retail areas, hotels, restaurants, commercial properties, andresidential properties along with repair and maintenance services in Macau.

Company D is a Macau-based contractor providing fitting-out works and building construction works.

The currency is converted at the rate of 1 MOP = 0.97HK$.

The ranking is calculated for the year ended 31 March 2021.

Entry barriers

Technical Know-how and Track Record – Fitting-out works require high level of technicalknowledge, from tile laying, brick laying, plastering, floor screed to marble works, and competency inproject management. Given the complexity of fitting-out works with different specialisedsub-segments, substantial experience in project management and technical knowledge is considered aspre-requisite in fitting-out works industry. Accordingly, fitting-out works contractors with proven trackrecord in management and coordination are preferred by the clients in Macau. Industry expertisecombined with track record serves as a key barrier for new entrants in the fitting-out works industryin Macau.

Relationship with Industry Players – Fitting-out works contractors usually work within strictbudget and specific timeline. Without well-developed relationships with suppliers, new entrants maynot be able to acquire materials at competitive prices and suppliers may prioritise firms with betterrelationships before serving the new entrants, which could possibly affect the timeline of project. Withlong-standing partnership, some fitting-out works contractors are on tender lists of the clients and areeligible for tender submission and quotation invitation. New market entrants without previousexperience and connection in the industry face difficulties in securing business and resourcedeployment.

INDUSTRY OVERVIEW


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Reputation and Creditability – Word of mouth, advertisements, and awards are the key selectioncriterion of fitting-out works contractors. Credible track record for quality of works, efficient divisionof labour, timely delivery within budget control is the critical metrics for the companies to performfitting-out works. New entrants without sound reputation built on the past experience in deliveringfitting-out works would compromise a company’s overall competitiveness in the market.

Price Trend of Major Cost Components

The average daily wages of fitting-out workers in Macau has risen from approximatelyMOP767.5 in 2015 to MOP852.0 in 2016, due to the prolonged labour shortage and rising demand forfitting-out works. With the completion of key hotels development projects in Macau, the average dailywages of fitting-out workers in Macau recorded a slight decrease from MOP767.5 in 2015 toMOP734.5 in 2020. The decrease in 2019 and 2020 is due to the slowdown of the overall constructionmarket in 2019 and the impact of COVID-19 during the period. Given the development of integratedresort and re-positioning of the tourism industry, more non-gaming amenities and infrastructure wouldbe built. The average daily wages of fitting-out workers in Macau is expected to rise in the future.The average daily wages of fitting-out workers in Macau are forecasted to reach approximatelyMOP908.0 in 2025 at the CAGR of approximately 4.6% from 2021 to 2025.

852.0 819.4775.9 741.5 734.5 757.9 792.0

835.5 869.0908.0

0.0

200.0

400.0

600.0

800.0

1,000.0

2015 2016 2019 2025E

(MOP)

2017 2018 2020 2021E 2022E 2023E 2024E

2015 -2020 2021E -2025E

CAGR -0.9% 4.6%

767.5

Average Daily Wages of Fitting-out Workers (Macau), 2015 – 2025E

Source: DSEC; Frost & Sullivan

General fitting-out materials include, among others, sand, concrete and aggregates, clampingplate, ordinary wood column, brick, pipes, paints and glass, experienced a steady increase in pricefrom 2015 to 2020, primarily due to the continued growth in the property market and constructionindustry in Macau. The price increase in general fitting-out materials from 2015 to 2020 was drivenby the rising demand and the continuous development of construction market in Macau. The expectedrise in price of raw materials of fitting-out works is due to the continued growth in the property andconstruction market from 2021 and 2025.

Average prices of major materials in fitting-out works industry (Macau), 2015-2025E

MOP perUnit

2015 2016 2017 2018 2019 2020 2021E 2025E CAGR 2015-2020 CAGR 2020-2025

Sand m3 199 212 223 260 289 295 314 404 8.2% 6.5%Concrete m3 774 819 805 848 959 992 1027 1178 5.1% 3.5%

Aggregate (gravel and crushed stone)

m3 95.3 95.3 101 127 213 228 253 385 19.1% 11.0%

Clamping plate (plywood) m2 59.1 58.4 58.3 61 61.5 62 63 66 1.1% 1.0%

Ordinary wood column m3 2605 2676 2620 2501 2672 2781 2795 2851 1.3% 0.5%

Brick 100 pieces 95 92 93.3 96.7 104 106 108 116 2.1% 2.0%

Ordinary clear sheet glass m2

92.2 92.3 93.2 111 112 121 125 145.1 5.6% 3.8%

Toughened glass m2

286 289 296 342 359 398 410 479.6 6.8% 4.0%

Emulsion paint litre 29.7 30.2 30.3 31 31.8 32 32.4 33.7 1.5% 1.0%Thick grey PVC water pipe

(Length: 4m Diameter: 32mm) Unit 28.8 29.7 31.6 33.5 32.8 31.1 31.5 32.9 1.5% 1.1%

Galvanised steel pipe (grade B) (Length: 6m Diameter:

13mm) Unit 78.8 80.3 80.5 82.5 82.5 82.8 83.2 84.8 1.0% 0.5%

Galvanised steel pipe (grade B) (Length: 6m Diameter:

19mm) Unit 102 103 103 107 107 109 110.2 113.7 1.3% 0.8%

Source: DSEC; Frost & Sullivan

INDUSTRY OVERVIEW


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HONG KONG FITTING-OUT WORKS INDUSTRY OVERVIEW

Market Size

A high mobility of the office relocation segment is recorded over the recent years, with some ofthe office tenants of conventional central business districts (CBDs), such as Central, Admiralty andWan Chai, plan to relocate their current offices upon lease expiry, mainly attributable to the surgingrental prices and aged buildings in the CBDs. With the enhanced accessibility and infrastructuraldevelopment and support in areas, such as Kowloon East and Island East, rapid expansion andrenovation of office spaces serve as another factor as tenants seek to revitalise working ambience witha view to elevate aesthetic appearance at a relatively lower rental price. Besides, for the retailbusiness sector, market players are facing fierce competition and a limited property lifecycle of 5-10years and property developers tend to invest in their premises pursuant to nowadays customers’expectation and preferences. As such, driven by the impetus of the dynamic landscape of office rentaland the competitive landscape in the retail sector, the fitting-out works industry is poised to benefitfrom the humongous source of business in the course of relocation and renovation. From 2015 to2020, the gross output value of fitting-out works in the commercial sector increased fromapproximately HK$25.0 billion to approximately HK$35.1 billion, representing a CAGR of 7.0%.Moving forward, the gross output value of fitting-out works in the commercial sector is expected toreach HK$54.4 billion in 2025, representing a CAGR of approximately 10.1% from 2021 to 2025.

Non-commercial sector is primarily comprised of fitting-out works in public and privateresidential buildings, while storage and industrial buildings account for merely approximately 10% ofthe non-commercial sector.

Going forward, as highlighted by the Housing Authority, Rating and Valuation Department andTransport and Housing Bureau, in order to increase the supply of residential buildings in Hong Kong,the annual number of actual production of public housing is expected to reach 95,200 units from 2020to 2025, while the completion of private residential units is expected to reach 105,522 units from2020 to 2025. As such, the gross output value of fitting-out works in the non-commercial sector isanticipated to grow at a CAGR of 10.6%, attaining approximately HK$51.6 billion by the end of2025.

Commercial

Revenue (HK$ Billion)

Revenue of Fitting-out Market by Commercial and Non-commercial Segments (Hong Kong), 2015-2025E

22.4

25.0

47.4

23.7

26.2

49.9

28.6

30.7

59.3

31.7

34.3

66.0

31.2

35.9

67.1

31.5

35.1

66.6

34.5

37.1

71.5

37.9

40.0

77.9

40.4

43.1

83.5

45.5

48.4

93.9

51.6

54.4

106.0

2015-2020CAGR

2021E-2025ECAGR

7.0% 10.0%

7.1% 10.6%

2015 2016 2017 2018 2019 2020 2021E 2022E 2023E 2024E 2025E

Non-commercial

CAGR: 7.0%

CAGR: 10.3%

0

20

40

60

80

100

120


Market Drivers and Opportunities

Rising public and private housing supply – The fitting-out works industry in Hong Kong isprimarily underpinned by the flourishing supply of public housing as established by the government aswell as the active participation of property development on new private residential and commercialhousing projects. As stipulated in the latest 2020 policy address by the Chief Executive, the LongTerm Housing Strategy Annual Progress Report published by the Transport and Housing Bureau hasidentified 330 hectares of land required for providing 316,000 public housing units to meet thedemand in the coming 10 years (i.e. 2021/22 to 2030/31). The actual completion is almost a double ofthat in last decade. Such land supply mainly comes from reclamation in Tung Chung, utilisation onagricultural land and brownfield sites in New Development Areas and Fanling golf courses. The

INDUSTRY OVERVIEW


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Housing Authority also released new role of subsidised home by launching the Home OwnershipScheme 2020, to provide around 7,000 flats. For private sector, the Hong Kong Government envisagedan estimated average annual production of about 19,600 units in the upcoming five years from 2020 to2025, substantially greater than the average production of about 15,600 units in the past five yearsfrom 2015 to 2019. Accordingly, the rising supply of newly constructed private residential units isexpected to meet the housing demand within the community, subsequently driving the source ofrevenue for Hong Kong fitting-out works companies.

Large quantities of old buildings and the renovation cycle – According to the Rating andValuation Department of the Hong Kong Government, more than 50.0% of the buildings in HongKong were constructed before 1990. On the other hand, according to the Urban Renewal Authority,the number of residential and composite buildings aged 30 years or above has increased from 40,000units in 2015 to 42,100 units in 2019, representing a CAGR of approximately 1.2%. As the renovationcycles are typically less than 10 years for commercial buildings and less than 20 years for privatehousehold, the number of projects requiring fitting-out services in Hong Kong has been sustainingwith increasing demand. Furthermore, it is not uncommon for residence to request for fitting-out workduring or around the period of building repair and maintenance. The stipulation of MandatoryBuilding Inspection Scheme by the Hong Kong Government further contribute to the salience andrequirement to maintain the residential building as a whole as well as to improve interior fitting-outworks. As such, the growing building and residential apartment renovation market has become a majordriver to the fitting-out services market.

For public sector, the social unrest in Hong Kong in 2019 has resulted in damage to publicfacilities such as traffic and street lights, railings, paving blocks, building and surveillance system.Also, the continuous aging of facilities such as the International Airport, hospitals, schools and otherrecreational facilities such as parks and communal areas have collectively serve as an impetus to thedeployment of fitting out work. According to the 2019/20 Hong Kong Budget, Architectural ServicesDepartment’s financial provision of maintenance of the Government buildings increased fromHK$679.0 million in 2017/18 to HK$753.7 million in 2019/20. As such, the nature of renovation cyclecoupled with rising expenditure on maintenance from the government, will be driving a number ofnew and existing fitting-out works project in Hong Kong.

Market Trends

Technology-enabled fitting out works implementation – In early years, fitting-out workscompanies have CAD and 3D modelling software to constitute communications and specifications withclients. To further facilitate visualisation for the benefit of the service provider itself on projectmanagement as well as to conduce better communication between stakeholders, the emergence ofBuilding Information Modelling (BIM) such as Vectorworks Architect and Revit, have come in placethat fitting-out works companies may leverage to efficiently handle conceptual design, designdevelopment, rendering, and documentation for both facade and interior of a building. BIM sets outcomprehensive details by listing every specifications of spatial configuration, finishes, materials, cost,daylight analysis etc. It also assists fitting-out works designers by prompting errors and suggestingimprovement changes in a comprehensive manner. BIM also provides visualisation in axonometric and360° panoramic perspective with animated walkthroughs. The time effectiveness, clarity andtransparency of the BIM keeps execution workers, designers, and stakeholders on the same page,which is set fitting-out works to become a trending technology adopted by market players in the HongKong industry. Nevertheless, the formulation of a BIM-designed drawing requires extensive time andtechnical know-how effort than other types of designing software. As such, the usage of suchtechnology is currently limited to competent and major market participants.

COMPETITIVE LANDSCAPE OF HONG KONG FITTING-OUT WORKS INDUSTRY

Overview of market competition

The overall fitting-out works market in Hong Kong is considered as relatively highly fragmentedand competitive in terms of number of market participants. The top five market participants accountfor approximately 6.4% of market share by revenue in 2020 in Hong Kong. With reference to the

INDUSTRY OVERVIEW


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statistics from Construction Industry Council as of December 2020, there are 901 market participantsproviding renovation and fitting-out services in Hong Kong. As estimated, there are more than 2,000market participants in the fitting-out works market in Hong Kong in 2020. Our Group recorded therevenue of approximately HK$39.3 million in Hong Kong in FY2021, accounting for a market shareof 0.06%.

Rank Market participant Listing statusEstimated revenue in FY2021

(HK$ million)Estimated market share in

FY2021 (%)

1 Company A Listed 1,748 2.6%

2 Company E Listed 958.4 1.4%

3 Company F Private 823.2 1.2%

4 Company G Listed 481.3 0.7%

5 Company H Listed 278.2 0.4%

Subtotal 4,289.1 6.4%

Total 66,600.0 100.0%

Ranking and market share of leading fitting-out works market by revenue (Hong Kong), FY2021


Note:

Company A is an integrated fitting-out works contractor and has been providing fitting-out works for residentialproperties and hotel projects in Hong Kong and Macau since 1996.

Company E principally engages in property and construction business, and also provides interior fitting-out andworks building renovation services in Hong Kong.

Company F was founded in 2004 and is one of the leading interior contractor providing fitting-out services inHong Kong.

Company G was established in 2003 and is an interior fitting-out solutions provider with major customerspredominantly situated in Grade A offices in Hong Kong.

Company H was established in 1995 and is a contractor of fitting-out services in Hong Kong and mainlyconducted on new buildings of residential and commercial properties.

The ranking is calculated for the year ended 31 March 2021.

Entry barriers

Industry Expertise – Technical know-how serves as the fundament of the fitting-out worksindustry. Several type of labours such as electrical fitter and plumber not only require extensiveknowledge on the specialised work, but also the accreditation of corresponding licenses issued by theHong Kong Electrical and Mechanical Services Department. Facing the hiccups of shortage ofexperienced workers, established companies are usually able to secure the quality of labour, while itposes huge hindrance for new entrants to recruit qualified and experienced workers.

Proven Track Record – Proven track record is vital under the competitive landscape offitting-out works industry. In general, sizeable clients especially from the commercial and retail sector,prefer fitting-out works service providers with proven track record and established portfolio as tosubstantiate their capability and credibility of the business. Fitting-out works companies with proventrack record have usually established network with multiple clients, securing the stream of income.Accordingly, it imposes as a key entry barrier for new entrants as job reference is yet to beestablished.

Hefty Capital Investment – Hefty capital is required for the purchase of raw materials andrecruitment of fitting-out workers as well as project manager who oversees each fitting-out worksprojects. During daily operation, a further upfront cost shall be invested on hiring of workers,licensing professional software, enterprise resources planning (ERP) system, and procuring supplierupfront contracts and purchase of raw materials, as well as possible surety bond required by clients.As such, new entrants who do not have an adequate amount of financial resources may encounterhumongous hindrance to gain competitive position and reputation under fierce competition.

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Price Trend of Major Cost Components

Consolidating all types of fitting-out workers, the average daily wages of fitting out workersincreased from HK$1,226 in 2015 to HK$1,351 in 2020, representing a CAGR of approximately 2.0%.Moving forward, the average daily wages is anticipated to increase from HK$1,359 in 2021 toHK$1,508 in 2025, with an anticipated CAGR of approximately 2.6%.

Average Daily Wages of Fitting-out Workers (Hong Kong), 2015-2025E

1,226 1,2741,365 1,326 1,317 1,351 1,359 1,374 1,410 1,462 1,508

0.0

500.0

1,000.0

1,500.0

2,000.0

2021E2015

(HKD)

2018 2019 2025E20172016 2020 2024E2022E 2023E

2015 -2020 2021E -2025E

CAGR 2.0% 2.6%

Source: Census and Statistics Department of Hong Kong, Frost & Sullivan

Majority of fitting-out materials are imported from the PRC and a small portion from overseascountries, the price of major materials have seen an increase generally from 2015 to 2020. It is largelydue to the increasing demand in the PRC for various materials to cater to rapid growth of constructionand fitting-out works in recent years, which subsequently has led to a stable material inflation inHong Kong. In light of the outbreak of COVID-19, the processing and manufacturing of semi-finishedmaterials such as marble, floor tiles and furnishings were temporarily suspended due to the shutdownof factories and the transportation disruptions in Mainland China and overseas countries. Besides, themajor mode of raw materials transportation has been sea freights, while the 14-day quarantine policyrestricting arrival of Mainland China’s bulk carriers has posed limitation on the supply of rawmaterials. Among all the materials, the average price of glazed mosaic tiles has inflated fromapproximately HK$132.8 in 2015 to approximately HK$149.0 in 2020, representing a CAGR ofapproximately 2.3%. Driven by the expedite growth of construction and fitting-out works sector in theMainland China, the inflation is envisioned to sustain in the coming years. In particular, the averageprice of sawn hardwood decreased from HK$6,303.0 per cubic meter in 2019 to HK$4,669.0 per cubicmeter in 2020, due to the slowdown of the construction market and the drop in demand for furnitureduring the outbreak of COVID-19.

Item Unit 2015 2016 2017 2018 2019 2020 2021E 2025ECAGR

(2015 -2020)

CAGR(2021E -2025E)

Floor tiles HK$ per square meter 160.0 162.2 167.7 174.2 177.2 182.0 184.0 192.1 2.6% 1.1%

Sawn hardwood HK$ per cubic meter 5,707.0 5,707.0 5,805.1 6,177.8 6,303.0 4,669.0 5,061.1 5,187.6 -3.9% 0.6%

Marble HK$ per metric tonne 4,226.3 4,180.0 4,145.3 4,360.7 5,158.6 5,219.3 5,279.7 5,528.6 4.3% 1.2%

Granite HK$ per metric tonne 1,269.9 1,457.8 1,848.4 910.4 1,186.1 1,213.1 1,222.2 1,259.0 -0.9% 0.7%

Steel reinforcement HK$ per metric tonne 4,476.9 4,503.5 5,152.4 5,455.4 5,468.3 5,724.5 5,753.1 5,869.0 5.0% 0.5%

Plywood HK$ per square meter 75.0 74.2 74.3 76.4 76.0 75.0 76.1 80.5 0.0% 1.4%

Steel plate HK$ per metric tonne 5,676.7 5,125.7 4,823.8 5,380.8 5,815.4 6,358.0 6,327.7 6,208.1 4.4% -0.5%

Plastic laminate HK$ per metric tonne 83.1 83.9 85.1 86.2 87.1 88.8 89.7 93.6 1.1% 1.1%

Fire-rated acoustic door

HK$ per unit 4,660.0 4,700.0 4,730.0 4,810.0 4,930.0 5,120.0 5,181.8 5,436.6 1.7% 1.2%

Glazed ceramic walltiles – White tiles,108mm x 108mm

HK$ per 100 pieces 233.0 238.3 243.0 243.0 243.0 243.0 243.9 247.5 0.8% 0.4%

Glazed ceramic walltiles – Colour tiles,200mm x 200mm

HK$ per 100 pieces 431.0 442.3 440.0 440.0 440.0 440.0 445.9 470.1 0.4% 1.3%

Portland cement (ordinary)

HK$ per metric tonne 739.2 714.7 699.9 698.5 727.8 770.0 767.2 756.1 0.8% -0.4%

Glazed mosaic tiles HK$ per square meter 132.8 139.1 144.7 145.0 148.7 149.0 151.9 164.1 2.3% 2.0%

Glass HK$ per square meter 157.0 157.0 157.0 160.5 161.0 162.0 163.8 171.2 0.6% 1.1%

Average prices of major materials in fitting-out works industry (Hong Kong), 2015-2025E

Source: Census and Statistics Department of Hong Kong, Frost & Sullivan

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HONG KONG LAWS AND REGULATIONS

A. Fitting-out and other building works, labour, health and safety

Buildings Ordinance (Chapter 123 of the Laws of Hong Kong)

The Buildings Ordinance and associated regulations regulate the planning, design,and construction of buildings and associated works. The Buildings Ordinance andassociated regulations contain a set of controls for undertaking any construction works,including the requirement to obtain prior approval and consent from the BuildingAuthority before the commencement of works, and to appoint authorised persons (suchas architects, engineers and surveyors registered under the Buildings Ordinance) andregistered professionals to design and supervise the works, and registered contractors tocarry out the works.

Under section 14(1) of the Buildings Ordinance, no person shall commence orcarry out any building works, including alteration, addition and every kind of buildingoperation, without having obtained approval and consent from the Building Authority.According to section 41(3) of the Buildings Ordinance, building works (other thandrainage works, ground investigation in the scheduled areas, site formation works orminor works) in any building are exempt from the requirement for approval from theBuilding Authority if the works do not involve the structure of the building. Even ifthe building works satisfy the criteria under section 41(3) of the Buildings Ordinanceand can be carried out without prior approval of the Buildings Ordinance, the worksconcerned would have to comply with the building standards stipulated in theregulations made under the Buildings Ordinance. It is a requirement under theBuildings Ordinance for an authorised person (who co-ordinates any building worksand who prepares and submits plans for the approval of the Building Authority) to beappointed by either the ultimate beneficiary of the works, the employer of the works,or the contractor.

Building (Minor Works) Regulation (Chapter 123N of the Laws of Hong Kong)(“B(MW)R”)

The B(MW)R is a subsidiary legislation under the Buildings Ordinance andprovides for a simplified procedure and requirements to regulate building works whichhave been specified as “minor works”. Under the B(MW)R, minor works are classifiedinto three classes according to their nature, scale and complexity and the risk andsafety they pose. The works are further classified into types and items that correspondto the specialisation of works in the industry. Class I minor works are relatively morecomplicated and require higher technical experience and more stringent supervision andthus requires the appointment of a prescribed building professional (such as anauthorised person and where necessary, may include a registered structural engineerand/or a registered geotechnical engineer) and a prescribed registered contractor. Theother two classes of minor works, Class II and Class III, can be carried out by aprescribed registered contractor (which can be a registered general building contractor,

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a registered specialist contractor registered under the category of demolition works/siteformation works/foundation works/ground investigation field works or a registeredminor works contractor) without the involvement of a prescribed building professional.

Construction Workers Registration Ordinance (Chapter 583 of the Laws of HongKong)

Construction Workers Registration Ordinance requires construction workers to beregistered for carrying out construction work on a construction site.

According to section 3(1) and section 5 of the Construction Workers RegistrationOrdinance, the main contractors, subcontractors or controllers of the construction sitesare required to employ only registered construction workers to personally carry outconstruction work on construction sites.

The Construction Workers Registration Ordinance also contains a “designatedworkers for designated skills” provision, which provides that only registered skilled orsemi-skilled workers of designated trade divisions are permitted to carry outconstruction works on construction sites relating to those trade divisions independently.

Unregistered skilled or semi-skilled workers are only allowed to carry outconstruction works of designated trade divisions (i) under the instruction andsupervision of registered skilled or semi-skilled workers of relevant designated tradedivision(s); (ii) in proposed emergency works (i.e. construction works which are madeor maintained consequential upon the occurrence of emergency incidents); or (iii) insmall-scale construction works (e.g. value of works not exceeding HK$100,000).

Employment Ordinance (Chapter 57 of the Laws of Hong Kong)

All employees under contracts of employment are covered by the EmploymentOrdinance and as employers generally of personnel we are obliged to adhere to theEmployment Ordinance.

Under the Employment Ordinance, all employees are entitled to the followingbasic rights:

� wage payments;

� protection against wage deduction;

� statutory holiday entitlements;

� protection against discrimination;

� a notice period for termination of employment; and

� protection against unlawful dismissal.

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Employees who have been employed continuously by the same employer for aperiod of four weeks or more with at least 18 hours worked in each week are furtherentitled to benefit such as compulsory rest days, paid annual leave, maternity leave,sickness allowance, severance and long service payments and MPF contributions.

A main contractor shall be subject to the provisions on subcontractor’s employees’wages in the Employment Ordinance. According to section 43C of the EmploymentOrdinance, a main contractor or a main contractor and every superior subcontractor(i.e. a subcontractor higher in the contractual chain) jointly and severally is/are liableto pay any wages that become due to an employee who is employed by a subcontractoron any work which the subcontractor has contracted to perform, and such wages arenot paid within the period specified in the Employment Ordinance. This is relevant toour business as we subcontract certain works to subcontractors, and therefore can beexposed to a claim from a subcontractor’s worker if he/she is not paid by his/heremployer. Further we must be cautious to ensure that all workers on site are registeredworkers under the Construction Workers Registration Ordinance (Chapter 583 of theLaws of Hong Kong). The risks of non-payment of labour and illegal workers can bemanaged through the careful selection of subcontractors we work with. The liability ofa main contractor and superior subcontractor (where applicable) shall be limited (i) tothe wages of an employee whose employment relates wholly to the work which theprincipal contractor has contracted to perform and whose place of employment iswholly on the site of the building works; and (ii) to the wages due to such anemployee for two months (such months shall be the first two months of the period inrespect of which the wages are due). An employee who has outstanding wage paymentsfrom subcontractor must serve a notice in writing on the principal contractor within 60days after the wage due date. A main contractor and superior subcontractor (whereapplicable) shall not be liable to pay any wages to the employee of the subcontractor ifthat employee fails to serve a notice on the principal contractor.

Upon receipt of such notice from the relevant employee, a main contractor shall,within 14 days after receipt of the notice, serve a copy of the notice on every superiorsubcontractor to that subcontractor (where applicable) of whom he is aware. A maincontractor who without reasonable excuse fails to serve notice on the superiorsubcontractor(s) shall be guilty of an offence and shall be liable on conviction to a fineof HK$50,000.

Pursuant to section 43F of the Employment Ordinance, if a main contractor orsuperior subcontractor pays to an employee any wages under section 43C of theEmployment Ordinance, the wages so paid shall be a debt due by the employer of thatemployee to the main contractor or superior subcontractor, as the case may be. Themain contractor or superior subcontractor may either (i) claim contribution from everysuperior subcontractor to the employee’s employer or from the main contractor andevery other such superior subcontractor as the case may be; or (ii) deduct by way ofsetoff the amount paid by him from any sum due or may become due to thesubcontractor in respect of the work that he has subcontracted.

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Employees’ Compensation Ordinance (Chapter 282 of the Laws of Hong Kong)

The Employees’ Compensation Ordinance establishes a no-fault andnon-contributing employee compensation system for work injuries and lays down therights and obligations of employers and employees in respect of injuries or deathcaused by accidents arising out of and in the course of employment, or by prescribedoccupational diseases.

Under the Employees’ Compensation Ordinance, if an employee sustains an injuryor dies as a result of an accident arising out of and in the course of his employment,his employer is in general liable to pay compensation even if the employee might havecommitted acts of fault or negligence when the accident occurred. Similarly, anemployee who suffers incapacity arising from an occupational disease is entitled toreceive the same compensation as that payable to employees injured in occupationalaccidents.

Under section 24 of the Employees’ Compensation Ordinance, the main contractoris liable to pay compensation to subcontractors’ employees who are injured in thecourse of their employment which the main contractor would have been liable to pay asif they were his own employees. The main contractor is, nonetheless, entitled to beindemnified by the subcontractor who would have been liable to pay compensation tothe injured employee. The employees in question are required to serve a notice inwriting on the main contractor before making any claim or application against suchprincipal contractor.

Under section 40 of the Employees’ Compensation Ordinance, all employers(including the main contractors and subcontractors) are required to take out insurancepolicies to cover their liabilities both under the Employees’ Compensation Ordinanceand at common law for injuries at work in respect of all their employees (includingfull-time and part-time employees). An employer who fails to comply with theEmployees’ Compensation Ordinance to secure an insurance cover is liable onconviction to a fine of HK$100,000 and imprisonment for two years.

Mandatory Provident Fund Schemes Ordinance (Chapter 485 of the Laws of HongKong) (“MPFSO”)

Employers are required to enrol their regular employees (except for certainexempt persons) aged between at least 18 but under 65 years of age and employed for60 days or more in an Mandatory Provident Fund (“MPF”) scheme within the first 60days of employment.

For both employees and employers, it is mandatory to make regular contributionsinto an MPF scheme. For an employee, subject to the maximum and minimum levels ofincome (HK$30,000 and HK$7,100 per month, respectively), an employer will deduct5% of the relevant income on behalf of an employee as mandatory contributions to aregistered MPF scheme with a ceiling of HK$1,500. An employer will also be requiredto contribute an amount equivalent to 5% of an employee’s relevant income to theMPF scheme, subject only to the maximum level of income of HK$30,000.

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Industry Schemes (“Industry Schemes”) were established under the MPF systemfor employers in the construction and catering industries in view of the high labourmobility in these two industries, and the fact that most employees in these industriesare “casual employees” whose employment is on a day-to-day basis or for a fixedperiod of less than 60 days.

For the purpose of the Industry Schemes, the construction industry covers thefollowing eight major categories: (i) foundation and associated works; (ii) civilengineering and associated works; (iii) demolition and structural alteration works; (iv)refurbishment and maintenance works; (v) general building construction works; (vi) fireservices, mechanical, electrical and associated works; (vii) gas, plumbing, drainage andassociated works; and (viii) interior fitting-out works.

The MPFSO does not stipulate that employers in these industries must join theIndustry Schemes. The Industry Schemes provide convenience to the employers andemployees in the construction and catering industries. Casual employees do not have toswitch schemes when they change jobs within the same industry, so long as theirprevious and new employers are registered with the same Industry Scheme. This isconvenient for scheme members and saves administrative costs.

Occupiers Liability Ordinance (Chapter 314 of the Laws of Hong Kong)

The Occupiers Liability Ordinance regulates the obligations of a person occupyingor having control of premises on injury resulting to persons or damage caused to goodsor other property lawfully on the land.

The Occupiers Liability Ordinance imposes a common duty of care on an occupierof premises to take such care as in all the circumstances of the case is reasonable tosee that the visitor will be reasonably safe in using the premises for the purposes forwhich he is invited or permitted by the occupier to be there.

Immigration Ordinance (Chapter 115 of the Laws of Hong Kong)

According to section 38A of the Immigration Ordinance, a construction sitecontroller (i.e. the main contractor and includes a subcontractor, owner, occupier orother person who has control over or is in charge of a construction site) shall take allpracticable steps to (i) prevent having illegal immigrants from being on site; or (ii)prevent illegal workers who are not lawfully employable from taking employment onsite.

Where it is proved that (i) an illegal immigrant was on a construction site; or (ii)such illegal worker who is not lawfully employable took employment on a constructionsite, the construction site controller commits an offence and is liable to a fine ofHK$350,000.

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Minimum Wage Ordinance (Chapter 608 of the Laws of Hong Kong)

The Minimum Wage Ordinance provides for a prescribed minimum hourly wagerate (currently at HK$37.5 per hour) during the wage period for every employeeengaged under a contract of employment under the Employment Ordinance (Chapter 57of the Laws of Hong Kong). Any provision of the employment contract which purportsto extinguish or reduce the right, benefit or protection conferred on the employee bythe Minimum Wage Ordinance is void.

Occupational Safety and Health Ordinance (Chapter 509 of the Laws of Hong Kong)

The Occupational Safety and Health Ordinance provides for the protection ofhealth and safety of employees in workplaces, both industrial and non-industrial.

Employers must, as far as reasonably practicable, ensure the safety and health atwork of all employees by:

� providing and maintaining plant and systems of work that are safe andwithout risks to health;

� making arrangements for ensuring safety and absence of risks to health inconnection with the use, handling, storage or transport of plant orsubstances;

� providing all necessary information, instruction, training, and supervision forensuring safety and health;

� as regards any workplace under the employer’s control, maintaining theworkplace in a condition that is safe and without risks to health andproviding and maintaining means of access to and egress from the workplacethat are safe and without risks to health; and

� providing and maintaining a work environment that is safe and without risksto health.

Failure to comply with any of the above provisions constitutes an offence and theemployer is liable on conviction to a fine of HK$200,000. An employer who fails to doso intentionally, knowingly or recklessly commits an offence and is liable onconviction to a fine of HK$200,000 and to imprisonment for six months.

The Commissioner for Labour may also issue an improvement notice againstnon-compliance of the Occupational Safety and Health Ordinance or the Factories andIndustrial Undertakings Ordinance (Chapter 59 of the Laws of Hong Kong) orsuspension notice against activity or condition of workplace which may createimminent risk of death or serious bodily injury. Failure to comply with such noticewithout reasonable excuse constitutes an offence punishable by a fine of HK$200,000and HK$500,000 respectively and imprisonment for up to 12 months.

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Factories and Industrial Undertakings Ordinance (Chapter 59 of the Laws of HongKong)

The Factories and Industrial Undertakings Ordinance specifically provides for thesafety and health protection to workers in the industrial sector. Under the Factories andIndustrial Undertakings Ordinance, every proprietor shall take care of the safety andhealth at work of all persons employed by it at an industrial undertaking by:

� providing and maintaining plant and work systems that do not endangersafety or health;

� making arrangement for ensuring safety and health in connection with theuse, handling, storage or transport of plant or substances;

� providing all necessary information, instruction, training, and supervision forensuring safety and health;

� providing and maintaining safe access to and egress from the workplaces;and

� providing and maintaining a safe and healthy work environment.

A proprietor who contravenes any of these duties commits an offence and is liableto a fine of HK$500,000. A proprietor who contravenes any of these requirementswilfully and without reasonable excuse commits an offence and is liable to a fine ofHK$500,000 and to imprisonment for six months.

Other matters regulated under the subsidiary regulations of the Factories andIndustrial Undertakings Ordinance, including the Construction Sites (Safety)Regulations (Chapter 59I of the Laws of Hong Kong), include (i) the prohibition ofemployment of persons under 18 years of age (save for certain exceptions); (ii) themaintenance and operation of hoists; (iii) the duty to ensure safety of places of work;(iv) prevention of falls; (v) safety of excavations; (vi) the duty to comply withmiscellaneous safety requirements; and (vii) provision of first aid facilities.Non-compliance with any of these rules may constitute an offence and different levelsof penalty will be imposed and a contractor guilty of the relevant offence could beliable to a fine of up to HK$200,000 and imprisonment for up to 12 months.

Competition Ordinance (Chapter 619 of the Laws of Hong Kong)

The Competition Ordinance (Chapter 619 of the Laws of Hong Kong) forbids therestrictions on competition in Hong Kong. Under section 6 of the CompetitionOrdinance, no person shall make or give effect to an agreement or to engage in aconcerted practice and any member of an association of undertakings to make or giveeffect to a decision to the association, if the object or effect of the agreement,concerted practice or decision is to prevent, restrict or distort competition in HongKong.

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Under section 21 of the Competition Ordinance, no person with a substantialdegree of market power shall abuse its market power by engaging in conduct that hasas its object or effect the prevention, restriction or distortion of competition in HongKong.

Fatal Accidents Ordinance (Chapter 22 of the Laws of Hong Kong)

The Fatal Accidents Ordinance provides a mechanism for dependents of anyperson who died from any wrongful act, neglect, or default to claim damages againstthe individual who would be liable for the wrongful act, neglect, or default.

B. Environmental protection

Air Pollution Control Ordinance (Chapter 311 of the Laws of Hong Kong)

The Air Pollution Control Ordinance is the principal legislation in Hong Kong forcontrolling emission of air pollutants and noxious odour from construction, industrialand commercial activities and other polluting sources. Subsidiary regulations of the AirPollution Control Ordinance impose control on air pollutant emissions from certainoperations through the issue of licences and permits.

A contractor shall observe and comply with the Air Pollution Control Ordinanceand its subsidiary regulations, particularly the Air Pollution Control (Open Burning)Regulation (Chapter 311O of the Laws of Hong Kong), the Air Pollution Control(Construction Dust) Regulation (Chapter 311R of the Laws of Hong Kong) and the AirPollution Control (Smoke) Regulations (Chapter 311C of the Laws of Hong Kong). Forinstance, the contractor responsible for a construction site shall devise, arrange methodsof working and carrying out the works in such a manner so as to minimise dustimpacts on the surrounding environment, and shall provide experienced personnel withsuitable training to ensure that these methods are implemented. Asbestos controlprovisions in the Air Pollution Control Ordinance require that building works involvingasbestos must be conducted only by registered qualified personnel and under thesupervision of a registered consultant. It is customary for construction contracts inHong Kong to place the responsibility for obtaining these on the contractor. The AirPollution Control (Construction Dust) Regulation also requires precautionary measuresfor stock piling of materials on site.

Noise Control Ordinance (Chapter 400 of the Laws of Hong Kong)

The Noise Control Ordinance controls the noise from construction, industrial andcommercial activities. A contractor shall comply with the Noise Control Ordinance andits subsidiary regulations in carrying out general construction works. For constructionactivities that are to be carried out during the restricted hours and for percussive pilingduring the daytime on a day not being a general holiday, construction noise permits arerequired from the Environmental Protection Department in advance. It is customary forconstruction contracts in Hong Kong to place the responsibility for obtaining these onthe contractor.

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Under the Noise Control Ordinance, construction works that produce noises andthe use of powered mechanical equipment in populated areas (other than percussivepiling) are not allowed between 7:00 p.m. and 7:00 a.m. or at any time on generalholidays, unless prior approval has been granted by the Noise Control Authoritythrough the construction noise permit system. The use of certain equipment is alsosubject to restrictions. Hand-held percussive breakers and air compressors must complywith noise emissions standards and be issued with a noise emission label from theNoise Control Authority.

Any person who carries out any construction work except as permitted is liable onfirst conviction to a fine of HK$100,000 and on subsequent convictions to a fine ofHK$200,000, and in any case to a fine of HK$20,000 for each day during which theoffence continues.

Water Pollution Control Ordinance (Chapter 358 of the Laws of Hong Kong)

The Water Pollution Control Ordinance controls the effluent discharged from alltypes of industrial, commercial, institutional and construction activities into publicsewers, rainwater drains, river courses or water bodies. For any industry/tradegenerating wastewater discharge (except domestic sewage that is discharged intocommunal foul sewers or unpolluted water to storm drains), they are subject tolicensing control by the Director of the Environmental Protection Department which weare required to comply with.

All discharge, other than domestic sewage to a communal sewer or unpollutedwater to a communal drain, must be approved by a water pollution control licence. Thelicence specifies the permitted physical, chemical and microbial quality of the effluent.The general guidelines are that the effluent does not damage sewers or pollute inlandor inshore marine waters. According to the Water Pollution Control Ordinance, unlessbeing licensed under the Water Pollution Control Ordinance, a person who dischargesany waste or polluting matter into the water or discharges any matter into a communalsewer or communal drain in a water control zone commits an offence and is liable toimprisonment for up to six months and (i) at a first offence, a maximum fine ofHK$200,000; (ii) for a second or subsequent offence, a maximum fine of HK$400,000.In addition, if the offence is a continuing offence, a fine of HK$10,000 for each dayduring which it is proved to the satisfaction of the court that the offence has continuedwill be imposed.

Waste Disposal Ordinance (Chapter 354 of the Laws of Hong Kong)

The Waste Disposal Ordinance controls the production, storage, collection,treatment, recycling and disposal of wastes. At present, livestock waste and chemicalwaste are subject to specific controls whilst unlawful deposition of waste is prohibited.Import and export of waste is generally controlled through a permit system. Acontractor shall observe and comply with the Waste Disposal Ordinance and itssubsidiary regulations, particularly the Waste Disposal (Charges for Disposal ofConstruction Waste) Regulation (Chapter 354N of the Laws of Hong Kong) and theWaste Disposal (Chemical Waste) (General) Regulation (Chapter 354C of the Laws of

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Hong Kong). Under the Waste Disposal Ordinance, a person shall not use, or permit tobe used, any land or premises for the disposal of waste unless he has a licence fromthe Environmental Protection Department. A person who except under and inaccordance with a permit or authorisation, does, causes or allows another person to doanything for which such a permit or authorisation is required commits an offence andis liable to a fine of HK$200,000 and to imprisonment for six months for the firstoffence, and to a fine of HK$500,000 and to imprisonment for six months for a secondor subsequent offence.

Under the Waste Disposal (Charges for Disposal of Construction Waste)Regulation, a main contractor who undertakes construction work with a value of HK$1million or above will be required to establish a billing account with the Director of theEnvironmental Protection Department to pay any disposal charges payable in respect ofthe construction waste generated from construction work undertaken under thatcontract.

Public Health and Municipal Services Ordinance (Chapter 132 of the Laws of HongKong)

Pursuant to section 127 of the Public Health and Municipal Services Ordinance,where a nuisance notice is served on the person by reason of whose act, default orsufferance the nuisance arose or continues, or of that person cannot be found, on theoccupier or owner of the premises or vessel on which the nuisance exists, then if eitherthe nuisance to which the notice relates arose by reason of the wilful act or default ofthat person; or that person fails to comply with any of the requirements of the noticewithin the period specified therein, that person shall be guilty of an offence.

Emission of dust from any building under construction or demolition in suchmanner as to be a nuisance is actionable under the Public Health and MunicipalServices Ordinance. Maximum penalty is HK$10,000 upon conviction with a daily fineof HK$200.

Discharge of muddy water from a construction site is actionable under the PublicHealth and Municipal Services Ordinance. Maximum fine is HK$50,000 uponconviction.

Any accumulation of water on any premises found to contain mosquito larvae orpupae is actionable under the Public Health and Municipal Services Ordinance.Maximum penalty is HK$25,000 upon conviction and a daily fine of HK$450.

Any accumulation of refuse which is a nuisance or injurious to health isactionable under the Public Health and Municipal Services Ordinance. Maximumpenalty is HK$10,000 upon conviction and a daily fine of HK$200.

Any premises in such a state as to be a nuisance or injurious to health isactionable under the Public Health and Municipal Services Ordinance. Maximumpenalty is HK$10,000 upon conviction and a daily fine of HK$200.

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Environmental Impact Assessment Ordinance (Chapter 499 of the Laws of HongKong)

The Environmental Impact Assessment Ordinance is to avoid, minimise andcontrol the adverse environmental impacts from designated projects as specified inSchedule 2 of the Environmental Impact Assessment Ordinance (for example, publicutility facilities, certain large-scale industrial activities, community facilities, etc.)through the application of the environmental impact assessment process and theenvironmental permit system prior to their construction and operation (anddecommissioning, if applicable), unless otherwise exempted.

According to the Environmental Impact Assessment Ordinance, a person commitsan offence if he constructs or operates a designated project as listed in Part I ofSchedule 2 of the Environmental Impact Assessment Ordinance (which includes roads,railways and depots, dredging operation, residential and other developments, etc.) ordecommissions a designated project listed in Part II of Schedule 2 of the Ordinancewithout an environmental permit for the project; or contrary to the conditions, if any,set out in the permit. The offender is liable (i) on a first conviction on indictment to afine of HK$2,000,000 and to imprisonment for six months; (ii) on a second orsubsequent conviction on indictment to a fine of HK$5,000,000 and to imprisonmentfor two years; (iii) on a first summary conviction to a fine of HK$100,000 and toimprisonment for six months; (iv) on a second or subsequent summary conviction to afine of HK$1,000,000 and to imprisonment for one year, and in any case where theoffence is of a continuing nature, the court or magistrate may impose a fine ofHK$10,000 for each day on which he is satisfied the offence continued.

C. Contractor registration regime

General building contractor and specialist contractor

Under the current contractors registration system in Hong Kong, a contractorcarrying out private sector works must be registered with the Buildings Departmenteither as general building contractor, specialist contractor or minor works contractor.The registration of specialist contractors is categorised by specialisation in demolitionworks, foundation works, site formation works, ventilation works and groundinvestigation field works. Registered general building contractors may carry out generalbuilding works and street works which do not include any specialised works designatedfor registered specialist contractors. Registered specialist contractors may only carryout specialised works in their corresponding categories in the sub-registers in whichthey have been entered. Registered general building contractors may also carry out alltypes of minor works as stipulated in Part 2 of Schedule 1 of the Building (MinorWorks) Regulation (Chapter 123N of the Laws of Hong Kong) while registeredspecialist contractors may only carry out the minor works as specified in section28(1)(b) to (e) of the Building (Minor Works) Regulation according to theircorresponding categories in the sub-registers in which they have been entered.

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Under section 8B(2) of the Buildings Ordinance, an applicant for registration as aregistered general building contractor or registered specialist contractor must satisfy theBuilding Authority on the following aspects:

� if the contractor is a corporation, the adequacy of its management structure;

� the appropriate experience and qualifications of its personnel;

� its ability to have access to plant and resources; and

� the ability of the person appointed by the contractor to act for the contractorfor the purposes of the Buildings Ordinance to understand building worksand street works through relevant experience and a general knowledge of thebasic statutory requirements.

In considering each application, the Building Authority will consider thequalifications, competence and experience of the following key personnel of theapplicant:

(a) a minimum of one person appointed by the applicant to act for the applicantfor the purposes of the Buildings Ordinance, hereinafter referred to as theauthorised signatory (the “Authorised Signatory”);

(b) for a corporation, a minimum of one director from the board of directors ofthe applicant, hereinafter referred to as a “Technical Director” who isauthorised by the board to (i) have access to plant and resources; (ii) providetechnical and financial support for the execution of building works and streetworks; and (iii) make decisions for the company and supervise theAuthorised Signatory and other personnel, for the purpose of ensuring thatthe works are carried out in accordance with the Buildings Ordinance; and

(c) for a corporation which appoints a director who does not possess therequired qualification or experience as Technical Director to manage thecarrying out of building works and street works, another officer asauthorised by the board of directors shall be appointed to assist the TechnicalDirector.

In addition to the above key personnel, the applicant is also required todemonstrate that it has employed appropriate qualified staff members to assist theapplicant and the above key personnel to execute, manage and supervise the buildingworks and street works.

For registration as a registered specialist contractor, the applicant must satisfy theBuilding Authority that it has the necessary experience and, where appropriate,professional and academic qualifications, to undertake work in the specialist categoryand should also demonstrate that it has the access to engaging qualified persons tocarry out the relevant specialised duties.

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D. Taxation

Inland Revenue Ordinance (Chapter 112 of the Laws of Hong Kong)

The Inland Revenue Ordinance is an ordinance for the purposes of imposing taxeson property, earnings and profits in Hong Kong. The Inland Revenue Ordinanceprovides, among others, that persons, which include corporations, partnerships, trusteesand bodies of persons, carrying on any trade, profession or business in Hong Kong arechargeable to tax on all profits (excluding profits arising from the sale of capitalassets) arising in or derived from Hong Kong from such trade, profession or business.As at the Latest Practicable Date, the standard profits tax rate for corporations is at8.25% on assessable profits up to HK$2,000,000 and 16.5% on any part of assessableprofits over HK$2,000,000. The Inland Revenue Ordinance also contains provisionsrelating to, among others, permissible deductions for outgoings and expenses, set-offsfor losses and allowances for depreciation.

E. Laws expected to come into force which may impact our business

Security of Payment Legislation for the Construction Industry (“SOPL”)

The Hong Kong Government is currently formulating the new legislation for theconstruction industry to address unfair payment terms, payment delays and disputes.SOPL is intended to encourage fair payment, rapid dispute resolution and increase cashflow in the contractual chain.

When it comes into force, SOPL will apply to all written and oral contracts whereconstruction works or plant and materials are being supplied for works in Hong Kong.All public sector construction contracts will be caught by the legislation, whereas onlyconstruction and supply contracts relating to a “new building” (as defined by theBuildings Ordinance) which has an original value in excess of HK$5 million will becaught in private sector. However where SOPL applies to the main contract, it willautomatically apply to all subcontracts in the contractual chain.

The new legislation will:

� prohibit “pay when paid” and similar clauses in contracts. Payers will not beable to rely on such clauses in dispute resolution forums.

� prohibit payment periods of more than 60 calendar days for interimpayments or 120 calendar days for final payments.

� enable amounts due for construction work or materials or plant supplies tobe claimed as statutory payment claims, upon receipt of which the payer has30 calendar days to serve a payment response, and either party has astatutory right to refer the matter to adjudication for decision (typically a 60day process).

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� give parties who have not been paid amounts admitted as due the right tosuspend works until payment is made.

It is probable that some of our contracts will be caught by the new SOPLlegislation and where such contracts are subject to SOPL we will have to ensure thattheir terms comply with the legislation in this regard. SOPL is designed to assistcontractors throughout the contractual change to ensure cash-flow and access to a swiftdispute resolution process and therefore it is generally considered that where SOPLapplies, this will have a positive impact on ensuring that we get paid in a timelymanner.

MACAU LAWS AND REGULATIONS

A. Fitting-out works

Decree-Law no. 79/85/M stipulates the administrative regulations of project review,filing of approval, and license issuance and inspection in conducting civil engineeringworks. No construction of new building, reconstruction, repair, maintenance, alteration,expansion or demolition of existing buildings, and any project or work resulting intopographical change shall be conducted without the approval of the DSSOPT on the relatedproject and its issuance of relevant license. However, a new legislation, the Legal Regime ofurban construction (Law No.14/2021) is published on 16 August 2021. Decree-Law no. 79/85/M will be superseded by the aforesaid Regime from 16 August 2022.

Based on Law no. 1/2015 “System of qualifications on urban construction and urbanplanning（都市建築及城市規劃範疇的資格制度）”, technicians certified by “Architect, Engineerand Urban Academy （建築、工程及城市規劃專業委員會）” are allowed to entitled as“Architect”, “Landscape Architect”, “Urban Planner” or “Engineer”. Registration at the saidacademy is required for acquisition of the said titles. Such certified technicians are requiredto register at DSSOPT for execution of duties on formation of plan, project steering orproject monitoring.

In Clause 1 of Article 18 of Law no. 1/2015, only technicians at private sectors,individual entrepreneurs (natural person) with at least one registered technician andcompanies are allowed to register at DSSOPT for execution of duties on formation of plan,project steering or project monitoring.

In Clause 2 of Article 18 of Law no. 1/2015, civil liability insurance policy is anessential requirement for registration and renewal of registration. Technicians, individualentrepreneurs (natural person) and companies must take out valid civil liability insurancethat covers damages caused during formation of plan, project steering or project monitoring.

The validity of registration ends in the end of the following year after the date ofregistration. The renewal of registration should fulfill the requirements stipulated in theClauses 1 and 2 of Article 18 of Law no. 1/2015 must proceed in the calendar year of expiryof registration between 1 November 1 to 31 December.

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Under the laws of Macau, fitting-out works can be divided into three categories: (i)simple works for residential unit (家居簡單裝修工程), which refers to all interior alteration,repair and maintenance works excluding change of use of the unit, the structure of thebuilding or the area, change of entrance openings, walls, facades or outside windows, watersupply or drainage network; (ii) simple works for non-residential unit (非家居簡單裝修工程),which only includes works of alteration, repair and maintenance which does not change theusage of the unit and the structure of the building, the size of the concerned unit is notlarger than 120 sq.m., not affecting the fire fight system and is only required the supervisionof DSSOPT. In the case of ground-floor units, it includes fitting projection into facades ofthe unit, modifying facade with brickworks, glass, slabs or other materials, opening doors onthe wall and innovation and that does affect any other units and (iii) non-simple works (非簡單裝修工程), which includes all fitting-out works other than the above two categories.

Fitting-out works of the above three categories are subject to different licensingrequirements. DSSOPT is the competent authority to supervise the implementation of therelevant requirements. Simple works for residential unit are not subject to any work licenseor project approval. Simple works for non-residential unit are subject to giving a prior noticeto DSSOPT. Non-simple works are subject to obtaining a work license from DSSOPT.

An interested party is required to make a prior notice to or to obtain a work licensefrom the DSSOPT by submitting particulars of the works, including commencement andtermination dates. The interested party should also submit a DSSOPT registeredconstructor-declaration to the DSSOPT which undertakes all liability arising from relevantworks and to comply with all architectural technique requirements. If the prior notice orwork license has been duly made or obtained by the main contractor or the first contractorof the works, subcontractors or subsequent contractors who involve in any part of suchworks are not required to make or obtain any independent prior notice or license.

B. Labour related matters

Law no. 7/2008 “Labour Relations Law” is a general regime that defines labourrelations. In Macau, an employer has the right to set out rules to be obeyed by employeeswithin the working environment as required by relevant regulations and formulates a set ofcompany rules that states clearly the working arrangement and discipline, and theimplementation thereof shall not result in working conditions inferior to that as required bysuch law.

Pursuant to the provisions in Law no. 21/2009 “Law for the employment ofnon-resident workers”, before hiring a non-resident worker to work in Macau, permissionshall be obtained by the employer in advance by submitting an application to the DSAL.Once approved, the non-resident worker being employed shall apply for an “Authorisation toStay for Non-resident Workers” and a “Non-resident Worker’s Identification Card” from thePublic Security Police Force of Macau before commencing work in Macau. Item 1 of Article5 of the Law no. 21/2009 provides that the following persons are authorised to hirenon-resident workers: (1) Macau residents; (2) legal persons with their head-office or anestablishment in the Macau; (3) non-residents with a commercial or industrial establishmentin the Macau.

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Pursuant to the Article 4 of Administrative Regulation no. 17/2004 “Regulation onProhibition of Illegal Work”, under exceptional cases, where a non-resident of Macau agreeswith a natural person or legal person whose residence is located within Macau tospecifically or occasionally carry out works or provide services, especially for the provisionof consultative, technical, quality controlling or auditing services by a non-resident workerof Macau, he / she may work or provide services continuously or intermittently for no morethan 45 days during the six months stay in Macau. The above-said six-month periodcommences on the day when such non-resident is permitted to legally enter the territory ofMacau, and records on the actual dates on which such person provides services shall bemaintained.

Any natural person or legal person of Macau who violates the limitations andconditions as stipulated in Article 4 of the Regulation regarding on prohibition of illegalwork shall be subject to a penalty of MOP20,000 to MOP50,000 for each involved employeeand shall be held liable for criminal charges.

Law no. 4/2010 defines social security system（社會保障制度）and aims at providingbasic social security, especially retirement pension, for Macau residents, in order to improveliving standard. All employers who maintain employment relationships shall makeregistration with social security fund and make contribution therefore. The beneficiary (i.e.employee) and the employer are obliged to make contribution to Social Security Fund.Social security system covers allowances for disability, unemployment, births, marriages andfunerals. The system also includes other social security measures set out in the specificsubsidy plan approved by the Chief Executive of Macau.

Pursuant to Decree Law no. 40/95/M “Employees Compensation Insurance Ordinance”defines the system applicable to compensation for loss arising from occupational accidentsand occupational diseases. It is applicable to all employees of any industry who are entitledto compensation for loss arising from occupational accidents and occupational diseases asprovided by such law. Where occupational accidents occur outside the territory, employeeswho are employed and work for an employer who legally engages in business in Macaushall be entitled to compensation as stipulated by such law except for compensation grantedto such employee and his or her family under the law of the place where the accidentoccurs. Where the compensation granted under the law of the place where the accidentoccurs is inferior to that as required by such law, the employer shall afford the differencetherewith. Employers shall take out mandatory insurance to cover compensation foremployees injured in work accidents or suffer from occupational diseases.

C. Environmental Protection

The regulatory authority in charge of environmental protection matters is theEnvironmental Protection Bureau of Macau (the “EPB”).

The Basic Law of the Macau, Law no 2/91/M “the Environmental Law”, Law no 8/2014 “Prevention and Control of Environment Noise” are some of the legislations that relateto safety and environment in Macau, applicable to both individuals and corporations.

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As a general rule under the Law no. 2/91/M, any violation of the environmentallegislation will be subject to civil liability, administrative fine or criminal punishment asstipulated in a number of legislations in various fields such as natural heritage protection, airsea and noise pollutions, hygiene of environment, chemical goods, etc.

According to the Law no. 8/2014, any work, which may produce annoying noise, isforbidden to be conducted during whole day of Sundays and public holidays and between20:00-8:00 (next day) of weekdays. Any contractor who violates this rule within 200 metersfrom any residential building or hospital by use of moving or fixed mechanical equipment isliable to a fine up to MOP200,000.

Administrative Regulation no.20/2020 “Regulation on Construction WasteManagement” stipulates the system of construction waste management, especially on sorting,transportation, dumping, disposal, processing and final placement, etc., which aimed toreduce the impact of the construction waste to the environment. Construction waste, beforebeing transported to designated location for process and final placement, shall be sorted inaccordance with its nature: (i) inert construction and demolition materials; (ii) specialconstruction and demolition materials; (iii) other construction and demolition materials.

Inert construction and demolition materials, special construction and demolitionmaterials shall be transported to construction waste landfill for final placement; otherconstruction and demolition materials shall be transported to the following locations forprocessing in priority in accordance with its nature: (i) the Macau Refuse Incineration Plantfor combustible waste; (ii) Macau Hazardous Waste Treatment Plant for chemical waste; (iii)recycle facilities for recyclable materials.

Under exceptional circumstances with proper reasons, the EPB shall permit dumping orplacing of construction waste, except combustible waste, recyclable materials and chemicalwaste at the Macau Refuse Incineration or the Macau Hazardous Waste Treatment Plant.

D. Taxation

Pursuant to Clause 1 of Article 2 of the Macau Industrial Tax Regulation approved byand attached to Law no. 15/77/M, natural person or legal person who engages in anyindustrial or commercial activities is subject to industrial tax. Nevertheless, pursuant toArticle 11 of Law no. 27/2020, the activities stated in table 1 and table 2 of MacauIndustrial Tax Regulation is exempted from industrial tax by the Macau SpecialAdministrative Government for the year of 2021. Such exemption is subject to the renewalor extension by the budget law of each fiscal year as approved by the Legislative Assemblyof Macau.

Complementary income tax（所得補充稅）is levied on the total income earned withinMacau by a natural person or legal person regardless of its residence. Pursuant to the article4 of the Regulation of Complementary Income Tax, as approved by Law no. 21/78/M dated9 September 1978. Taxpayers of Complementary Income Tax are classified as either GroupA or Group B.

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Group A taxpayers are those entities (i) public companies and partnerships limited byshares; or (ii) any types of companies whose capital is not less than MOP1,000,000 or theaverage taxable income in the last three consecutive years exceeds MOP1,000,000; or (iii)any companies being the ultimate parent entity; or (iv) other natural or legal persons who,having duly organized accounting, have opted for this group, upon declaration to bedelivered by December 31 of the year to which the tax relates, unless they have started theiractivity in the last quarter of that year, if that the respective declaration can be delivered byJanuary 31 of the following year. Besides the above, all other taxpayers are under Group B.

For the Group A taxpayer, the Complementary Income Tax is assessed based on itsactual profit and each of the Group A taxpayers, along with a licensed accountant/auditor, isrequired to submit the following documents to the Financial Services Bureau of the MacauGovernment (the “Macau Financial Services Bureau”) within April to June each year:

– Income declaration under the given tax form;

– Copy of the meeting minutes approving the accounts;

– Copies of consolidated balance sheet and profit and loss account in accordancewith the Official Plan of Accounting;

– Worksheets due to adjustments and the trial balance;

– Depreciation schedule under the given tax form;

– Usage of reserve fund under the given tax form;

– Supporting documents of bad debts; and

– Technical report in relation to inventory value and the criteria of valuation,general administrative costs and other necessary information for determining thetaxable profits.

Group B taxpayer is not required to engage a licensed accountant/auditor nor submitthe aforementioned mandatory documents that a Group A taxpayer is required to submit fortax reporting. However, a Group B taxpayer is still required to report its profit or deficitwithin February to March each year. The Macau Financial Services Bureau shall determinethe estimate profit based on the type and performance of the industry that the taxpayerpractices and other factors that the same authority thinks relevant, and shall issue thetaxpayer an assessment letter in which the estimated profit and the tax amount will be statedon July of the respective year. Should the Group B taxpayer accept the estimate profit andpay the tax amount, the tax duties shall be complied with.

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Pursuant to the provisions under Article 23 of Law no. 22/2019 (revised by Law no. 3/2020) (“The Budge Law 2020”), under which the applicable tax rate is specified in Article7 of Regulation on Complementary Income Tax（所得補充稅規章）approved by Law no. 21/78/M on 9 September 1978. The Budge Law 2020, article 22 clause 1 and clause 2,exemption allowance for complementary income tax assessment in 2020 is MOP$600,000. Atax rate of 12% shall levy when the income exceed such amount; additional deduction of upto MOP300,000 for tax payable. However, the aforesaid exemption is subject to the renewalor extension by the budget law of each fiscal year as approved by the Legislative Assemblyof Macau.

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OVERVIEW

Our Company was incorporated in the Cayman Islands under the Companies Act as anexempted company with limited liability on 14 May 2021. Pursuant to the Reorganisation asmore particularly described in the paragraph headed “Reorganisation” in this section, ourCompany has become the holding company of our Group for the purpose of the[REDACTED] and holds the entire interest of our subsidiaries.

OUR BUSINESS DEVELOPMENT

We are a contractor engaging in fitting-out services in Hong Kong and Macau withover 30 years of operating history, since Mr. Y. W. Chan incorporated our first operatingsubsidiary, Wang Hing Interior Design, in March 1989.

Hong Kong

In March 1989, Mr. Y. W. Chan and Mr. Wong Kwok Hung, an Independent ThirdParty, established Wang Hing Interior Design to engage in fitting-out services in HongKong. Mr. Y. W. Chan has participated in the day-to-day management and operation of ourGroup since the incorporation of Wang Hing Interior Design; while Ms. Wan has overseenhuman resources and administration functions of our Group since she joined our Group in2000. In June 2006, Ms. Wan acquired Wang Hing Interior Engineering to support theoperations of Wang Hing Interior Design. For the changes in shareholdings of Wang HingInterior Design and Wang Hing Interior Engineering, please refer to the paragraphs headed“Our corporate history — Wang Hing Interior Design” and “Our corporate history — WangHing Interior Engineering” in this section, respectively.

Macau

In March 2005, Mr. Y. W. Chan and Mr. Ma Iat Peng, an Independent Third Party,established Hap Lei Wang Hing to engage in fitting-out services in Macau. In March 2007,Mr. Y. W. Chan and Ms. Wan established L & F Interior Engineering with the view toprovide ancillary services to assist the operation of Hap Lei Wang Hing. Following thediscontinuance of Hap Lei Wang Hing, Mr. Y. W. Chan and Ms. Wan established Wang HingLain Fung in May 2016 to continue to engage in the provision of fitting-out services inMacau. For further details, please refer to the paragraph headed “Relationship with OurControlling Shareholders — Hap Lei Wang Hing” in this document. For the changes inshareholdings of L & F Interior Engineering and Wang Hing Lain Fung, please refer to theparagraphs headed “Our corporate history — L & F Interior Engineering” and “Ourcorporate history — Wang Hing Lain Fung” in this section, respectively.

Our Group has undertaken a wide range of fitting-out works for different types ofpremises such as residential buildings, offices, restaurants, hotels, shopping malls, andcasinos in Hong Kong and Macau.

HISTORY, DEVELOPMENT AND REORGANISATION


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Major business milestones

The following table sets forth a summary of the major business milestones of ourGroup’s development:

Year Event

1989 • Incorporation of Wang Hing Interior Design1999 • Awarded the Asia Pacific Interior Design Awards in the Bar/Restaurant

Category A by the Hong Kong Interior Design Association2006 • Incorporation of Wang Hing Interior Engineering2007 • Incorporation of L & F Interior Engineering2012 • Awarded the Certificate of Well-performed Fitting-out Works

Contractor by Customer B• Commenced fitting-out projects for a residential development at Lok

Wo Sha, Hong Kong, with an aggregate initial contract sum overHK$100 million

2016 • Incorporation of Wang Hing Lain FungAwarded a fitting-out works project for a cultural facility in WestKowloon, Hong Kong with an initial contract sum over HK$13million

2017 • Awarded a fitting-out works project for a casino in a hotel in Cotai,Macau with an initial original contract sum over HK$60 million

2018 • Commenced fitting-out projects for a hotel in Cotai, Macau with anaggregate initial contract sum over HK$150 million

2019 • Awarded a fitting-out project in a hotel in Cotai, Macau, with aninitial contract sum over HK$163 million

2021 • Awarded the Certificate of Well-performed Fitting-out WorksContractor by Customer B

• Awarded a fitting-out works project for a public leisure facility inKowloon City District, Hong Kong with an initial contract sum overHK$40 million

OUR CORPORATE HISTORY

As at the Latest Practicable Date, our Group has incorporated operating subsidiaries inHong Kong and Macau to carry out our business. Major corporate development of oursubsidiaries is set out below.

For further details of certain issues and transfers of shares in the share capital of ourCompany and our subsidiaries which took place pursuant to the Reorganisation, please referto the paragraph headed “Reorganisation” in this section.



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Wang Hing Interior Design

Wang Hing Interior Design principally engages in fitting-out services in Hong Kong.Wang Hing Interior Design was incorporated in Hong Kong with limited liability on 14March 1989 with an authorised share capital of HK$500,000 divided into 500,000 shares ofHK$1.00 each. On the same day, one and one share in Wang Hing Interior Design wasallotted and issued to Mr. Y. W. Chan and Mr. Wong Kwok Hung, credited as fully paid,respectively.

On 5 August 1998, Mr. Wong Kwok Hung transferred one share in Wang Hing InteriorDesign to Mr. Lo Yuk Sang, Vincent, an Independent Third Party, at par value. On the sameday, 84 and 14 shares in Wang Hing Interior Design were allotted and issued to Mr. Y. W.Chan and Mr. Lo Yuk Sang, Vincent at par value, credited as fully paid, respectively.

On 18 November 1999, Mr. Y. W. Chan transferred 20 shares in Wang Hing InteriorDesign to Ms. Wan at par value.

On 17 October 2000, Mr. Lo Yuk Sang, Vincent transferred 15 shares in Wang HingInterior Design to Mr. Y. W. Chan at par value.

On 4 March 2003, the authorised share capital of Wang Hing Interior Design wasincreased to HK$1,000,000 divided into 1,000,000 shares of HK$1.00 each. On 5 March2003, 799,920 and 199,980 shares in Wang Hing Interior Design were allotted and issued toMr. Y. W. Chan and Ms. Wan at par value, credited as fully paid, respectively.

Immediately after the Reorganisation, Wang Hing Interior Design became an indirectwholly-owned subsidiary of our Company. For further details, please refer to the paragraphheaded “Reorganisation” in this section.

Wang Hing Interior Engineering

Wang Hing Interior Engineering principally engages in fitting-out services in HongKong. Wang Hing Interior Engineering was incorporated in Hong Kong with limited liabilityon 30 March 2006 with an authorised share capital of HK$10,000 divided into 10,000 sharesof HK$1.00 each. On 28 June 2006, one share in Wang Hing Interior Engineering wastransferred from the initial subscriber to Ms. Wan.

On 14 May 2009, 5,000 and 4,999 shares in Wang Hing Interior Engineering wereallotted and issued to Mr. Y. W. Chan and Ms. Wan at par value, credited as fully paid,respectively. On 17 June 2009, the authorised share capital of Wang Hing InteriorEngineering was increased to HK$1,000,000 divided into 1,000,000 shares of HK$1.00 each.On 18 June 2009, 495,000 and 495,000 shares in Wang Hing Interior Engineering wereallotted and issued to Mr. Y. W. Chan and Ms. Wan, at par value, credited as fully paid,respectively.



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Immediately after the Reorganisation, Wang Hing Interior Engineering became anindirect wholly-owned subsidiary of our Company. For further details, please refer to theparagraph headed “Reorganisation” in this section.

L & F Interior Engineering

L & F Interior Engineering principally engages in the provision of ancillary servicesrelating to fitting-out services in Macau. L & F Interior Engineering was incorporated inMacau with limited liability on 22 March 2007 with an authorised capital of MOP50,000divided into two quotas of MOP25,000 each. On the same date, one and one quota ofMOP25,000 in L & F Interior Engineering was allotted and issued to Mr. Y. W. Chan andMs. Wan, respectively.

Immediately after the Reorganisation, L & F Interior Engineering became an indirectwholly-owned subsidiary of our Company. For further details, please refer to the paragraphheaded “Reorganisation” in this section.

Wang Hing Lain Fung

Wang Hing Lain Fung principally engages in provision of fitting-out services in Macau.Wang Hing Lain Fung was incorporated in Macau with limited liability on 23 May 2016with an authorised capital of MOP25,000 divided into two quotas of MOP12,500 each. Onthe same day, one and one quota of MOP12,500 in Wang Hing Lain Fung was allotted andissued to each of Mr. Y. W. Chan and Ms. Wan, respectively.

Immediately after the Reorganisation, Wang Hing Lain Fung became an indirectwholly-owned subsidiary of our Company. For further details, please refer to the paragraphheaded “Reorganisation” in this section.

Beijing Yongxing

Beijing Yongxing was established in the PRC with limited liability on 30 July 2003 byWang Hing Interior Design with registered share capital of HKD5.0 million. Our Directorsconfirmed that Beijing Yongxing had not carried out any business operations since the dateof its incorporation.

In order to streamline our Group structure and focus on our core business in HongKong and Macau, our Group has applied to deregister Beijing Yongxing. On 31 August2021, Beijing Yongxing received a notice from the tax authority in the PRC whichconfirmed its eligibility for de-registration of its tax registration.

Immediately after the Reorganisation, Beijing Yongxing became an indirect,wholly-owned subsidiary of our Company. For further details, please refer to the paragraphheaded “Reorganisation” in this section.



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REORGANISATION

In preparation for the [REDACTED], our Group has undergone the Reorganisation forthe purpose of establishing our corporate structure. The shareholdings and corporatestructure of our Group before the Reorganisation are set forth below:

20%80%

100%

Mr. Y. W. Chan Ms. Wan

Wang HingInterior Design(Hong Kong)

BeijingYongxing

(PRC)

50%50%


Wang HingInterior Engineering

(Hong Kong)

Note :

– Entity under deregistration process



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50%50%


L & F InteriorEngineering (Macau)

50%50%


Wang HingLain Fung(Macau)

The principal steps of the Reorganisation are as follows:

Step 1. Incorporation of Faithful Trinity

Faithful Trinity was incorporated in the BVI with limited liability on 8 January2021 and was authorised to issue a maximum of 50,000 shares with a par value ofUS$1.00 each in one single class or series. On 27 March 2021, one and one fully-paidshare of Faithful Trinity was allotted and issued to Mr. Y. W. Chan and Ms. Wan,respectively. On 8 September 2021. 68 and 30 fully-paid shares were allotted andissued to Mr. Y. W. Chan and Ms. Wan, respectively.

Step 2. Incorporation of our Company

For the purpose of the [REDACTED], our Company was incorporated under thelaws of the Cayman Islands as an exempted company with limited liability on 14 May2021. Its authorised share capital is HK$388,000.00 divided into 38,800,000 ordinaryshares of par value of HK$0.01 each, of which one fully-paid Share was allotted andissued to the third party initial subscriber which was subsequently transferred toFaithful Trinity on the same date at par value. Our Company became a wholly-ownedsubsidiary of Faithful Trinity.

Step 3. Incorporation of Grateful Luck

Grateful Luck was incorporated in the BVI with limited liability on 18 September2020 and was authorised to issue a maximum of 50,000 shares with a par value ofUS$1.00 each in one single class or series. On 5 January 2021, one and one fully-paidshare of Grateful Luck was allotted and issued to Mr. Y. W. Chan and Ms. Wan,respectively.



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Step 4. Acquisitions of subsidiaries by Grateful Luck

L & F Interior Engineering

On 18 August 2021, Mr. Y. W. Chan, Ms. Wan and Grateful Luck entered into aquota purchase agreement, pursuant to which Mr. Y. W. Chan and Ms. Wan sold oneand one quota in L & F Interior Engineering to Grateful Luck at the par value ofMOP25,000 each.

Wang Hing Lain Fung

On 18 August 2021, Mr. Y. W. Chan, Ms. Wan and Grateful Luck entered into aquota purchase agreement, pursuant to which Mr. Y. W. Chan and Ms. Wan sold oneand one quota in Wang Hing Lain Fung to Grateful Luck at the par value ofMOP12,500 each.

Wang Hing Interior Engineering

On 23 August 2021, Mr. Y. W. Chan, Ms. Wan and Grateful Luck entered into ashare purchase agreement, pursuant to which Mr. Y. W. Chan and Ms. Wan transferred500,000 and 500,000 shares in Wang Hing Interior Engineering to Grateful Luck. Inconsideration thereof, Grateful Luck allotted and issued one and one new share to Mr.Y. W. Chan and Ms. Wan, credited as fully paid, respectively.

Wang Hing Interior Design and Beijing Yongxing

On 8 September 2021, Mr. Y. W. Chan, Ms. Wan and Grateful Luck entered into ashare purchase agreement, pursuant to which Mr. Y. W. Chan and Ms. Wan transferred800,000 and 200,000 shares in Wang Hing Interior Design to Grateful Luck,respectively. In consideration thereof, Grateful Luck allotted and issued 67 and 29 newshares to Mr. Y. W. Chan and Ms. Wan, credited as fully paid, respectively. Theconsideration was determined with reference to the net asset value of Wang HingInterior Design as at 31 March 2021.

Upon completion of the above transfers, each of Beijing Yongxing, L & F InteriorEngineering, Wang Hing Interior Design, Wang Hing Interior Engineering, and WangHing Lain Fung became wholly-owned subsidiaries of Grateful Luck.



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Step 5. Acquisition of Grateful Luck by our Company

On [�], our Company acquired 69 and 31 shares in Grateful Luck from Mr. Y. W.Chan and Ms. Wan, representing all issued shares of Grateful Luck. In consideration ofthe transfer of the shares in Grateful Luck from Mr. Y. W. Chan and Ms. Wan to ourCompany, our Company allotted and issued 99 Shares with a par value of HK$0.01each, credited as fully paid, to Faithful Trinity at the direction of Mr. Y. W. Chan andMs. Wan.

Upon completion of the above transfers, each of [Beijing Yongxing,] L & FInterior Engineering, Wang Hing Interior Design, Wang Hing Interior Engineering andWang Hing Lain Fung became indirect wholly-owned subsidiaries of our Company.

[REDACTED]

Subject to the sole Shareholder passing the written resolutions and the [REDACTED]becoming unconditional and the share premium account of our Company having sufficientbalance, our Directors are authorised to [REDACTED] the amount of HK$[REDACTED]standing to the credit of the share premium account of our Company by applying such sumto pay up in full at par a total of [REDACTED] Shares to be allotted and issued to FaithfulTrinity, so that the number of Shares so allotted and issued, when aggregated with thenumber of Shares already owned by it, will constitute [REDACTED]% of the issued sharecapital of our Company immediately after completion of the [REDACTED] and the[REDACTED] (without taking into account any Shares which may be allotted and issuedupon exercise of the options which may be granted under the Share Option Scheme).



– 88 –

Corporate structure of our Group immediately after the Reorganisation

69% 31%

100%

100%

100% 100% 100% 100%

Faithful Trinity(BVI)

Mr. Y. W.Chan Ms. Wan

Company(Cayman Islands)


100%

BeijingYongxing

(PRC)

Grateful Luck(BVI)

Wang HingInterior

Engineering(Hong Kong)

Note :


Wang Hing LainFung

(Macau)

L & F InteriorEngineering

(Macau)



– 89 –

Corporate structure of our Group immediately after the Reorganisation and upon[REDACTED]

The shareholdings and corporate structure of our Group upon [REDACTED] (withouttaking into account any Shares of our Company which may be issued upon exercise of the[REDACTED] or any options granted under the Share Option Scheme) are set out in thebelow diagram:

Corporate structure of our Group immediately after the [REDACTED]

69% 31%

[REDACTED]% [REDACTED]%

100%

100%

100%

100% 100% 100%

Faithful Trinity(BVI)

Mr. Y. W.Chan Ms. Wan


BeijingYongxing

(PRC)

Company(Cayman Islands)

Grateful Luck(BVI)

Wang HingInterior

Engineering(Hong Kong)

Wang Hing LainFung

(Macau)

[REDACTED]

L & F InteriorEngineering

(Macau)

Note :




– 90 –

OVERVIEW

We are an established contractor principally engaged in providing fitting-out services toour private sector customers in Hong Kong and Macau with over 30 years of operatingexperience. During the Track Record Period and up to the Latest Practicable Date, we havecompleted 54 fitting-out works projects in Hong Kong and Macau. According to the F&SReport, we accounted for a market share of approximately 0.06% and 5.4% in the fitting-outworks industries in Hong Kong and Macau, respectively, in terms of revenue in FY2021, inwhich we ranked the fifth in terms of market share in the fitting-out works industry inMacau. Please refer to the section headed “Industry Overview” in this document for furtherdetails.

For FY2019, FY2020 and FY2021, we recorded revenue of approximately HK$196.6million, HK$250.7 million and HK$294.2 million, respectively. The table below shows abreakdown of our revenue by geographical location during the Track Record Period:

FY2019 FY2020 FY2021

Revenue

% oftotal

revenue Revenue

% oftotal

revenue Revenue

% oftotal

revenueHK$’000 % HK$’000 % HK$’000 %

Hong Kong 79,304 40.3 72,196 28.8 39,333 13.4Macau 117,305 59.7 178,506 71.2 254,883 86.6

Total 196,609 100.0 250,702 100.0 294,216 100.0

During the Track Record Period, we mainly carried out our works as a fitting-outworks subcontractor. Depending on the scale of a project, the specific technicalities required,the required completion timeframe and our manpower availability, we may delegate works toour subcontractors under close supervision and management by our project managementteam to ensure their conformity to our customers’ requirements and that projects arecompleted timely and efficiently, and our main responsibilities include (i) projectmanagement; (ii) developing work programmes; (iii) procurement of major raw materials;(iv) coordinating with our customers or the main contractors; (v) quality and time control ofthe works carried out by our subcontractors; and (vi) ensuring the project is carried out in asafe manner.

BUSINESS


– 91 –


FY2019 FY2020 FY2021

Revenue

% oftotal

revenue Revenue

% oftotal

revenue Revenue

% oftotal

revenueHK$’000 % HK$’000 % HK$’000 %


Total 196,609 100.0 250,702 100.0 294,216 100.0


COMPETITIVE STRENGTHS

Our Directors believe that our competitive strengths as set out below havedistinguished us from our competitors in the fitting-out works industries in Hong Kong andMacau:

Well established presence and proven track record

We have over 30 years of experience in the fitting-out works industries in Hong Kongand Macau. Over the years, we have established ourselves as a dedicated contractor in thefitting-out works industries in Hong Kong and Macau achieving customer satisfaction, whichin turn enables our Group to gain confidence from our customers. During the Track RecordPeriod and up to the Latest Practicable Date, we have completed a number of sizeableprojects for our customers in Hong Kong, including (i) a fitting-out works project for anoffice tower in North Point with an original contract sum of approximately HK$45.5 millionin 2018 and (ii) a fitting-out works project for a residential development in Mid-levels withan original contract sum of approximately HK$44.1 million in 2018. During the TrackRecord Period and up to the Latest Practicable Date, we have also undertaken a number ofsizeable projects for our customers in Macau, most notably (i) a fitting-out works project fora hotel at Cotai with an original contract sum of approximately HK$163.1 million in 2020;and (ii) a fitting-out works project for a cinema in a resort area at Cotai with an originalcontract sum of approximately HK$67.9 million in 2018. We believe that our solid trackrecord and well-established presence in the fitting-out works industries in Hong Kong andMacau which is crucial to our future business development.

BUSINESS


– 92 –

Our implementation, management and execution expertise in the fitting-out worksindustries in Hong Kong and Macau

During the Track Record Period, we have been involved in fitting-out works projectsfor different types of premises such as residential buildings, offices, restaurants hotels,shopping malls, and casinos in Hong Kong and Macau. Utilising our long years ofexperience in undertaking such diverse projects, we have developed a project tendering,implementation, management and execution strategy to deliver fitting-out services to ourcustomers’ satisfaction. We have also developed a tender assessment process under whichour quantity surveying department review and evaluate the commercial viability andprofitability of the potential project based on factors including the scope, complexity,technicality and particular specifications of the projects, site conditions, achievability of thespecified timetable, prior experience, human resources and expertise, prevailing marketconditions, estimated costs of the project and our current competitiveness and financialconditions. When we decide that a potential project is commercially viable, our quantitysurveying department will proceed to prepare the tender proposal.

According to the F&S Report, it is increasingly common for project owners to engagea fitting-out works contractor with design capability as it could streamline the selection andappointment process for engaging multiple working parties for different fields of worksthroughout various stages of the projects and minimise the time lag in the communicationamong different working parties because the fitting-out works contractors would take chargeof the co-ordination and supervision of associated construction works. As such, thefitting-out works contractors who have integrated design and build capabilities enjoy acompetitive edge in the industry and are preferred by main contractors and project owners.When required, our Group’s project managers will be responsible for modifying andenhancing the engineering designs suited for the conditions and limitations of different sitesand requirements from our customers. Our Directors believe that our capability in modifyingand enhancing the engineering designs gives us a competitive advantage because whenevaluating tender submissions, customers may assess the capability in modifying andenhancing the engineering designs, and such expertise may increase the likelihood of beingawarded a contract.

In addition, leveraging on our experience with different types of fitting-out worksprojects and premises in the private sector and our connections with our suppliers andsubcontractors, we are able to control budget and scheduling, catering for our customers’changing preferences and requirements during the course of the projects and swiftly resolveprocurement and project implementation issues. We believe our expertise in implementing,managing and executing our fitting-out works projects systemically and efficiently is asignificant factor distinguishing us from our competitors.

BUSINESS


– 93 –

Established relationship with renowned commercial enterprises

With our ability to deliver fitting-out services with quality to our customers, we haveestablished and maintained stable relationships with our major customers in Hong Kong andMacau, some of which are companies or subsidiaries of companies which are listed in HongKong. In particular, we have been sustaining working relationship with certain establishedconstruction companies and commercial enterprises in Hong Kong for more than 20 years.We believe that the established working relationships with our major customers haveenhanced our market recognition and enabled us to attract more business opportunities,which is evidenced by the tender invitations given by our recurring customers during theTrack Record Period and the awards we received from our customer in 2012 and 2021,details of which are set out in the paragraph headed “Awards and recognitions” in thissection.

Experienced and dedicated management team

Our Directors and senior management team have extensive industry knowledge, projectmanagement experience and industry expertise in the fitting-out works business as well asother peripheral operations. In particular, Mr. Y. W. Chan, our Director, has over 30 years ofexperience in the fitting-out works industry. Mr. Ng Wing Cheong Stephen (our chiefexecutive officer), Dr. Tam Tak Chung (our project director), Mr. Chan Kam Wo (our deputyproject director) and Mr. Chan Wai Kin (our deputy project director) have over 30 years, 30years, ten years and ten years experience in the construction industry, respectively. Theirexpertise, industry knowledge and extensive experience will continue to play an importantrole in the future growth of our Group. For the background of our Directors and of oursenior management, please refer to the section headed “Directors and Senior Management”in this document. We believe that the collective knowledge, experience and expertise of oursenior management and key personnel will facilitate the preparation of competitive tendersin a timely manner, and are essential to us in securing new business and the efficient andtimely implementation and supervision of our works. With our experienced managementteam and our professional staff, we are able to provide comprehensive services includingmodifying and enhancing fitting-out works designs, site supervision, subcontractorcoordination and project management in fitting-out works project to satisfy our customer’svarious preference and requirement.

Commitment to stringent risk management, quality controls and health and safetymeasures

We have adopted stringent risk management, quality controls and health and safetymeasures. Our approach is supported by our guiding values and endorsed by our internaloperating procedures. To control our risk exposure on quality, health, safety and theenvironmental protection aspects, we adopt and implement procedures regarding (i) reportingsystem for our processes such as construction procedure checks, quality control ofsubcontractors and suppliers; (ii) assessment of subcontractors and suppliers in terms ofenvironmental and quality criteria; and (iii) regularly updating our safety and healthmanagement system.

BUSINESS


– 94 –

Our Directors confirm that we did not encounter any material work-related incidentsduring the Track Record Period and up to the Latest Practicable Date. Furthermore, we didnot encounter any severe or fatal accidents during the Track Record Period and up to theLatest Practicable Date. Please refer to the paragraph headed “Occupational health andsafety” in this section for further details.

We believe that our risk, quality, health and safety management will enhance our publicimage, credibility and customers’ confidence in us. Some of our customers consideroccupational safety or environmental compliance as part of their tender assessment criteria.Thus, we believe a good compliance track record and management system would secure acompetitive position in obtaining contracts from those customers. We consider the preventiveand monitoring measures and controls we put in place are adequate to protect us from theoperational risks and liability we face.

OUR BUSINESS STRATEGIES

We aim to expand our scale of business and strengthen our market position in thefitting-out works industries in Hong Kong and Macau. We plan to achieve our businessobjective by pursuing the following key strategies:

Continue to expand our business with further market penetration

As at the Latest Practicable Date, we had 26 fitting-out works projects on hand inHong Kong and Macau. We believe that we have established a proven track record bycompleting and undertaking a number of sizeable fitting-out works projects in Hong Kongand Macau and have well-positioned ourselves to capture the growth in the fitting-out worksindustries in Hong Kong and Macau. In addition, according to the F&S Report, the growingestimated number of aged residential and composite buildings in Hong Kong and the trendof redevelopment of hospitality facilities in Macau will continuously drive the futuredemands for fitting-out works in Hong Kong and Macau. Therefore, our Directors considerthat there is much room for our business expansion and further market penetration in thefitting-out works industries in Hong Kong and Macau. Accordingly, we plan to furtherexpand our market share in the fitting-out works industries in Hong Kong and Macau byundertaking more sizeable projects.

Strengthen our liquidity position in order to obtain sizeable projects with concurrentdurations

According to the F&S Report, for fitting-out works projects of sizeable contract sum, itis not uncommon for customers to require contractors to take out surety bonds by a bank oran authorised insurer in the amount of certain percentage (generally would not exceed 10%)of the contract sum to their customers to ensure a contractor’s due performance andobservance of a contract.

BUSINESS


– 95 –

During the Track Record Period, part of our tender invitations involved surety bondrequirement. During the Track Record Period, our surety bonds were generally issued thecustomers by banks on behalf of the Group and secured by properties and unlimited personalguarantees provided by our Directors and related parties of the Group and pledged bankdeposits of a related company

During the Track Record Period and up to the Latest Practicable Date, we havereceived tender invitations from our potential customers for over 300 fitting-out worksprojects. However, we considered that our financial resources have been substantiallyutilised for our projects on hand and hence we were restricted to undertaking a limitednumber of sizeable projects simultaneously. As at 31 July 2021, the bank balances and cashof our Group amounted to approximately HK$7.1 million. Considering that we did not havesufficient financial resources and liquidity to meet the expected surety bond requirement andupfront costs requirements, historically, we are inclined to (i) undertake projects in whichwe are not required to provide surety bond; (ii) declined certain invitations of tender forprojects with surety bond requirement, or (iii) submitted a less competitive tender price fortenders by factoring a higher profit margin in costs estimation to maintain our presence inthe market.

Furthermore, our Directors consider that it is of strategic importance to undertakesizeable projects from new customers to lessen customer concentration in the future. Assuch, we have devoted and will continue to expend efforts in exploring and securing projectsfrom new customers through participation of more competitive tendering from customersthat we have no or less prior business relationship with. It is anticipated that going forward,we will come across more tender opportunities that are in line with our strategy but whichwill involve customers that have no or less prior business relationship with us, and/orinvolving projects with substantial contract sum, in which surety bond arrangements arenormally required.

Therefore, the aggregate number and size of contracts that we are able to undertakesimultaneously in our business is directly linked to, among others, the amount of ouravailable working capital. The surety bond requirement may result in the lock-up of aportion of our capital during the term of the surety bond and therefore affects our liquidityposition. Our Directors consider that if we are to enhance our market share and undertakemore sizeable projects, we must continue to enhance our available financial resources andstrengthen our liquidity position. In this connection, approximately HK$[REDACTED],representing approximately [REDACTED]% of the [REDACTED], will be used to take outsurety bonds in favour of the relevant customers to ensure our due performance andobservance of the contracts for the Potential Projects. For further details, please refer to theparagraph headed “Future Plans and [REDACTED] — [REDACTED]” in this document.

BUSINESS


– 96 –

Furthermore, we normally incur net cash outflows at an early stage of carrying out aproject to cover a variety of upfront costs and expenses including costs of materials,subcontracting costs, staff and labour costs and other site set-up costs. Such costs andexpenses will further increase if we undertake more sizeable contracts in the future. Ourcustomers usually withhold up to 10% of each of our progress payment subject to amaximum of 5% of the original contract sum as retention money, half of which is usuallyreleased upon practical completion of a project and the remaining half is released upon theexpiry of the relevant defects liability period (which is generally ranging from three to 24months after practical completion of the project). As at 31 March 2019, 2020 and 2021, ourretention receivables amounted to approximately HK$17.0 million, HK$21.5 million andHK$26.2 million, respectively. On the other hand, we generally pay our suppliers andsubcontractors within 30 days after we receive their invoice and we incur other upfront costsand expenses prior to receiving payment from our customers. With reference to ourmanagement’s best estimation based on our historical projects of similar scale andquotations obtained from relevant suppliers, subcontractors and other service providers, it isestimated that the upfront cost and working capital requirement would be approximately20% of the total contract sum of our projects. Therefore, the cash flow requirement at theinitial stage of our projects restricts our financial capacity to take up more projectssimultaneously under our then available resources. Our Directors consider that if we are toexpand our customer base, enhance our market share and undertake more sizeable projects inthe long run, we must continue to enhance our available financial resources.

Accordingly, we also plan to utilise HK$[REDACTED] of the [REDACTED] from the[REDACTED] to finance the upfront costs and working capital requirements associated withundertaking a contract awarded to us. Please refer to the section headed “Future Plans and[REDACTED]” in this document for further details. Our Directors believe that the[REDACTED] from the [REDACTED] will strengthen our financial capacity to meet theneeds of upfront costs of the projects we plan to secure in the future and allow us toundertake more sizeable projects in the future.

Further strengthen our manpower

We believe that a team of dedicated staff equipped with appropriate knowledge andexperience is crucial to our continuing success. To ensure that we have sufficient manpowerto cater for the workforce required for the potential projects we plan to secure and, at thesame time, to maintain our quality of work to the satisfaction of our customers, we plan toutilise approximately HK$[REDACTED] of the [REDACTED] from the [REDACTED] toexpand our workforce by hiring one project manager, two assistant project managers, onequantity surveyor, one procurement manager, one safety supervisor, two site supervisors andfive staff handing BIM in our fitting-out works projects. Please refer to the section headed“Future Plans and [REDACTED]” in this document for further details.

For further details on the implementation of the above-mentioned business strategies,please refer to the section headed “Future Plans and [REDACTED]” in this document.

BUSINESS


– 97 –

SCOPE OF OUR SERVICES

We principally undertake fitting-out works in respect of the interior spaces of differenttypes of premises in the private sector, such as residential buildings, offices, hotels,restaurants, shopping malls and casinos in Hong Kong and Macau, to make them suitable foroccupation or available to handed over to the end users.

The scope of our fitting-out works differs depending on the use of premises and mainlycomprise (i) fitting-out; (ii) ceiling works; (iii) floor works; (iv) wall and window works; (v)services and utilities covering M&E (mechanical & electrical) works; (vi) fabrication,modification, removal or installation of hardware and equipment; (vii) addition or renovationof lift cars; and (viii) other works for upgrading or improving the general condition ofbuildings and their facilities. The photos below show the work done by us on some of ourprojects:

Photo showing the work-in-progress ofproject HK04

Photo showing the finished work ofproject HK04

Photo showing the work-in-progress ofproject M05

Photo showing the finished works ofproject M05

BUSINESS


– 98 –

OUR PROJECTS

Projects by geographical location

The table below shows a breakdown of our revenue by geographical location during theTrack Record Period:

FY2019 FY2020 FY2021

Revenue

% oftotal

revenue Revenue

% oftotal

revenue Revenue

% oftotal

revenueHK$’000 % HK$’000 % HK$’000 %

Hong Kong 79,304 40.3 72,196 28.8 39,333 13.4Macau 117,305 59.7 178,506 71.2 254,883 86.6

Total 196,609 100.0 250,702 100.0 294,216 100.0

Projects by type of buildings


FY2019 FY2020 FY2021

Revenue

% oftotal

revenue Revenue

% oftotal

revenue Revenue

% oftotal

revenueHK$’000 % HK$’000 % HK$’000 %


Total 196,609 100.0 250,702 100.0 294,216 100.0


Contracts as subcontractor

During the Track Record Period, we mainly carried out our works as a fitting-outworks subcontractor. Depending on the scale of a project, the specific technicalities required,the required completion timeframe and our manpower availability, we may delegate works toour subcontractors under close supervision and management by our project managementteam to ensure their conformity to customers’ requirements and that projects are completedon time and within budget, and our main responsibilities include (i) project management; (ii)supervision of work progress; (iii) developing work programmes; (iv) procurement of majorraw materials; (v) coordinating with our customers or the main contractors; (vi) quality andtime control of the works carried out by our subcontractors; and (vii) ensuring the project iscarried out in a safe manner.

BUSINESS


– 99 –

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BUSINESS


– 100 –

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95,

051

185,

471

113,

737

2,04

2

42fi

tting

-out

wor

kspr

ojec

ts,e

ach

ofw

hich

has

orig

inal

cont

ract

sum

ofle

ssth

anH

K$1

0.0

mill

ion,

amon

gw

hich

38an

dfo

urw

ere

proj

ects

inH

ong

Kon

gan

dM

acau

,res

pect

ivel

y90

,133

17,3

8036

,780

68,4

542,

279

Tota

l:38

6,33

222

,431

222,

251

182,

191

4,32

1

Not

es:

(1)

Com

men

cem

ent

date

inge

nera

lre

fers

toth

eco

mm

ence

men

tda

teas

spec

ifie

din

the

orig

inal

cont

ract

orle

tter

ofaw

ard

(whe

reco

ntra

ctis

yet

tobe

exec

uted

),th

eda

teof

issu

eof

firs

tpa

ymen

tap

plic

atio

nor

date

ofco

mm

ence

men

tw

ith

refe

renc

eto

othe

rre

leva

ntdo

cum

enta

tion

.

(2)

Com

plet

ion

date

inge

nera

lre

fers

toth

eda

teof

fina

lin

voic

eor

the

stat

emen

tof

fina

lac

coun

tfo

rth

eco

ntra

ctis

sued

upon

the

expi

ryof

defe

cts

liab

ilit

ype

riod

ofth

ere

leva

ntpr

ojec

t.

(3)

Ori

gina

lco

ntra

ctsu

mre

fers

toth

eco

ntra

ctsu

mas

stat

edin

the

orig

inal

cont

ract

orle

tter

ofaw

ard

(whe

reco

ntra

ctis

yet

tobe

exec

uted

),or

the

amou

ntof

actu

albi

llin

gup

toco

mpl

etio

n(w

here

anam

ount

ofor

igin

alco

ntra

ctsu

mis

not

stat

edin

the

orig

inal

cont

ract

),w

here

asth

ere

venu

ere

cogn

ised

for

the

Tra

ckR

ecor

dP

erio

dre

pres

ents

the

reve

nue

gene

rate

dfr

omth

eac

tual

amou

ntof

wor

kspe

rfor

med

byus

duri

ngth

esa

me

peri

od,

whi

chco

uld

diff

erfr

omth

eor

igin

alco

ntra

ctsu

mas

are

sult

of,

amon

got

her

thin

gs,

vari

atio

nor

ders

we

rece

ived

for

the

rele

vant

proj

ect.

(4)

Cus

tom

erI

isan

indi

rect

who

lly-

owne

dsu

bsid

iary

ofa

com

pany

list

edon

the

Mai

nB

oard

,w

hich

ispr

inci

pall

yen

gage

din

prop

erty

and

faci

lity

man

agem

ent

busi

ness

.

(5)

Cus

tom

erJ

isa

priv

ate

com

pany

inco

rpor

ated

inth

eB

riti

shV

irgi

nIs

land

san

da

regi

ster

edno

n-H

ong

Kon

gco

mpa

ny.

The

late

stan

nual

retu

rnof

Cus

tom

erJ

avai

labl

eat

the

Com

pani

esR

egis

try

does

not

cont

ain

info

rmat

ion

asto

the

iden

tity

ofth

esh

areh

olde

rsof

Cus

tom

erJ.

To

the

best

ofou

rD

irec

tors

’kn

owle

dge,

the

shar

ehol

der(

s)of

Cus

tom

erJ

are

all

Inde

pend

ent

Thi

rdP

arti

es.

Cus

tom

erJ

isno

ta

list

edco

mpa

nyan

dth

eref

ore

info

rmat

ion

rela

ting

toit

ssc

ale

ofop

erat

ions

isno

tav

aila

ble.

(6)

Cus

tom

erK

isa

priv

ate

com

pany

inco

rpor

ated

inH

ong

Kon

g.B

ased

onth

ela

test

annu

alre

turn

ofC

usto

mer

Kav

aila

ble

atth

eC

ompa

nies

Reg

istr

y,ou

rD

irec

tors

conf

irm

that

its

shar

ehol

der

isan

Inde

pend

ent

Thi

rdP

arty

.C

usto

mer

Kis

not

ali

sted

com

pany

and

ther

efor

ein

form

atio

nre

lati

ngto

its

scal

eof

oper

atio

nsis

not

avai

labl

e.

(7)

Cus

tom

erL

isan

indi

rect

who

lly-

owne

dsu

bsid

iary

ofa

com

pany

list

edon

the

Mai

nB

oard

,w

hich

ispr

inci

pall

yen

gage

din

the

prov

isio

nof

buil

ding

cons

truc

tion

serv

ices

,an

dre

pair

,m

aint

enan

ce,

alte

rati

onan

dad

diti

onw

ork

serv

ices

.

BUSINESS


– 101 –

Pro

ject

son

han

d

As

atth

eL

ates

tP

ract

icab

leD

ate,

we

had

ato

tal

of26

fitt

ing-

out

wor

kspr

ojec

tson

hand

inH

ong

Kon

gan

dM

acau

.T

heta

ble

belo

wse

tsfo

rth

deta

ils

ofou

rpr

ojec

tson

hand

asat

the

Lat

est

Pra

ctic

able

Dat

e:

No.

Proj

ect

Cod

eC

usto

mer

Part

icul

ars

and

loca

tion

ofpr

ojec

t

Act

ual/e

xpec

ted

com

men

cem

ent

date

(No

te1

)

Exp

ecte

dco

mpl

etio

nda

te(N

ote

2)

Ori

gina

lco

ntra

ctsu

m(N

ote

3)

Vari

atio

nor

der

rece

ived

on/b

efor

eth

eL

ates

tPr

acti

cabl

eD

ate

Am

ount

ofre

venu

ere

cogn

ised

befo

reth

eTr

ack

Rec

ord

Peri

od

Tota

lre

venu

ere

cogn

ised

for

the

Trac

kR

ecor

dPe

riod

(No

te4

)

Est

imat

edre

venu

eto

bere

cogn

ised

afte

rth

eTr

ack

Rec

ord

Peri

od(H

K$’

000)

(HK

$’00

0)(H

K$’

000)

(HK

$’00

0)(H

K$’

000)

Hon

gK

ong

1H

K12

Cus

tom

erO

(No

te5

)Fi

tting

-out

wor

ksfo

ra

luxu

ryho

tel

atC

entr

alA

pril

2021

June

2023

90,3

63–

––

90,3

63

2H

K13

Cus

tom

erC

Fitti

ng-o

utw

orks

for

publ

icle

isur

efa

cilit

ies

atK

owlo

onC

itydi

stri

ctO

ctob

er20

21M

arch

2024

43,8

80–

––

43,8

80

3H

K14

Cus

tom

erM

(No

te6

)Fi

tting

-out

wor

ksfo

ra

resi

dent

ial

deve

lopm

ent

atTa

iLa

m,T

uen

Mun

Oct

ober

2018

Mar

ch20

2222

,800

6,28

4–

28,8

4823

6

Mac

au

1M

02Su

nFo

okK

ong

–K

unFa

iEn

gine

erin

gan

dC

onst

ruct

ion

Co.

Ltd.

Fitti

ng-o

utw

orks

for

gues

troo

ms,

corr

idor

,lif

tca

rsan

dlif

tlo

bby

ina

hote

lat

Cot

ai

Mar

ch20

20Ju

ne20

2316

3,10

718

,252

–89

,365

91,9

94

2M

03C

usto

mer

EFi

tting

-out

wor

ksan

del

ectr

ical

and

mec

hani

cal

wor

ksfo

ra

cine

ma

ina

reso

rtar

eaat

Cot

ai

Dec

embe

r20

18D

ecem

ber

2022

67,9

422,

732

–63

,142

7,53

2

3M

04C

usto

mer

GFi

tting

-out

wor

ksfo

ra

yach

tcl

ubin

Mac

auSe

ptem

ber

2021

Sept

embe

r20

2369

,732

––

–69

,732

4M

05Fu

ji(C

hina

)D

ecor

atio

n&

Engi

neer

ing

Co.

,Ltd

Fitti

ng-o

utw

orks

for

aca

sino

ina

hote

lat

Cot

aiD

ecem

ber

2017

Mar

ch20

2266

,066

40,4

356,

306

99,8

7731

8

5M

06C

usto

mer

AFi

tting

-out

wor

ksfo

ra

club

hous

eat

are

side

ntia

lan

dco

mm

erci

alde

velo

pmen

tat

Taip

a

Oct

ober

2017

Mar

ch20

2256

,058

6,97

226

,922

34,7

741,

334

6M

07C

usto

mer

GFi

tting

-out

wor

ksfo

rre

side

ntia

lde

velo

pmen

tat

Taip

aG

rand

eJu

ly20

20Se

ptem

ber

2022

55,0

1014

,596

–69

,606

–

7M

08C

usto

mer

AFi

tting

-out

wor

ksfo

ra

casi

noat

Cot

aiJu

ly20

18D

ecem

ber

2022

54,3

6910

,637

–64

,530

476

BUSINESS


– 102 –

No.

Proj

ect

Cod

eC

usto

mer

Part

icul

ars

and

loca

tion

ofpr

ojec

t

Act

ual/e

xpec

ted

com

men

cem

ent

date

(No

te1

)

Exp

ecte

dco

mpl

etio

nda

te(N

ote

2)

Ori

gina

lco

ntra

ctsu

m(N

ote

3)

Vari

atio

nor

der

rece

ived

on/b

efor

eth

eL

ates

tPr

acti

cabl

eD

ate

Am

ount

ofre

venu

ere

cogn

ised

befo

reth

eTr

ack

Rec

ord

Peri

od

Tota

lre

venu

ere

cogn

ised

for

the

Trac

kR

ecor

dPe

riod

(No

te4

)

Est

imat

edre

venu

eto

bere

cogn

ised

afte

rth

eTr

ack

Rec

ord

Peri

od(H

K$’

000)

(HK

$’00

0)(H

K$’

000)

(HK

$’00

0)(H

K$’

000)

8M

09C

usto

mer

HFi

tting

-out

wor

ksfo

rre

side

ntia

lde

velo

pmen

tM

acau

Col

oane

Isla

ndN

ovem

ber

2021

Aug

ust

2023

38,7

26–

––

38,7

26

9M

10C

usto

mer

AFi

tting

-out

wor

ksin

aho

tel

atC

otai

Nov

embe

r20

18M

arch

2022

32,0

392,

444

–33

,981

502

10M

11C

usto

mer

HFi

tting

-out

wor

ksfo

rre

side

ntia

lde

velo

pmen

tat

Mac

auC

oloa

neIs

land

Sept

embe

r20

20Se

ptem

ber

2022

24,8

907,

781

–32

,671

–

11M

12C

usto

mer

N(N

ote

7)

Fitti

ng-o

utw

orks

for

aho

tel

atM

acau

Peni

nsul

aJu

ne20

19M

arch

2022

23,9

811,

332

–18

,201

7,11

2

Sub-

tota

l:80

8,96

311

1,46

533

,228

534,

995

352,

205

12fi

tting

-out

wor

kspr

ojec

ts,e

ach

ofw

hich

has

orig

inal

cont

ract

sum

ofle

ssth

anH

K$1

0.0

mill

ion,

amon

gw

hich

ten

and

two

wer

epr

ojec

tsin

Hon

gK

ong

and

Mac

au,r

espe

ctiv

ely.

41,4

2662

1–

21,4

6720

,580

Tota

l:85

0,38

911

2,08

633

,228

556,

462

372,

785

Not

es:

(1)

Com

men

cem

ent

date

inge

nera

lre

fers

toth

eco

mm

ence

men

tda

teas

spec

ifie

din

the

orig

inal

cont

ract

orle

tter

ofaw

ard

(whe

reco

ntra

ctis

yet

tobe

exec

uted

),th

eda

teof

issu

eof

firs

tpa

ymen

tap

plic

atio

nor

date

ofco

mm

ence

men

tw

ith

refe

renc

eto

othe

rre

leva

ntdo

cum

enta

tion

.

(2)

Com

plet

ion

date

inge

nera

lre

fers

toth

eda

teof

fina

lin

voic

eor

the

stat

emen

tof

fina

lac

coun

tfo

rth

eco

ntra

ctis

sued

upon

the

expi

ryof

defe

cts

liab

ilit

ype

riod

ofth

ere

leva

ntpr

ojec

t.

(3)

Ori

gina

lco

ntra

ctsu

mre

fers

toth

eco

ntra

ctsu

mas

stat

edin

the

orig

inal

cont

ract

orle

tter

ofaw

ard

(whe

reco

ntra

ctis

yet

tobe

exec

uted

),or

the

amou

ntof

actu

albi

llin

gup

toco

mpl

etio

n(w

here

orig

inal

cont

ract

sum

isno

tst

ated

inth

eor

igin

alco

ntra

ct),

whe

reas

the

reve

nue

reco

gniz

edfo

rth

eT

rack

Rec

ord

Per

iod

repr

esen

tsth

ere

venu

ege

nera

ted

from

the

actu

alam

ount

ofw

orks

perf

orm

edby

usdu

ring

the

sam

epe

riod

,w

hich

coul

ddi

ffer

from

the

orig

inal

cont

ract

sum

asa

resu

ltam

ong

othe

rth

ings

,va

riat

ion

orde

rsw

ere

ceiv

edfo

rth

ere

leva

ntpr

ojec

t.

(4)

Thi

sta

ble

excl

udes

one

term

cont

ract

whi

chw

asaw

arde

dto

usby

Cus

tom

erB

inF

Y20

20,

wit

ha

cont

ract

peri

odfr

om1

Apr

il20

20to

31D

ecem

ber

2021

,pu

rsua

ntto

whi

chou

rG

roup

wou

ldpr

ovid

efi

ttin

g-ou

tw

orks

and

mai

nten

ance

serv

ices

once

rtai

nw

orks

ites

ofC

usto

mer

Bin

Hon

gK

ong

upon

requ

ests

byC

usto

mer

Bon

anor

der-

by-o

rder

basi

s(t

he“T

erm

Con

trac

t”).

The

actu

alw

orks

requ

ired

tobe

perf

orm

edby

our

Gro

upar

esu

bjec

tto

Cus

tom

erB

’sw

ork

orde

rsfr

omti

me

toti

me

duri

ngth

eco

ntra

ctpe

riod

,w

hich

are

char

ged

acco

rdin

gto

the

agre

edsc

hedu

les

ofra

tes

stat

edin

the

Ter

mC

ontr

act.

Our

reve

nue

gene

rate

dfr

omth

eT

erm

Con

trac

tdu

ring

the

thre

efi

nanc

ial

year

sen

ded

31M

arch

2019

,20

20an

d20

21w

ere

appr

oxim

atel

yni

l,ni

lan

dH

K$2

.9m

illi

on,

resp

ecti

vely

,am

ount

ing

toap

prox

imat

ely

nil,

nil,

and

1.0%

ofou

rG

roup

’sto

tal

reve

nue

duri

ngth

esa

me

peri

ods.

BUSINESS


– 103 –

(5) Customer O is a private company incorporated in Hong Kong. Based on the latest annual return ofCustomer O available at the Companies Registry, our Directors confirm that its shareholders are allIndependent Third Parties. Customer O is not a listed company and therefore information relating to itsscale of operations is not available.

(6) Customer M is a private company incorporated in Hong Kong. Based on the latest annual return ofCustomer M available at the Companies Registry, our Directors confirm that its shareholders are allIndependent Third Parties. Customer M is not a listed company and therefore information relating to itsscale of operations is not available.

(7) Customer N is a private company incorporated in Macau. Based on the latest business registrationcertificate of Customer N, our Directors confirm that its shareholders are all Independent Third Parties.Customer N is not a listed company and therefore information relating to its scale of operations is notavailable.

Movement of our backlog

The following table sets forth the movement of backlog of our fitting-out worksprojects in terms of the outstanding contract value of projects during the Track RecordPeriod and up to the Latest Practicable Date:

FY2019 FY2020 FY2021

From1 April 2021

up to theLatest

PracticableDate

HK$’000 HK$’000 HK$’000 HK$’000

Outstanding contract value ofprojects in our openingbacklog 168,520 262,306 246,582 201,509

Add: Value of new projectsawarded in the financialyear/period 299,191 193,066(Note) 180,940 169,580

Add: Value of adjustment/variation orders received inthe financial year/period (8,796) 41,912 65,329 6,017

Less: Revenue recognised inthe financial year/period (196,609) (250,702) (291,342)(Note) (155,671)(Note)

Outstanding contract value ofprojects in our closingbacklog 262,306 246,582 201,509 221,435


BUSINESS


– 104 –

The following table sets forth the movement of backlog of our fitting-out worksprojects in terms of number of projects during the Track Record Period and up to the LatestPracticable Date:

FY2019 FY2020 FY2021

From 1April

2021 upto theLatest

PracticableDate

Outstanding number of projects inour opening backlog 28 31 26 25

Add: Number of projects awardedto us 23 9(Note) 11 9

Less: Number of projectscompleted (20) (14) (12) (8)

Outstanding number of projects inour closing backlog 31 26 25 26


OUR OPERATION FLOW

The customer base, requisite expertise and experiences relating to fitting-out worksmay be different. Nevertheless, since these categories of works share essentially similarnature of construction projects, the relevant project workflows and our procedures forproject execution for such businesses are generally the same. The actual works undertakenby us and the duration of works may vary according to the nature of our projects.

BUSINESS


– 105 –

The following diagram summarises the principal steps of our operation flow:

Monitoring of project progress and regular

progress meetings withcustomers and subcontractors

Tender invitation fromcustomers/Identification of

tender opportunities

Tender evaluationand assessment

Preparation and submission of tender documents

Receiving inquiry orrequest for quotation from

customers/potential customers

Confirmation of quotationby customer

Tender not successful

Reviewing our tendering strategy

Tendersuccessful

Formation of project management team Procurement of materials

Planning and arranging for required machinery and

equipment

Taking out insurance/surety bond (depends

on the project requirement)

Safety/health/environmental/quality management

Monitoring and control of project costs and progress

Variation ordersCertification, payment of

works done and withholding of retention money

Project planning and administration

Project implementation

Practical completion

Receipt of final accounts/issuance of final invoice

Rectification, defectsliability period

Planning and administration

PhaseApproximately

1-2 months

Business identification

PhaseApproximately

1-2 months

Implementation Phase

Approximately 3-36 months

Completion Phase

Approximately 1-24 months

Master kick-off meeting

Negotiation withcustomers and

providing quotation

Subcontracting arrangement

BUSINESS


– 106 –

Business identification phase

Tender or quotation invitation from customers

During the Track Record Period, most of our projects were obtained through acompetitive tendering process. Our potential customers usually approach us with current orupcoming tender opportunities through our referrals, word-of-mouth or from our previousworking relationship. They generally send us letters to invite for tender or pre-qualificationor letters to express interest for tender. For some fitting-out works project of smaller scale,sometimes we are approached by potential customers which request for quotations for ourfitting-out services without going through a tendering process.

Tender evaluation and assessment

Our quantity surveying department is led by Mr. Y. W. Chan (our Director) and Mr. NgWing Cheong Stephen (our chief executive officer), whose background and experience areset out in the section headed “Directors and Senior Management” in this document. Ourquantity surveying department is responsible for reviewing and evaluating tender documentsand preparing tender submissions. Generally, we review and evaluate the commercialviability and profitability of the potential project based on factors including the scope,complexity, technicality and particular specifications of the projects, site conditions,achievability of the specified timetable, prior experience, human resources and expertise,prevailing market conditions, estimated costs of the project and our current competitivenessand financial conditions. After we decide that a potential project is commercially viable, ourquantity surveying department will then proceed to prepare the tender proposal.

After submitting the tender, we may be required to answer queries or invited to attendinterviews with the potential customers to clarify certain aspects of our submitted tender,demonstrate our understanding on the project, and discuss availability of our resources andour estimated project costs. We will follow up with the potential customers on theirrequirements and details of our tender.

Pricing policy

Based on the experience of our Directors and senior management, we will consider thepotential difficulty and risk factors in estimating the total cost of each project. We will thendetermine the tender price based on our estimated project costs (taking into account variousfactors including and not limited to subcontracting costs, material costs, availability of themanpower and resources required and complexity of the works involved) plus a mark-upmargin at the time when we submit our tenders or quotations to our potential customer.Depending on the complexity or scale of the project, sometimes we may obtain quotationsfrom our subcontractors prior to submitting a tender proposal and reflect the estimatedmaterial costs and subcontracting costs in our tender price.

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Tender success rate

During the Track Record Period, majority of our projects awarded to us were obtainedthrough tendering while some of our projects (generally with smaller size and scale) wereobtained through quotation invitations.

During Track Record Period, our tender success rate remain relatively stable. The tablebelow shows our overall tender success rate during the Track Record Period:

FY2019 FY2020 (Note 2) FY2021

Number of tender invitationreceived 113 106 84

Number of tenders submitted 62 57 55Number of tendered projects

awarded to our Group 9 9 8Tender success rate (Note 1) 14.5% 15.8% 14.5%

Notes:

(1) Tender success rate is calculated as the number of successful tenders (regardless of whether theywere awarded in the same or subsequent financial year) submitted by our Group during a financialyear, divided by the total number of successful and unsuccessful tenders submitted by our Groupduring the respective financial year.

(2) This table excludes one term contract which was awarded to us by Customer B in FY2020, with acontract period from 1 April 2020 to 31 December 2021, pursuant to which our Group would providefitting-out works and maintenance services on certain worksites of Customer B in Hong Kong uponrequests by Customer B on an order-by-order basis (the “Term Contract”). The actual worksrequired to be performed by our Group are subject to Customer B’s work orders from time to timeduring the contract period, which are charged according to the agreed schedules of rates stated in theTerm Contract. Our revenue generated from the Term Contract during the three financial years ended31 March 2019, 2020 and 2021 were nil, nil and approximately HK$2.9 million, respectively,amounting to approximately nil, nil, and 1.0% of our Group’s total revenue during the same periods.

Planning and administration phase

Generally, once our tender proposal is accepted by our customer, a letter of award orletter of acceptance will be issued to us, which forms part of the tender contract. We willcommence the administration of the project which includes formation of a projectmanagement team, procurement of materials, planning and arranging for the requiredequipment to be delivered to the site and selection and appointment of subcontractors.

Master kick-off meeting

Our customer may co-ordinate a master kick-off meeting and issue a master programmesetting out the implementation plan for the whole project such as the work flow for variousstages of project execution, the respective scheduled duration and the project’s progressmilestones in which our works are involved.

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Formation of project management team

Depending on the scale and complexity of the projects, our project management teamgenerally comprises the following key members: project manager, site coordinator, quantitysurveyor and safety and site supervisor. Set out below are the main responsibilities of eachkey member in a project management team:

� Our project manager is mainly responsible for supervising our overall workforceon site, monitoring work efficiency and performance of site workers,communicating with our customers, subcontractors and other members of theproject management team on the project status, allocation of resources in a projectand preparing the progress reports.

� Our site coordinator is responsible for assisting our project manager to superviseand monitor work progress on site, supervising workmanship and quality andpreparing site daily records setting out the works performed by our workers andsubcontractors.

� Our quantity surveyor is responsible for inspecting the work progress on site andpreparing payment application. Our quantity surveyor is also required to updateour project manager with the latest certified progress from our customers.

� Our safety and site supervisor is responsible for supervising the on-site activitiesand overseeing the implementation of site safety measures and monitoringday-to-day occupational health and safety compliance.

Procurement of materials

Depending on our customers’ requirements and project nature, we may be responsiblefor the procurement of raw material based on the terms stated in the relevant contracts. Wemay also be responsible for sourcing doors, furniture and tailor-made accessories accordingto the specifications of our customers. We will place orders with our suppliers and purchasethe required materials based on our project need. For further details, please refer to theparagraph headed “Procurement” in this section.

Subcontracting arrangement

During the Track Record Period, we normally engage subcontractors to carry out thesite works in order to increase labour mobility. The works we subcontract to oursubcontractors are generally labour intensive. Our Group generally provides the major rawmaterials such as wood, stone, metal, tiles, plastic laminates and acoustic materials to thesubcontractors to enable them to carry out the works delegated based on the terms stated inthe relevant contracts. We oversee our subcontractors in carrying out their works in order toensure the works completed are in accordance with the specifications, requirements andtime-frame under the relevant contract. With the engagement of subcontractors, we are ableto focus on quality assurance and overall project management. For further details onselections of subcontractors and our subcontracting arrangement, please refer to theparagraph headed “Procurement — Subcontractors” in this section.

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Taking out insurance and/or surety bonds (depends on the project requirement)

The main contractor of our projects are normally required to take out contractor’s allrisks, employee’s compensation and third party liability insurance to comply with theapplicable laws and regulations and the requirements under the contracts. For further details,please refer to the paragraph headed “Insurance” in this section.

For some projects undertaken by us, we are required to provide surety bonds issued bya bank backed by cash collateral and/or guarantees in favour of our customers to secure ourperformance under contracts, which is common in our industry. The amount of the suretybonds required for each project is typically 10% of the total contract sum. Our surety bondsnormally expire or are released upon completion of the project or as otherwise specified inthe contract.

Implementation phase

Monitoring of project progress and regular progress meetings with customers andsubcontractors

We believe that our quality of works and reputation are crucial to securing futuretenders and future business opportunities. As such, we place strong emphasis on qualitycontrol of our works to ensure that our works meets with or exceeds the required standards.Our project management team holds regular meetings with our customers and oursubcontractors to review the progress of the project and to resolve any problems which mayarise. We will also provide periodic progress reports as each of the projects may require.Upon completion of our works, certain tests such as water-proofing test may be performedby us to confirm that the relevant specifications or standards have been met. For furtherdetails, please refer to the paragraph headed “Quality control” in this section.

Monitoring and control of project costs and progress

Our results of operations are impacted in part by our ability to control project costswithin our budget, which, however, will be dependent on a number of factors including butnot limited to the scope and complexity of the projects, site conditions, project time-frame,estimated raw material costs and labour cost. Some of these factors are beyond the controlof our Group. We may also be subject to liquidated damages due to delay in completing theproject if extension of time is not granted by our customers. During the Track Record Periodand up to the Latest Practicable Date, save for a single occasion on which one of ourcustomers imposed liquidated damages in the amount of HK$72,000 against our Group forproject delay, (i) our Group did not incur any liquidated damages for our projects and (ii)we had no loss-making projects during the same period.

During the financial year ended 31 March 2019, our Group incurred liquidated damagesin the amount of HK$72,000 in one project with Customer B due to project delay. For thefirst stage of such project, the contract period was 60 days commencing on a date not longbefore the Chinese New Year holidays in 2018. The shortage of workers of oursubcontractors who were available over the Chinese New Year holidays resulted in a delayin completing such project. Our Directors are of the view that such liquidated damages

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imposed on us did not have adverse impact on our relationship with Customer B, havingconsidered that (i) Customer B has remained as one of our top five customers for each ofthe years ended 31 March 2019, 2020 and 2021, and (ii) up to the Latest Practicable Date,contracts entered into between Customer B and our Group were subsisting and no notice oftermination of contracts have been received from Customer B.

Our Directors confirm that, save for the aforementioned liquidated damages imposed onour Group by Customer B, we had not been claimed against for any liquidated damages byour customers due to any delay in project delivery, nor were there any material claims orcomplaints brought against us by our customers for defects liability, during the Track RecordPeriod and up to the Latest Practicable Date.

In response to the above-mentioned risks in our operations, we implement certaincost-control measures. Our management will prepare a budget plan for each fitting-out worksproject. The budget plan will be reviewed and approved by our Directors taking into accountof the following factors:

� scope and complexity of the fitting-out works works to be carried out;

� duration of the fitting-out works contract;

� tenders or quotations obtained from our suppliers and subcontractors, taking intoaccount future inflation in prices; and

� the resources of our Group, such as manpower, to be allocated to the project.

In order to mitigate the risk of delay in completing our projects, our project managerwill review the progress of our projects on a regular basis. Our project managers willprepare progress report for each project showing the work done for the reporting period.Any sites that fall behind the project schedule will be discussed to seek possible remedialactions such as allocating more manpower. Based on the above, our Directors believe thatour current measures on cost control and monitoring work progress are being carried outeffectively.

Certification, payment of work done and withholding of retention money

Our Group’s contracts normally require our customers to make progress payments on amonthly basis. Based on the works performed by us in the preceding month, we submitpayment application to our customers which generally include details of completed works,the actual quantities of our work done and variation orders (if any) on a monthly basis.Once our Group has submitted a payment application, our customers or their representativewill certify the amount of work done and issue a payment certificate to us. We will issuebilling invoice to our customers and our customers then make payment to us based on thecertified amount. For some customers who do not issue payment certificates due to theirinternal policy, after we make payment application, the internal quantity surveyors of suchcustomers will confirm the percentage of work completed for us to issue billing invoice. Wegenerally receive payment from these customers within 30 days after we issue billinginvoice.

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In general, there is a contract term for the customer to hold up retention money fromthe progress payment. Retention money is normally 10.0% of the value of work done,subject to a maximum rate of 5.0% of the total contract sum. The terms and conditions onrelease of retention money also vary from contract to contract, which may be subject tocompletion of contract works or a pre-agreed time period after completion of the contractworks. We expect that all such retention money will be released according to the respectivecontracts and work done.

Variation orders

Our customers or their consultant team in general have the right to order variationsduring the course of the project pursuant to the relevant contract terms. Variation orders mayinclude: (i) additions, omissions, substitutions, alterations, changes in quality, form, design,services, materials, workmanship, character, kind, position or dimension; (ii) changes to anysequence, method or timing of our works; and (iii) limitations of working space and hours.The rates for the works under such variation orders follow the schedule of rates as providedin the relevant contracts or the fair value of work, day rates or estimated cost and profitagreed by our customers or their consultant teams and us. In general, after receivinginstruction of a variation order, our project manager will make an estimation of the costslikely to be involved and may obtain quotations from our subcontractors. Subsequently, wesubmit a proposed rate for such variation order to our customers or their consultant teamsfor approval. We generally apply for progress payments for such variation orders during thecourse of the project.

Completion phase

Practical completion

In some of our projects, our customers or their consultant teams conduct inspection tocheck whether the works are satisfactorily completed and then issues a certificate ofpractical completion certifying that the project is substantially completed and is approved forhandover. Some customers do not issue certificate of practical completion due to theirinternal policy. In that case, the date of practical completion is generally agreed between usand such customers.

Rectification and defects liability period

Our customers would normally require a defects liability period, during which we areresponsible for rectifying any construction defects. The defects liability period usuallyranges from three to 24 months. Under the usual terms of our contracts, we are liable torectify all works defects (if any) during the defects liability period. At the end of the defectsliability period, our rectifications obligations will be completed and we will follow up withcustomers and reach agreement on the final accounts. During the Track Record Period, wedid not experience any material claim by our customers in respect of the works defects onour projects.

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Receipt of final accounts/issuance of final invoice

We generally receive the statements of final accounts from our customer upon theexpiry of defects liability period. A final invoice will then be issued by us for ourcustomers’ settlement, indicating the final completion of the project.

OUR CUSTOMERS

Characteristics of our customers

During the Track Record Period, our customers primarily consist of private sectorcustomers including construction companies, hotel operators, casino operators, propertydevelopers and other commercial enterprises which require fitting-out services, some ofwhich are companies or subsidiaries of companies which are listed in Hong Kong.

In line with market practice, our customers generally award contracts to us on aproject-by-project basis and are non-recurring in nature. During the Track Record Period,save for the Term Contract, details of which are set out in Note (4) in the paragraph headed“Our Project — Completed and projects on hand — Projects on hand” in this section, wedid not enter into any long-term contract with our customers.

For FY2019, FY2020 and FY2021, revenue derived from our five largest customersaccounted for approximately 81.6%, 76.3% and 85.9% of our total revenue, respectively. Forthe same periods, revenue derived from our largest customer accounted for approximately51.7%, 24.6% and 30.1% of our total revenue, respectively. Our Directors confirm that all ofour five largest customers are Independent Third Parties.

The tables below set forth the details of our five largest customers based on theranking of their contribution to our total revenue during the Track Record Period:

For FY2019

Rank CustomerBackground of thecustomer

Type of worksundertaken by us

Year ofcommencementof businessrelationship

Typical creditterms andpaymentmethod

Revenuederived

from thecustomer

% ofour totalrevenue

HK$’000

1. Customer A(Note 1)

A wholly-ownedsubsidiary of a companywhich the shares arelisted on the MainBoard. The principalbusiness of suchsubsidiary includesconstruction contractingand related investments,bidding for housingprojects, port works,civil engineering andinfrastructure projects.

Fitting-out works forclubhouses, a casinoand a hotel in Macau

2014 30 days uponissue of invoice;by cheque

101,712 51.7

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Revenuederived

from thecustomer


HK$’000

2. Customer B(Note 2)

Companies consisting ofsubsidiary(ies)/relatedcompany(ies) of acompany which theshares are listed on theMain Board andcompanies which arecommonly controlled bythe same group ofbeneficial owners. Theprincipal business ofsuch companiesincludes the provisionof construction services.

(i) Fitting-out works forcommercialdevelopments; (ii)fitting-out works forresidential developmentsand a commercialdevelopment; and (iii)offsite design mock-upfor proposed residentialdevelopments in HongKong


18,175 9.2

3. Customer C(Note 3)

Companies consisting ofsubsidiaries of acompany which theshares are listed on theMain Board. Theprincipal business ofsuch subsidiariesincludes the provisionof construction and civilengineering services.

(i) Fitting-out works forcommercialdevelopments; (ii)fitting-out works forresidential developmentsand a cultural facility;and (iii) fitting-outworks for residentialand commercialdevelopments in HongKong


14,417 7.3

4. Fuji (China)Decoration &Engineering Co.,Ltd (Note 4)

A private companyincorporated in HongKong which theprincipal business is theprovision of fitting-outworks and decorationservices.

Fitting-out works for acasino at Cotai, Macau


13,202 6.7

5. Customer D(Note 5)

A private companyincorporated in HongKong. The principalbusiness of suchcompany is theprovision of cateringservices.

Fitting-out works for arestaurant at Central,Hong Kong


13,002 6.7

Five largest customers in aggregate 160,508 81.6

All other customers 36,101 18.4

Total revenue 196,609 100.0

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For FY2020





Revenuederived

from thecustomer


HK$’000

1. Customer A(Note 5)

A wholly-ownedsubsidiary of a companywhich the shares arelisted on the MainBoard. The principalbusiness of suchsubsidiary includesconstruction contractingand related investments,bidding for housingprojects, port works,civil engineering andinfrastructure projects.

Fitting-out works forclubhouses, a casinoand hotels in Macau


61,786 24.6

2. Customer E(Note 6)

A wholly-ownedsubsidiary incorporatedin Macau of a companywhich the shares arelisted on the MainBoard. The principalbusiness of suchsubsidiary includescinema operation.

Fitting-out works andelectrical andmechanical works for acinema in a resort areaat Cotai, Macau


53,436 21.3

3. Fuji (China)Decoration &Engineering Co.,Ltd (Note 4)

A private companyincorporated in HongKong which theprincipal business is theprovision of fitting-outworks and decorationservices.



39,489 15.8



(i) Fitting-out works forcommercialdevelopments, (ii)fitting-out works forresidential developmentsand a commercialdevelopment; and (iii)fitting-out works forproposed residentialdevelopments in HongKong


18,762 7.5

5. Customer F(Note 7)

Companies consisting ofsubsidiaries of acompany which theshares are listed on theMain Board. Theprincipal business ofsuch companiesincludes the provisionof property developmentservices.

(i) Fitting-out works forsales office and showflats at Mongkok, HongKong; and (ii)fitting-out works withinpublic areas at a hotelat Jordan, Hong Kong


17,901 7.1




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For FY2021





Revenuederived

from thecustomer


HK$’000

1. Sun Fook Kong– Kun FaiEngineering andConstruction Co.Ltd. (Note 8)

A joint ventureincorporated in Macauwith limited liabilitywhich is owned as to40% by Sun Fook KongEngineering Limited, awholly ownedsubsidiary of SFKConstruction HoldingsLimited (stock code:1447), and 60% by anIndependent ThirdParty. The principalbusiness of suchsubsidiary includesbuilding constructionand public worksimplementation.

Fitting-out works forguestrooms, corridor,lift cars and lift lobbyin a hotel at Cotai,Macau


88,682 30.1

2. Customer G(Note 9)

A private companyincorporated in Macauwhich the principalbusiness is theprovision ofconstruction services.

Fitting-out works forresidential developmentat Taipa, Macau


69,606 23.7

3. Fuji (China)Decoration &Eng Co., Ltd(Note 4)

A private companyincorporated in HongKong which theprincipal business is theprovision of interiorfitting-out works anddecoration services.



47,185 16.0

4. Customer H(Note 10)

A private companyincorporated in Macauwhich the principalbusiness is theprovision ofconstruction services.

Fitting-out works for aresidential developmentat Coloane, Macau


32,671 11.1



(i) Fitting-out works fora commercialdevelopment; (ii)fitting-out works forresidentialdevelopments; and (iii)fitting-out works for aproposed residentialdevelopment in HongKong


14,573 5.0




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Notes:

1. Customer A, which was incorporated in Macau, is a wholly-owned subsidiary of a company listed on theMain Board (the “Customer A Holdco”). Based on the latest annual report of the Customer A Holdco, therevenue of the Customer A Holdco amounted to approximately HK$62,458.0 million for the financial yearended 31 December 2020. Based on the latest disclosure of interests filed, our Directors confirm that thesubstantial shareholders of the Customer A Holdco are all Independent Third Parties.

2. Customer B consists of subsidiary(ies) related company(ies) of a company which the shares are listed on theMain Board (the “Customer B Holdco”) and companies which are commonly controlled by the same groupof beneficial owners. The principal business of such companies includes the provision of constructionservices. Based on the latest annual report of the Customer B Holdco, the revenue of the Customer BHoldco amounted to approximately HK$21,108.0 million for the financial year ended 31 December 2020.Based on the latest disclosure of interests filed, our Directors confirm that the substantial shareholders ofthe Customer B Holdco are all Independent Third Parties.

3. Customer C consists of subsidiaries of a company which the shares are listed on the Main Board (the“Customer C Holdco”). The principal business of such subsidiaries includes the provision of constructionand civil engineering services. Based on the latest annual report of the Customer C Holdco, the revenue ofthe Customer C Holdco amounted to approximately HK$59,007.8 million for the financial year ended 30June 2020. Based on the latest disclosure of interests filed, our Directors confirm that the substantialshareholders of the Customer C Holdco are all Independent Third Parties.

4. Fuji (China) Decoration & Engineering Co., Ltd is a private company incorporated in Hong Kong in 1984.Based on the latest annual return of Fuji (China) Decoration & Engineering Co., Ltd available at theCompanies Registry, its share capital is HK$5,000,000 and our Directors confirm that its shareholder(s) areall Independent Third Parties. Fuji (China) Decoration & Engineering Co., Ltd is not a listed company andtherefore information relating to its scale of operations is not available.

5. Customer D is a private company incorporated in Hong Kong in 2001. Based on the latest annual return ofCustomer D available at the Companies Registry, its share capital is HK$20,000 and our Directors confirmthat its shareholder is an Independent Third Party. Customer D is not a listed company and thereforeinformation relating to its scale of operations is not available.

6. Customer E is a wholly-owned subsidiary incorporated in Macau of a company listed on the Main Board(the “Customer E Holdco”) Based on the latest annual report of the Customer E Holdco, the revenue of theCustomer E Holdco amounted to approximately HK$126.2 million for the financial year ended 30 June2020. Based on the latest disclosure of interests filed, our Directors confirm that the substantialshareholders of the Customer E Holdco are all Independent Third Parties.

7. Customer F consists of company(ies) which are the subsidiaries of a company which the shares are listed onthe Main Board (the “Customer F Holdco”). Based on the latest annual report of Customer F Holdco, therevenue of Customer F Holdco amounted to HK$10,305.3 million for the financial year ended 31 December2020 and our Directors confirm that the substantial shareholders of Customer F Holdco are all IndependentThird Parties.

8. Sun Fook Kong – Kun Fai Engineering and Construction Limited is a joint venture incorporated in Macauwith limited liability which is owned as to 40% by Sun Fook Kong Engineering Limited, a wholly-ownedsubsidiary of SFK Construction Holdings Limited (stock code: 1447) and 60% by an Independent ThirdParty. Based on the latest annual report of the SFK Construction Holdings Limited, the revenue of the SFKConstruction Holdings Limited amounted to approximately HK$3,772.0 million for the financial year ended31 December 2020. Based on the latest disclosure of interests filed, our Directors confirm that thesubstantial shareholders of the SFK Construction Holdings Limited are all Independent Third Parties.

9. Due to the contra-charge arrangement, Customer G is considered as one of our suppliers. For details of thecontra-charge arrangement, please refer to the paragraph headed “Contra-charge arrangements with ourcustomers” in this section. Customer G is a private company incorporated in Macau. Based on the latestbusiness registration certificate of Customer G, our Directors confirm that its shareholders are allIndependent Third Parties. Customer G is not a listed company and therefore information relating to itsscale of operations is not available.

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10. Due to the contra-charge arrangement, Customer H is considered as one of our suppliers. For details of thecontra-charge arrangement, please refer to the paragraph headed “Contra-charge arrangements with ourcustomers” in this section. Customer H is a private company incorporated in Macau. Based on the latestbusiness registration certificate of Customer H, our Directors confirm that its shareholders are allIndependent Third Parties. Customer H is not a listed company and therefore information relating to itsscale of operations is not available.

During the Track Record Period and up to the Latest Practicable Date, save asdisclosed in the paragraph headed “Contra-charge arrangements with our customers” in thissection, there was no overlapping of our major customers and major suppliers /subcontractors.

Our Directors confirm that we did not have any material dispute with our customersduring the Track Record Period and up to the Latest Practicable Date.

During the Track Record Period, none of our Directors, Shareholders (which to theknowledge of our Directors owns more than 5.0% of our issued share capital) or theirrespective close associates had any interest in any of our five largest customers.

Customer concentration and sustainability of our business

For FY2019, FY2020 and FY2021, the percentage of our total revenue attributable toour five largest customers amounted to approximately 81.6%, 76.3% and 85.9% respectively.The percentage of our total revenue attributable to our largest customer amounted toapproximately 51.7%, 24.6% and 30.1% respectively for the same periods. Our customerconcentration is due to the following factors:

(i) Nature of the fitting-out works industry: We believe that customer concentrationis not uncommon for fitting-out works service providers in Hong Kong andMacau, especially when there is a single project which has a relatively largecontract sum and the duration of our contracts generally lasts for one year toseveral years, the relevant customer may easily become our largest customer interms of revenue contribution in a financial year. Further, according to the F&SReport, proven practical knowledge and industry experience is one of theimportant competitive factors to be considered by customers. We consider thatproperty developers or main contractors tend to invite contractors with practicalindustry experience, solid track record and prior business relationship forsubmission of tender. As such, the concentration of customers within thefitting-out works industry is common.

(ii) Availability of financial resources: We believe that the number of projects we areable to undertake are limited by the availability of our available financialresources in view of the working capital requirement associated with undertakingsuch projects. We could be restricted to undertaking a limited number of projectsof large scale simultaneously if our available financial resources are not sufficientto catch up with our business growth. Therefore, during the Track Record Period,we were inclined to undertake a few projects of larger sum for a few customers,hence giving rise to customer concentration during the Track Record Period.

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Nevertheless, our Directors consider that the following factors should contribute to thesustainability of our business in view of the revenue concentration:

(i) with our long years of operating history, we have built up a strong businessnetwork of customers and other professional consultants, which has consistentlypresented us with business opportunities; and

(ii) we have been providing fitting-out services to a number of reputable propertydevelopers, contractors, hotel operators, casino operators and other commercialenterprises. Our Directors consider such customers as competitive, reputable andreliable customers, and we believe our services provided to these customers wouldserve as a stable source of revenue.

Contra-charge arrangements with our customers

As set out in by the F&S Report, it is common in the construction industry that acustomer may pay on behalf of its subcontractor for certain expenses incurred in aconstruction project. Such expenses are typically deducted from its payments to the relevantsubcontractors in settling its service fees for the project. Such payment arrangement isreferred to as the “contra-charge arrangement” and the amounts involved are referred to asthe “contra-charge”.

During the Track Record Period, we had contra-charge arrangements with our certaincustomers. In particular, we entered into contra-charge arrangements with (i) Sun Fook Kong– Kun Fai Engineering and Construction Co. Ltd., the main contractor of project M02, inrelation to, among others, the provision of foreign-worker resources by Sun Fook Kong –Kun Fai Engineering and Construction Co. Ltd.; (ii) Customer G, the main contractor ofproject M07, primarily for the purchase of materials and products such as marbles andfurniture from Customer G; and (iii) Customer H, the main contractor of project M11,primarily for the purchase of materials such as marbles and decorative materials fromCustomer H. Due to the scale and manpower requirement of project M02, it was agreedbetween our Group and Sun Fook Kong – Kun Fai Engineering and Construction Co. Ltd.that they would be responsible for the provision of certain foreign worker resources andworking tools (e.g. lifting platform) by way of contra-charge arrangement. On the otherhand, since Customer G and Customer H had preferences as to the suppliers of certain rawmaterials to be used in the respective projects, for procurement efficiency, we requestedCustomer G and Customer H to purchase and pay for such raw materials and settled suchraw material costs with us by way of contra-charge arrangement in the respective projects.As confirmed by our Directors, all the above contra-charge arrangements were conducted onnormal commercial terms.

For each of the three years ended 31 March 2021, the total contra-charge amount inrespect of these three customers amounted to nil, nil and approximately HK$61.6 million,respectively, representing nil, nil and approximately 24.5% of our total cost of sales for therespective year. As we settled such costs by way of contra-charge arrangements by nettingoff with the payments due from Sun Fook Kong – Kun Fai Engineering and ConstructionCo. Ltd., Customer G and Customer H, cash inflows from the project works done and cash

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outflows from the purchases were reduced by the same amount. Therefore, the contra-chargearrangements had no material effect on our Group’s cashflow positions during the TrackRecord Period.

The table below sets forth further information on the contra-charge transactions withour customers during the Track Record Period:

FY2019 FY2020 FY2021HK$’000 % HK$’000 % HK$’000 %

Sun Fook Kong – Kun FaiEngineering and ConstructionCo. Ltd.

Gross profit and gross profit marginon project M02 – – 58 8.5 7,538 8.5

Revenue derived and percentage ofour total revenue – – 683 0.3 88,682 30.1

Contra-charge amount and percentageof our total cost of sales – – 7 Nil(Note) 11,839 4.7

Customer GGross profit and gross profit margin

on project M07 – – – – 9,257 13.3Revenue derived and percentage of

our total revenue – – – – 69,606 23.7Contra-charge amount and percentage

of our total cost of sales – – – – 29,112 11.6

Customer HGross profit and gross profit margin

on project M11 – – – – 4,045 12.4Revenue derived and percentage of

our our total revenue – – – – 32,671 11.1Contra-charge amount and percentage

of our total cost of sales – – – – 20,650 8.2

Note:

The contra-charge incurred in the project as a percentage of the total cost of sales for the year wasnegligible (0.003%).

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Key contract terms with our customers

The terms of contracts with our customers vary from project to project, and aregenerally based on the standard industry forms, the specific requirement for each project, aswell as further negotiations by the parties on the particular terms therein. Our Directorsconsider the terms of contracts we entered into with our major customers during the TrackRecord Period generally conform with market norms. Save as otherwise specified, the keycontract terms specified below generally apply to the fitting-out works projects undertakenby us in Hong Kong and Macau:

Project Duration : The period begins with the commencement date and endswith the completion date within which the project has to becompleted, subject to extensions. A contract typicallycommences on the date when we are allowed to commenceworks at the construction site. Depending on the nature andcomplexity of a project as well as the existence of anyunforeseen circumstances (such as bad weather conditions,industrial accidents, variation orders requested bycustomers, etc., if any), the duration of our projects(including defects liability period) could generally rangefrom approximately three months to 60 months.

Scope of services : The types and scope of the work in details which we areengaged to perform under the contracts.

Schedule of rates : The breakdown of the contract sum itemising the works,components, materials and their respective quantities andprice rates. Provisional items and/or re-measurement itemsof works may also be stipulated.

Indemnity : An indemnity in favour of our customers for, among others,liabilities in respect of personal injury or death and propertydamage may be stipulated.

Liquidateddamages

: A contract may contain clauses on liquidated damages toprotect our customers against any significant delay incompletion of works. However, under certain circumstancessuch as poor weather conditions or issue of variation orders,our customers may grant us extension of time without aneed to pay liquidated damages to our customers. We maybe liable to pay liquidated damages to our customers if weare unable to meet the time schedules specified in thecontracts and/or extended time granted by the customers (ifany). Liquidated damages are typically calculated on thebasis of a fixed sum per day as stipulated under thecontract.

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Payment terms : We are usually entitled to submit interim paymentapplications to our customers, usually on a monthly basis,taking into account the amount of works completed in thepreceding month. The contract also stipulates the partyrepresenting the customer, such as the customer’s designatedsurveyor, architect or project manager, to certify the valueof the amount of works completed. After the relevant partyhas certified the value of works completed, our customersusually arrange a settlement of the payment by cheque,based on the certified amount less any retention money.During the Track Record Period, the credit terms in relationto the settlement of amounts due from our customers for theworks completed by us vary from contract to contract. Ingeneral, the credit term is within 30 days from the date ofinvoice.

Variation orders : Our customers are generally entitled to order variations inthe course of the projects. Variation orders generallyinclude: (i) additions, omissions, substitutions, alterations,changes in quality, form, design, services, materials,workmanship, character, kind, position or dimension; (ii)changes to any sequence, method or timing of our works;and (iii) limitations of working space and hours.

Retention money : Our customers are generally entitled to withhold 10.0% ofeach progress payment, subject to a maximum retention of5.0% of the total contract sum, as retention money. Theretention money is usually specified to be released in thefollowing manner: the first half upon the practicalcompletion of the project and the remaining portion uponthe expiry of the defects liability period.

Insurance : The main contractors of our projects are generallyresponsible for taking out and maintaining employees’compensation insurance, contractors’ all risks insurance andpublic liability insurance, and the coverage of such policiesgenerally include all works performed by us and oursubcontractors. Please refer to the paragraph headed“Insurance” in this section for further details.

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Surety bond : For some contracts, we are required to provide surety bondsin favour of our customers to secure our performance undercontracts. The amount of surety bond required for eachproject is typically 10.0% of the total contract sum. Thesurety bond normally expires or is released upon completionof the project or as otherwise specified in the contract.

Practicalcompletion

: In some of our projects, a certificate of practical completionis issued upon substantial completion of works to thesatisfaction of the customer. Some customers do not issuecertificate of practical completion due to their internalpolicy. In that case, the date of practical completion isgenerally agreed between us and such customers.

Defects liabilityperiod

: The period during which we are responsible to rectifydefects in our works, which is typically ranged from threeto 24 months after the practical completion of the project.

Termination : Our customers usually have the right to terminate thecontract if we commit material delay in delivery of ourservices or commit other material default or go intoliquidation/insolvency. We may terminate the contract if ourcustomers fail to pay us according to specified paymentterms or go into liquidation/insolvency. Generally both ofour customers and us have the right to terminate thecontract if the works under the relevant project wassuspended for more than a period of time as specified in thecontract and not attributable to each party.

Our Directors confirm that none of our contracts was terminated prior to expiry duringthe Track Record Period and up to the Latest Practicable Date.

Credit terms with customers

During the Track Record Period, our revenue was generally denominated in either HK$or MOP. Our customers generally settle the payments by cheque payments. In general, ourcustomers pay us within 30 days after the date of invoice. Our customers generally pay usprogress payments on a monthly basis and have the right to hold retention money.

Sales and marketing

Our Directors believe that our solid customer base, expertise, reputation in the industryand past project references are our important assets to secure future projects. Our Directorsand members of senior management are generally responsible for maintaining our customers’relationship, and keeping abreast of market developments and potential businessopportunities. We believe that the [REDACTED] will be a breakthrough in promoting us tothe general public, thus further enhancing our brand and future business development.

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PROCUREMENT

Suppliers of materials

We mainly source raw materials for our fitting-out works projects such as wood, stone,metal, tiles, plastic laminates and acoustic materials from suppliers. We also source doors,furniture and accessories tailor-made according to the specifications of our customers.During the Track Record Period and up to the Latest Practicable Date, we had notexperienced any material disputes with our suppliers.

Our major suppliers

For FY2019, FY2020 and FY2021, material costs attributable to our five largestsuppliers in aggregate amounted to approximately HK$7.3 million, HK$16.1 million andHK$65.0 million, representing approximately 48.5%, 39.3% and 68.3% of our total materialcosts, respectively, while material costs attributable to our largest supplier amounted toapproximately HK$2.2 million, HK$6.4 million and HK$29.1 million, representingapproximately 15.0%, 15.5% and 30.6% of our total material costs, respectively. To the bestof our Directors’ knowledge, none of our Directors or their respective close associates or ourShareholders who own more than 5% of the issued share capital of our Company had anyinterest in our five largest suppliers during the Track Record Period. All of our five largestsuppliers during the Track Record Period are Independent Third Parties. The following tablesset forth the details of our five largest suppliers based on the ranking of their contribution toour total material costs during the Track Record Period:

For FY2019

Rank Supplier

Principalbusiness ofthe supplier

Types ofmaterialsprovided toour Group



Materialcosts

% of ourtotal material

costs(HK$’000)

1 Supplier A Supply offurnishingmaterials

Furnishingmaterialsincludingleather andfabricwallcovering


2,248 15.0

2 Play ConceptLimited

Supply, designandmaintenanceof playgroundequipments

Furnitures andaccessories


2,175 14.6

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Rank Supplier





Materialcosts


costs(HK$’000)

3 Supplier B Supply, designandmaintenanceof fitnessequipments

Fitnessequipments


1,528 10.2

4 Supplier C Supply ofsignage

Light box,LED displays,plasticdecorativeproducts andlightdecorativematerials


661 4.4

5 Supplier D Design andsupply ofartistic interiordecorativeitems

Decorativematerials


640 4.3

Five largestsuppliers inaggregate

7,252 48.5

All othersuppliers

7,690 51.5

Total materialcosts:

14,942 100.0

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For FY2020

Rank Supplier





Materialcosts


costs(HK$’000)

1 Supplier E Materialtrading

Mosaic tiles 2019 30 days uponissue of invoice;by cheque

6,361 15.5

2 KeytechConsultancyLtd.

Materialtrading

Sanitaryfitting


4,566 11.2

3 Massford(Hong Kong)Limited

Materialtrading

Sanitaryfitting andironmongery


1,936 4.7

4 Supplier F Furnituretrading

Furniture andhomedecorativematerials


1,626 4.0

5 Supplier G Supply oflights

Chandelierlighting


1,614 3.9


16,103 39.3

All othersuppliers

24,837 60.7


40,940 100.0

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For FY2021

Rank Supplier





Materialcosts


costs(HK$’000)

1 Customer G(Note 1)

Provision ofinteriorfitting-outworks anddecorationservices

Marbles andfurniture


29,112 30.6

2 Customer H(Note 2)

Provision ofinteriorfitting-outworks anddecorationservices

Marbles anddecrorativematerials


16,135 17.0

3 G.D.A Marmie Graniti s.r.l.

Supply andproduction ofmarble slabs

Marble slabs 2020 60 days uponissue of invoice;by letter ofcredit

7,578 8.0

4 Supplier H Provision ofinteriorfitting-outworks anddecorationservices

Woodware andmetallic glass


6,262 6.6

5 珠海泰福建材供應鏈有限公司

Supply ofconstructionmaterialincludingsteel, woodand stone

Wooden floortiles


5,883 6.1


64,970 68.3

All othersuppliers

30,089 31.7


95,059 100.0

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Notes:

1. Due to the contra-charge arrangement, Customer G is considered as one of our suppliers. For details of thecontra-charge arrangement, please refer to the paragraph headed ‘‘Contra-charge arrangements with ourcustomers’’ in this section for further details.

2. Due to the contra-charge arrangement, Customer H is considered as one of our suppliers. For details of thecontra-charge arrangement, please refer to the paragraph headed ‘‘Contra-charge arrangements with ourcustomers’’ in this section for further details.

Basis for selection of suppliers

We generally obtain quotation from more than one supplier in our internal list ofapproved suppliers if customers do not nominate a particular supplier and no tailor-madeitems are involved. Such internal list is reviewed by the procurement manager and updatedno less than annually according to the performance of the material suppliers. As at theLatest Practicable Date, we had over 250 suppliers available from our internal list ofapproved suppliers, and we generally have multiple approved suppliers for the majormaterials used in our projects. We select suppliers based on various criteria, including,among other things, the product quality, price and delivery time.

During the Track Record Period, our Directors confirm that we did not experience anymaterial shortage or delay in the supply of materials that adversely affected our business.

Pricing of suppliers

In general, the price is determined with reference to the quotation of suppliers asagreed on an order-by-order basis, which is generally the market price at the time. Duringthe Track Record Period, we have not entered into any long-term agreement with oursuppliers. Our Directors consider that such arrangement is in line with the industry practicein Hong Kong and Macau.

Payment terms

During the Track Record Period, the procurement payments made by our Group weregenerally denominated in HK$ or MOP. We generally pay our suppliers within 30 days afterthe date of invoice.

Inventory

We do not keep inventories of materials. We normally issue purchase orders tosuppliers indicating the different tentative delivery dates which match with the projectschedules. All materials are delivered by our suppliers to the project site or designatedlocation for installation.

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Subcontractors

We generally engage subcontractors for labour intensive works to obviate the need forkeeping a large number of workers under our permanent employment, thereby enabling us tofocus on our core management competencies and allowing us the flexibility to deploy ourresources more cost effectively without compromising our work quality. Subcontractingworks generally include, among other things, ceiling works, floor works, wall and windowworks, wet trade works, glass works, paint works, lighting works, electrical works andinstallation of decorative and furniture works.

Our agreements with our subcontractors are generally on a project-by-project basis. Oursubcontractors are neither our employees nor agents, and we are not a party to theemployment arrangement between our subcontractors and their employees.

Our major subcontractors

For FY2019, FY2020 and FY2021, the subcontracting costs attributable to our fivelargest subcontractors in aggregate amounted to approximately HK$114.9 million, HK$82.7million and HK$89.8 million, representing approximately 76.2%, 51.2% and 70.8% of ourtotal subcontracting costs, respectively, while the subcontracting costs attributable to ourlargest subcontractor amounted to approximately HK$61.3 million, HK$47.7 million andHK$31.2 million, representing approximately 40.7%, 29.5% and 24.6% of our totalsubcontracting costs, respectively. To the best of our Directors’ knowledge, none of ourDirectors or their respective close associates or our Shareholders who own more than 5% ofthe issued share capital of our Company had any interest in our five largest subcontractorsduring the Track Record Period. All of our five largest subcontractors during the TrackRecord Period are Independent Third Parties.

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The following table set forth the details of our five largest subcontractors based on theranking of their contribution to our total subcontracting costs during the Track RecordPeriod:

For FY2019

Rank Subcontractor

Principalbusiness of thesubcontractor

Type of servicesprovided to ourGroup


Typical creditterms and paymentmethod

Subcontractingcosts

% of ourGroup’s total

subcontractingcosts

HK$’000

1. Subcontractor A Fitting-out works,electrical andmechanical, repairand maintenanceworks

Fitting-out worksfor clubhouse andcasino

2017 30 days upon issueof invoice; bycheque

61,292 40.7

2. KGMS LimitedKGMS (Macau)Company Limited

Fitting-out works,design anddecoration



23,942 15.9

3. Subcontractor B Fitting-out worksand construction

Fitting-out worksfor restaurant andcinema


15,067 10.0

4. Ri ShengDecorationEngineering

Fitting-out works Design andinstallation ofwoodwares


7,846 5.2

5. Subcontractor C Fitting-out worksand materialtrading

Fitting-out worksfor restaurant


6,722 4.4

Five largest subcontractors in aggregate 114,869 76.2

All other subcontractors 35,803 23.8

Total subcontracting costs: 150,672 100.0

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For FY2020

Rank Subcontractor





Subcontractingcosts


subcontractingcosts

HK$’000




47,690 29.5

2. Subcontractor B Fitting-out worksand construction

Fitting-out worksfor restaurant andcinema


10,731 6.6

3. 駿華裝修工程有限公司

Fitting-out worksand graphicdesign

Electrical andmechanical worksfor cinema


10,037 6.2

4. Subcontractor D Fitting-out works Electrical andmechanical worksfor cinema


7,194 4.5

5. Nation AffluentConstructionCompany Limited

Fitting-out works,electrical andmechanical designand works, supplyof furnishingmaterials

Fitting-out worksfor restaurant


7,078 4.4




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For FY2021

Rank Subcontractor





Subcontractingcosts


subcontractingcosts

HK$’000

1. Subcontractor E Fitting-out worksand materialtrading

Fitting-out worksfor penthouseduplex


31,237 24.6

2. Subcontractor F Fitting-out worksand construction

Fitting-out worksfor hotel


20,914 16.5

3. Ri ShengDecorationEngineering

Fitting-out works Design andinstallation ofwoodwares


13,872 10.9




13,162 10.4

5. KGMS LimitedKGMS (Macau)Company Limited

Fitting-out works,design anddecoration



10,656 8.4




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Selection criteria of subcontractors

We currently maintain a list of over 200 internally approved subcontractors. Weconduct background searches on new subcontractors before they are admitted to our list ofinternally approved subcontractors. With the relatively large pool of internally approvedsubcontractors, we do not foresee any material difficulties in finding substitutesubcontractors should the need arise.

We select subcontractors based on project requirements and assess the subcontractors’reputation, past performance, capacity, capability to meet our requirements as to quality,schedule, costs, environment and safety. We generally only engage subcontractors on our listof internally approved subcontractors unless they are designated by our customers asnominated subcontractors. Generally, we invite more than one subcontractor as our candidatefor tendering/quotation for the same services. In addition, to minimise the concentration riskand avoid reliance on a particular subcontractor, we generally try to engage differentsubcontractors for different types of projects.

Our Directors confirm that, during the Track Record Period and up to the LatestPracticable Date, (i) we did not receive any material claims or disputes with our customersin respect of our subcontractors as to quality or timeliness in delivery of services; and (ii)we did not experience any material difficulty in procuring services from our subcontractors.

Major terms of subcontracting agreement

We generally enter into contracts with our subcontractors on a project-by-project basis.Notwithstanding that the terms of the contracts with our subcontractors vary, depending onproject requirements, we normally adopt the following principal terms in a typical contractwith our subcontractors in order to protect our interest:

Contract period : The contract period of the subcontracting agreement is inline with that of the main contract between us and ourcustomer.

Subcontractingfee andschedule ofrates

: A fixed subcontracting fee which is inclusive of labour,materials and costs incurred by the subcontractors togetherwith the schedule of rates showing the breakdown of thecontract sum, itemising the works and quantities, and settingout the price or price rate of each item of works. Theschedule of rates may also contain provisional items and/orre-measurement items of works.

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Indemnity : Our subcontractors generally undertake to indemnify usagainst: any breach, non-observance or non-performance bythe subcontractor or its agents of the main contract; any actor omission of the subcontractor or its agents which subjectour Group to any liability to our customer under the maincontract; any claim, damage, loss or expense due to orresulting from any negligence or breach of duty of thesubcontractor or its agents; and any loss or damage resultingfrom any claim by an employee of the subcontractor inrespect of personal injury.

Liquidateddamages

: Liquidated damages are payable by the subcontractor if thesubcontractor fails to complete the works before thespecified completion date.

Payment terms : We generally pay our subcontractor progress paymentswithin 30 days after the date of invoice.

Variation order : We have the right to order variations and determine the ratefor the works under variation orders in accordance with themain contract or as the case may be, a pre-determinedschedule of rate.

Retention money : We are generally entitled to withhold 10.0% of eachprogress payment, subject to a maximum retention of 5.0%of the total contract sum, as retention money. The retentionmoney is usually specified to be released in the followingmanner: the first half upon the issue of the certificate ofpractical completion and the remaining portion upon theexpiry of the defects liability period.

Insurance : The main contractors of our projects are generallyresponsible for taking out and maintaining employees’compensation insurance, contractors’ all risks insurance andpublic liability insurance, and the coverage of such policiesgenerally include all works performed by us and oursubcontractors. Please refer to the paragraph headed“Insurance” in this section for further details.

Defects liabilityperiod

: Subcontractor to bear all the costs in rectifying the worksdefects typically for a period ranging from three to 24months upon the issue of the practical completioncertificate.

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Compliance : The subcontractor is obliged to comply with all the relevantrules and regulations in connection with the occupationalsafety and health and the subcontractor’s responsibilitiesand policies relating to quality control, work safety andenvironmental protection. In addition, the subcontractorshall comply with all the provisions relating to thesubcontracted works under the main contract we enteredinto with our customer, unless such provisions under themain contract is inconsistent with the terms of thesubcontracting agreement.

Assignment andsubcontracting

: Without our prior written consent, assignment orsubcontracting by the subcontractor of their works under thesubcontracting agreement is prohibited.

Termination : We have the right to terminate the contract forthwith uponthe subcontractor’s default, suspension of works withoutreasonable cause, bankruptcy or liquidation.

Control over subcontractors

In order to closely monitor the performance of our subcontractors and to ensure thatthe subcontractors comply with the contractual requirements and the relevant laws andregulations, we require our subcontractors to follow our internal control measures in relationto quality control, safety and environmental compliance. For further information regardingour measures in relation to quality control, safety and environmental compliance, pleaserefer to the paragraphs headed “Quality control”, “Occupational health and safety” and“Environmental protection” below in this section for further details.

Designated Workers for Designated Skills Provision

On 1 April 2017, the “designated workers for designated skills” provision of theConstruction Workers Registration Ordinance came into effect, whereby construction workerswill generally be forbidden from undertaking the construction works of the designated tradedivisions unless they are registered skilled or semi-skilled workers for the relevant tradedivision or under the instruction and supervision of the relevant skilled or semi-skilledworkers. Please refer to the paragraph headed “Regulatory Overview — Hong Kong lawsand regulations — A. Fitting-out and other building works, labour, health and safety —Construction Workers Registration Ordinance (Chapter 583 of the Laws of Hong Kong)” inthis document for further details. Our Group will ensure that our subcontractors will employonly registered skilled and semi-skilled workers for designated trade divisions to carry outour fitting-out works.

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QUALITY CONTROL

Our Group’s quality management system is contained in our project quality plan whichsets out the steps to be carried out throughout the fitting-out works process frompre-construction stage to maintenance stage. To ensure that our works meet the requiredstandard, we normally assign our site supervisor as the first line of monitoring the quality ofworks done by our own staff and, as the case may be, our subcontractors. Our sitesupervisor makes regular visits to construction sites for which he is responsible and monitorsthe work quality, the progress of work and ensures that works are completed according tothe agreed schedule.

Furthermore, our quantity surveying department communicate frequently with ourDirectors who closely monitor the progress of each project and discuss issues identified toensure our fitting-out works (i) meet our customers’ requirements; (ii) are completed withinthe time stipulated in the contract and the budget allocated for the project; and (iii) complywith all relevant codes and regulations applicable to the works.

Furthermore, we closely monitor the quality of our materials. To ensure the quality ofsupplies, prior to ordering, our quantity surveyors will ensure that the materials are sourcedfrom our approved suppliers to ensure overall quality of supplies. Upon arrival of theordered materials, all materials are sent directly to the relevant work sites for inspection byour site supervisor before utilisation. Any defective materials or materials that fall short ofthe product specifications would be returned to the suppliers for replacement. Our customersmay also occasionally inspect the materials used by us at project sites and verify thespecifications from time to time.

Our Directors confirm that during the Track Record Period and up to the LatestPracticable Date, we had not received any complaint or claim for compensation from ourcustomers due to quality issue in relation to the services performed by us or worksperformed by our subcontractors.

OCCUPATIONAL HEALTH AND SAFETY

We place emphasis on occupational health and work safety during the delivery of ourservices as it is our concern not to put our employees, our subcontractors and the generalpublic in hazards. We have adopted an occupational health and safety system as required byrelevant occupational health and safety laws, rules and regulations and mainly managed byour safety and site supervisors under the supervision of our Directors, whose backgroundand industry experience are set out in the section headed “Directors and SeniorManagement” in this document.

Occupational health and work safety measures

Due to the nature of works in the fitting-out works industry, workers at the sites areprone to safety hazards. In order to provide a safe and healthy working environment for ouremployees and our subcontractors and to ensure compliance with the applicable laws andregulations in Hong Kong and Macau, we implement our safety plan at the commencementand during the implementation period of each project.

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Our safety control policy adopted and used during the Track Record Period sets outwork safety measures to prevent accidents which could happen at sites. Our work safetymeasures include but are not limited to:

� Site inspections are carried out by our safety and site supervisor regularly toensure strict compliance with the statutory occupational health and safety laws,rules and regulations.

� Our project managers, with the assistance of our safety and site supervisor, willconduct regular review on our on-going projects and ensure that our work safetyrequirements are incorporated into our proposed construction methods from theplanning stage, and are subsequently adhered to throughout the projectimplementation.

� Our safety and site supervisors will undergo initial induction trainings, coveringcore topics such as work safety measures, relevant health and safety regulations,emergency, rescue and typhoon procedures, common hazards of the work sites,accident reporting and first aid procedures.

Workers who have breached our safety control policy may receive a warning from usand workers who have repeatedly breached our safety control policy despite our warningmay be suspended from our construction site. We will continue to put adequate resourcesand effort to uphold and improve our safety management in order to reduce our risks relatedsafety issues.

Analysis on accident rate

The following table sets out a comparison of the industrial accident rate per 1,000workers and the industrial fatality rate per 1,000 workers in the construction industrybetween our Group and the industry average during the periods indicated:

Construction industry average Our Group (Note 1)

Hong Kong Macau Hong Kong Macau

From 1 Januaryto 31 December 2018 FY2019

Accident rate per 1,000 workers 31.7 (Note 2) 22.9 (Note 3) 0 0Fatality rate per 1,000 workers 0.125 (Note 2) 0.2 (Note 3) 0 0

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Construction industry average Our Group (Note 1)

Hong Kong Macau Hong Kong Macau





Notes:

(1) Our Group’s rates are calculated with reference to the number of injuries divided by the dailyaverage site workers in our Group’s construction sites during the year and multiply the result by1,000. The daily average site workers only consisted of our subcontractors’ labours and theemployees of our Group.

(2) The statistics are extracted from the Occupational Safety and Health Statistics Bulletin Issue No. 19(August 2019) published by Occupational Safety and Health Branch of the Labour Department of theGovernment.

(3) The statistics are extracted from the Relatório de análise estatística relativo aos acidentes de trabalho2018 (Analysis Report on the Work Injuries Statistics) published by DSAL of the MacauGovernment.





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A table showing our Group’s lost time injuries frequency rates (“LTIFRs”) is set outbelow:

Our GroupHong Kong Macau

FY2019 0 0FY2020 0 0FY2021 0 0

Notes:

1. LTIFR is a frequency rate that shows how many lost time injuries (‘‘LTIs’’) occurred over a specifiedtime (e.g. per 1,000,000 hours) worked in a period. The LTIFR is calculated as multiplying thenumber of LTIs of our Group happened in the calendar year by 1,000,000 and then dividing by thenumber of hours worked by the workers over that calendar year.

2. It is assumed that the working hour of each worker is nine hours per day.

3. To the best of our Directors’ knowledge, information and belief and upon reasonable enquiries, thereis no public information in relation to the average LTIFRs of the construction industry in Hong Kong.

During the Track Record Period and up to the Latest Practicable Date, there was noaccident which may give rise to potential employees’ compensation or personal injuriesclaims in Hong Kong and Macau. As illustrated above, we achieved zero accident rate andzero fatality rate in Hong Kong and Macau for the Track Record Period, which was lowerthan the construction industry average in Hong Kong and Macau. Our Directors confirm thatwe have no industrial fatal accident during the Track Record period and up to the LatestPracticable Date.

Hygienic working environment

In view of the outbreak of COVID-19 in Hong Kong and Macau, our Group had takenall practicable steps in our worksites to maintain a hygienic working environment in theinterest of all personnel who may be present including our employees, subcontractors,visitors and members of the public. In response to the outbreak of COVID-19 in Hong Kongand Macau, we have implemented the following personal hygiene measures:

� conducting mandatory body temperature check at the entry of works sites andoffices;

� requesting all personnel to wear surgical masks at the works sites and offices;

� disinfecting works sites and offices regularly; and

� providing and monitoring the inventory of personal hygiene supplies such assurgical masks, hand sanitisers and disinfectant.

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Accordingly, all our employees and workers of our subcontractors are required tofamiliarise themselves with requirements of our hygiene measures for pandemic outbreakand ensure that all the workers under our supervision fully comply with the requirements.We will provide training to our workers on the proper use of the personal protectiveequipment (if applicable) and safety supervisors and/or site supervisors will check whethersuch equipment are functional and clean, and workers are using them properly.

INSURANCE

In light of the risks relating to our business operations and in compliance with theapplicable laws and regulations, we take out and maintain policies that we consider adequateand in line with the industry norm. In line with market practice, the main contractor of ourprojects generally take out and maintained employees’ compensation insurance, contractors’all risks insurance and public liability insurance for our projects and the coverage of suchpolicies include all works performed by us and our subcontractors. In respect of ourcontractors’ all risks and public liability insurance taken out during the Track Record Period,it generally covers (i) loss and damage caused to on-site contract works by us and oursubcontractors in the performance of the contract undertaken, for which the coveragenormally comprises the contract sum under the relevant contract; and (ii) loss and damagecaused to third parties by us and our subcontractors in the performance of the contractundertaken. We have also taken out and maintained office safety insurance covering loss anddamage to office content, public liabilities and personal accidents, employees’ compensationinsurance covering employees’ compensation claims and personal injuries actions. Withregards to our employees’ compensation insurance in Hong Kong, it generally covers costsand compensation to our employees and the subcontractors’ employees for personal injuriessustained in the course of their employment in the relevant projects which meets thestatutory minimum insurance coverage of HK$200 million on a per incident basis.

Although based on our past experience, industry developments, benchmarking andvarious other considerations, we consider our current policies are adequate for protecting usfrom most of the common liabilities associated with our business, our insurance coveragemay not sufficiently indemnify all the risks exposed to us. For further details of associatedrisks, please refer to the paragraph headed “Risk Factors — Risks relating to our business— Our current insurance coverage may not sufficiently protect us against all the risks weare exposed to” in this document.

IMPACT OF OUTBREAK OF COVID-19

Potential disruptions to our business and operations

To the best knowledge of our Directors, under the outbreak of COVID-19, our Grouphas not experienced any material business suspensions in Hong Kong and Macau up to theLatest Practicable Date.

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To the best knowledge of our Directors, none of our employees or other personnelworking at our site(s) have been diagnosed with confirmed cases of COVID-19 since theoutbreak of COVID-19 and up to the Latest Practicable Date. However, if the outbreak ofCOVID-19 persists for a substantial period or there are personnel working at the site(s) whoare infected with COVID-19 from time to time whereby the site(s) have to be suspendedfrom time to time correspondingly, the potential effect of the delay or disruption to thesite(s) may be substantial. If any personnel working in the site(s) has been confirmedpositive for COVID-19, the relevant main contractor(s), property developer(s) or ultimatecustomer(s) of our fitting-out works projects would consider suspending all works in therelevant site(s), including our fitting-out works, for certain period of time. If suchcircumstances arise, our Directors consider that such suspension will, subject to its durationand frequency, delay our work progress and project timetable. There may also be materialdisruptions to the sourcing of materials and subcontracting services. Such disruption, if notproperly addressed, may affect our abilities to discharge our obligations under the existingcontracts. All of these will adversely affect our business operation and financial performanceas a result. Our relationship with the relevant customers may also be adversely affected.

The economies of Hong Kong and Macau has been adversely affected by the outbreakof COVID-19 in the first half of 2020. Please refer to the section headed “IndustryOverview” in this document for further details. The slowdown of the Hong Kong, Macaueconomies may have certain impacts on the fitting-out works market in Hong Kong andMacau and our business operations and financial conditions may be adversely affected.

Business contingency plans

For our projects on hand as at the Latest Practicable Date, we have formulated businesscontingency plans:

� Business contingency plans as to sourcing of materials

To the best knowledge of our Directors, some of our suppliers may source theirmaterials from manufacturers located in the PRC. To the best knowledge of ourDirectors, as at the Latest Practicable Date, the continuing supply of our raw materialsfrom our suppliers would not be materially affected. According to the F&S Report, inview of the number of confirmed cases of COVID-19 in the PRC has gradually sloweddown and appeared to be effectively controlled in March 2020, some companies in thePRC, including production and manufacturing enterprises, have been implementingstaged returns to work and some have even resumed full production. We will closelymonitor the situation and have prepared contingency plans. Assuming the hypotheticalcase in which suppliers are not able to deliver the materials to us on time, or at all,although we do not keep inventories of materials, our Directors consider there to beimmaterial impact on us, as we have multiple approved suppliers as alternatives for themajor materials used in our projects.

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� Business contingency plans as to subcontracting services

To the best knowledge of our Directors, at the Latest Practicable Date, oursubcontractors are generally able to provide labour or perform the services engaged.We will closely monitor the situation and have prepared contingency plans. Assumingthe hypothetical case in which subcontractors are not able to deliver the subcontractingservices to us on time, or at all, our Directors consider there to be immaterial impacton us, as we have multiple approved subcontractors as alternatives for each particulartype of works.

� Business contingency plans in case we encounter project cancellations ormaterial delays in work progress

Our Directors recognise that, if the development of COVID-19 persists orintensifies, the economies in Hong Kong and Macau may be adversely affected. In suchevent, the resultant unfavourable economic conditions of Hong Kong and Macau,dampened market sentiment and decreased purchasing power of the general publiccould be a disincentive for property developers or other ultimate customers tocommence new property projects, thus delaying or reducing the number of new projectsto be awarded to us. Furthermore, our customers may become unable to settle thepayments due to us for our services rendered within the agreed schedule or at all.There may also be cancellation or material delays to our projects on hand. We haveconsidered the following business contingency plans which will be implemented in casewe encounter project cancellations or material delays in work progress:

� Evaluate existing contracts and liaise with our customers for possibleextension of contract periods if necessary;

� Maintain minimum headcount to support our operations by placing our staffon unpaid leave; and

� Reduce material costs or subcontracting charges by suspending suppliers’/subcontractors’ services until further notice.

Our Directors confirm that as at the Latest Practicable Date:

(i) there had been no material impact on the supply of materials and/or labour to ourGroup;

(ii) our Group had not experienced material difficulties in collecting payments fromcustomers; and

(iii) our Group had not experienced material difficulties in discharging our obligationsunder all existing contracts.

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Furthermore, as part of our Group’s contingency plan due to the outbreak ofCOVID-19, our Directors confirm that there are sufficient hygiene measures in place. Pleaserefer to the paragraph headed ‘‘Occupational health and safety — Hygienic workingenvironment’’ in this section for more details.

MARKET AND COMPETITION

According to the F&S Report, the overall fitting-out works market in Hong Kong ishighly fragmented and competitive; whereas, the fitting-out works market in Macau isconcentrated by certain major contractors, but competitive nevertheless. There were over2,000 and 200 market participants providing fitting-out services in Hong Kong and Macau,respectively, in 2020. The industry players in Hong Kong and Macau generally compete witheach other on industry expertise, industry reputation, track record, relationship with theindustry players, as well as financial capability. Our Directors believe that we are able todistinguish ourselves from our competitors and maintain a steady growth of our business byvirtue of our competitive strengths: (i) established reputation and proven track record; (ii)implementation, management and execution expertise in providing fitting-out services; (iii)commitment to the management of risk, quality, health, safety and environment; (iv) stablebusiness relationships with our major customers and suppliers; and (v) experienced andefficient management team and key personnel.

SEASONALITY

Our Directors consider that neither our business nor our revenue was subject to anymaterial seasonality during the Track Record Period.

RESEARCH AND DEVELOPMENT

Our Directors confirm that we did not engage in any research and development activityduring the Track Record Period and up to the Latest Practicable Date.

INTELLECTUAL PROPERTY

Domain name

Wang Hing Interior Design has been the registrant of the domain namewww.wanghinggroup.com since 5 January 2021. For further information, please refer to theparagraph headed “Statutory and General Information — B. Further information about thebusiness of our Group — 2. Intellectual property rights — (b) Domain name” in AppendixIV to this document.

Trademarks

As at the Latest Practicable Date, we had applied for registration of one, two and twotrademarks in Hong Kong, Macau and the PRC, respectively, which are material to ourbusiness. For further information, please refer to the paragraph headed “Statutory andGeneral Information — B. Further information about the business of our Group — 2.Intellectual property rights — (a) Trademark” in Appendix IV to this document.

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Our Directors confirm that we had not engaged in, and were not aware of, any materialdispute, litigation or legal proceedings for violation of intellectual property rights during theTrack Record Period and up to the Latest Practicable Date.

PROPERTIES

As at the Latest Practicable Date, we did not own any property and we leased oneproperty in Hong Kong and three properties in Macau, details of which are set out below:

Address Landlord UsageLeaseexpiry date

Hong Kong

Unit C&D, 13/F, Max Share Centre, 373King’s Road, North Point, HongKong

On FineInvestmentLimited

Office 31 March2022

Macau

Avenida da Praia Grande No 283, Edf.Ka Fai, 1 Andar C, Macau

AnIndependentThird Party

Office 31 May2022

Avenida da Praia Grande N° 9, Edf.Lung Tou Kok, 6 Andar D, Macau


Staffdormitory

24 March2022

Rua da Éuora 317, Prince Flower City(Lai San Kok), 13 Andar B, Taipa


Staffdormitory

11 March2022

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EMPLOYEES

As at 31 March 2019, 2020, 2021 and the Latest Practicable Date, we had 13, 13, 14and 14 employees, respectively, directly employed by our Group in Hong Kong. As at 31March 2019, 2020, 2021 and the Latest Practicable Date, we had 14, 20, 29 and 36employees, respectively, directly employed by our Group in Macau. The number of ouremployees classified by function is as follows:

Number of employees as at

31 March

TheLatest

PracticableDateFunction 2019 2020 2021

Hong Kong

Management 3 3 4 4Project manager and site

coordinator 4 3 4 4Quantity surveyor 1 1 1 1Procurement 1 1 1 1Designer 1 – – –Administration, accounting, finance

and marketing 1 3 2 2Safety and site supervisor 2 2 2 2

Total 13 13 14 14

Macau

Management 2 2 2 2Project manager and site

coordinator 1 6 6 3Quantity surveyor 1 1 1 1Designer 1 1 – –Administration, accounting, finance

and marketing 4 3 3 4Safety and site supervisor 1 1 2 1Site worker 4 6 15 25

Total 14 20 29 36

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Training and recruitment policies

In general, we recruit our staff mainly with reference to their experience, qualificationsand expertise required for our operations. We intend to use our best effort to attract andretain appropriate and suitable personnel to serve our Group. Our Group assesses theavailable human resources on a continuing basis and will determine whether additionalpersonnel are required to cope with the business development of our Group from time totime. We offer training programmes to our employees, which are designed to develop theirskills that we need to meet our strategic goals, customer requirements, regulatoryrequirements and our internal control requirements. In particular, we also offer site trainingto our site personnel in respect of management of quality, environmental protection andhealth and safety matters.

Our Directors consider that we have maintained good relationship with our employees.We have not experienced any significant problems with our employees or any disruption toour operations due to labour disputes nor have we experienced any material difficulties inthe recruitment and retention of our experienced core staff or skilled personnel during theTrack Record Period and up to the Latest Practicable Date.

Measures to prevent employment of illegal workers

Hong Kong

Pursuant to section 38A of the Immigration Ordinance (Chapter 115 of the Laws ofHong Kong), a construction site controller should take all practicable steps to prevent fromhaving illegal workers working on site. For further information, please refer to the paragraphheaded “Regulatory Overview — Hong Kong laws and regulations — A. Fitting-out andother building works, labour, health and safety — Immigration Ordinance (Chapter 115 ofthe Laws of Hong Kong)” in this document.

Macau

Pursuant to Law no. 21/2009 and Administrative Regulation no. 8/2010, for the purposeto work in Macau, non-residents must obtain a valid work permit issued by the MacauLabour Bureau and apply for an “Authorisation to stay for Non-resident Workers” and a“Non-resident Worker’s Identification Card” from the Macau Public Security Police Force.For further information, please refer to the paragraph headed “Regulatory Overview —Macau laws and regulations — B. Labour related matters” in this document.

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To satisfy the aforesaid requirements in Hong Kong and Macau respectively, we haveput in place the following measures to prevent having illegal immigrants from being on siteand to prevent illegal workers who are not lawfully employable from taking employment onsite:

� our administrative staff will inspect and take copy of the original of the workerMacau identity card and/or other documentary evidence showing that he/she islawfully employable in Hong Kong and Macau; and

� our site supervisors will refuse any person who does not possess any validtraining certificate from entering the site.

Our Directors confirm that (i) we have not been convicted of any offences under thelaws of Hong Kong and Macau in relation to the aforesaid requirements in the past and (ii)we have not been involved in any employment of illegal workers (whether directly orindirectly via subcontracting) in the past in respect of work sites over which we had or havecontrol or of which we are or were in charge.

LICENCES AND PERMITS

Our Directors confirm that, (i) we had obtained all licences, permits, approvals,qualification and certificates material for our business operation in Hong Kong and Macau,and (ii) we had complied with applicable laws and regulations in all material respects inHong Kong and Macau, during the Track Record Period and up to the Latest PracticableDate.

The following table sets out our major qualification and licence held by us:

Licence/permit/certifications

Relevantauthority Holder Works permitted Expiry date

RegisteredSubcontractor

ConstructionIndustry Council

Wang HingInterior Design

02.11 Renovationand Fitting-out

20 July 2023

Companyregistration(urbanconstruction)*公司註冊（都市建築）

DSSOPT Wang Hing LainFung

Civil engineeringworks

31 December2021

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AWARDS AND RECOGNITIONS

The table below sets out the major awards and recognitions we obtained as at theLatest Practicable Date.

Year of grant Recipient Award/recognitionAwardingorganisation/ authority

2021 Wang Hing InteriorDesign

Certificate ofWell-performedFitting-out worksContractors（良好表現承判商（裝修）嘉許狀）

E Man Construction Co.Ltd.

2012 Wang Hing InteriorDesign

Certificate ofWell-performedFitting-out worksContractors（良好表現承判商（裝修）嘉許狀）

E Man Construction Co.Ltd.

LITIGATION AND POTENTIAL CLAIMS

We may from time to time become a party to various legal, arbitration oradministrative proceedings arising in the ordinary course of our business. As at the LatestPracticable Date, save as disclosed under “Litigation and potential claims” in this section, nomember of our Group was engaged in any litigation, arbitration, administrative proceedingsor claim of material importance and no litigation, arbitration, administrative proceedings orclaim of material importance was known to our Directors to be pending or threatened by oragainst any member of our Group that would have a material adverse effect on our businessoperations or financial position.

The claims and litigations as well as pending and threatened claims and litigationsagainst us during the Track Record Period and up to the Latest Practicable Date wasprincipally related to a contractual dispute with a subcontractor (details of which are set outbelow). Our Directors are of the view that such proceedings would not have a materialimpact on our business operations or financial position, or on our Shares, the [REDACTED]and the [REDACTED].

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Settled claims

During the Track Record Period and up to the Latest Practicable Date, our Group asdefendant had settled the following claim in relation to workplace injuries, which wascovered by insurance policies:

Hong Kong

Subsidiary of our GroupNature of theclaims Particulars of the claims

Covered byinsurance

Wang Hing Interior Design Personal injuryclaim

On 26 March 2016, anemployee of our subcontractorin a fitting-out project sustainedback injury resulting in lumbarspine fracture in the course ofemployment. The claim wassettled in March 2021.

Yes

All fitting-out works projects undertaken by us are normally protected by contractor’sall-risk and third-party liability insurance with a view to providing sufficient coverage forsuch work-related injuries for our employees and we have not incurred any materialliabilities as a result thereof during the Track Record Period. As such, our Directors do notexpect such work-related injuries to have a material impact on our Group’s operations. Forfurther details, please refer to the paragraph headed “Insurance” in this section.

Ongoing litigation

Litigation with Subcontractor B (the “Litigation”)

In February and March 2019, Wang Hing Lain Fung and Subcontractor B entered intosubcontracting agreements for two fitting-out works projects at Cotai, Macau (the“Subcontracting Agreements”). Such projects are still ongoing as at the Latest PracticableDate.

In January 2021, Subcontractor B commenced a civil action against Wang Hing LainFung alleging that Wang Hing Lain Fung had failed to pay Subcontractor B for the worksperformed under the Subcontracting Agreements and to settle payments for delay of worksfor a total amount of approximately MOP58.9 million (including statutory interest) (the“Claims”). In March 2021, Wang Hing Lain Fung filed counter-claims against SubcontractorB in relation to the payments of approximately MOP140.2 million made by Wang Hing LainFung to the relevant suppliers and sub-subcontractors involved in such projects, which shallbe borne by Subcontractor B.

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As at the Latest Practicable Date, the Litigation is still in pleadings stage. Pleadingsstage is a preliminary stage of litigation pursuant to the relevant litigation procedure inMacau as advised by our legal advisers as to Macau Law. Nevertheless, as advised by ourlegal advisers as to Macau law in accordance with the opinion of the relevant litigationlawyer in respect of the Litigation, our Directors are of the view that based on the availableevidence as at the Latest Practicable Date, the Claims against Wang Hing Lain Fung arewithout merit, and the likelihood of an outflow of resources is remote.

Restraining order application

On 23 September 2020, Subcontractor B unilaterally filed an application against WangHing Lain Fung for an interim order to restrain Wang Hing Lain Fung from disposing itsassets (the “Restraining Order Application”). The Restraining Order Application wasdismissed in both the court of first instance in Macau on 30 October 2020 and the appealcourt in Macau on 22 March 2021.

No provision for the Litigation

In respect of the Litigation, upon obtaining legal advices from our legal advisers as toMacau law and the relevant litigation lawyer in respect of the Litigation, our Directors areof the view that based on the evidence available as at the Latest Practicable Date, theClaims against Wang Hing Lain Fung are without merit, and the likelihood of an outflow ofresources is remote. Therefore, no provision for the Claims has been made by our Groupduring the Track Record Period.

COMPLIANCE

Our Directors confirm that during the Track Record Period and up to the LatestPracticable Date, our Group had not experienced any material non-compliance or systemicnon-compliance.

ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE MATTERS

We are committed to complying with the environmental, social and governance(“ESG”) reporting requirements upon [REDACTED] and have established an ESG policy(the “ESG Policy”) in accordance with Appendix 27 to the Listing Rules.

Our Board has the collective and overall responsibility for establishing, adopting andreviewing the ESG vision, policy and target of our Group, and evaluating, determining andaddressing our ESG-related risks at least once a year. Our Board may engage IndependentThird Party(ies) to evaluate the ESG risks and review existing strategies, targets and internalcontrols. Necessary improvement measures will then be implemented to mitigate the risks.

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Environmental protection

We endeavour to minimise any adverse impact on the environment resulting from ourbusiness activities. Apart from following the environmental protection policies formulatedand required by our customers, we have also established our environmental protection policyto ensure proper management of environmental protection and compliance withenvironmental laws and regulations by both our employees and workers of oursubcontractors on, among others, air pollution, noise control and waste disposal. In anyevent that any failure to observe our environmental protection policy is identified, ourmanagement will take immediate actions to investigate the incident.

Our environmental protection policies in addressing different environmental issuespertinent to our Group are as follows:

Hazardous materials

� Any hazardous chemicals used shall be disposed of in accordance with therelevant laws and regulations such as the Air Pollution Control Ordinance, theWater Pollution Control Ordinance and the Waste Disposal Ordinance.

� Adequate ventilation shall be provided where hazardous materials such aschemicals or cleaning agents are used.

� Instructions for handling, storage, use, disposal and treatment of hazardousmaterials shall be provided when necessary.

To the best knowledge of our Directors, our Group did not generate material amount ofhazardous waste in the course of our operation during the Track Record Period.

Noise control

� Use of powered mechanical equipment during restricted hours is prohibited.

� Hearing protection devices are provided to our employees and workers of oursubcontractors.

To the best knowledge of our Directors, our Group did not generate noise thatexceeded the prescribed level regulated by the Noise Control Ordinance and other relevantregulations during the Track Record Period.

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Waste management

� Generation of waste shall be avoided.

� Provision of specified collection points on the site at which all solid waste shallbe deposited and frequent and regular collection and removal of such wastearticles from the site shall be arranged.

� Reuse and recycling of waste shall be carried out as far as possible.

Dust and fumes management

� Dust nuisance and smoke shall be prevented.

� Adequate water supply/storage for dust suppression shall be ensured.

� Dust screens or sheeting can be used when necessary to reduce dust and smokeemission.

Water management

� The faucets should be closed in time after using water to prevent the wastage andleakage of water.

� We place water-saving reminders to remind our employees and workers of oursubcontractors to efficiently use any water resources and to conserve water.

To the best knowledge of our Directors, we do not consume significant of water in ourbusiness operations and as such, we do not discharge a material amount of sewage in ourprojects during the Track Record Period.

Electricity consumption

� Running of idle equipment and unreasonable electric wiring distribution areforbidden.

� Our employees and workers of our subcontractors are encouraged to turn onelectrical equipment, including lighting equipment, air conditioners, fans, etc.during business hours depending on actual needs, and turn off the power when notin use or before off duty.

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Social matters

We are committed to upholding the principles of equal opportunities, diversity andantidiscrimination in our workplace. Recruitment and retention of employees will be basedon a range of diversity parameters, including but not limited to gender, age, cultural andeducational background, industry experience, professional qualifications, skills, knowledge,length of services or any other factors considered relevant and applicable from time to timeand beneficial to our business operations and development.

In addition, we place emphasis on occupational health and work safety. For details ofour occupational health and work safety measures, please refer to the paragraph headed“Occupational health and safety” in this section.

Corporate governance

Our Company will comply with the Corporate Governance Code as set out in Appendix14 to the Listing Rules. We have established procedures for developing and maintaininginternal control systems covering areas such as corporate governance, operationsmanagement, compliance matters and financial reporting as appropriate for our businessoperations. In particular, we have adopted the following internal control measures to enhanceour corporate governance:

� Our Directors attended training sessions conducted by our legal advisers as toHong Kong law on the on-going obligations and duties of a director of a companywhose shares are [REDACTED] on the Stock Exchange.

� We have adopted various policies to ensure compliance with the Listing Rules,including those relating to risk management, continuing connected transactionsand information disclosures.

� We have agreed to engage [Advent Corporate Finance Limited] as our complianceadviser and will, upon [REDACTED], engage a legal adviser as to Hong Konglaws, which will advise and assist our Board on compliance matters in relation tothe Listing Rules and/or other relevant laws and regulations applicable to ourCompany.

� We have established an audit committee which comprises all independentnon-executive Directors, namely Ms. Cheng Ching Yee, Mr. Lam Chi Wing andMr. Leung Hoi Ki. The audit committee has adopted its terms of reference whichsets out clearly its duties and obligations to, among other things, overseeing theinternal control procedures and accounting and financial reporting matter of ourGroup, and ensuring compliance with the relevant laws and regulations. For thebiographical details of the independent non-executive Directors, please refer to thesection headed “Directors and Senior Management” in this document.

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INTERNAL CONTROL AND RISK MANAGEMENT

In preparation for the [REDACTED], we have engaged an independent internal controlconsultant to perform certain agreed-upon procedures in relation to our internal controlpolicies with respect to entity-level controls, including financial and accounting procedures,cash management procedures, procurement procedures, human resources managementprocedures, taxation management procedures and other general control measures. Theinternal control consultant provided recommendations in relation to strengthening ourGroup’s internal controls, and our Group adopted measures to implement the relevantinternal control measures.

The internal control consultant has performed a follow-up review by focusing on theremedial actions undertaken by the management of our Group on the internal controldeficiencies identified in the first round of review. Based on the results of the follow-upreview, our Directors confirmed that our Group has adopted the internal control measuresand policies recommended by the internal control consultant and is in the process ofadopting the remaining internal control measures and policies, and are satisfied that ourGroup’s internal controls are adequate and effective for our Group’s operation.

In order to strengthen our internal control system, our Group will adopt the followingkey measures to mitigate the risks relating to our Group:

(i) Customer concentration risk

Please refer to the paragraph headed “Our customers — Customer concentrationand sustainability of our business” in this section for further details.

(ii) Risk of potential inaccurate costs estimation and cost overrun

Please refer to the paragraph headed “Our operation flow — Businessidentification phase — Pricing policy” in this section for further details how weaddress the risk of potential inaccurate estimation and cost overrun.

(iii) Credit risk relating to the collection of trade receivables and retentionreceivables

Please refer to the paragraph headed “Our customers — Credit terms withcustomers” in this section for further details.

(iv) Liquidity risk

In the management of the liquidity risk, our Group monitors and maintains a levelof cash and cash equivalents deemed adequate by the management to finance ourGroup’s operations and mitigate the effects of fluctuations in cash flows.

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(v) Quality control

Please refer to the paragraph headed “Quality control” in this section for furtherdetails.

(vi) Occupational health and safety

Please refer to the paragraph headed “Occupational health and safety” in thissection for further details.

(vii) Environmental management

Please refer to the paragraph headed “environmental protection” in this section forfurther details.

(viii) Anti-corruption and anti-bribery measures

We are fully committed to the principle of honesty, integrity and fair play in allits business and activities. All staff are prohibited from soliciting any advantage fromany persons having business dealings with our Company (such as customers, suppliers,contractors and sub-contractors). We set out the code of conduct which provides a cleardefinition of the provision and acceptance of interests.

Our Company has whistleblowing policy in effect, which is overseen by the auditcommittee, encouraging and assisting whistle-blowers to disclose relevant misconduct,malpractice or irregularity, such as bribery, theft and corruption, through a confidentialreporting channel. Our Company will handle the report with care and will treatwhistleblower concerns fairly and properly.

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BACKGROUND OF OUR CONTROLLING SHAREHOLDERS

Immediately after completion of the [REDACTED] and the [REDACTED] (withouttaking into account any Shares that may be allotted and issued upon the exercise of the[REDACTED] or any options that may be granted under the Share Option Scheme, FaithfulTrinity, Mr. Y. W. Chan and Ms. Wan will be the Controlling Shareholders (within themeaning of the Listing Rules) of our Company.

Faithful Trinity is an investment holding company incorporated in the BVI. Mr. Y. W.Chan is the founder of our Group and has been leading the development of and strategicplanning of our Group throughout the years. He and his spouse, Ms. Wan, are both ourexecutive Directors. For details of the background and experience of Mr. Y. W. Chan andMs. Wan, please refer to the paragraph headed “Directors and Senior Management —Directors” in this document.

RULE 8.10 OF THE LISTING RULES

Business activities carried on by our Controlling Shareholders outside our Group

Prior to the commencement of the Track Record Period, Mr. Y. W. Chan, ourControlling Shareholder, had engaged in fitting-out works in Macau through Hap Lei WangHing. During the Track Record Period, Mr. Y. W. Chan and Ms. Wan engaged in fitting-outworks in the PRC through Lain Fung Shanghai. Both Mr. Y. W. Chan and Ms. Wanconfirmed that they used personal resources in conducting the business in Lain FungShanghai and devoted most of their time to our Group during the Track Record Period. Theparticulars of Hap Lei Wang Hing and Lain Fung Shanghai are as follows:

Hap Lei Wang Hing

Mr. Y. W. Chan, one of our Controlling Shareholders and executive Directors, hadengaged in fitting-out works in Macau through Hap Lei Wang Hing, a company owned as to60% by Mr. Y. W. Chan and 40% by Mr. Ma Iat Peng, an Independent Third Party.

Both Mr. Y. W. Chan and Mr. Ma Iat Peng had participated in the day-to-daymanagement and operations of Hap Lei Wang Hing. In 2016, Mr. Ma Iat Peng expressed toMr. Y. W. Chan his intention to go into retirement due to his old age and that he did notwish to further participate in the day-to-day management and operation of Hap Lei WangHing. Upon discussions, Mr. Y. W. Chan and Mr. Ma Iat Peng decided to discontinue theoperations of Hap Lei Wang Hing. Mr. Y. W. Chan and Mr. Ma Iat Peng confirm that HapLei Wang Hing has not undertaken any new projects since 2017 and maintains its “live”status for collection of outstanding accounts receivables from a customer in a previousproject.

In February 2017, Cheung Siu Shing, trading as Fu Sing Engineering and SafetyConsultants, filed a claim against Hap Lei Wang Hing for a sum of approximately MOP0.7million, in respect of security services rendered to Hap Lei Wang Hing from February 2015to February 2016 in the fitting-out works project of an integrated resort facility in Macau. InMay 2018, judgment was entered in favor of Cheung Siu Shing and Hap Lei Wang Hing was

RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS


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ordered to pay approximately MOP0.7 million together with interest to Cheung Siu Shing.As at the Latest Practicable Date, Hap Lei Wang Hing is in the process of reaching asettlement arrangement with Cheung Siu Shing.

Our Directors confirm that, save as disclosed above, during the Track Record Periodand up to the Latest Practicable Date, Hap Lei Wang Hing had no material non-compliancewith relevant laws and regulations in Macau.

Reasons for exclusion of Hap Lei Wang Hing in our Group

Taking into account that (i) Hap Lei Wang Hing had already discontinued operationsprior to the commencement of the Track Record Period; (ii) Mr. Y. W. Chan and Mr. Ma IatPeng have confirmed that they would not undertake any new fitting-out related worksthrough Hap Lei Wang Hing in the future; and (iii) there had not been any sharing of humanresources, operational resources (such as office premises) and financial resources betweenour Group and Hap Lei Wang Hing, our Directors consider that the exclusion of Hap LeiWang Hing from our Group will not result in any actual or potential competition betweenHap Lei Wang Hing and our Group.

Lain Fung Shanghai

Mr. Y. W. Chan, one of our Controlling Shareholders and executive Directors, hadengaged in fitting-out services industry in the PRC through Lain Fung Shanghai, a companywholly-owned by Mr. Y. W. Chan previously. Ms. Wan, one of our Controlling Shareholdersand executive Directors, is the supervisor of Lain Fung Shanghai. Lain Fung Shanghai ismanaged by a management team separate from our Group, and both Mr. Y. W. Chan and Ms.Wan did not involve in the day-to-day operations and management of Lain Fung Shanghaiduring the Track Record Period. Whilst Lain Fung Shanghai and our Group are in the sameindustry, we are of the view that there is a proper delineation of the business of our Groupwhich carries out business in Hong Kong and Macau, whereas Lain Fung Shanghai carriesout business in the PRC.

On 23 February 2021, in order to focus on the management of our Group, Mr. Y. W.Chan resigned as the legal representative of Lain Fung Shanghai. Mr. Chen Weiqi, nephewof Mr. Y. W. Chan, who was responsible for the day-to-day management of Lain FungShanghai throughout the Track Record Period, was appointed as the legal representative ofLain Fung Shanghai on the same date. On 18 August 2021, Mr. Y. W. Chan furthertransferred the entire equity interest in Lain Fung Shanghai to Ms. Chan Kit Ying, daughterof Mr. Y. W. Chan and Ms. Wan. Our Directors consider that under the current arrangement,there is essential and effective mechanism in ring-fencing the business of our Group andLain Fung Shanghai.

In addition, our independence is further safeguarded by the Deed of Non-competition,pursuant to which our Controlling Shareholders agreed that their subsidiaries (other than ourGroup) will not, directly or indirectly, whether for profit or not, conduct fitting-out works inHong Kong and Macau, and will also cause their subsidiaries (other than our Group) not to



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engage in such business in Hong Kong and Macau. For details of the Deed ofNon-competition, please refer to the paragraph headed “Non-competition undertaking” in thissection.

Save as disclosed above, each of our Controlling Shareholders, Directors and theirrespective close associates does not have any interest apart from the business of our Groupwhich competes or is likely to compete, directly or indirectly with the business of our Groupand which requires disclosure pursuant to Rule 8.10 of the Listing Rules. As at the LatestPracticable Date, save and except for their respective interests in our Company and itssubsidiaries, none of the Controlling Shareholders nor any of their respective closeassociates had any interest in any other companies which held interests in the business ofour Company during the Track Record Period and had ceased to hold such interests after theReorganisation.

In addition, each of our Controlling Shareholders has given certain non-competitionundertakings in favour of our Group. For details, please refer to the paragraph headed“Non-competition undertaking” in this section.

INDEPENDENCE FROM CONTROLLING SHAREHOLDERS

Save as otherwise disclosed in the section headed “Connected Transactions” in thisdocument, our Directors do not expect that there will be any other significant transactionsbetween our Group and our Controlling Shareholders and their respective close associatesupon or shortly after the [REDACTED]. Our Directors believe that our Group is capable ofcarrying on our business independently of, and does not place undue reliance on, ourControlling Shareholders or their respective close associates after the [REDACTED] havingconsidered the following factors:

Management independence

Our Board consists of five Directors, comprising two executive Directors and threeindependent non-executive Directors. The three independent non-executive Directors haveextensive experience in different areas or professions. The main functions of our Boardinclude the approval of our Group’s overall business plans and strategies, monitoring theimplementation of these plans and strategies and the management of our Group.

Further, each of our Directors is aware of his or her fiduciary duties as a Directorwhich requires, among other things, that he or she acts for the benefit and in the bestinterests of our Company and our Shareholders as a whole, and does not allow any conflictbetween his or her duties as a Director and his or her personal interest to exist. In the eventthat there is a potential conflict of interest arising out of any transaction to be entered intobetween our Group and our Directors or their respective close associates, the interestedDirector(s) shall abstain from voting at the relevant Board meetings in respect of suchtransactions and shall not be counted in the quorum. Our independent non-executiveDirectors are also expected to oversee the Board independently to ensure that there is nopotential conflict of interest.



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In view of the aforesaid, our Directors are of the view that our Group is capable ofmanaging our business independently of our Controlling Shareholders and their respectiveclose associates after the [REDACTED].

Our Group has an independent management team comprising a team of seniormanagement who have substantial experience in the business of our Group. The managementteam is able to implement the policies and strategies of our Group and performs its roles inour Company independently.

Operational independence

Our Group has established our own organisational structure comprising individualdepartments, each with specific areas of responsibilities. Our Group has not shared ouroperational resources, such as suppliers, customers, sales and marketing, and generaladministration resources with our Controlling Shareholders and/or their respective closeassociates. Our Group has independent access to customers for the business of our Group.Our Group has also established a set of internal control mechanism to facilitate the effectiveoperations of the business of our Group. Our Group holds all relevant licences necessary tocarry on businesses and has sufficient capital, equipment and employees to operate ourbusinesses independently. Our Group has also established various internal control proceduresto facilitate the effective operation of our business.

Save as disclosed in the section headed “Connected Transactions” in this document, ourGroup has not entered into any connected transaction with any of our ControllingShareholders and/or their respective close associates that will continue after the[REDACTED]. Our Directors confirmed that our Group will not enter into any transactionwith our connected persons and their respective close associates after the [REDACTED]that will affect our operational independence from our Controlling Shareholders and theirrespective close associates.

Financial independence

During the Track Record Period and up to the Latest Practicable Date, our Group hadobtained bank loans secured by guarantees of and collaterals provided by our ControllingShareholders and their associates. The guarantees and collaterals will be released upon[REDACTED].

Notwithstanding the above, our Directors are of the view that our Group will befinancially independent from our Controlling Shareholders or their respective closeassociates upon [REDACTED]. The management of our Group is capable of makingfinancial decisions independent according to the needs of the business of our Group freefrom interference from the Controlling Shareholders and their respective close associatesafter the [REDACTED]. Our Group has sufficient capital to operate our businessindependently and has adequate internal resources and credit profile to support the dailyoperation.



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NON-COMPETITION UNDERTAKING

Each of our Controlling Shareholders (each a “Covenantor”, and collectively the“Covenantors”) has entered into the Deed of Non-competition in favour of our Companyand has jointly and severally undertaken and covenanted with our Company (for itself and astrustee of its subsidiaries) that he or she or it shall not, and shall procure entities orcompanies controlled by him or it (other than members of our Group) not to at any timeduring the period that the Deed of Non-competition remains effective, directly or indirectly,either on his or its own account or in conjunction with or on behalf of any person, firm orcompany (in each case whether as a shareholder, partner, agent, employee or otherwise)partnership or joint venture:

(i) carry on, engage, participate, hold any rights or interest in any way assist in orprovide support (whether financial, technical or otherwise) to any business similarto or which competes (either directly or indirectly) or is likely to compete withthe business of provision of fitting-out services and any other business conductedby our Group for time to time (the “Restricted Business”), save for the holdingof 10% shareholding interests (individually or any of the Covenantors with theirassociates collectively) in any listed company in Hong Kong;

(ii) canvass, solicit, interfere with or endeavour to entice away from members of ourGroup any person, firm, company or organisation which to his or her or itsknowledge has from time to time or has at any time with the immediate past one(1) year before the date of such solicitation, interference or enticement been acustomer, a supplier or a business partner or employee of any members of ourGroup for the purpose of conducting the Restricted Business;

(iii) procure orders from or solicit business from any person, firm, company ororganisation which to his or her or its knowledge has dealt with any member ofour Group or is in the process of negotiating with any member of our Group inrelation to the Restricted Business;

(iv) take any action which interferes with or disrupts or may interfere with or disruptthe business of our Group and/or do or say anything which may be harmful to thereputation of any member of our Group or which may lead any person to reducetheir level of business with any member of our Group or seek to improve theirterms of trade with any member of our Group;

(v) solicit or entice or endeavour to solicit or entice for employment by him or her orit or companies controlled by him or her or it (other than members of our Group)or at any time employ or procure the employment of any person who has, at anytime within the immediate past one (1) year before the date of such solicitation oremployment, been or is a director, manager, employee of, or consultant tomembers of our Group who is or may be likely to be in possession of anyconfidential information or trade secrets relating to the Restricted Business carriedon by our Group; and



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(vi) make use of any information pertaining to the business of our Group which mayhave come to his or its knowledge in his or her or its capacity as a shareholder ofour Company or director of any member of our Group for the purpose ofconducting the Restricted Business.

In addition, each of the Covenantors has jointly and severally undertaken andcovenanted with our Company that if any new business opportunity relating to the RestrictedBusiness (the “New Business Opportunity”) is made available to any of the Covenantors ortheir respective associates, directly or indirectly, whether individually or together (other thanmembers of our Group), he or she or it will direct or procure the relevant respectiveassociates to direct the New Business Opportunity to our Group with such requiredinformation to enable our Group to evaluate the merits of the relevant New BusinessOpportunity. The relevant Covenantor will provide or procure the relevant respectiveassociates to provide our Group with all such reasonable assistance to secure such NewBusiness Opportunity.

None of the Covenantors and their relevant respective associates (other than membersof our Group) shall pursue the New Business Opportunity unless our Company decides notto pursue the New Business Opportunity. A Covenantor may only engage in the NewBusiness Opportunity if (i) a notice is received by the Covenantor from our Companyconfirming that the New Business Opportunity is not accepted and/or does not constitutecompetition with the Restricted Business (the “Non-Acceptance Notice”); or (ii) theNon-Acceptance Notice is not received by the Covenantor within 30 days after the proposalof the New Business Opportunity is received by our Company. If there is a material changein the terms and conditions of the New Business Opportunities pursued by the Covenantorsand/or their relevant associates, the offeror will refer the New Business Opportunities as sorevised to our Company. Any decision of our Company as to whether or not to pursue theNew Business Opportunity will have to be approved by our independent non-executiveDirectors and the basis for not taking up the New Business Opportunity will be disclosed inthe annual reports of our Company. Our Group will not be required to pay any fees to anyof the Covenantors and/or their relevant respective associates in relation to the NewBusiness Opportunity.

The Deed of Non-competition and the rights and obligations thereunder are conditionaland will take effect immediately upon [REDACTED]. The obligations of the Covenantorsunder the Deed of Non-competition shall cease if:

(a) our Shares cease to be [REDACTED] on the Stock Exchange; or

(b) our Controlling Shareholders cease to be the controlling shareholders (as definedunder the Listing Rules) of our Company,

whichever occurs first.

Nothing in the Deed of Non-competition shall prevent our Controlling Shareholders orany of their associates from carrying on any business other than the Restricted Business.



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As the Covenantors have given non-competition undertakings in favour of ourCompany, and none of them has interests in other businesses that compete or may competewith the business of our Group, our Directors are of the view that our Group is capable ofcarrying on our Group’s business independently of the Covenantors after the [REDACTED].

Corporate governance measures

In order to resolve actual or potential conflicts of interests between our Company andour Controlling Shareholders and to ensure the performance of the above non-competitionundertakings, the Covenantors will:

(a) in case of any actual or potential conflict of interest, abstain from attending andvoting at any meetings or part of any meeting convened to consider any NewBusiness Opportunity and shall not be counted towards the quorum for suchmeeting;

(b) as required by our Company, provide all information necessary for ourindependent non-executive Directors to conduct an annual review on thecompliance with the terms of the Deed of Non-competition and the enforcementof it;

(c) procure our Company to disclose to the public either in the annual report of ourCompany or issue an announcement in relation to any decision made by ourindependent non-executive Directors to pursue or decline the New BusinessOpportunity, together with the reasons in case of decline;

(d) disclose the decision(s) and related basis on matters reviewed by our independentnon-executive Directors in relation to our Company’s compliance of the terms ofthe Deed of Non-competition and make a declaration in relation to the complianceof the terms of the Deed of Non-competition in the annual report of ourCompany, and ensure that the disclosure of information relating to compliancewith the terms of the Deed of Non-competition and the enforcement of it are inaccordance with the requirements of the Listing Rules;

(e) that during the period when the Deed of Non-competition is in force, fully andeffectually indemnify our Company and/or its subsidiaries against any loss,liability, damage, cost, fee and expense as a result of any breach on the part ofsuch Covenantor of any statement, warrant or undertaking made under the Deedof Non-competition; and

(f) our independent non-executive Directors may appoint independent financialadvisers and other professional advisers as they consider appropriate to advisethem on any matter(s) relating to the non-competition undertaking or connectedtransaction(s) at the cost of our Company.



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OVERVIEW

Our Group has entered into transactions with various entities which will be regarded asconnected persons of our Company upon [REDACTED]. Details of the transactions are setout below.

CONNECTED PERSON

Prior to the [REDACTED], we have entered into transactions with the followingentities and individuals which will be regarded as connected persons of our Company:

On Fine Investment Limited (“On Fine”)

On Fine is a company incorporated in Hong Kong on 21 April 2006 which is whollyowned by Mr. Y. W. Chan. As Mr. Y. W. Chan is an executive Director and ControllingShareholder of our Company, and Ms. Wan is the spouse of Mr. Y. W. Chan, On Fine, beingan associate of each of Mr. Y. W. Chan and Ms. Wan, is a connected person of our Companyunder Chapter 14A of the Listing Rules.

Mr. Chan Wai Kin (“Mr. Ryan Chan”)

Mr. Ryan Chan, one of our senior management team member, is the son of Mr. Y. W.Chan and Ms. Wan. As each of Mr. Y. W. Chan and Ms. Wan is an executive Director andControlling Shareholder of our Company, Mr. Ryan Chan, being an associate of each of Mr.Y. W. Chan and Ms. Wan, is a connected person of our Company under Chapter 14A of theListing Rules.

Mr. Chan Kam Wo (“Mr. K. W. Chan”)

Mr. K. W. Chan, one of our senior management team member, is the nephew of Mr. Y.W. Chan. As Mr. Y. W. Chan is an executive Director and Controlling Shareholder of ourCompany, Mr. K. W. Chan, being a deemed connected person of Mr. Y. W. Chan, is aconnected person of our Company under Chapter 14A of the Listing Rules.

Ms. Chan Ying Yu (“Ms. Yvonne Chan”)

Ms. Yvonne Chan, our company secretary, is the daughter of Mr. Y. W. Chan and Ms.Wan. As each of Mr. Y. W. Chan and Ms. Wan is an executive Director and ControllingShareholder of our Company, Ms. Yvonne Chan, being an associate of each of Ms. Y. W.Chan and Ms. Wan, is a connected person of our Company under Chapter 14A of the ListingRules.

CONNECTED TRANSACTIONS


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EXEMPTED CONNECTED TRANSACTION

Tenancy agreement between Wang Hing Interior Design and On Fine (the “TenancyAgreement”)

Background of the transaction

On 1 April 2021, Wang Hing Interior Design as tenant and On Fine as landlord enteredinto the Tenancy Agreement in respect of the property situated at Unit C&D, 13/F., MaxShare Centre, 373 King’s Road, North Point, Hong Kong with a saleable area ofapproximately 2,030 sq. ft. (the “Premises”). The Premises is used as our Group’s HongKong office. It is expected that our Group will continue to lease the Premises after[REDACTED]. Pursuant to the Tenancy Agreement, On Fine leased the Premises to WangHing Interior Design for a term commencing from 1 April 2021 to 31 March 2022, at amonthly rent of HK$50,000, exclusive of water, electricity, management fee, rates andgovernment rent, which are payable by the tenant.

The total aggregate of rental paid by our Group in respect of the Premises wasHK$180,000, HK$180,000 and HK$180,000 for FY2019, FY2020 and FY2021, respectively.

Since 2013, Wang Hing Interior Design has been leasing the Premises from On Finefor use by Wang Hing Interior Design and Wang Hing Interior Engineering as their principalplace of business in Hong Kong. Our Directors consider it to be commercially necessary andbeneficial to enter into the Tenancy Agreement for our Company and its Hong Kongsubsidiaries to have a stable principal place of business in Hong Kong and be free of anypotential relocation cost or disruption of operations.

The independent property valuer of our Group has reviewed the Tenancy Agreementand conducted market search on the leasing market in Hong Kong. It has confirmed that theterms of the Tenancy Agreement, including rental payable there under, are fair andreasonable and the rental payment thereunder reflects the prevailing market rate as at thedate of the commencement of the Tenancy Agreement.

Accounting treatment of the Tenancy Agreement

In accordance with HKFRS 16, our Group recognised the rental payments to be paid byour Group under the Tenancy Agreement as acquisition of right-of-use asset whichconstitutes a one-off connected transaction for our Group under Chapter 14A of the ListingRules.



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Listing Rules implications

As each of the relevant percentage ratios calculated for the purpose of Chapter 14A inrespect of the value of the right-of-use of the Premises under the Tenancy Agreement isexpected to be less than 5% and the value of the right-of-use is less than HK$3,000,000, theTenancy Agreement would fall within the de minimis threshold under Rule 14A.76(1) of theListing Rules and would be fully exempt from the reporting, annual review, announcement,circular and independent Shareholders’ approval requirements under Chapter 14A of theListing Rules.

Confirmation from the Directors

The Directors (including the independent non-executive Directors) consider that theTenancy Agreement has been entered into the ordinary and usual course of business and onnormal commercial terms, and the terms of and transactions contemplated under the TenancyAgreement set out above are fair and reasonable, on normal commercial terms and in theinterest of our Company and Shareholders as a whole.

Employment contract with Mr. Ryan Chan, Mr. K.W. Chan and Ms. Yvonne Chan

Our Group has entered into employment contract with Mr. Ryan Chan, Mr. K. W. Chanand Ms. Yvonne Chan, respectively (together the “Employment Agreements”). Thecontractual amount payable under the Employment Agreements has been arrived at afterarm’s length negotiation and determined in the ordinary course of business based on normalcommercial terms, and with reference to prevailing market rates for employing suchpersonnel, and the scope of human resources administration services as required by ourGroup.

Mr. Ryan Chan

On 1 June 2021, Mr. Ryan Chan entered into a written employment agreement withWang Hing Interior Design, pursuant to which Mr. Ryan Chan is employed as deputy projectdirector. We expect Mr. Ryan Chan shall continue to be employed by our Group in the sameposition upon and following the [REDACTED].

The total aggregate of salary paid by our Group under the Employment Agreement withMr. Ryan Chan was approximately HK$0.6 million, HK$0.6 million and HK$0.5 million forthe Track Record Period.

Our Directors estimate that the annual salary payable to Mr. Ryan Chan shall notexceed HK$0.7 million, HK$0.7 million and HK$0.8 million for the years ending 31 March2022, 31 March 2023 and 31 March 2024.



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Mr. K. W. Chan

On 1 June 2021, Mr. K. W. Chan entered into a written employment agreement withWang Hing Lain Fung, pursuant to which Mr. K. W. Chan is employed as a deputy projectdirector. We expect Mr. K. W. Chan shall continue to be employed by our Group in the sameposition upon and following the [REDACTED].

The total aggregate of salary paid by our Group under the Employment Agreement withMr. K. W. Chan was approximately MOP0.7 million, MOP0.6 million and MOP0.8 millionfor the Track Record Period.

Our Directors estimate that the annual salary payable to Mr. K.W. Chan shall notexceed MOP0.9 million, MOP0.9 million and MOP1.0 million for the years ending 31March 2022, 31 March 2023 and 31 March 2024.

Ms. Yvonne Chan

On 1 June 2021, Ms. Yvonne Chan entered into a written employment agreement withWang Hing Interior Design, pursuant to which Ms. Yvonne Chan is employed as a companysecretary officer. We expect Ms. Yvonne Chan shall continue to be employed by our Groupin the same position upon and following the [REDACTED].

The total aggregate of salary paid by our Group under the Employment Agreement withMs. Yvonne Chan was approximately HK$0.4 million and approximately HK$0.5 million forFY2020 and FY2021.

Our Directors estimate that the annual salary payable to Ms. Yvonne Chan shall notexceed HK$0.6 million, HK$0.6 million and HK$0.7 million for the years ending 31 March2022, 31 March 2023 and 31 March 2024.

Confirmation from the Directors

Our Directors (including our independent non-executive Directors) have confirmed thatthe contractual amount payable under the Employment Agreements have been arrived at afterarm’s length negotiation between the parties and that the terms of the employment contractswere entered into, and conducted, on normal terms or better, and in the interests of ourCompany and Shareholders as a whole, and that the employment contracts are entered intoin the ordinary and usual course of business of our Group, and are fair and reasonable.

Listing Rules implications

Since the applicable percentage ratios with respect to the transactions contemplatedunder each of the Employment Agreements are less than 5% and the annual consideration isless than HK$3,000,000, the transactions contemplated under the Employment Agreementsconstitute de minimis continuing connected transaction under Rule 14A.76(1) of the ListingRules, and are exempted from the annual review, announcement and independentshareholders’ approval requirements applicable under Chapter 14A of the Listing Rules.



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SUMMARY OF DIRECTORS AND SENIOR MANAGEMENT

Name Age Present position

Date ofappointmentas Director/seniormanagement

Date ofjoining ourGroup

Roles andresponsibilities

Relationship with otherDirector(s), and/orsenior management

Executive Directors

Mr. Chan Yun Wun（陳潤宏先生）

62 ExecutiveDirector andchairman of ourBoard

14 May2021

14 March1989

Overallmanagement andformulating ofbusiness strategiesof our Group

Spouse of Ms. Wan, ourexecutive Director, fatherof Mr. Ryan Chan andMs. Yvonne Chan, oursenior managementmember and companysecretary, respectively,and uncle of Mr. K. W.Chan, our seniormanagement teammember

Ms. Wan Sau Mui（尹秀妹女士）

62 ExecutiveDirector

14 May2021

7 November2000

Overallmanagement andoverseeing humanresources andadministrationfunctions of ourGroup

Spouse of Mr. Y. W.Chan, our executiveDirector, and mother ofMr. Ryan Chan and Ms.Yvonne Chan, our seniormanagement teammember and companysecretary, respectively

Independent non-executive Directors

Ms. Cheng ChingYee（鄭靖怡）

53 Independentnon-executiveDirector

[�] [�] Providingindependent adviceto our Board

Nil

Mr. Lam Chi Wing（林至頴）



Nil

Mr. Leung Hoi Ki（梁海祺）



Nil

DIRECTORS AND SENIOR MANAGEMENT


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Name Age Present position

Date ofappointmentas Director/seniormanagement

Date ofjoining ourGroup

Roles andresponsibilities

Relationship with otherDirector(s), and/orsenior management

Senior management

Mr. Ng WingCheongStephen（吳榮祥先生）

62 Chief executiveofficer

January2021

September2019

Overallmanagement,project planningand overseeingproject executionand operation inHong Kong andMacau

Nil

Dr. Tam Tak Chung（談德忠博士）

62 Project director February2019

February2019

Supervising tenderand quotationprocedure andmanaging projectexecution andoperation in Macau

Nil

Mr. Chan Wai Kin（陳偉健先生）

39 Deputy projectdirector

November2014

February2004

Site coordination,site supervisionand projectmanagement inHong Kong

Son of Mr. Y. W. Chanand Ms. Wan, ourexecutive Directors, andbrother of Ms. YvonneChan, our companysecretary

Mr. Chan Kam Wo（陳錦和先生）

37 Deputy projectdirector

February2017

October2004

Site coordination,site supervisionand projectmanagement inMacau

Nephew of Mr. Y. W.Chan, our executiveDirector



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DIRECTORS

Our Board consists of five Directors, comprising two executive Directors and threeindependent non-executive Directors.

Executive Directors

Mr. Chan Yun Wun（陳潤宏）, aged 62, established our Group as a director of WangHing Interior Design on 14 March 1989. He was appointed as a Director on 14 May 2021and was re-designated as an executive Director on 17 September 2021. He also serves as thechairman of our Board. He is primarily responsible for the overall management andformulation of business strategies of our Group. He is also a director of Grateful Luck, L &F Interior Engineering, Wang Hing Interior Design, Wang Hing Interior Engineering, andWang Hing Lain Fung. Mr. Y. W. Chan is also the legal representative of Beijing Yongxing.Mr. Y. W. Chan completed primary education at Sze Shan Public School in 1974.

Mr. Y. W. Chan was also a director/legal representative of the following companies atthe time of their respective deregistration and/or revocation of business licence:

Name of company

Place ofincorporation/establishment

Principalbusiness activityprior tocessation ofbusiness/revocation ofbusiness licence

Date ofderegistration/revocationof businesslicence Status

Reason ofderegistration/revocation of businesslicence

The Shanghairepresentative officeof Wang HingInterior Design

PRC Had not carriedout any businesssince January2000

23 June2010

Business licenserevoked

The business licensewas revoked for itsfailure to attend annualinspection.

Lain Fung ShanghaiLuwan Branch

PRC Had notcommenced anybusiness

16November2006

Deregistered(注銷)

The company appliedfor deregistration andits deregistration wasapproved by therelevant authority.

Beijing Yongxing PRC Had notcommenced anybusiness

14 October2005

Business licencerevoked

The business licencewas revoked for itsfailure to attend annualinspection; and thecompany was solvent atthe time of its businesslicence being revoked.The company iscurrently underderegistration process.



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Mr. Y. W. Chan confirmed that Beijing Yongxing, Lain Fung Shanghai Luwan Branchand the Shanghai representative office of Wang Hing Interior Design were solventimmediately prior to their respective revocation of business licence or deregistration. Mr. Y.W. Chan further confirmed no misconduct or misfeasance on his part leading to therevocation of business licence or deregistration of such companies and he is not aware ofany actual or potential claim that has been or will be made against him as a result of therevocation of business licence or deregistration of such companies.

Ms. Wan Sau Mui（尹秀妹）, aged 62, joined our Group as a director of Wang HingInterior Design on 7 November 2000. She was appointed as a Director on 14 May 2021 andwas re-designated as an executive Director on 17 September 2021. She is primarilyresponsible for the overall management and overseeing human resources and administrationfunctions of our Group. She is also a director of Grateful Luck, L & F Interior Engineering,Wang Hing Interior Design, Wang Hing Interior Engineering and Wang Hing Lain Fung.

Ms. Wan has over 20 years of experience in the fitting-out works industry. Ms. Wancompleted form three education at Ching Yih Girl’s Middle School in 1976.

Ms. Wan was a director of the following companies at the time of their respectivedissolution/deregistration:

Name of companyPlace ofincorporation

Principalbusiness activityprior tocessation ofbusiness

Date ofdissolution/deregistrationStatus Reasons of dissolution

Lain Fung ShanghaiLuwan Branch

PRC Had notcommenced anybusiness

16November2006

Deregistered(注銷)

The company appliedfor deregistration andits deregistration wasapproved by therelevant authority.

Wang Hing (China)Consultant Limited

Hong Kong Had notcommenced anybusiness

6 July 2001 Dissolved andderegistered(Note)

The company wasinactive.

Note: Dissolved by deregistration pursuant to section 291AA of the predecessor Companies Ordinance.

Ms. Wan confirmed that the above companies were solvent immediately prior to theirrespective dissolution/deregistration. Ms. Wan further confirmed that there was nomisconduct or misfeasance on her part leading to the dissolution/deregistration of suchcompanies and she is not aware of any actual or potential claim that has been or will bemade against her as a result of the dissolution/deregistration of such companies.



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Ms. Cheng Ching Yee（鄭靖怡）(“Ms. Cheng”) (formerly known as Cheng Lai MuiJennifer), aged 53, was appointed as an independent non-executive Director on [�]. Ms.Cheng is the chairperson of our Remuneration Committee and a member of our AuditCommittee and Nomination Committee.

Ms. Cheng has over ten years of experience in the legal sector. Ms. Cheng was calledto the Bar in Hong Kong in December 2006 and is a practising barrister in Hong Kong. Sheobtained a Bachelor’s degree in Laws from the University of London as an external studentin August 2002 and further obtained a Master’s degree in Laws from the City University ofHong Kong in November 2003. Ms. Cheng was awarded the Postgraduate Certificate inLaws from The University of Hong Kong in June 2004.

Mr. Lam Chi Wing（林至頴）(“Mr. Lam”), aged 41, was appointed as an independentnon-executive Director on [�]. Mr. Lam is a member of our Audit Committee, NominationCommittee and Nomination Committee.

From September 2003 to July 2015. Mr. Lam worked at Li & Fung Group with his lastappointment as group chief representative and general manager, Southern China of Li &Fung Development (China) Limited. Mr. Lam has been appointed as an independentnon-executive director of Aidigong Maternal & Child Health Limited (formerly known asCommon Splendor International Health Industry Group Limited), a company listed on theMain Board (Stock Code: 286), since March 2016. Mr. Lam has been appointed as anindependent non-executive director of Wai Hung Group Holdings Limited, a company listedon the Main Board (Stock Code: 3321), since March 2019. From July 2020 to December2020, he was an executive Director of Bonjour Holdings Limited, a company listed on theMain Board (Stock Code: 653).

Mr. Lam is a member of the Twelfth Guangdong Committee of the Chinese People’sPolitical Consultative Conference（中國人民政治協商會議第十二屆廣東省委員）and the TwelfthZhongshan Committee of the Chinese People’s Political Consultative Conference（中國人民政治協商會議第十二屆廣東省中山市委員）. Mr. Lam is currently the vice chairman of the HongKong Guangdong Youth Association（香港廣東青年總會）, vice chairman of the eighth councilof the Guangdong Society of Commercial Economy（廣東省商業經濟學會第八屆理事會副會長）,a member of the advisory committee of the Sustainable Agricultural Development Fund ofthe Hong Kong Government, a committee member of the Appeal Panel (Housing) of HongKong and a committee member of the Mainland Business Advisory Committee of the HongKong Trade Development Council. Mr. Lam is also an adjunct associate professor in theDepartment of Information Systems, Business Statistics and Operations Management of thebusiness school at The Hong Kong University of Science and Technology.

Mr. Lam obtained a Bachelor’s degree in Business Administration in Accounting andFinance, from The University of Hong Kong in December 2003, a Master of Science inKnowledge Management from The Hong Kong Polytechnic University in December 2006and a Master of Business Administration from The Chinese University of Hong Kong inDecember 2010.



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Mr. Leung Hoi Ki（梁海祺）(“Mr. Leung”), aged 33, was appointed as an independentnon-executive Director on [�]. Mr. Leung is the chairman of our Audit Committee and amember of our Remuneration Committee.

Mr. Leung has over nine years of accounting experience. From September 2011 to May2014, he worked in BDO Limited, with his last position as senior associate of the AssuranceDepartment. From June 2014 to November 2014, Mr. Leung worked in Ernst & Young, withhis last position as senior accountant of the Assurance Department. From December 2014 toJanuary 2017, he worked in KPMG with his last position as manager. Mr. Leung has beenthe company secretary of Dragon Rise Group Holdings Limited, a company listed on theMain Board (Stock Code: 6829), since March 2017.

Mr. Leung obtained a Bachelor’s degree in Business Administration in Accountancyfrom The Hong Kong Polytechnic University in October 2011. He was admitted as aCertified Public Accountant in March 2015.

Save as disclosed above, each of our Directors has not held directorships in the lastthree years in other public companies the securities of which are listed on any securitiesmarket in Hong Kong or overseas.

Save as disclosed above, each of our Directors confirms with respect to him/her that:(a) he/she does not hold other positions in our Company or other members of our Group asat the Latest Practicable Date; (b) he/she does not have any relationship with any otherDirectors, senior management, substantial Shareholder or Controlling Shareholders of ourCompany as at the Latest Practicable Date; (c) he/she does not have any interests in theShares within the meaning of Part XV of the SFO, save as disclosed in the paragraphheaded “Statutory and General Information — C. Further information about our Directorsand substantial shareholders — 1. Disclosure of interests” in Appendix IV to this document;(d) he/she does not have any interest in any business which competes or is likely tocompete, directly or indirectly, with our Group, which is disclosable under the Listing Rules;and (e) to the best knowledge, information and belief of our Directors having made allreasonable enquiries, there is no additional information relating to our Directors or seniormanagement that is required to be disclosed pursuant to Rule 13.51(2) of the Listing Rulesand no other matter with respect to their appointments that needs to be brought to theattention of our Shareholders as at the Latest Practicable Date.

SENIOR MANAGEMENT

Our senior management team consists of four individuals (excluding our executiveDirectors).

Mr. Ng Wing Cheong Stephen（吳榮祥）(“Mr. Ng”), aged 62, joined our Group asdeputy managing director in September 2019. He is currently our chief executive officerwho is primarily responsible for the overall management, project planning and overseeingproject execution and operation in Hong Kong and Macau.



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Mr. Ng has over 30 years of experience in the architectural industry during which heworked for various architectural firms responsible for residential and commercialdevelopment projects in Hong Kong, the PRC, and Canada. From 1978 to 2001, he workedas draftsman and architectural technologist in various architectural firms. From October 2003to March 2013, Mr. Ng worked in a subsidiary of Wang On Group Limited, a companylisted on the Main Board (Stock Code: 1222), with his last position as design director. FromMarch 2014 to October 2018, Mr. Ng worked as a business development director of FullProfit Property Services Company Limited. From April 2015 to January 2016, Mr. Ng wasan executive director of EJE (Hong Kong) Holdings Limited (formerly known as Jia MengHoldings Limited), a company listed on the GEM of the Stock Exchange (Stock Code:8101). From August 2016 to October 2018, Mr. Ng was a non-executive director of FinsoftFinancial Investment Holdings Limited, a company listed on the GEM of the StockExchange (Stock Code: 8018). Mr. Ng then joined our Group as deputy managing director inSeptember 2019, and has been appointed as our chief executive officer since January 2021.

Mr. Ng obtained the Certificate in Building Studies from the Vocational TrainingCouncil in July 1983 and the Endorsement Certificate in Building Studies from The HongKong Polytechnic University (formerly known as Hong Kong Polytechnic) in November1986. He was admitted as a fellow member of the Hong Kong Institute of Directors in 2013.

Dr. Tam Tak Chung（談德忠） (“Dr. Tam”), aged 62, joined our Group as projectdirector in February 2019. He is primarily responsible for supervising the tender andquotation procedure managing project execution and operation in Macau.

Dr. Tam has over 30 years of experience in the construction industry. Before joiningour Group, he worked in the various government departments from August 1980 to April1989 with his last position as assistant clerks of work. He worked in Wang ChongConstruction Company Limited in Hong Kong from March 1989 to April 1992 with his lastposition as assistant contract manager. He worked in Yrong Zhing Construction CompanyLimited in Hong Kong from April 1993 to October 1996 with his last position as projectmanager. Dr. Tam worked in Armorcoat (Hong Kong) Ltd. in Hong Kong from August 2009to April 2013 with his last position as general manager. He worked in Interior ContractInternational Limited in Hong Kong from May 2013 to May 2014 with his last position asassistant general manager. He worked in Kong Sing Construction Engineering CompanyLimited from May 2014 to April 2018 with his last position as commercial manager. Heworked in Kinsway Construction Co. Ltd from August 2018 to February 2019 with his lastposition as project manager. Dr. Tam joined our Group in February 2019 and has been theproject director of our Group since then.

Dr. Tam obtained the Higher Certificate in Building Studies from the TechnicianEducation Council through The Hong Kong Polytechnic University (formerly known asHong Kong Polytechnic in July 1982 and Endorsement Certificate in Clerks of WorksStudies from The Hong Kong Polytechnic University (formerly known as Hong KongPolytechnic) in November 1985. Dr. Tam obtained Master’s degree in BusinessAdministration in Total Quality Management from the Newport University of the UnitedStates through long distance learning in August 2000. Dr. Tam further obtained a degree ofDoctor of Business Administration at the Lincoln University of the United States throughlong distance learning in September 2006.



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Dr. Tam was admitted as an associate of the Chartered Institute of Building of theUnited Kingdom in November 1984. He was also admitted as a full member, CertifiedIndustrial Engineer and Certified Environmental Manager of the Canadian Institute ofIndustrial Engineers of Canada in 1999. He was admitted as a certified trainer in knowledgemanagement of the Asian Knowledge Management Association in September 2002.

Mr. Chan Wai Kin（陳偉健）(“Mr. Ryan Chan”), aged 39, joined our Group as a siteforeman in February 2004. He is currently our deputy project director who is primarilyresponsible for site coordination, site supervision and project management in Hong Kong.

Mr. Ryan Chan has over ten years of experience in the fitting-out works industry. Hejoined our Group as a site foreman of Wang Hing Interior Design in February 2004, and wasthen promoted to assistant project manager in April 2008 and project manager in November2014. He has been further promoted to our deputy project director since January 2020.

Mr. Ryan Chan attended his secondary education in St. Francis Xavier SecondarySchool in Canada from 1998 to 2000. He further obtained a diploma of interior andenvironmental design from the First Institute of Art and Design in Hong Kong in August2009.

Mr. Chan Kam Wo（陳錦和）(“Mr. K. W. Chan”), aged 37, joined our Group as a sitecoordinator in October 2004. He is currently our deputy project director who is primarilyresponsible for site coordination, site supervision and project management in Macau.

Mr. K. W. Chan has over ten years of experience in the fitting-out works industry. Hejoined our Group as a site coordinator of Wang Hing Interior Design in October 2004. FromAugust 2005 to January 2017, he worked in Hap Lei Wang Hing with his last position asproject manager. He then left Hap Lei Wang Hing and joined our Group again in February2017 as deputy project director. Mr. K. W. Chan completed form five education in KwunTong Maryknoll College in 2003.

Save as disclosed above, each of our senior management has not held any directorshipsin the last three years in other public companies the securities of which are listed on anysecurities market in Hong Kong or overseas.

COMPANY SECRETARY

Ms. Chan Ying Yu（陳映予）, (“Ms. Yvonne Chan”), aged 28, was appointed as thecompany secretary of our Company on 14 May 2021. She is mainly responsible for thesecretarial affairs of our Group.

Ms. Yvonne Chan has over five years of experience in company secretarial work. FromDecember 2015 to June 2018, she worked in Topworld Registrations Limited in Hong Kongwith her last position as company secretarial assistant and executive assistant. From July2018 to February 2019, she worked in Panda Green Energy Group Limited, a company listedon the Main Board (Stock Code: 686) with her last position as assistant to companysecretarial department. Ms. Yvonne Chan joined our Group in May 2019 and has been ourcompany secretary officer since then.



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Ms. Yvonne Chan has been admitted as an associate of The Hong Kong CharteredGovernance Institute in December 2020.

BOARD COMMITTEES

Audit committee

Our Company established an audit committee with written terms of reference incompliance with Rule 3.21 of the Listing Rules and paragraph C.3.3 of the CorporateGovernance Code set out in Appendix 14 to the Listing Rules. The primary duties of ourAudit Committee are, among others, to make recommendations to our Board on theappointment, reappointment and removal of external auditor, review the financial statementsand provide material advice in respect of financial reporting, oversee the financial reportingprocess, internal control, risk management systems and audit process of our Company,monitoring any future and/or potential continuing connected transactions and perform otherduties and responsibilities assigned by our Board.

At present, the Audit Committee comprises three independent non-executive Directors,namely, Ms. Cheng Ching Yee, Mr. Lam Chi Wing and Mr. Leung Hoi Ki. Mr. Leung HoiKi is the chairperson of the Audit Committee.

Remuneration committee

Our Company established a remuneration committee on [�] with written terms ofreference in compliance with Rule 3.25 of the Listing Rules and paragraph B.1.2 of theCorporate Governance Code set out in Appendix 14 to the Listing Rules. The primary dutiesof our Remuneration Committee are to review and approve the management’s remunerationproposals, make recommendations to our Board on the remuneration package of ourDirectors and senior management and ensure none of our Directors or any of their associatesdetermine their own remuneration.

At present, the Remuneration Committee comprises one executive Director and threeindependent non-executive Directors, namely Mr. Y. W. Chan, Ms. Cheng Ching Yee, Mr.Lam Chi Wing and Mr. Leung Hoi Ki. Ms. Cheng Ching Yee is the chairperson of theRemuneration Committee.

Nomination committee

Our Company established a nomination committee on [�] with written terms ofreference in compliance with paragraph A.5.2 of the Corporate Governance Code set out inAppendix 14 to the Listing Rules. The primary duties of our Nomination Committee are,among others, to review the structure, size and composition of our Board, and select ormake recommendations on the selection of individuals nominated for directorships.

At present, the Nomination Committee comprises one executive Director and twoindependent non-executive Directors, namely Mr. Y. W. Chan, Ms. Cheng Ching Yee and Mr.Lam Chi Wing. Mr. Y. W. Chan is the chairperson of the Nomination Committee.



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COMPLIANCE ADVISER

Our Company has agreed to engage [Advent Corporate Finance Limited] as thecompliance adviser pursuant to Rule 3A.19 of the Listing Rules for the term commencing onthe [REDACTED] and ending on the date on which our Company distributes annual reportin respect of its financial results for the first full financial year commencing after the[REDACTED]. Such appointment may be subject to extension by mutual agreement.

Pursuant to Rule 3A.23 of the Listing Rules, our Company shall seek advice from thecompliance adviser on a timely basis in the following circumstances:

� before the publication of any regulatory announcement, circular or financialreport;

� where a transaction, which might be a notifiable or connected transaction, iscontemplated, including share issues and share repurchases;

� where our Company proposes to use the [REDACTED] of the [REDACTED] ina manner different from that detailed in this document or where businessactivities, developments or results of our Group deviate to a material extent fromany forecast, estimate, or other information in this document; and

� where the Stock Exchange makes an inquiry of our Company regarding unusualmovements in the price or trading volume of the Shares.

REMUNERATION POLICY

Our Directors and senior management receive compensation in the form of salaries,benefits in kind and discretionary bonuses related to their performance. Our Group alsoreimburse them for expenses which are necessarily and reasonably incurred in relation to allbusiness and affairs carried out by our Group from time to time or for providing services toour Group or executing their functions in relation to the business and operations of ourGroup. Our Group regularly review and determine the remuneration and compensationpackage of our Directors and senior management by reference to, among other things,market level of salaries paid by comparable companies, the respective responsibilities of ourDirectors and performance of our Group.

After the [REDACTED], our Directors and senior management may also receiveoptions to be granted under the Share Option Scheme.

REMUNERATION OF DIRECTORS AND SENIOR MANAGEMENT

For FY2019, FY2020 and FY2021, the aggregate remuneration including basic salaries,allowance, other benefits and contribution to retirement benefit scheme, paid to ourDirectors by our Group was approximately HK$0.6 million, HK$0.7 million and HK$0.6million, respectively.



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For FY2019, FY2020 and FY2021, the aggregate remuneration including basic salaries,allowance, other benefits and contribution to retirement benefit scheme, paid to the fivehighest paid individuals (including our Directors) by our Group was approximately HK$3.2million, HK$3.8 million and HK$3.9 million, respectively.

For FY2019, FY2020 and FY2021, the aggregate of bonuses paid to or receivable byour Directors which was discretionary or was based on our Company’s, our Group’s or anymembers of our Group’s performance were nil, nil and nil, respectively.

Under the arrangements currently in force, we estimate that the aggregate remunerationpayable to, and benefits in kind receivable by, our Directors (excluding discretionary bonus)for FY2022 will be approximately HK$0.7 million. Upon completion of the [REDACTED],the Remuneration Committee will make recommendations on the remuneration of ourDirectors taking into account the performance of our Directors and market standards and theremuneration will be subject to approval by our Shareholders. Accordingly, the historicalremuneration to our Directors during the Track Record Period may not reflect the futurelevels of remuneration of our Directors.

Save as disclosed in this document, no other emoluments have been paid, or arepayable, by our Group to our Directors and the five highest paid individuals in respect ofeach of FY2019, FY2020 and FY2021.

During the Track Record Period, no remuneration was paid by our Group to, orreceived by, our Directors or the five highest individuals as an inducement to join or uponjoining our Group or as compensation for loss of office. There was no arrangement underwhich our Directors have waived or agreed to waive any remuneration during the TrackRecord Period.

For additional information on Directors’ remuneration during the Track Record Periodas well as information on the five highest paid individuals, please refer to the Accountants’Report set out in Appendix I to this document.

BOARD DIVERSITY POLICY

Our Group has adopted the Board Diversity Policy (the “Board Diversity Policy”)which sets out our approach to accomplish and preserve diversity on our Board so as toadvance the effectiveness of our Board. Our Group is aware of and embraces the advantagesof diversity of our Board to reinforce the quality of our performance. We endeavour toensure that our Board has appropriate balance and level of skills, experience andperspectives which we reckon essential to support and consolidate the execution of ourbusiness strategies. Our Group seeks to achieve diversity of our Board by the selection ofcandidates for our Board based on a number of considerations. Those factors include but notlimited to gender, age, ethnicity, cultural and education background, professional experience,skills, expertise, knowledge and length of services.



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Measurable objectives

� Selection of candidates will take into account the Board Diversity Policy. Theultimate decision will be based on merit and contribution that the selectedcandidates will bring to our Board, having due regard to the benefits of diversityof our Board and also the needs of our Board without focusing on a singlediversity aspect.

� Our Board also aspires to have an appropriate proportion of Directors who havedirect experience in our Group’s core markets.

Our Board comprises three male members (including one executive Director and twoindependent non-executive Directors) and two female members (including one executiveDirector and one independent non-executive Director). The ages of our Directors range from33 years old to 62 years old. Our Directors have a balanced mix of experiences, includingaccounting, legal and business management experience. Due to the industry nature of ourbusiness as a contractor providing fitting-out services, we have four male seniormanagement members. We have also taken, and will continue to take steps to promotegender diversity at all levels of our Company, including but not limited to our Board andsenior management levels. While we recognise that gender diversity at the Board level hasbeen achieved given its current composition, we will continue to apply the principle ofappointments based on merits with reference to our Board Diversity Policy as a whole.Nevertheless, in recognising the particular importance of gender diversity, our Companyconfirms that our Nomination Committee will, within three years from the [REDACTED],identify and develop a pipeline of potential successors to our Board for its consideration toensure that gender diversity can be maintained. Our Board will also review such objectivesfrom time to time, so to make sure their appropriateness and ascertain the progress madetowards actualising our objectives. After [REDACTED], the Nomination Committee willrevisit the Board Diversity Policy and monitor its implementation from time to time.

CORPORATE GOVERNANCE CODE

Our Company will comply with the Corporate Governance Code and our Directors willreview our corporate governance polices and compliance with the Corporate GovernanceCode each financial year and apply the “comply or explain” principle in our corporategovernance report which will be included in our annual reports after the [REDACTED].

SHARE OPTION SCHEME

Our Company has conditionally adopted the Share Option Scheme. Please refer to theparagraph headed “Statutory and General Information — D. Share Option Scheme” inAppendix IV to this document for further information on the Share Option Scheme.



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SUBSTANTIAL SHAREHOLDERS

So far as our Directors are aware, immediately after completion of the [REDACTED]and the [REDACTED] (without taking into account any Share that may be allotted andissued upon the exercise of the [REDACTED] or any options that may be granted under theShare Option Scheme), the following persons will have an interest or short position in theShares or underlying Shares which would fall to be disclosed to our Company under theprovisions of Divisions 2 and 3 of Part XV of the SFO, or, who/which is expected, directlyor indirectly, to be interested in 10% or more of the nominal value of any class of sharecapital carrying rights to vote in all circumstances at the general meetings of theShareholders of our Company:

Person / corporationCapacity / natureof interest

Number ofShares held as at

the date ofsubmission of

applicationfor the

[REDACTED]

Number ofShares held/

interestedimmediately aftercompletion of the

[REDACTED]and the

[REDACTED](Note 1)

Percentage ofinterests in our

Companyimmediately aftercompletion of the

[REDACTED]and the

[REDACTED](Note 2)

Faithful Trinity Beneficial owner 1 Share [REDACTED] (L) [REDACTED]%

Mr. Y. W. Chan (Note 3) Interest in acontrolledcorporation

1 Share [REDACTED] (L) [REDACTED]%

Ms. Wan (Note 3) Interest in acontrolledcorporation

1 Share [REDACTED] (L) [REDACTED]%

Notes:

1. The letter “L” denotes a person’s/corporation’s “long position” (as defined under Part XV of theSFO) in the Shares.

2. The calculation is based on the total number of Shares in issue immediately following the completionof the [REDACTED] and the [REDACTED] (without taking into account any Share which may beallotted and issued pursuant to the exercise of the [REDACTED] or any options which may begranted under the Share Option Scheme).

3. These Shares are held by Faithful Trinity, a company incorporated in the BVI and owned as to 69%and 31% by Mr. Y. W. Chan and Ms. Wan, respectively. Pursuant to the SFO, each of Mr. Y. W. Chanand Ms. Wan is deemed to be interested in the Shares in which Faithful Trinity has an interest.

Save as disclosed above, our Directors are not aware of any person/corporation who/which will, immediately after completion of the [REDACTED] and the [REDACTED](without taking into account any Share that may be allotted and issued upon the exercise ofthe [REDACTED] or any options which may be granted under the Share Option Scheme),have an interest or short position in Shares or underlying Shares which fall to be disclosedto our Company and the Stock Exchange under the provisions of Divisions 2 and 3 of PartXV of the SFO, or, directly or indirectly, be interested in 10% or more of the nominal valueof any class of share capital carrying rights to vote in all circumstances at general meetingsof our Group. Our Directors are not aware of any arrangement which may at a subsequentdate result in a change of control of our Company.

SUBSTANTIAL SHAREHOLDERS


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SHARE CAPITAL

The tables below set forth information with respect to the share capital of ourCompany after completion of the [REDACTED] and the [REDACTED].

Authorised share capital: HK$

[3,000,000,000] Shares of HK$0.01 each [30,000,000]

Assuming the [REDACTED] or any options which may be granted under the ShareOption Scheme is not exercised, our Company’s issued share capital immediately aftercompletion of the [REDACTED] and the [REDACTED] will be as follows:

Shares HK$

1 Share in issue as at the date of this document 0.01[99] Shares to be issued pursuant to the Reorganisation [0.99]

[REDACTED] Shares to be issued pursuant to the [REDACTED] (Note 1) [REDACTED][REDACTED] Shares to be issued pursuant to the [REDACTED] (Note 2) [REDACTED]

[REDACTED] Total [REDACTED]

Notes:

1. Pursuant to the written resolutions of the sole Shareholder passed on [•], conditional upon the sharepremium account of our Company being credited as a result of the [REDACTED], our Directors wereauthorised to capitalise the amount of HK$[REDACTED] from the amount standing to the credit of theshare premium account of our Company and to apply such amount in paying up in full at par a total of[REDACTED] new Shares for allotment and issue to Faithful Trinity, as the sole Shareholder of ourCompany at the close of business on [•].

2. If the [REDACTED] is exercised in full, then [REDACTED] additional Shares will be issued resulting in atotal issued share capital of HK$[REDACTED] Shares with an aggregate nominal value ofHK$[REDACTED].

ASSUMPTIONS

The above tables assume that the [REDACTED] becomes unconditional and Shares areissued pursuant to the [REDACTED]. It takes no account of any Share that may be issuedor repurchased by our Company pursuant to the general mandates granted to our Directors toissue or repurchase Shares as described below.

MINIMUM PUBLIC FLOAT

Pursuant to Rule 8.08(1)(a) of the Listing Rules, at the time of [REDACTED] and atall times thereafter, our Company must maintain the minimum prescribed percentage of atleast [REDACTED]% of the total number of issued Share in the hands of the[REDACTED].

SHARE CAPITAL


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RANKING

The [REDACTED] are ordinary Shares in the share capital of our Company and rankequally with all Shares currently in issue or to be issued and, in particular, will rank equallyfor all dividends or other distributions declared, made or paid on the Shares in respect of arecord date which falls after the date of this document.

SHARE OPTION SCHEME

Our Company has conditionally adopted the Share Option Scheme. Please refer to theparagraph headed “Statutory and General Information — D. Share Option Scheme” inAppendix IV to this document for the summary of the principal terms of the Share OptionScheme.

Our Company did not have any outstanding share option, warrant, convertibleinstrument or similar right convertible into the Shares as at the Latest Practicable Date.

GENERAL MANDATE TO ISSUE SHARES

Our Directors have been granted a general unconditional mandate to allot, issue anddeal with Shares in aggregate not exceeding:

(a) 20% of the total number of Shares in issue immediately after completion of the[REDACTED] and the [REDACTED] (assuming the [REDACTED] is notexercised and without taking into account any Share that may be allotted andissued upon the exercise of any options which may be granted under the ShareOption Scheme); and

(b) the aggregate number of issued Share which may be repurchased by our Company(if any) under the mandate to repurchase Shares referred to below.

Our Directors may, in addition to the Shares which they are authorised to issue underthe general mandate, allot, issue and deal in the Shares pursuant to a rights issue, an issueof Shares pursuant to the exercise of the subscription rights attaching to any warrant of ourCompany, scrip dividends or similar arrangements or options providing for the allotment andissue of Shares in lieu of the whole or in any part of any cash dividends or options to begranted under the Share Option Scheme and any option scheme or similar arrangement forthe time being adopted.

This general mandate to issue Shares will remain in effect until whichever is theearliest of:

(a) the conclusion of our Company’s next annual general meeting; or

(b) the date by which our Company’s next annual general meeting is required by theArticles or any applicable law to be held; or

SHARE CAPITAL


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(c) the passing of an ordinary resolution of the Shareholders in a general meetingrevoking or varying the authority given to our Directors.

For details of this general mandate to issue shares please refer to the paragraph headed“Statutory and General Information — A. Further information about our Group — 5. Writtenresolutions of our sole Shareholder passed on [�]” in Appendix IV to this document.

GENERAL MANDATE TO REPURCHASE SHARES

Subject to the [REDACTED] becoming unconditional, our Directors have been granteda general unconditional mandate to exercise all powers of our Company to repurchase, onthe Stock Exchange and/or on any other stock exchange on which the securities of ourCompany may be [REDACTED] and which is recognised by the SFC and the StockExchange for this purpose in accordance with applicable laws and requirements of theListing Rules (or of such other stock exchange), Shares in the number not exceeding 10% ofthe total number of Shares in issue immediately after completion of the [REDACTED] andthe [REDACTED] (assuming the [REDACTED] is not exercised and without taking intoaccount any Share that may be allotted and issued upon the exercise of any options whichmay be granted under the Share Option Scheme).

This general mandate only relates to repurchases made on the Stock Exchange, or onany other stock exchange which is recognised by the SFC and the Stock Exchange for thispurpose in accordance with the applicable laws and requirements of the Listing Rules (orsuch other stock exchange). Please refer to the paragraph headed “Statutory and GeneralInformation — A. Further information about our Group — 6. Repurchase by our Companyof our own securities” in Appendix IV to this document for a summary of the relevantListing Rules.

This general mandate to repurchase Shares will remain in effect until whichever is theearliest of:

(a) the conclusion of our Company’s next annual general meeting; or

(b) the date by which our Company’s next annual general meeting is required by theArticles or any applicable law to be held; or

(c) the passing of an ordinary resolution of our Shareholders in a general meetingrevoking or varying the authority given to our Directors.

Please refer to the paragraph headed “Statutory and General Information — A. Furtherinformation about our Group — 6. Repurchase by our Company of our own securities” inAppendix IV to this document for further details of this general mandate to repurchaseshares.

SHARE CAPITAL


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CIRCUMSTANCES UNDER WHICH GENERAL MEETING AND CLASS MEETINGARE REQUIRED

As a matter of the Cayman Companies Act, an exempted company is not required bylaw to hold any general meetings or class meetings. The holding of general meeting or classmeeting is prescribed for under the articles of association of a company. Accordingly, ourCompany will hold general meetings as prescribed for under the Articles, a summary ofwhich is set out in Appendix III to this document.

SHARE CAPITAL


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You should read this section in conjunction with our Group’s audited combinedfinancial information, including the notes thereto, as set out in the Accountants’ Reportset out in Appendix I to this document (“Combined Financial Information”). OurGroup’s Combined Financial Information has been prepared in accordance with theHKFRS. You should read the entire Accountants’ Report and not merely rely on theinformation contained in this section.

The following discussion and analysis contains certain forward-looking statementsthat reflect the current views with respect to future events and financial performance.These statements are based on assumptions and analyses made by our Group in light ofour Group’s experience and perception of historical trends, current conditions andexpected future developments, as well as other factors our Group believes areappropriate under the circumstances. However, whether actual outcomes anddevelopments will meet our Group’s expectations and projections depend on a number ofrisks and uncertainties over which our Group does not have control. For furtherinformation, please refer to the section headed “Risk Factors” in this document.

Discrepancies between totals and sums of amounts listed herein in any table orelsewhere in this document may be due to rounding.

OVERVIEW

We are an established contractor principally engaged in providing fitting-out services toour private sector customers in Hong Kong and Macau with over 30 years of operatingexperience.

For FY2019, FY2020 and FY2021, our Group generated revenue of approximatelyHK$196.6 million, HK$250.7 million and HK$294.2 million, respectively. For FY2019,FY2020 and FY2021, our Group’s net profit amounted to approximately HK$12.7 million,HK$19.6 million and HK$26.2 million, respectively.

BASIS OF PREPARATION AND PRESENTATION OF HISTORICAL FINANCIALINFORMATION

Please refer to note 2 to the Accountants’ Report as set out in Appendix I to thisdocument.

KEY FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Our results of operations are subject to the influence of numerous factors, the principalof which are set out below:

Demand for fitting-out works in Hong Kong and Macau

During the Track Record Period, most of our revenue was derived in Hong Kong andMacau. Thus, our business depends on a large extent on the level of demand for ourfitting-out works in Hong Kong and Macau which is in turn largely subject to the continuedavailability of construction and building activities, the nature, extent and timing of whichwill be determined by the interplay of a variety of factors, in particular, the investment of

FINANCIAL INFORMATION


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enterprise owners, property developers, hotel operators and the general conditions andprospects of local economy. Also, the demand for our services may fall if our customersterminate or reduce the size of projects or cut project budget when they downsize theirbusiness, suspend or cease marketing, development or expansion plans, or stop leasing oracquiring properties due to change in market conditions, business strategy or performance. Ifsuch events occur, our business operations, financial condition and prospects may bematerially and adversely affected.

Cost and performance of our subcontractors

Depending on our resources, complexity and schedule of our projects, we woulddelegate the fitting-out works to our subcontractors. For FY2019, FY2020 and FY2021, oursubcontracting costs amounted to approximately HK$150.7 million, HK$161.6 million andHK$126.9 million, respectively, which accounted for approximately 86.6%, 73.5% and50.6%, respectively, of our total cost of sales. As a result, our profitability heavily dependson our ability to control and manage our subcontracting costs. In addition, thesubcontracting arrangement also exposes us to risks associated with any non-performance,delayed performance or sub-standard performance by our subcontractors or their respectiveemployees. If those happen to our subcontractors in our projects, we will have to appointreplacement subcontractor(s) and additional costs will be incurred. We may incur additionalcosts or be subject to liability due to delay in schedule or defects in the works of oursubcontractors or if there is any accident causing personal injuries or death of oursubcontractors’ employees. In addition, our ability to hire qualified subcontractors mayhinder our ability to complete a project successfully. Last but not least, in case of anysignificant increase in the subcontracting costs, and if our Group is unable to pass suchincrease to our customers, our business and profitability may be adversely affected.

Sensitivity Analysis

The following sensitivity analysis illustrates the impact of hypothetical fluctuations inour subcontracting costs on our profit before tax during the Track Record Period. As a majorfactor affecting the subcontracting costs is, in the opinion of our Directors, labour wages,the hypothetical fluctuation rates for subcontracting costs are set at 1.0% and 11.0%,respectively, which represent the approximate minimum and maximum percentage changes inthe average daily wages of workers engaged in fitting-out works in Macau and Hong Kong(whichever is higher) from 2015 to 2020 as set out in the F&S Report. Please refer to theparagraphs headed “Industry Overview — Competitive landscape of Hong Kong fitting-outworks industry — Price trend of major cost components” and “Industry Overview —Competitive landscape of Macau fitting-out works industry — Price trend of major costcomponents” in this document, and are therefore, considered reasonable for the purpose ofthis sensitivity analysis.



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Hypothetical fluctuations in oursubcontracting costs -1.0% -11.0% +1.0% +11.0%

Increase/(decrease) in profitsbefore taxation (Note) HK$’000 HK$’000 HK$’000 HK$’000

FY2019 1,507 16,577 (1,507) (16,577)FY2020 1,616 17,778 (1,616) (17,778)FY2021 1,269 13,959 (1,269) (13,959)

Note: Our profit before taxation was approximately HK$14.8 million, HK$22.2 million and HK$29.9million for each of FY2019, FY2020 and FY2021, respectively.

Timing of collection of our retention money and trade receivables

Customers are generally entitled to hold retention money from the progress payments.Our customers generally retain 10% of each progress payment while the aggregate amountof the retention money is subject to a cap of 5% of the original contract sum. Generally,upon issuance of the certificate of practical completion, half of the retention money will bereleased to us, while the remaining amount will be released upon the expiry of the defectsliability period. Our liaison with our customers on the rectification of any defects associatedwith our fitting-out works and any potential disputes with our customer that may arise willaffect the timing and amount of the release of the retention money. There can be noassurance that such retention money will be released by our customers to us on a timelybasis and in full upon the expiry of the defects liability period.

As at 31 July 2021, our retention money and trade receivables amounted toapproximately HK$28.6 million and HK$6.3 million respectively. Should we fail inrecovering payments from our customers to us on time and in full, our liquidity andfinancial position would be adversely and materially impacted.

SIGNIFICANT ACCOUNTING POLICIES AND ESTIMATES

Critical accounting policies and estimates refer to those accounting policies andestimates that entail significant uncertainty and judgment, and could yield materiallydifferent results under different conditions and/or assumptions. The preparation of ourCombined Financial Information in conformity with the HKFRS requires our management tomake judgments, estimates and assumptions that affect the application of policies andreported amounts of assets, liabilities, income and expenses. The methods and approach thatwe use in determining these items is based on our experience, the nature of our businessoperations, the relevant rules and regulations and the relevant circumstances. Theseunderlying assumptions and estimates are reviewed regularly as they may have a significantimpact on our operational results as reported in our Combined Financial Informationincluded elsewhere in this document. Below is a summary of the significant accountingpolicies in accordance with HKFRS that we believe are important to the presentation of ourCombined Financial Information and involve the need to make estimates and judgmentsabout the effect of matters that are inherently uncertain. We also have other policies,judgments, estimates and assumptions that we consider as significant, which are set out indetails in notes 4 and 5 to the Accountants’ Report.



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Revenue recognition

We recognise revenue when (or as) a performance obligations is satisfied, i.e. when“control” of the goods or services underlying the particular performance obligations istransferred to customers. For FY2019, FY2020 and FY2021, we recognised revenue ofapproximately HK$196.6 million, HK$250.7 million and HK$294.2 million, respectively,from our fitting-out works projects.

We recognised revenue from the provision of fitting-out services over time, using aninput method. The input method recognises revenue based on the proportion that costsincurred for work performed by our Group to date relative to the estimated total costs inmeasuring the percentage of completion for the revenue recognised during each of thereporting period.

Our Group reviews and revises the estimated total costs to complete the satisfaction ofthese services and the profit margin of each construction contract as the contract progresses.Budgeted contract costs and profit margin are prepared by the management of our Group onthe basis of quotations from time to time provided by the major subcontractors, suppliers orvendors involved and the experience of the management of our Group. In order to keep thebudget accurate and up-to-date, management of our Group conducts periodic reviews of thebudgets of contracts by comparing the budgeted amounts to the actual amounts incurred.Such significant estimate may have impact on the profit recognised in each period.

Recognised amounts of contract revenue from provision of fitting-out works and relatedcontract assets and receivables reflect management’s best estimate of each contract’soutcome and value of works completed, which are determined on the basis of a number ofestimates. This includes the assessment of the profitability of on-going constructioncontracts. For more complex contracts in particular, costs to complete and contractprofitability are subject to significant estimation uncertainty. The actual outcomes in termsof total cost or revenue may be higher or lower than estimated at the end of each reportingperiod, which would affect the revenue and profit or loss recognised in future years as anadjustment to the amounts recorded to date.

Provision for expected credit losses on financial assets

Our Group performs impairment assessment under expected credit loss (“ECL”) modelon financial assets (including trade receivables, other receivables, amounts due from relatedcompanies, amounts due from directors, pledged bank deposits and bank balances) andcontract assets which are subject to impairment assessment under HKFRS 9. The amount ofECL is updated at each reporting date to reflect changes in credit risk since initialrecognition. The measure of ECL is a function of the probability of default, loss givendefault (i.e. the magnitude of the loss if there is a default) and the exposure at default. Theassessment of the probability of default and loss given default is based on historical dataand forward-looking information.

The assessments are done based on our the Group’s historical credit loss experience,adjusted for factors that are specific to the debtors, general economic conditions and anassessment of both the current conditions at the reporting date as well as the forecast of



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future conditions. Our Group recognises an impairment gain or loss in profit or loss for allfinancial instruments by adjusting their carrying amount, with the exception of tradereceivables and contract assets where the corresponding adjustment is recognised through aloss allowance account. We recorded impairment of trade receivables of approximatelyHK$45,000 as at 31 March 2021 and an impairment of contract assets of approximatelyHK$0.6 million, respectively. The information regarding the ECLs on our Group’s tradereceivables and contract assets is disclosed in notes 17 and 18 to the Accountants’ Report asset out in Appendix I to this document.

SUMMARY RESULTS OF OPERATION

The following table sets out the summary of our Group’s combined results ofoperations for the Track Record Period, which are derived from, and should be read inconjunction with the combined financial information contained in the Accountants’ Reportset out in Appendix I to this document.

FY2019 FY2020 FY2021HK$’000 HK$’000 HK$’000

Revenue 196,609 250,702 294,216Cost of sales (173,903) (219,886) (250,891)

Gross profit 22,706 30,816 43,325Other income 14 162 811Other loss (20) (9) (196)Impairment losses under expected credit loss

model, net of reversal (366) (19) (213)Administrative expenses (6,080) (6,706) (8,798)[REDACTED] [REDACTED][REDACTED][REDACTED]Finance costs (1,476) (2,023) (1,643)

Profit before taxation 14,778 22,221 29,933Income tax expenses (2,101) (2,610) (3,728)

Profit for the year and total comprehensiveincome for the year 12,677 19,611 26,205



– 188 –

DESCRIPTION AND ANALYSIS OF PRINCIPAL ITEMS IN THE COMBINEDSTATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Revenue

During the Track Record Period, we derived our revenue from our fitting-out worksprojects in Hong Kong and Macau. We generated revenue of approximately HK$196.6million, HK$250.7 million and HK$294.2 million for FY2019, FY2020 and FY2021respectively.

The table below sets forth a breakdown of our revenue by geographical location towhich our services relate during the Track Record Period:

FY2019 FY2020 FY2021

Revenue

% oftotal

revenue Revenue

% oftotal

revenue Revenue

% oftotal

revenueHK$’000 % HK$’000 % HK$’000 %

Hong Kong 79,304 40.3 72,196 28.8 39,333 13.4Macau 117,305 59.7 178,506 71.2 254,883 86.6

Total 196,609 100.0 250,702 100.0 294,216 100.0

Cost of sales

Our cost of sales for the Track Record Period primarily consisted of subcontractingcosts, material costs, staff and labour costs and others. The following table sets out thebreakdown of our Group’s costs of sale for the Track Record Period:

FY2019 FY2020 FY2021HK$’000 % HK$’000 % HK$’000 %

Subcontracting costs 150,672 86.6 161,635 73.5 126,883 50.6Material costs 14,942 8.6 40,940 18.6 95,059 37.9Staff and labour costs 5,807 3.3 10,344 4.7 22,716 9.0Others 2,482 1.5 6,967 3.2 6,233 2.5

Total 173,903 100.0 219,886 100.0 250,891 100.0

For FY2019, FY2020 and FY2021, our cost of sales was approximately HK$173.9million, HK$219.9 million and HK$250.9 million, respectively, representing approximately88.5%, 87.7% and 85.3% of our revenue. For details of the fluctuation of our cost of salesduring the Track Record Period, please refer to the paragraph head “Year-to-year comparisonof results of operations” in this section.



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Subcontracting costs

Subcontracting costs were the key component of our cost of sales, which representedthe costs incurred by our Group for engaging subcontractors to carry out fitting-out works.For FY2019, FY2020 and FY2021, our subcontracting costs amounted to approximatelyHK$150.7 million, HK$161.6 million and HK$126.9 million, respectively, and accounted forapproximately 86.6%, 73.5% and 50.6%, respectively, of our total cost of sales for thecorresponding years.

Material costs

Material costs mainly represented the costs for the purchase of building and decorativematerials installed or utilised in our projects. For FY2019, FY2020 and FY2021, ourmaterial costs amounted to approximately HK$14.9 million, HK$40.9 million and HK$95.1million, respectively, and accounted for approximately 8.6%, 18.6% and 37.9%, of our totalcost of sales for the corresponding years.

Since materials can either be procured by our Group or our subcontractors dependingon our arrangement with subcontractors and/or customers’ requirements, the procurementpattern of different projects may vary. Therefore, our Directors consider that it is normal thatthe proportion of our subcontracting costs and material costs to total cost of sales may varyfrom time to time.

Staff and labour costs

Staff and labour costs mainly represented the staff costs and labour costs directlyemployed by us and/or employed by our customers which the relevant costs were charged tous. Our staff and labour costs amounted to approximately HK$5.8 million, HK$10.3 millionand HK$22.7 million for FY2019, FY2020 and FY2021, respectively, representingapproximately, 3.3%, 4.7% and 9.0% of our costs of sales for the corresponding period,respectively.

Others

Others mainly represented insurance, transportation, security expenses for sites andsundry expenses.



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Gross profit and gross profit margin

For FY2019, FY2020 and FY2021, our gross profit was approximately HK$22.7million, HK$30.8 million and HK$43.3 million, respectively, representing gross profitmargin of approximately 11.5%, 12.3% and 14.7% for the corresponding years.

The following table sets out the breakdown of our gross profit margin in Hong Kongand Macau during the Track Record Period:

FY2019 FY2020 FY2021

GrossProfit

GrossProfit

MarginGrossProfit

GrossProfit

MarginGrossProfit

GrossProfit

MarginHK$’000 % HK$’000 % HK$’000 %

Hong Kong 11,162 14.1 10,471 14.5 5,359 13.6Macau 11,544 9.8 20,345 11.4 37,966 14.9

Total/ Overall 22,706 11.5 30,816 12.3 43,325 14.7

For details of the fluctuations of our gross profit and gross profit margin during theTrack Record Period, please refer to the paragraph headed “Year-to-year comparison ofresults of operations” in this section.

Other income

The following table sets out the breakdown of our Group’s other income for the TrackRecord Period:

FY2019 FY2020 FY2021HK’000 HK$’000 HK$’000

Other income– Bank interest income –* 77 41– Government subsidies – – 770– Sundry income 14 85 –

14 162 811

* Less than HK$1,000

Our other income during the Track Record Period mainly comprised of:

(a) bank interest income, which represented interest generated from our Group’sdeposits pledged in the bank; and



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(b) government subsidies of HK$648,000 and HK$122,000 to our Group in respectiveof Covid-19 related subsidies, which were related to employment and/or businesssupport provided by the Hong Kong and Macau Governments respectively.

Administrative expenses

The following table sets out the breakdown of our Group’s administrative expensesduring the Track Record Period:

FY2019 FY2020 FY2021HK$’000 % HK$’000 % HK$’000 %

Staff costs and staff welfare 3,711 61.1 3,646 54.4 4,241 48.2Legal and professional

expenses 389 6.4 376 5.6 1,001 11.4Bank charges 201 3.3 633 9.4 940 10.7Entertainment expense 215 3.5 332 5.0 690 7.8Rent and rates 367 6.0 467 7.0 374 4.3Office expenses 267 4.4 261 3.9 305 3.5Depreciations 220 3.6 298 4.4 213 2.4Travelling expenses 236 3.9 234 3.5 194 2.2Others 474 7.8 459 6.8 840 9.5

Total 6,080 100.0 6,706 100.0 8,798 100.0

For FY2019, FY2020 and FY2021, our Group recorded administrative expenses ofapproximately HK$6.1 million, HK$6.7 million and HK$8.8 million, representingapproximately 3.1%, 2.7% and 3.0% of our total revenue, respectively.

Our administrative and other expense mainly comprised of :

(1) Staff costs and staff welfare, which mainly represented directors’ emoluments andsalaries, allowances and retirement contributions to our administrative and otherstaff;

(2) Legal and professional expenses, which mainly represented auditor’sremuneration, legal advisory fee and other consultancy fee;

(3) Bank charges, which mainly represented handling fees and service fees charged bybanks in relation to arrangement of bank borrowing or bank overdrafts;

(4) Entertainment, which mainly represented costs in relation to relationship buildingwith existing and potential customers;

(5) Office expenses, which mainly represented printing and stationery expenses,telecommunication charges and utilities;



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(6) Rent and rates, which mainly represented short term lease payments on office andstaff dormitories and building management fee;

(7) Depreciations, which represented depreciation of property, plant and equipmentand right-of-use asset;

(8) Travelling expenses, which mainly represented to travelling expenses related tobusiness trips; and

(9) Others, which mainly represented motor vehicle expenses and insurance fee.

Finance costs

The following table sets forth a breakdown of our finance costs during the TrackRecord Period:

FY2019 FY2020 FY2021HK$’000 HK$’000 HK$’000

Interest on bank borrowings 1,098 1,358 1,204Interest on bank overdrafts 374 654 436Interest on lease liability 4 11 3

1,476 2,023 1,643

Income tax expense

The following table sets out the breakdown of our Group’s income tax expense for theTrack Record Period:

FY2019 FY2020 FY2021HK$’000 HK$’000 HK$’000

Hong Kong Profits TaxProvision for the year 1,088 822 175

Macau Complementary Income TaxProvision for the year 1,013 1,788 3,553

Total 2,101 2,610 3,728

Pursuant to the rules and regulations of the Cayman Islands and the British VirginIslands, our Group is not subject to any income tax in the Cayman Islands and the BritishVirgin Islands.

Under the two-tiered profits tax rates regime of Hong Kong Profits Tax, the first HK$2million of profits of the qualifying group entity will be taxed at 8.25%, and profits aboveHK$2 million will be taxed at 16.5%. The profits of group entities not qualifying for thetwo-tiered profits tax rates regime will continue to be taxed at a flat rate of 16.5%.



– 193 –

We are also subject to Macau Complementary Income Tax calculated at 12% of theestimated annual assessable profits exceeding MOP600,000 for the Track Record Period.

The income tax expense for the Track Record Period can be reconciled to the profitbefore taxation as follows:

FY2019 FY2020 FY2021HK$’000 HK$’000 HK$’000

Profit before taxation 14,778 22,221 29,933

Tax charge at domestic income tax rate 2,084 2,890 3,490Tax effect of expenses not deductible for tax

purpose 281 320 851Tax effect of income not taxable for tax purpose – (17) (132)Tax effect of tax exemption under Macau

Complementary Income Tax (70) (70) (70)Tax effect of deductible temporary differences

not recognised 11 – –Utilisation of deductible temporary differences

previously not recognised – (17) –Tax effect of two-tiered profits tax rates regime (165) (165) (100)Tax concessions (40) (331) (311)

Income tax expense for the year 2,101 2,610 3,728

Our effective tax rate was approximately 14.2%, 11.7% and 12.5% for FY2019,FY2020 and FY2021, respectively.

Our Group had no tax obligation arising from other jurisdictions during the TrackRecord Period. Our Directors confirm that, during the Track Record Period and up to theLatest Practicable Date, our Group had no material dispute or unresolved tax issues with therelevant tax authorities.



– 194 –

YEAR-TO-YEAR COMPARISON OF RESULTS OF OPERATIONS

FY2020 compared to FY2019

Revenue

The table below sets forth the breakdown of our revenue by geographical location forFY2020 and FY2019:

FY2019 FY2020Revenue

HK$’000% of total

revenueRevenue

HK$’000% of total

revenue

Hong Kong 79,304 40.3 72,196 28.8Macau 117,305 59.7 178,506 71.2

Total 196,609 100.0 250,702 100.0

Our revenue increased from approximately HK$196.6 million for FY2019 toapproximately HK$250.7 million for FY2020, representing an increase of approximately27.5% or HK$54.1 million. Such increase was mainly due to the increase in revenue forprojects in Macau from approximately HK$117.3 million for FY2019 to approximatelyHK$178.5 million for FY2020, as project M05 in relation to fitting-out works for a casinowith an original contract sum of approximately HK$66.1 million and project M03 in relationto fitting-out works for a cinema with an original contract sum of approximately HK$67.9million were in work intensive stage and generated revenue of approximately HK$39.5million and HK$53.4 million for FY2020, respectively, as compared to approximatelyHK$13.2 million and HK$2.4 million for FY2019, respectively. Further, our Group alsocommenced fitting-out works for project M12 in relation to fitting-out works for a hotel inMacau with an original contract sum of approximately HK$24.0 million in late FY2019which contributed approximately HK$15.6 million for FY2020. Such increase in revenuewas partially offset by the decrease in revenue recognised for project M06 and project M01of approximately HK$37.6 million which were in late stage in FY2020.



– 195 –

Cost of sales

The table below sets forth the breakdown of our cost of sales by nature for FY2020and FY2019:

FY2019 FY2020

HK$’000

% of totalcost of

sales HK$’000

% of totalcost of

sales

Subcontracting costs 150,672 86.6 161,635 73.5Material costs 14,942 8.6 40,940 18.6Staff and labour costs 5,807 3.3 10,344 4.7Others 2,482 1.5 6,967 3.2

Total 173,903 100.0 219,886 100.0

Our cost of sales increased from approximately HK$173.9 million for FY2019 toapproximately HK$219.9 million for FY2020, representing an increase of approximately26.4% . Such increase in our cost of sales was mainly due to the increase in material costs.The increase in material costs from approximately HK$14.9 million for FY2019 toapproximately HK$40.9 million for 2020 was mainly due to the increased usage of mosaictiles and luxury decorative materials in projects M05 and M03. The subcontracting costsalso increased from approximately HK$150.7 million for FY2019 to approximatelyHK$161.6 million for FY2020, mainly due to the increase in subcontracting works forprojects M03 and M12 which were in line with the increase in revenue.


The following table sets out the breakdown of our gross profit margin in Hong Kongand Macau for FY2019 and FY2020:

FY2019 FY2020

GrossProfit

GrossProfit

MarginGrossProfit

GrossProfit

MarginHK$’000 % HK$’000 %

Hong Kong 11,162 14.1 10,471 14.5Macau 11,544 9.8 20,345 11.4

Total/ Overall 22,706 11.5 30,816 12.3

Our gross profit increased from approximately HK$22.7 million for FY2019 toapproximately HK$30.8 million for FY2020, representing an increase of approximately35.7%. The increase in our Group’s gross profit was mainly attributable to the increase inrevenue for projects in Macau as discussed above. The increase in gross profit margin for



– 196 –

projects in Macau from approximately 9.8% from FY2019 to approximately 11.4% forFY2020 was mainly attributable to the change of design and fitting-out plan for project M05which generated variation orders and our Group was able to charge our customer at a highermargin. Our Group’s gross profit margin remained relatively stable at approximately 11.5%and 12.3% for FY2019 and FY2020, respectively.

Other income

Our other income increased from approximately HK$14,000 for FY2019 toapproximately HK$162,000 for FY2020, which was mainly due to (i) the increase of bankinterest income of approximately HK$77,000 for FY2020 which was attributable to theincrease of bank deposits pledged for the issuance of surety bonds for our Macau projects;and (ii) the increase in sundry income from approximately HK$14,000 for FY2019 toapproximately HK$85,000 for FY2020.


Our administrative expenses slightly increased from approximately HK$6.1 million forFY2019 to approximately HK$6.7 million for FY2020, representing an increase ofapproximately 9.8% or HK$0.6 million. Such increase was mainly due to the increase inbank charges from approximately HK$0.2 million for FY2019 to approximately HK$0.6million for FY2020.

Finance costs

Our finance costs increased from approximately HK$1.5 million for FY2019 toapproximately HK$2.0 million for FY2020, representing an increase of approximately 33.3%or HK$0.5 million. Such increase was mainly attributable to the increase in bank borrowingsand bank overdrafts utilised during FY2020.

Income tax expenses

Our income tax expenses slightly increased from approximately HK$2.1 million forFY2019 to approximately HK$2.6 million for FY2020, representing an increase ofapproximately 23.8% or HK$0.5 million. Such increase was mainly attributable to theincrease in profit before taxation for FY2020. The effective tax rate slightly decreased fromapproximately 14.2% in FY2019 to 11.7% in FY2020, respectively, mainly due to the Macautax concession of MOP300,000 granted by the Macau Government.

Profit for the year and net profit margin

As a result of the cumulative effect of the above factors, our profit for the yearincreased by approximately HK$6.9 million, or 54.3% from approximately HK$12.7 millionfor FY2019 to approximately HK$19.6 million for FY2020. Our net profit margin alsoincreased from approximately 6.4% for FY2019 to approximately 7.8% for FY2020.



– 197 –

FY2021 compared to FY2020

Revenue

The table below sets forth the breakdown of our revenue by geographical location forFY2020 and FY2021:

FY2020 FY2021Revenue

HK$’000% of total

revenueRevenue

HK$’000% of total

revenue

Hong Kong 72,196 28.8 39,333 13.4Macau 178,506 71.2 254,883 86.6

Total 250,702 100.0 294,216 100.0

Our revenue increased from approximately HK$250.7 million for FY2020 toapproximately HK$294.2 million for FY2021, representing an increase of approximately17.4% or HK$43.5 million. Such increase was mainly attributable to (i) the increase inrevenue from projects in Macau as project M02 in relation to fitting-out works for a hotelwith an original contract sum of approximately HK$163.1 million commenced works in lateFY2020 and contributed revenue of approximately HK$88.7 million for FY2021 ascompared to approximately HK$0.7 million for FY2020; and (ii) projects M11 and M07 inrelation to fitting-out works for two luxury residential projects commenced works in FY2021and contributed revenue in aggregate of approximately HK$102.3 million for FY2021. Theincrease in revenue for projects in Macau had been partially offset by the decrease inrevenue for projects in Hong Kong as certain major projects such as projects HK14, HK10and HK04 were in late stage or has completed and therefore the aggregated revenuerecognised for these projects amounted to approximately HK$12.3 million for FY2021 ascompared to approximately HK$42.2 million FY2020.



– 198 –

Cost of sales

The table below sets forth the breakdown of our cost of sales by nature for FY2020and FY2021:

FY2020 FY2021

HK$’000

% of totalcost of

sales HK$’000

% of totalcost of

sales

Subcontracting costs 161,635 73.5 126,883 50.6Material costs 40,940 18.6 95,059 37.9Staff and labour costs 10,344 4.7 22,716 9.0Others 6,967 3.2 6,233 2.5

Total 219,886 100.0 250,891 100.0

Our cost of sales increased from approximately HK$219.9 million for FY2020 toapproximately HK$250.9 million for FY2021, representing an increase of approximately14.1% or HK$31.0 million. Such increase was mainly attributable to (i) the increase inmaterials costs from approximately HK$40.9 million for FY2020 to approximately HK$95.1million for FY2021 as more decorative materials and furniture were procured and utilisedfor projects M02, M11 and M07 during FY2021; (ii) the increase in staff and labour costsfrom approximately HK$10.3 million for FY2020 to approximately HK$22.7 million forFY2021, which was mainly due to the increase of staff and labour costs in project M02 andM11 to capture the projects progress for these projects; and partially offset by (iii) thedecrease in subcontracting costs of approximately HK$34.8 million for FY2021 as projectsM03, M08 and M10 were in late stage and less subcontracting works were engaged by ourGroup.


The following table sets out the breakdown of our gross profit margin in Hong Kongand Macau for FY2020 and FY2021:

FY2020 FY2021

GrossProfit

GrossProfit

MarginGrossProfit

GrossProfit

MarginHK$’000 % HK$’000 %

Hong Kong 10,471 14.5 5,359 13.6Macau 20,345 11.4 37,966 14.9

Total/ Overall 30,816 12.3 43,325 14.7



– 199 –

Our gross profit increased from approximately HK$30.8 million for FY2020 toapproximately HK$43.3 million for FY2021, representing an increase of approximately40.6% or HK$12.5 million. The increase in our Group’s gross profit was mainly attributableto the increase in revenue for projects in Macau as explained above. Our gross profit marginincreased slightly from approximately 12.3% for FY2020 to approximately 14.7% forFY2021, which was mainly attributable to the combined effects that (i) a relatively highergross profit margin was charged in the variation orders for project M05; and (ii) therelatively short project duration in projects M11 and M07 which allowed us to charge at arelatively higher margin.

Other income

Our other income increased from approximately HK$162,000 for FY2020 toapproximately HK$811,000 for FY2021, which was mainly due to the increase ingovernment subsidies of approximately HK$770,000 for FY2021 as compared with nil forFY2020, and partially offset by the decrease in bank interest income from approximatelyHK$77,000 for FY2020 to approximately HK$41,000 for FY2021.


Our administrative expenses increased from approximately HK$6.7 million for FY2020to approximately HK$8.8 million for FY2021, representing an increase of approximately31.3% or HK$2.1 million. Such increase was mainly due to (i) the increase in legal andprofessional fee primarily which was attributable to the increase in engagement of advisoryservices for overseeing the administration of projects and legal fees incurred in FY2021; and(ii) the increase in entertainment expense which was in line with our growth of business.

Finance costs

Our finance costs decreased from approximately HK$2.0 million for FY2020 toapproximately HK$1.6 million for FY2021, representing a decrease of approximately 20.0%or HK$0.4 million. Such decrease was mainly attributable to the decrease in bankborrowings utilised during FY2021.

Income tax expenses

Our income tax expenses increased from approximately HK$2.6 million for FY2020 toapproximately HK$3.7 million for FY2021, representing an increase of approximately 42.3%or HK$1.1 million. Such increase was mainly attributable to (i) the increase in profit beforetaxation for FY2021; and (ii) the non-deductible [REDACTED] of approximately HK$3.4million incurred for FY2021. The effective tax rate remained relatively stable at 12.5% forFY2021.



– 200 –

Profit for the year and net profit margin

As a result of the cumulative effect of the above factors, our profit for the yearincreased by approximately HK$6.6 million, or 33.6% from approximately HK$19.6 millionfor FY2020 to approximately HK$26.2 million for FY2021. Our net profit margin alsoincreased from approximately 7.8% for FY2020 to approximately 8.9% for FY2021.

[REDACTED]

The total [REDACTED] in relation to the [REDACTED], primarily consisting of feespaid or payable to professional parties and [REDACTED], are estimated to beapproximately HK$[REDACTED] (based on the mid-point of the [REDACTED] range ofHK$[REDACTED] per [REDACTED] and [REDACTED]). Among the estimated total[REDACTED], (i) approximately HK$[REDACTED] is expected to be accounted for as adeduction from equity upon [REDACTED]; and (ii) approximately HK$[REDACTED] isexpected to be recognised as expenses in our combined statements of profit or loss and othercomprehensive income, of which approximately HK$[REDACTED] had been recognisedduring FY2021 respectively and the remaining portion of approximately HK$[REDACTED]are expected to be recognised during FY2022.

Our Directors would like to emphasise that the amount of the [REDACTED] is acurrent estimate for reference only.

Prospective investors should note that the financial performance of our Group forFY2022 are expected to be adversely affected by the estimated non-recurring [REDACTED]mentioned above, and may or may not be comparable to the financial performance of ourGroup in the past.

LIQUIDITY AND CAPITAL RESOURCES

Our Group’s principal liquidity and capital requirements primarily relate to ouroperating expenses. Historically, we have met our working capital and other liquidityrequirements principally from cash generated from our operations, advances and borrowingsfrom Shareholders and banking facilities. Going forward, we expect to fund our workingcapital and other liquidity requirements with a combination of various sources, including butnot limited to cash generated from our operations, banking facilities, the [REDACTED]from the [REDACTED] as well as other external equity and debt financing.



– 201 –

Cash flows

The following table summarises our Group’s cash flows for the Track Record Period:

FY2019 FY2020 FY2021HK$’000 HK$’000 HK$’000


Net cash from/(used in) operating activities 11,524 34,323 (11,392)Net cash used in investing activities (25,013) (7,746) (9,689)Net cash from/(used in) financing activities 18,168 (7,533) 1,857

Net increase/(decrease) in cash and cashequivalents 4,679 19,044 (19,224)

Cash and cash equivalents at beginning of theyear 1,084 5,763 24,807


Cash flows in operating activities

For FY2019, FY2020 and FY2021, our Group had net cash generated from/(used in)operating activities of approximately HK$11.5 million, HK$34.3 million and HK$(11.4)million, respectively. During the Track Record Period, our Group derived its cash inflowsfrom operating activities primarily from the receipt of payments from contract works and ourcash used in operating activities mainly included payments of subcontracting costs, materialcosts, payments of staff costs and other operating expenses and income tax payments.

For FY2019, we recorded a profit before taxation of approximately HK$14.8 millionand net cash flows from operating activities of approximately HK$11.5 million, which wasmainly attributable to the negative adjustments due to (i) the increase in contract assets ofapproximately HK$30.9 million, which was mainly attributable to a substantial amount ofworks for projects M08 and M10 were performed by our Group during FY2019 and had notbeen billed as at 31 March 2019; (ii) the increase in deposits, prepayments and otherreceivables of approximately HK$9.4 million; partially offset by (iii) the increase in tradepayables of approximately HK$36.7 million as more materials costs and subcontracting costswere incurred by us which were in line with the increase of our revenue; and (iv) theincrease in accruals and other payables of approximately HK$10.6 million.



– 202 –

For FY2020, we recorded a profit before taxation of approximately HK$22.2 millionand net cash flows from operating activities of approximately HK$34.3 million, which wasmainly attributable to the positive adjustments due to (i) the increase in contract liabilities ofapproximately HK$22.1 million, which was mainly attributable to the customer of projectM02 had made payments to us in advance as mutually agreed; (ii) the decrease in contractassets of approximately HK$37.7 million; and partially offset by (iii) the decrease in tradepayables of approximately HK$42.5 million.

For FY2021, we recorded a profit before taxation of approximately HK$29.9 millionand net cash used in operating activities of approximately HK$11.4 million, which wasmainly attributable to the negative adjustments due to (i) the increase in contract assets ofapproximately HK$48.9 million, which was mainly due to substantial amounts of fitting-outworks performed for certain sizable projects in relation to project M05 and M12 near theend of FY2021 and had not been billed as at 31 March 2021; (ii) the decrease in contractliabilities of approximately HK$25.4 million which have been recognised as revenue duringFY2021; and partially offset by (iii) the decrease in deposits, prepayments and otherreceivables of approximately HK$16.3 million.

Cash flows in investing activities

During the Track Record Period, our cash flows used in investing activities mainlyreferred to advances to Directors and related companies and bank deposits pledged forsecuring bank borrowings and our cash flows from investing activities referred to repaymentfrom Directors and related companies and release of pledged bank deposits.

For FY2019, we recorded net cash flows used in investing activities of approximatelyHK$25.0 million, which mainly attributable to cash used in advances to Directors ofapproximately HK$26.7 million.

For FY2020, we recorded net cash flows used in investing activities of approximatelyHK$7.7 million, which mainly attributable to cash used in (i) advances to Directors ofapproximately HK$36.7 million; (ii) new pledged bank deposits placed of approximatelyHK$11.3 million; and partially offset by (iii) repayment from Directors of approximatelyHK$36.8 million.

For FY2021, we recorded net cash flows used in investing activities of approximatelyHK$9.7 million, which mainly attributable to cash used in advances to Directors ofapproximately HK$23.7 million; (ii) new pledged bank deposits placed of approximatelyHK$12.3 million; and partially offset by (iii) release of pledged bank deposits ofapproximately HK$11.3 million; and (iv) repayment from Directors of approximatelyHK$15.6 million.



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Cash flows in financing activities

During the Track Record Period, our cash flows from and used in financing activitiesmainly referred to bank borrowings raised and repayment of bank borrowings during therespective financial year.

For FY2019, we recorded net cash flows from financing activities of approximatelyHK$18.2 million, which was mainly attributable to the net proceeds raised from bankborrowings of approximately HK$18.4 million.

For FY2020, we recorded net cash flows used in financing activities of approximatelyHK$7.5 million, which was mainly attributable to the net repayments of bank borrowings ofapproximately HK$10.4 million.

For FY2021, we recorded net cash flows from financing activities of approximatelyHK$1.9 million, which was mainly attributable to the net proceeds raised from bankborrowings of approximately HK$7.0 million.

Working capital

Our Directors are of the opinion that, taking into consideration our internal resources,cash generated from our operations, banking facilities as well as our existing cash and cashequivalents and the estimated [REDACTED] from the [REDACTED], after deducting therelated expenses in relation to the [REDACTED], our Group has sufficient working capitalfor our present requirements for at least 12 months from the date of this document.



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NET CURRENT ASSETS

As at 31 March 2019, 31 March 2020, 31 March 2021 and 31 July 2021, our Grouphad net current assets of approximately HK$6.1 million, HK$5.8 million, HK$23.3 millionand HK$36.3 million, respectively. Details of the components are set out as follows:

As at 31 MarchAs at

31 July20212019 2020 2021

HK$’000 HK$’000 HK$’000 HK$’000(unaudited)

Current assetsTrade receivables 7,792 5,010 9,109 6,301Deposits, prepayments and other

receivables 15,884 22,539 7,260 5,298Contract assets 60,973 23,451 71,989 94,543Amounts due from related

companies 2,372 2,542 3,164 3,234Amounts due from directors 34,505 19,911 24,835 27,166Pledged bank deposits – 3,922 12,311 12,330Bank balances and cash 5,763 24,807 5,583 7,131

Total current assets 127,289 102,182 134,251 156,003

Current liabilitiesTrade payables 48,092 5,588 21,159 22,276Accruals and other payables 14,917 11,902 15,017 14,558Amounts due to related companies 1,630 1,881 2,041 2,021Amount due to a director – 1,589 12,974 13,004Contract liabilities 4,690 26,806 1,389 –Tax payable 4,318 6,509 10,283 12,138Bank borrowings 37,063 26,621 33,666 41,611Bank overdrafts 10,505 15,336 14,384 14,102Lease liability 20 128 22 –

Total current liabilities 121,235 96,360 110,935 119,710

Net current assets 6,054 5,822 23,316 36,293



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Our net current assets slightly decreased from approximately HK$6.1 million as at 31March 2019 to approximately HK$5.8 million as at 31 March 2020. Such decrease wasprimarily due to the combined effects of (i) the decrease in contract assets as discussed inthe paragraph headed “Discussion on selected items in financial statements — Contractassets and contract liabilities” in this section below; and (ii) the decrease in amounts duefrom directors mainly resulted from the offsetting by the dividends declared and settledduring FY2019; partially offset by the (iii) the decrease in trade payables and (iv) thedecrease in bank borrowings.

Our net current assets increased from approximately HK$5.8 million as at 31 March2020 to approximately HK$23.3 million as at 31 March 2021, mainly attributable to (i) theincrease in contract assets as discussed in the paragraph headed “Discussion on selecteditems in financial statements — Contract assets and contract liabilities” in this section; (ii)the decrease in contract liabilities as discussed in the paragraph headed “Discussion onselected items in financial statements — Contract assets and contract liabilities” in thissection below; partially offset by (iii) the increase in trade payables resulted from theincrease in subcontracting works incurred for projects M02, M11 and M07 before the yearend of FY2021.

As at 31 July 2021, being the latest practicable date for ascertaining our net currentassets position, our net current assets amounted to approximately HK$36.3 million, whichwas higher than our net current assets as at 31 March 2021. The increase in net currentassets was mainly due to the increase in contract assets from approximately HK$72.0 millionas at 31 March 2021 to approximately HK$94.5 million as at 31 July 2021; and partiallyoffset by the increase in bank borrowings from approximately HK$33.7 million as at 31March 2021 to approximately HK$41.6 million as at 31 July 2021.

DISCUSSION ON SELECTED ITEMS IN FINANCIAL STATEMENTS

Trade receivables

As at 31 March 2019, 2020 and 2021, our trade receivables amounted to approximatelyHK$7.8 million, HK$5.0 million and HK$9.1 million, respectively. The following table setsout the details of our trade receivables as at the dates indicated:

As at 31 March2019 2020 2021

HK$’000 HK$’000 HK$’000

Trade receivables 7,818 5,194 9,154Less: Allowances for credit losses (26) (184) (45)

7,792 5,010 9,109



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Our trade receivables decreased from approximately HK$7.8 million as at 31 March2019 to approximately HK$5.2 million as at 31 March 2020 mainly due to (i) theoutstanding balances from our customers for certain projects such as projects HK15, HK11and M06 as at 31 March 2019 had been settled in FY2020 and (ii) substantial amounts ofworks for these projects had already been completed in FY2019 thus only minimal revenuehad been generated in FY2020.

Our trade receivables increased from approximately HK$5.2 million as at 31 March2020 to approximately HK$9.2 million as at 31 March 2021 mainly due to the substantialamounts of works were performed for projects M11 and M07 and billed near the end ofFY2021.

For trade receivables and contract assets, our Group had applied simplified approach inHKFRS 9 to measure the loss allowance at lifetime ECL. Our Group determines the ECLbased on individual assessment. The expected credit loss rate ranged from 0.01% to 7.25%,0.08% to 6.12% and 0.01% to 3.44% as at 31 March 2019, 2020 and 2021 respectively. Theestimated loss rates are estimated based on historical observed default rates over theexpected life of the debtors and are adjusted for forward-looking information that isavailable without undue cost or effort. The grouping is regularly reviewed by themanagement to ensure relevant information about specific debtors are updated.

For each of the financial year during the Track Record Period, our Group providedimpairment allowance on trade receivables of HK$26,000, HK$184,000 and HK$45,000, netof reversal of HK$1,000, HK$26,000 and HK$184,000, respectively. Our Group alsoprovided impairment allowance on contract assets of HK$349,000, HK$170,000 andHK$389,000, net of reversal of HK$8,000, HK$309,000 and HK$37,000, respectively.

During the Track Record Period, the credit period with our customers was generally 0to 30 days.

The following table sets forth an ageing analysis of trade receivables based on dates ofwork certified:

As at 31 March2019 2020 2021

HK$’000 HK$’000 HK$’000

0 – 30 days 454 2,640 5,81431 – 60 days – – 2,36661 – 90 days 5,636 1,923 –Over 90 days 1,702 447 929

7,792 5,010 9,109

As at the Latest Practicable Date, approximately 100% of our trade receivables as at 31March 2021 had been settled.



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Trade receivables turnover days

The following table sets forth our trade receivables turnover days during the TrackRecord Period:

FY2019 FY2020 FY2021Days Days Days

Trade receivable turnover days (Note) 10.9 9.3 8.8

Note: The trade receivable turnover days are calculated by dividing the average trade receivable balance byrevenue for the relevant financial year multiplied by the number of days during the financial year(i.e. 365 days for FY2019 and 366 days for FY2020 and 365 days for FY2021). Average tradereceivable balance is the average of the beginning and ending trade receivable for the relevantfinancial year.

Deposits, prepayments and other receivables

As at 31 March 2019, 2020 and 2021, our Group had deposits, prepayments and otherreceivables of approximately HK$15.9 million, HK$22.5 million and HK$7.3 million,respectively.

The following table sets out a breakdown of deposits, prepayments and otherreceivables of our Group at the dates indicated:

As at 31 March2019 2020 2021

HK$’000 HK$’000 HK$’000

Deposits 20 74 96Advances paid to subcontractors and suppliers 12,920 22,196 5,269Surety bond 2,900 – –[REDACTED] – – [REDACTED][REDACTED] – – [REDACTED]Advances to staff 44 269 571

Total 15,884 22,539 7,260

Our Group’s deposits, prepayments and other receivables mainly comprised advancespaid to subcontractors and suppliers. The advances paid to subcontractors and suppliersincreased from approximately HK$12.9 million as at 31 March 2019 to approximatelyHK$22.2 million as at 31 March 2020 mainly due to the prepayments to subcontractors andsuppliers for their procurement of materials in relation to projects M05 and M03. Theadvances paid to subcontractors and suppliers decreased from approximately HK$22.2million as at 31 March 2020 to approximately HK$5.3 million as at 31 March 2021 mainlydue to the advances paid to the subcontractors and suppliers in the previous year had beenutilised as expenses during the execution of projects in FY2021.



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Contract assets and contract liabilities

Our contract asset represented our Group’s right to consideration in exchange forfitting-out services that our Group has provided to a customer that is not yet unconditional.If our Group provides fitting-out services to a customer before the customers paysconsideration or before payment is due, a contract asset is recognised for the earnedconsideration that is conditional. Furthermore, contract assets consist of our Group’s rightsto consideration for fitting-out works completed but unbilled amounts resulting fromconstruction contracts.

The following table sets forth the breakdown of our contract assets and contractliabilities as at the dates indicated:

As at 31 March2019 2020 2021

HK$’000 HK$’000 HK$’000

Contract assets (Note) 61,325 23,664 72,554Less: Allowance for credit losses (352) (213) (565)

60,973 23,451 71,989

Contract liabilities 4,690 26,806 1,389

Note: The contract assets included retention receivables of approximately HK$17.0 million, HK$21.5million and HK$26.2 million as at 31 March 2019, 2020 and 2021, respectively. The details are setout in this section.

Our contract assets decreased from approximately HK$61.3 million as at 31 March2019 to approximately HK$23.7 million as at 31 March 2020 mainly attributable to theprogress certificates for projects M08 and M10 as at 31 March 2019, which were issuedsubsequent to the year end of FY2019, had been billed and settled by our customers duringFY2020.

Our contract assets increased from approximately HK$23.7 million as at 31 March2020 to approximately HK$72.6 million as at 31 March 2021, which was mainly attributableto substantial amounts of fitting-out works performed for projects M02, M11 and M07 nearthe end of FY2021 but had not been billed as at 31 March 2021.



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In order to better reflect the liquidity pressure of our operation, after taking intoaccount of our contract assets when calculating trade receivable turnover days.

The following table sets forth our trade receivables and contract assets turnover daysfor the Track Record Period:


Trade receivables and contract assets turnoverdays (Note) 95.7 71.0 68.0

Note: The trade receivables and contract assets turnover days are calculated by dividing the average tradereceivables and contract assets balance by revenue for the relevant financial year multiplied by thenumber of days during the financial year (i.e. 365 days for FY2019 and 366 days for FY2020 and365 days for FY2021). Average trade receivables and contract assets balance is the average of thebeginning and ending trade receivables and contract assets balances for the relevant financial year.

Our trade receivables and contract assets turnover days were approximately 95.7 days,71.0 days and 68.0 days for FY2019, FY2020 and FY2021, respectively. The generaldecreasing trend of our trade receivables and contract assets turnover days during the TrackRecord Period was mainly attributable to our growth of business in terms of increase in ourrevenue.

As at the Latest Practicable Date, approximately 55.0% of our contract assets as at 31March 2021 had been subsequently billed.

Retention receivables

Retention receivables are recognised in respect of the retention money held up by ourcustomers from each progress payment (typically 10% of each progress payment) until aspecified percentage of the total contract sum (typically 5% of the total contract sum) isreached. The first half of the retention money is usually released upon the issue of thecertificate of practical completion and the remaining portion is usually released after thecompletion of the defects liability period or in accordance with the terms specified in therelevant contracts, ranging from three months to 24 months from the date of completion ofrespective projects.

As at 31 March 2019, 2020 and 2021, our retention receivables amounted toapproximately HK$17.0 million, HK$21.5 million and HK$26.2 million, respectively. Thegeneral increasing trend of our retention receivables was generally in line with our growthof business during the Track Record Period.



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Contract liabilities

Our contract liability is recognised when a payment is received or a payment is due(whenever is earlier) from a customer before our Group provides fitting-out services. Ourcontract liabilities mainly represent advance payments from our customers. Contractliabilities are recognised as revenue when our Group performs under the contract (i.e.provision of fitting-out services to the customer).

Our Group’s contract liabilities increased from approximately HK$4.7 million as at 31March 2019 to approximately HK$26.8 million as at 31 March 2020 mainly due to theadvanced payments provided by our customer for project M02 during FY2020.

Our Group’s contract liabilities decreased to approximately HK$1.4 million as at 31March 2021 mainly due to the recognition of contract liabilities as revenue during FY2021.

Amounts due from Directors

Our amounts due from Directors mainly represented advances to Mr. Y. W. Chan andMs. Wan, our executive Directors for their personal use of approximately HK$44.5 million,HK$29.9 million and HK$24.8 million as at 31 March 2019, 2020 and 2021, respectively.The amount was unsecured, interest-free, repayable on demand and of non-trade nature. OurDirectors confirm that the amounts due from Directors will be fully settled upon[REDACTED].

Trade payables

As at 31 March 2019, 2020 and 2021, trade payables of our Group amounted toapproximately HK$48.1 million, HK$5.6 million and HK$21.2 million, respectively.

Our trade payables decreased from approximately HK$48.1 million as at 31 March2019 to approximately HK$5.6 million as at 31 March 2020 mainly due to a substantialamount of subcontracting costs was incurred near the year end of FY2019 for projects M01,M08 and M10 and the relevant ending balances had been settled during FY2020. Our tradepayables increased from approximately HK$5.6 million as at 31 March 2020 toapproximately HK$21.2 million as at 31 March 2021 mainly due to a substantial amount ofsubcontracting costs was incurred near the year end of FY2021 for projects M02, M11 andM07 which were generally in line with our work progress for these projects during FY2021.

The payment terms with our major subcontractors and suppliers during the TrackRecord Period were normally within 30 days after the invoice dates.



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The following table sets out an ageing analysis of our Group’s trade payables as at thedates indicated:

As at 31 March2019 2020 2021

HK$’000 HK$’000 HK$’000

0 to 30 days 5,767 3,191 21,10731 to 60 days 37,195 1,664 –61 to 90 days 2,107 723 –Over 90 days 3,023 10 52

Total 48,092 5,588 21,159

The following table sets out the trade payables turnover days of our Group for theTrack Record Period:


Trade payables turnoverdays(Note) 62.4 44.7 19.5

Note: Trade payables turnover days are calculated by dividing the average trade payables balance by costof sales for the relevant financial year multiplied by the number of days during the financial year(i.e. 365 days for FY2019 and 366 days for FY2020 and 365 days for FY2021). Average tradepayables balance is the average of the beginning and ending trade payables balances for the relevant

financial year.

Our trade payables turnover days generally show a decreasing trend during the TrackRecord Period.

As at the Latest Practicable Date, approximately 82.1% of our Group’s trade payablesas at 31 March 2021 were subsequently settled.

Our Directors confirm that our Group did not have any material default in payment oftrade payables during the Track Record Period.

Retention payables

As at 31 March 2019, 31 March 2020 and 31 March 2021, our Group had retentionpayables of approximately HK$11.8 million, HK$9.3 million and HK$11.2 million,respectively. The retention payables fluctuate corresponding to the growth of our business.

Retention payables are recognised in respect of the retention money we hold up fromthe payments to our subcontractors. The retention money is usually specified to be releasedin the following manner: the first half upon the issue of the certificate of practical



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completion and the remaining portion upon the expiry of the defects liability period.Therefore, a certain portion of retention payables would normally remain outstanding as atthe end of reporting period.

Tax payables

The tax payables was approximately HK$4.3 million, HK$6.5 million and HK$10.3million as at 31 March 2019, 2020 and 2021, respectively.

Tax re-filings of Wang Hing Interior Design and Wang Hing Interior Engineering for theprior year adjustments made

Prior to the preparation of the [REDACTED], the statutory financial statements ofWang Hing Interior Design and Wang Hing Interior Engineering were prepared inaccordance with the Small and Medium-sized Entity Financial Reporting Framework andFinancial Reporting Standard (the “SME-FRS”). Those statutory financial statements wereaudited by a local auditor.

For the purpose of the [REDACTED], our Group had adopted Hong Kong FinancialReporting Standard (the “HKFRS”) in preparation of the financial information of our Groupand it came to the attention of our Company’s management that certain discrepancies wereidentified for the statutory financial statements of Wang Hing Interior Design and WangHing Interior Engineering for the financial years ended 31 March 2018, 2019 and 2020. As aresult, our Company had prepared the restated financial statements for Wang Hing InteriorDesign and Wang Hing Interior Engineering for the financial years ended 31 March 2018,2019 and 2020 to rectify the accounting adjustments resulted from the above-mentioneddiscrepancies (the “Accounting Adjustments”) and prepared the revised profits taxcomputations for the respective years of assessment.

In order to ensure the prior years’ tax positions of Wang Hing Interior Design andWang Hing Interior Engineering were properly rectified, our Company had engaged anindependent Hong Kong tax consultant (the “Hong Kong Tax Consultant”) to advise on theHong Kong profits tax refiling matters.

Upon review, the Hong Kong Tax Consultant estimated that the additional tax payablesfor Wang Hing Interior Design and Wang Hing Interior Engineering for the relevant years ofassessments are indicated below:

Years of assessment2017/2018 2018/2019 2019/2020

HK$’000 HK$’000 HK$’000Additional tax payable–Wang Hing Interior Design 32 480 412–Wang Hing Interior Engineering – 113 136

Total 32 593 548



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The additional tax payable was estimated based on each year’s revised profits taxcomputations and compared with the original profits tax computations or notices ofassessment issued by the Inland Revenue Department (the “IRD”) for the previous years’ ofassessments.

Our management had submitted the revised profits tax computations to the IRD,informing the IRD of the revised profits for the years of assessment 2017/2018, 2018/2019and 2019/2020 voluntarily.

Our management confirmed that the additional tax payable had been provided for andwill be settled in due course.

Our Hong Kong Tax Consultant opined, and our Legal Counsel concurred, that (i) theoriginal tax filings of Wang Hing Interior Design and Wang Hing Interior Engineering forthe years of assessments 2017/2018, 2018/2019 and 2019/2020 were prepared based on theamounts stated on the original audited financial statements, which were audited by the localauditor who had expressed opinion that the relevant financial statements were prepared in allmaterial respects in accordance with the SME-FRS and had been prepared in compliancewith the Hong Kong Companies Ordinance which were relied upon by our management; (ii)that both Wang Hing Interior Design and Wang Hing Interior Engineering do not have anywillful intention to evade tax in this regard given as soon as the Accounting Adjustmentswere identified, our management restated the financial statements and submitted the revisedprofits tax computations to the IRD proactively to inform the IRD and hence thecircumstances of Wang Hing Interior Design and Wang Hing Interior Engineering do not fallwithin the ambit of intention to evade tax under Section 82 of the Inland Revenue Ordinance(the “IRO”); and (iii) it is considered that our management shall have grounds to establishas having a reasonable excuse in this regard as our management relied on the originalaudited financial statements of Wang Hing Interior Design and Wang Hing InteriorEngineering which were audited by the local auditor and the preparations by the former taxrepresentative engaged by our management which had reported all revenue recognised in therespective original audited financial statements in the original profits tax computations.

The Legal Counsel opined that, and the Directors concurred that, the non-compliance inthe above incidents themselves do not have any material adverse effect on the operation andbusiness/financial performances of the Group in any material way.

Tax re-filing of Wang Hing Lain Fung and L & F Interior Engineering the prior yearadjustments

For the financial years ended 31 December 2018, 2019 and 2020, Wang Hing LainFung, our operating subsidiary in Macau, had engaged an independent local accounting firm(“Local Accountant”) to prepare and file the tax returns and/or financial statements for therelevant periods. Wang Hing Lain Fung had filed the Macau Complementary Income TaxReturns with the Financial Services Bureau of the Macau Government (the “MacauFinancial Services Bureau”) under Group B taxpayer category for the financial year ended31 December 2018 and Group A taxpayers category for the financial years ended 2019 and2020, respectively. Our income taxes paid for Wang Hing Lain Fung were assessed andcomputed by the Macau Financial Services Bureau based on the tax returns filed by Wang



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Hing Lain Fung for the respective years of assessment, which were reported by Wang HingLain Fung under the general financial reporting standards issued by the Macau Government(the “Macau FRS”).

L & F Interior Engineering, our operating subsidiary in Macau, had filed MacauComplementary Income Tax Returns under Group B taxpayer category with the MacauFinancial Services Bureau for the financial years ended 31 December 2018, 2019 and 2020.

Similar to the case of Wang Hing Interior Design and Wang Hing Interior Engineering,accounting adjustments were made for Wang Hing Lain Fung and L & F InteriorEngineering for the purpose of restate the financial statements for Wang Hing Lain Fung andL & F Interior Engineering for the previous financial years in accordance with the HKFRS.In order to ensure the prior years’ tax positions of Wang Hing Lain Fung and L & F InteriorEngineering were properly rectified, our Group had engaged an independent Macau taxconsultant (the “Macau Tax Consultant”) to advise the Macau Complementary Income Taxre-filing matters.

Accounting adjustments were made to the recognition of revenue and certain expensesrecorded by Wang Hing Lain Fung and L & F Interior Engineering during the financial yearsended 31 December 2018, 2019 and 2020 which were mainly attributable to the differencebetween Macau FRS and HKFRS and deductibility of expenses under the MacauComplementary Income Tax Regulation (the “CT Regulation”).

Upon review, the Macau Tax Consultant estimated that the additional tax payable forWang Hing Lain Fung and L & F Interior Engineering for the relevant financial years areindicated below:

For the financial year ended 31 DecemberAdditional tax payable 2018 2019 2020

MOP’ million MOP’ million MOP’ million

Wang Hing Lain Fung 1.3 2.0 3.2L & F Interior Engineering 0.7 1.3 2.8

Total 2.0 3.3 6.0

Our Group has made a refiling of the revised tax returns for the years of assessment2018, 2019 and 2020 for Wang Hing Lain Fung and L & F Interior Engineering to theMacau Financial Services Bureau.

Our management confirmed that the additional tax payable had already been providedfor and will be settled in due course.

Our Macau Tax Consultant opined, and our Macau legal advisers concurred, that ourfiling for tax reassessments was caused by the accounting adjustments resulted from theadoption of HKFRS as mentioned above. As such, it contributes a valid and legitimatereason for the acceptance by Macau Financial Services Bureau to make filing of taxreassessment. In the event that the Macau tax authority considers that the penalty is required



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for the initial tax filings, with reference to Article 64 of the CT Regulation, any latesubmission, inaccurate declarations and verified omissions in CT return will result in penaltyof MOP100-MOP10,000 and if the absence, inaccuracy or omission is verified to bedeliberate, the range of penalty will be increased to MOP1,000 to MOP20,000. Further,pursuant to Article 65 of the CT Regulation, the absence of proper accounting and financerecords will result in penalty of MOP100 to MOP2,000. In this connection, the maximumpotential penalty for Wang Hing Lain Fung and L & F Interior Engineering for failing tocomply with Articles 64 and 65 of the CT Regulation will be MOP20,000 for each companyper annum.

Having regard to (i) the nature and the reason of the tax-re-filing; (ii) the immaterialamount of potential penalties to be imposed on the Group; (iii) the fact that Group has notreceived any notice or summons from the Macau Financial Services Bureau as at the LatestPracticable Date; and (iv) the opinion of the Macau legal advisers and Macau TaxConsultant, the Directors believe that the abovementioned tax- refiling would have noadverse effect on the operation and business/financial performances in any material way.

Indemnity given by our Controlling Shareholders

In relation to the above, our Controlling Shareholders have undertaken to indemnifyour Group against any losses and liabilities arising from the above Hong Kong and Macautax re-filing matters. For further details, please refer to the section headed “Statutory andgeneral information” in Appendix IV to this document.

INDEBTEDNESS

Borrowings

As at 31 March 2019, 2020, 2021 and 31 July 2021, our Group had outstandingborrowings of approximately HK$47.6 million, HK$42.0 million, HK$48.1 million andHK$55.7 million, respectively, which mainly represented bank borrowings and bankoverdrafts.

The following table sets out a breakdown of our Group’s bank borrowings and bankoverdrafts as at the dates indicated:

As at 31 MarchAs at

31 July2019 2020 2021 2021

HK$’000 HK$’000 HK$’000 HK$’000

Bank borrowings – secured 37,063 26,621 33,666 41,611Bank overdrafts – secured 10,505 15,336 14,384 14,102

Total 47,568 41,957 48,050 55,713



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As at 31 March 2019, 2020 and 2021, our bank borrowings were denominated in HongKong dollars and Macau Pataca and were repayable on demand or within one year. The bankborrowings carry variable interest ranging from the prevailing best lending rates quoted bythe banks in Hong Kong (the “Prime Rate”) minus 2.65% per annum to the Prime Rateduring the Track Record Period.

Our Directors confirm that there was no material delay or default in repayment of bankborrowings during the Track Record Period and up to the Latest Practicable Date.

As at 31 March 2019, 2020 and 2021, our bank overdrafts were denominated in HongKong dollars and Macau Pataca and were repayable on demand. They bore variable interestranging from one month Hong Kong Interbank Offered Rate plus 1.4% per annum to thePrime Rate plus 2.5% per annum.

Mr. Y. W. Chan, Ms. Wan and Ms. Chan Kit Ying (“Ms. Chan”), daughter of Mr. Y. W.Chan and Ms. Wan, have provided unlimited personal guarantees to banks for bankingfacilities granted to our Group as at 31 March 2019, 2020 and 2021. Securities including (i)three properties respectively owned by On Fine Investment Limited (a company whollyowned by Mr. Y. W. Chan), Ms. Wan and Ms. Chan; (ii) a life insurance policy with Mr. Y.W. Chan being the policy owner thereof; and (iii) pledged bank deposits of Million FineEngineering Limited (a company owned as to 40% and 60% by Mr. Y. W. Chan and Ms.Wan, respectively) have been charged to the relevant banks for banking facilities granted toour Group as at 31 March 2019, 2020 and 2021. As at 31 March 2021, the balances of theSME Financing Guarantee Loan was HK$3,561,000, which was fully secured by loanguarantee provided by the Hong Kong Government and Mr. Y. W. Chan.

Our Directors confirmed that such personal guarantee, pledged properties owned byrelated parties, pledged life insurance of Mr. Y. W. Chan and pledged bank deposits ofMillion Fine will be released upon the [REDACTED].

SURETY BONDS

Our Group has obtained credit facilities for the issuance of surety bonds and thesecredit facilities were secured by properties and unlimited personal guarantees provided byour Directors and related parties of the Group and pledged bank deposits of a relatedcompany. Our Group had outstanding surety bonds amounted to approximately HK$11.9million, HK$41.5 million, HK$26.4 million and HK$26.4 million as at 31 March 2019,2020, 2021 and 31 July 2021, respectively.

Material indebtedness change

Our Directors have confirmed that, there has been no material change in indebtedness,capital commitment and contingent liabilities of our Group since 31 July 2021 and up to theLatest Practicable Date.

Our Directors have confirmed that as at the Latest Practicable Date, our Group did nothave any plans to raise any material debt financing shortly after [REDACTED].



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Lease liability

Our Group recorded lease liability of approximately HK$20,000, HK$150,000,HK$22,000 and nil as at 31 March 2019, 2020 and 2021 and as at 31 July 2021,respectively. Such amount mainly represented the liability arising from our Group’s leasingof office premises which have lease terms over one year. For more details, please refer tothe paragraph head “Connected Transaction — Exempt connected transaction” in thisdocument.

RELATED PARTY TRANSACTIONS

Our related party transactions during the Track Record Period are summarised in note28 to the Accountants’ Report as set out in Appendix I to this document. Our Directorsconfirm that these related party transactions were generally conducted on normal commercialterms and/or on terms not less favourable them terms available than terms from independentthird parties, which are considered fair, reasonable and in the interests of the shareholdersand our Company as a whole.

Having considered that the amounts of these related party transactions are relativelyinsignificant as compared to our Group’s revenue, our Directors are of the view that theaforesaid related party transactions did not distort our financial results during the TrackRecord Period or cause our Track Record Period results to be unreflective of our futureperformance.

OFF-BALANCE SHEET ARRANGEMENTS AND COMMITMENTS

Save as disclosed in the paragraph headed “Indebtedness” in this section, our Directorsconfirm that our Group had not entered into any off-balance sheet arrangements orcommitments during the Track Record Period and as at the Latest Practicable Date.

ANALYSIS OF KEY FINANCIAL RATIOS

FY2019 FY2020 FY2021

Net profit margin (%) (Note 1) 6.4 7.8 8.9Return on equity (%) (Note 2) 63.2 83.0 111.0Return on total assets (%) (Note 3) 9.0 16.3 19.5Interest coverage (times) (Note 4) 11.0 12.0 19.2

As at 31 March2019 2020 2021

Current ratio and quick ratio (times) (Note 5) 1.0 1.1 1.2Gearing ratio (%) (Note 6) 237.4 178.2 203.6Net debt-to-equity ratio (%) (Note 7) 208.6 73.2 179.9



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Notes:

1. Net profit margin is calculated based on the net profit for the financial year divided by total revenuefor the financial year and multiplied by 100%.

2. Return on equity is calculated based on the net profit for the financial year divided by total equity atthe end of the financial year and multiplied by 100%.

3. Return on total assets is calculated based on the net profit for the financial year divided by totalassets at the end of the financial year and multiplied by 100%.

4. Interest coverage is calculated based on the profit before interest and tax for the financial yeardivided by interest expenses for the financial year.

5. Current ratio is calculated based on the total current assets at the end of the financial year divided bythe total current liabilities at the end of the financial year. Quick ratio is calculated based on the totalcurrent assets (excluding inventories) at the end of the financial year divided by the total currentliabilities at the end of the financial year.

6. Gearing ratio is calculated based on total debt at the end of the financial year divided by total equityat the end of the financial year and multiplied by 100%. Total debt of our Group comprised of bankborrowings, bank overdrafts and lease liability.

7. Net debt-to-equity ratio is calculated based on net debt at the end of the financial year divided bytotal equity at the end of the financial year and multiplied by 100%. Net debt is defined as totaldebts which comprised of bank borrowings, bank overdrafts and lease liability net of cash and cash

equivalents.

Return on equity

Our Group had return on equity of approximately 63.2%, 83.0% and 111.0% forFY2019, FY2020 and FY2021, respectively. The ratio of return on equity showed anincreasing trend during the Track Record Period which was mainly attributable to theincrease in net profits as explained above.

Return on total assets

Our return on total assets was approximately 9.0%, 16.3% and 19.5% as at 31 March2019, 2020 and 2021, respectively, and the general increasing trend was mainly due to theincrease in net profits during the Track Record Period.

Interest coverage

Our Group had interest coverage of approximately 11.0 times, 12.0 times and 19.2times for FY2019, FY2020 and FY2021, respectively. The increasing trend of our interestcoverage was in line with our increased profit before interest and tax during the TrackRecord Period.

Current ratio and quick ratio

Our current ratio remained steady at approximately 1.0 times, 1.1 times and 1.2 timesas at 31 March 2019, 2020 and 2021, respectively.



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As our Group did not hold any inventory as at 31 March 2019, 2020 and 2021, ourGroup’s current ratio was the same as the quick ratio.

Gearing ratio

Gearing ratio of our Group was approximately 237.4%, 178.2% and 203.6% as at 31March 2019, 2020 and 2021, respectively. The gearing ratio was decreased fromapproximately 237.4% as at 31 March 2019 to approximately 178.2% as at 31 March 2020,mainly due to (i) the increase in equity as a result of the increase in retained earnings; and(ii) the decrease in bank borrowings.

The gearing ratio was increased from approximately 178.2% as at 31 March 2020 toapproximately 203.6% as at 31 March 2021, mainly due to the increase in bank borrowings.

Net debt-to-equity ratio

The net debt-to-equity ratio of our Group was approximately 208.6%, 73.2% and179.9% as at 31 March 2019, 2020 and 2021, respectively.

The fluctuations of the net debt-to-equity ratio generally correspond to the changes inour Group’s bank balances and cash and bank borrowings during the Track Record Period.

FINANCIAL RISK

The major financial risks arising from our Group’s normal course of business includecredit risk, interest rate risk, liquidity risk and currency risk. For details, please refer to note30 to the Accountants’ Report as set out in Appendix I to this document.

UNAUDITED PRO FORMA ADJUSTED COMBINED NET TANGIBLE ASSETS

[REDACTED]

For further details, please refer to “Unaudited Pro Forma Financial Information” set outin Appendix II to this document.

DIVIDEND

During FY2019, FY2020 and FY2021, subsidiaries of our Company had declareddividends of approximately HK$8.3 million, HK$16.0 million and HK$26.2 million,respectively. All such relevant dividends had been settled through the current account withour Directors.

The declaration and payment of future dividends will be subject to the decision of theBoard having regard to various factors, including but not limited to our operation andfinancial performance, profitability, business development, prospects, capital requirements



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and economic outlook. It is also subject to any applicable laws. The historical dividendpayments may not be indicative of future dividend trends. We do not have anypredetermined dividend payout ratio.

DISTRIBUTABLE RESERVES

Under the Companies Act, we may pay dividends out of our profit or our sharepremium account in accordance with the provisions of our Articles of Association, providedthat immediately following the date on which the dividend is proposed to be distributed, weremain able to pay our debts as and when they fall due in the ordinary course of business.Our Company was incorporated on 14 May 2021 and there was no distributable reserve as at31 March 2019, 2020 and 2021, respectively.

DISCLOSURE UNDER CHAPTER 13 OF THE LISTING RULES

Our Directors confirm that as at the Latest Practicable Date, they were not aware ofany there was no circumstance that would give rise to a disclosure requirement under Rules13.13 to 13.19 of the Listing Rules.

POST BALANCE SHEET EVENTS

For further details, please see “Summary — Recent development” and “Event after theend of the reporting period” in note 34 to the Accountants’ Report.

RECENT DEVELOPMENTS AND MATERIAL ADVERSE CHANGE

Our Directors confirm that, save for the expenses in connection with the[REDACTED] which are non-recurring in nature, up to the date of this document, there hasbeen no material adverse change in our financial or trading position or prospects since 31March 2021, and there had been no events since 31 March 2021 which would materiallyaffect the information shown in our audited combined financial statements included in theAccountants’ Report set out in Appendix I to this document.

For our recent development subsequent to the Track Record Period, please refer to theparagraph headed “Summary and Highlights — Recent development” in this document.



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FUTURE PLANS

Please refer to the paragraph headed “Business — Our business strategies” in thisdocument for our Group’s business objectives and strategies.

[REDACTED]

We estimate that the aggregate [REDACTED] to us from the [REDACTED], afterdeducting related [REDACTED] and estimated expenses in connection with the[REDACTED], assuming none of the [REDACTED] is exercised and assuming an[REDACTED] of HK$[REDACTED] per [REDACTED] (being the mid-point of the[REDACTED] range of HK$[REDACTED] to HK$[REDACTED]), will be approximatelyHK$[REDACTED]. Our Directors intend to apply such [REDACTED] as follows:

� approximately HK$[REDACTED], representing approximately [REDACTED]%of the [REDACTED], will be used to finance our upfront costs (such assubcontracting costs, costs of raw materials, staff and labour costs, site utilitiesand other site set-up costs) and working capital requirements at the early stage ofthe projects we plan to secure in the future.

As at the Latest Practicable Date, the total estimated contract sum of our tenderedprojects whose tender result is pending amounts to approximately HK$1,422.2million. Among these tender projects, our Directors are confident of securingeight potential projects (the “Potential Projects”) based on the progress ofnegotiation and taking into account that we have been (i) shortlisted by thepotential customer to attend tender interview; (ii) discussing and replying tovarious tender queries from the potential customers who are interested in ourservices; or (iii) being invited to submit revised tender price or best offer price incertain Potential Projects for the customers’ final decision of contractor selection.

Based on our Directors’ best estimation, the estimated contract sum of thePotential Projects amount to approximately HK$634.2 million. With reference toour management’s best estimation based on our historical projects of similar scaleand quotations obtained from relevant suppliers, subcontractors and other serviceproviders, it is estimated that the upfront cost and working capital requirementwould be approximately 20% of the total contract sum of our projects. As such, inanticipation of the Potential Projects, we estimate that our total upfront costs andworking capital requirements at the early stage of the Potential Projects willamount to approximately HK$[REDACTED]. We expect that the net cash outflowat the early stage of the Potential Projects can be met by the [REDACTED] fromthe [REDACTED] as described above and our financial position will therefore bestrengthened. In case the final upfront costs is more than HK$[REDACTED], theremaining balance will be funded by our Group’s internal resources.



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� approximately HK$[REDACTED], representing approximately [REDACTED]%of the [REDACTED], will be used to take out surety bonds in favour of therelevant customers to ensure our due performance and observance of the contractsfor the Potential Projects.

Among the Potential Projects with estimated contract sum of over HK$[REDACTED], most of them (with estimated contract sum of approximately HK$[REDACTED]) involve surety bond requirements.

Our Directors consider that if we are to enhance our market share and undertakemore sizeable projects, we must continue to enhance our available financialresources and strengthen our liquidity position. In this connection, approximatelyHK$[REDACTED], representing approximately [REDACTED]% of the[REDACTED], will be used to take out surety bonds in favour of the relevantcustomers to ensure our due performance and observance of the contracts for thePotential Projects.

� approximately HK$[REDACTED], representing approximately [REDACTED]%of the [REDACTED], will be used for expansion of our manpower resources toensure we have sufficient project management personnel for our projects on handand other future projects. We plan to expand our workforce by hiring one projectmanager, two assistant project managers, one quantity surveyor one procurementmanager, one safety supervisor, two site supervisors and five staff handing BIM inour fitting out works projects.

We consider that it is imperative to expand our workforce given that:

(a) As at the Latest Practicable Date, there were 31 tenders with a totalestimated contract sum of approximately HK$1,422.2 million whose resultswere still pending, among which our Directors are confident in securingeight projects with an estimated contract sum of approximately HK$634.2million. Furthermore, we have been awarded nine contracts with anaggregate original contract sum of approximately HK$169.6 million after theTrack Record Period and up to the Latest Practicable Date. Thisdemonstrates our Group’s growing momentum to expand our business tocapture the emerging business opportunities going forward. In view of suchemerging business opportunities, our Directors consider that our existingstaff are not sufficient to cope with our operational need for our businessexpansion as driven by the Potential Projects. Taking into account (i) thesize of the relevant projects and (ii) the complexity and workforcerequirement of the relevant projects, we intend to increase the number of ourstaff to cope with the manpower need of the Potential Projects. OurDirectors also consider that our existing manpower resources are by nomeans sufficient to cope with our prospective projects and we have genuineneed to expand our project management staff given that (a) there is noassurance that there will not be any delay in our projects on hand or we willnot be required to perform additional works for these projects, thus renderingit impracticable to release certain manpower for our expected projects and



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(b) although we engage subcontractors to carry out the site works, weconsider that it is imperative for our Group to recruit sufficient projectsupervision staff to supervise and maintain the work quality ofsubcontractors for our projects and also to increase the flexibility to avoiddelay from overlapping schedule of projects. Hence, we consider we havegenuine need to strengthen our project team by additional recruitment ofstaff as described above;

(b) we need to strengthen our manpower resources in view of the growth driversand business opportunities in the fitting-out works industry in Hong Kongand Macau. According to the F&S Report, it is estimated that the revenue ofthe fitting-out works industry in Hong Kong will grow from approximatelyHK$71.5 billion in 2021 to approximately HK$106.0 billion in 2025, at aCAGR of approximately 10.3%. Furthermore, it is estimated that the revenueof fitting-out works industry in Macau will grow from approximatelyMOP5.9 billion in 2021 to approximately MOP9.2 billion in 2025, at aCAGR of approximately 11.7%. The expected increase in construction ofnew buildings, the Government’s support to increase land and housingsupply will further boost building construction activities in Hong Kong andMacau. Please refer to the section headed “Industry Overview” in thisdocument for further details of our growth drivers. Having considered thefuture business opportunity, we need to recruit additional staff formanagement and supervision works for undertaking additional projects in thefuture;

(c) BIM is a process of building information modelling, three-dimensional anddigital representation of building data for ease of communications betweenarchitects, engineers, and construction companies for construction purpose.According to F&S Report, the application of BIM in the fitting-out worksindustry has become one of the market trends in the market. The emergenceof BIM allows fitting-out works service providers (i) to handle and visualiseconceptual design, design development, documentation, etc. during theworking process; (ii) to generate three-dimensional projection and modellingof our projects which can prevent conflicting designs and identify designfaults at an early stage; (iii) to facilitate in project management bymonitoring the construction progress and (iv) to enhance the cooperation andcommunication of various parties such as designers, contractors and workers.During the Track Record Period and up to the Latest Practicable Date, wehave declined most of the tender invitations which require BIM technologydue to the lack of a BIM execution plan in our tender submission. As such,to maintain our tendering performance at a satisfactory level along with ourproactive tendering strategy during the Track Record Period with our tendersuccess rate of 14.5%, 15.8% and 14.5% for FY2019, FY2020 and FY2021,respectively, our Directors are of the view that we have to recruit additionalstaff with relevant knowledge and skills on the usage of BMI technology tosimulate our project plan in tender submission in the future.



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(d) in tendering for new projects, availability of manpower resources is amongthe key assessment criteria. To increase our capabilities to tender projects, itis necessary for us to enhance our competitiveness by expanding ourworkforce for the projects for which we plan to tender; and

(e) based on the experience of our Directors, maintaining a pool of projectmanagement staff such as quantity surveyor, safety and site supervisors andprocurement staff could minimise the risk of disruption to our operations thatmay result from potential unsatisfactory performance by our subcontractorssince we rely on our project supervision staff to oversee our subcontractors’work in order to ensure the works are completed in accordance with thespecifications, requirements and time-frame under the relevant contract.Furthermore, by increasing our in-house capabilities, even should we beunable to secure all of the Potential Project, it would give us greaterflexibility in (i) deploying sufficient project supervision staff to meet thetight schedule sometimes imposed by our customers or to handle any urgentwork tasks; and (ii) preserving our project management efficiency andservice quality,

� approximately HK$[REDACTED], representing approximately [REDACTED]%of the [REDACTED], will be used as general working capital of our Group.

The above allocation of the [REDACTED] from the [REDACTED] will be adjustedon a pro rata basis in the event that the [REDACTED] is fixed at a higher level or a lowerlevel compared to the mid-point of the [REDACTED] range. If the final [REDACTED] isset at the highest or lowest point of the [REDACTED] range, the [REDACTED] to bereceived by us from the [REDACTED] will increase or decrease by approximately HK$[REDACTED], respectively. In such event, the [REDACTED] will be used in the sameproportions as disclosed above irrespective of whether the [REDACTED] is determined atthe highest or lowest of the [REDACTED] range.

If any of the [REDACTED] is exercised in full, we estimate that we will receiveadditional [REDACTED] of approximately HK$[REDACTED], assuming an [REDACTED]of HK$[REDACTED] per [REDACTED], being the mid-point of the [REDACTED] rangeas stated in this document. If the [REDACTED] is set at the high-end of the [REDACTED]range, the additional estimated [REDACTED] upon full exercise of any of the[REDACTED] will increase by approximately HK$[REDACTED]. If the [REDACTED] isset at the low-end of the [REDACTED] range, the additional estimated [REDACTED] uponfull exercise of any of the [REDACTED] will decrease by approximatelyHK$[REDACTED]. In the event any of the [REDACTED] is exercised in full, we intend toapply the additional [REDACTED] for the above purposes in the proportions as statedabove.

To the extent that the [REDACTED] are not immediately applied to the abovepurposes due to any factors, and to the extent permitted by applicable laws and regulations,we will carefully evaluate the situations and it is our present intention to deposit the[REDACTED] into short-term demand deposits with authorised financial institutions and/orlicensed banks in Hong Kong.



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Should our Directors decide to re-allocate the intended [REDACTED] proceeds toother business plans and/or new projects of our Group to a material extent and/or there isany material modification to the [REDACTED] as described above, our Group will issue anannouncement in accordance with the Listing Rules.

REASONS FOR THE [REDACTED]

Our Directors believe that the [REDACTED] will greatly benefit our Group for thefollowing reasons:

� We need a [REDACTED] to enhance our competitiveness to compete with ourlisted competitors

Our Directors consider achieving a [REDACTED] to be a crucial and critical wayto compete with our group’s major competitors in the fitting-out works industries inHong Kong and Macau. According to the F&S Report, among our competitors whichpossess the qualifications and experience to compete for fitting-out works in HongKong and Macau, four out of the top five market participants in Hong Kong and all thetop four market participants in Macau (our Group ranked the fifth in terms of revenuein FY2021) have achieved a [REDACTED] respectively. Our Directors believe that a[REDACTED], transparent financial disclosures and regulatory supervision are definitecompetitive advantage to which our customers would give due weight in a competitivetendering process nowadays. Our Directors consider that a lack of a [REDACTED]could be a hindrance to our Group’s success to tender for fitting-out works projects.Therefore, our Directors believe that it is of critical and strategic importance to ourGroup to achieve a [REDACTED] in order to enhance our competitiveness to competewith the other listed construction contractors. Our Directors consider the[REDACTED] would bring about the above intangible benefit which could justify thecosts, the risks and uncertainties involved in a [REDACTED].

� Our Group has genuine funding needs for expansion of our business

It is necessary for us to raise funds through the [REDACTED] for the followingreasons:

(i) Business opportunities and growth drivers in view of the industry outlook:Our Group’s business is expected to expand steadily taking into account ourprojects on hand and the tenders we plan to submit coupled with thecontinuous growth in the construction works industry. According to the F&SReport, it is expected that the revenue of the fitting-out works industry inHong Kong will grow at a CAGR of approximately 10.3%, from aboutHK$71.5 billion in 2021 to about HK$106.0 billion in 2025. Furthermore, itis estimated that the revenue of fitting-out works industry in Macau willgrow from approximately MOP5.9 billion in 2021 to approximately MOP9.2billion in 2025, at a CAGR of approximately 11.7%. Our Directors envisagethat there would be considerable business opportunities and growth driverswhich justify our Group’s expansion plan to compete for more fitting-outworks projects. These business opportunities and drivers include the



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Government’s policy to increase land supply and housing supply, increasingnumber of residential projects and the Government’s policy for urbanrenewal, which have collectively contributed to the growth in the number offitting-out works projects in Hong Kong and Macau, and the correspondinggrowth of the fitting-out works industry in the near future. Please refer tothe section headed “Industry Overview” in this document for further detailsof our growth drivers.

(ii) We need funding to finance our projects on hand and need additional capitalrequired to grasp the business opportunities and consolidate our Group’smarket position: As at the Latest Practicable Date, we had 26 projects onhand with a total contract sum of approximately HK$850.4 million, in whichapproximately HK$372.8 million is expected to be recognised as revenueafter the Track Record Period. Moreover, as at the Latest Practicable Date,there were 31 tenders with a total estimated contract sum of approximatelyHK$1,422.2 million whose results were still pending, among which ourDirectors are confident in securing eight projects with an estimated contractsum of approximately HK$634.2 million. Furthermore, we have beenawarded nine contracts with an aggregate original contract sum ofapproximately HK$169.6 million after the Track Record Period and up to theLatest Practicable Date. This demonstrates our Group’s growing momentumto expand our business to capture the emerging business opportunities.Moreover, our Directors consider that given our expertise in the fitting-outworks industry and our stable business relationship with our customers, ourGroup has the ability to grasp the continuous growth in these industries andfurther increase our market share, which hinges on the availability of ourthen available operational resources including financial resources, manpowerresources and availability of our machineries to support our future businessgrowth.

(iii) We have capital input and upfront costs and therefore incur net cash outflowat the early stage of the projects: We have to pay the start-up costs such assubcontracting costs of raw materials, staff and labour costs, site utilities andother site set-up costs. In general, our customers withhold up to 10% of thesum of each of our progress payment and subject to a maximum of 5% ofthe original contract sum as retention money, half of which is usually bereleased upon practical completion of a project, and the remaining portion isusually released upon expiry of the relevant defects liability period (whichis, in general, ranging from three to 24 months after practical completion ofthe project). On the other hand, we generally pay our suppliers andsubcontractors within 30 days after they issue their invoice. As such, prior toreceiving payment from our customers, the cash flow requirement at theinitial stage of our projects could constraint the number of projects that wecould take under our then available resources. Our customers make the firstpayment certain period of time after the commencement of the projects andwe would therefore incur net cash outflows at the early stage of carrying outour works. Furthermore, the progress payments from our customer will notalways be paid to us on time and in full and we could experience amismatch of our cash flow when there is any timing difference betweenmaking payments to our suppliers and our subcontractors and receivingpayments from our customers.



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With reference to our management’s best estimation based on our historicalprojects of similar scale and quotations obtained from relevant suppliers,subcontractors and other service providers, it is estimated that the upfrontcost and working capital requirement would be approximately 20% of thetotal contract sum of our projects, which restricts our financial capacity totake up more projects simultaneously under our then available resources.

� Other commercial rationale for the [REDACTED]

– Our Directors believe that a [REDACTED] will enhance our credibility withour subcontractors, suppliers and customers and thus, enhance our level ofcompetitiveness in competing for and carrying out our projects. With suchstatus, our Group can be differentiated from other competitors during thetendering process, enhancing our success rate in competing for sizable andprofitable projects.

– The [REDACTED], which allows us to access the capital market for fundraising, will assist our future business development and strengthen ourcompetitiveness. Following the [REDACTED], we will be able to usesecondary fund raising for our future growth and expansion plans, whennecessary, through the issuance of equity and/or debt securities. Suchplatform would allow our Company to gain direct access to the capitalmarket for equity and/or debt financing to fund its existing operations andfuture expansion, which could be instrumental to our expansion and improveour operating and financial performance for maximum Shareholder return.While we will continue to obtain certain amount of banking facilities after[REDACTED] alongside with equity financing, our Directors believe thatwe would be in a better position to negotiate with banks and financialinstitutions if we are a [REDACTED] with enlarged capital structure.

– By strengthening our financial position through fund-raising, we will alsohave more bargaining power when negotiating terms with our suppliers forraw materials and with other business partners, if any. Hence, our Group willthen be able to maintain a lower level of gearing ratio, which benefits ourGroup and Shareholders as a whole and enhances our capital structure.

– Our Directors believe that the [REDACTED] will help raise staff confidenceand improve our ability to recruit, motivate and retain key managementpersonnel and will enable us to offer an equity-based incentive programme toour employees in correlating to their performance with our Group’s business.We would therefore be in a better position to motivate our employees withany incentive programmes that are closely aligned with the objective ofcreating value for our Shareholders.



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– Our Directors believe that a [REDACTED], transparent financial disclosuresand regulatory supervision are definite competitive advantage to which ourcustomers would give due weight in a competitive tendering processnowadays. Our Directors consider that a lack of a [REDACTED] could be ahindrance to our Group’s success to tender for fitting-out works projects inHong Kong and Macau. Therefore, our Directors believe that it is of criticaland strategic importance to our Group to achieve a [REDACTED] in orderto enhance our competitiveness to compete with the other listed fitting-outworks contractors in Hong Kong and Macau. Our Directors consider the[REDACTED] would bring about the above intangible benefit which couldjustify the costs involved in our [REDACTED].

– Furthermore, a [REDACTED] will generate reassurance among our Group’sexisting customers and suppliers and strengthen our competitiveness in themarket. A [REDACTED] will also enhance our corporate profile andrecognition and assist us in reinforcing our brand image and awareness. OurDirectors believe that a [REDACTED] could attract potential customers andsuppliers who are more willing to establish business relationship with listedcompanies.



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The following is the text of a report set out on pages I-1 to I-51, received from theCompany’s reporting accountants, [Deloitte Touche Tohmatsu], Certified Public Accountants,Hong Kong, for the purpose of incorporation in this document.

ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THEDIRECTORS OF WANG HING GROUP HOLDINGS LIMITED AND ADVENTCORPORATE FINANCE LIMITED

Introduction

We report on the historical financial information of Wang Hing Group HoldingsLimited (the “Company”) and its subsidiaries (together, the “Group”) set out on pages I-3to I-51, which comprises the combined statements of financial position of the Group as at 31March 2019, 2020 and 2021, the combined statements of profit or loss and othercomprehensive income, the combined statements of changes in equity and the combinedstatements of cash flows of the Group for each of the three years ended 31 March 2021 (the“Track Record Period”) and a summary of significant accounting policies and otherexplanatory information (together, the “Historical Financial Information”). The HistoricalFinancial Information set out on pages I-3 to I-51 forms an integral part of this report,which has been prepared for inclusion in the document of the Company dated [�] (the“Document”) in connection with the [REDACTED] of shares of the Company on the MainBoard of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

Directors’ responsibility for the Historical Financial Information

The directors of the Company are responsible for the preparation of HistoricalFinancial Information that gives a true and fair view in accordance with the basis ofpreparation and presentation set out in Note 2 to the Historical Financial Information, andfor such internal control as the directors of the Company determine is necessary to enablethe preparation of Historical Financial Information that is free from material misstatement,whether due to fraud or error.

Reporting accountants’ responsibility

Our responsibility is to express an opinion on the Historical Financial Information andto report our opinion to you. We conducted our work in accordance with Hong KongStandard on Investment Circular Reporting Engagements 200 “Accountants’ Reports onHistorical Financial Information in Investment Circulars” issued by the Hong Kong Instituteof Certified Public Accountants (the “HKICPA”). This standard requires that we complywith ethical standards and plan and perform our work to obtain reasonable assurance aboutwhether the Historical Financial Information is free from material misstatement.

Our work involved performing procedures to obtain evidence about the amounts anddisclosures in the Historical Financial Information. The procedures selected depend on thereporting accountants’ judgement, including the assessment of risks of material misstatement

APPENDIX I ACCOUNTANTS’ REPORT


– I-1 –

of the Historical Financial Information, whether due to fraud or error. In making those riskassessments, the reporting accountants consider internal control relevant to the entity’spreparation of Historical Financial Information that gives a true and fair view in accordancewith the basis of preparation and presentation set out in Note 2 to the Historical FinancialInformation in order to design procedures that are appropriate in the circumstances, but notfor the purpose of expressing an opinion on the effectiveness of the entity’s internal control.Our work also included evaluating the appropriateness of accounting policies used and thereasonableness of accounting estimates made by the directors of the Company, as well asevaluating the overall presentation of the Historical Financial Information.

We believe that the evidence we have obtained is sufficient and appropriate to providea basis for our opinion.

Opinion

In our opinion the Historical Financial Information gives, for the purposes of theaccountants’ report, a true and fair view of the Group’s financial position as at 31 March2019, 2020 and 2021 and of the Group’s financial performance and cash flows for the TrackRecord Period in accordance with the basis of preparation and presentation set out in Note 2to the Historical Financial Information.

Report on matters under the Rules Governing the Listing of Securities on the StockExchange and the Companies (Winding up and Miscellaneous Provisions) Ordinance

Adjustments

[In preparing the Historical Financial Information, no adjustments to the UnderlyingFinancial Statements as defined on page I-3 have been made.]

Dividends

We refer to Note 13 to the Historical Financial Information which contains informationabout the dividends declared and paid by group entities now comprising the Group inrespect of the Track Record Period.

No historical financial statements for the Company

No financial statements have been prepared for the Company since its date ofincorporation.

[Deloitte Touche Tohmatsu]Certified Public AccountantsHong Kong[Date]



– I-2 –

HISTORICAL FINANCIAL INFORMATION OF THE GROUP

Preparation of Historical Financial Information

Set out below is the Historical Financial Information which forms an integral part ofthis accountants’ report.

[The consolidated financial statements of Grateful Luck Limited (“Grateful Luck”)and its subsidiaries for the Track Record Period , on which the Historical FinancialInformation is based, have been prepared in accordance with the accounting policies whichconform with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by HKICPAand were audited by us in accordance with Hong Kong Standards on Auditing issued by theHKICPA (the “Underlying Financial Statements”).]

The Historical Financial Information is presented in Hong Kong dollars (“HK$”),which is the same as the functional currency of the Company, and all values are rounded tothe nearest thousand (HK$’000) except when otherwise indicated.



– I-3 –

COMBINED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVEINCOME

Year ended 31 March2019 2020 2021

NOTES HK$’000 HK$’000 HK$’000

Revenue 6 196,609 250,702 294,216Cost of sales (173,903) (219,886) (250,891)

Gross profit 22,706 30,816 43,325Other income 7 14 162 811Other loss 7 (20) (9) (196)Impairment losses under expected credit loss

model, net of reversal 8 (366) (19) (213)Administrative expenses (6,080) (6,706) (8,798)[REDACTED] – – [REDACTED]Finance costs 9 (1,476) (2,023) (1,643)

Profit before taxation 10 14,778 22,221 29,933Income tax expense 11 (2,101) (2,610) (3,728)

Profit and total comprehensive income forthe year 12,677 19,611 26,205



– I-4 –

COMBINED STATEMENTS OF FINANCIAL POSITION

As at 31 March2019 2020 2021

NOTES HK$’000 HK$’000 HK$’000

Non-current assetsProperty, plant and equipment 15 128 311 278Right-of-use asset 16 19 144 20Amount due from a director 19 10,000 10,000 –Pledged bank deposits 20 3,845 7,368 –

13,992 17,823 298

Current assetsTrade receivables 17 7,792 5,010 9,109Deposits, prepayments and other

receivables 17 15,884 22,539 7,260Contract assets 18 60,973 23,451 71,989Amounts due from related companies 19 2,372 2,542 3,164Amounts due from directors 19 34,505 19,911 24,835Pledged bank deposits 20 – 3,922 12,311Bank balances and cash 20 5,763 24,807 5,583

127,289 102,182 134,251

Current liabilitiesTrade payables 21 48,092 5,588 21,159Accruals and other payables 21 14,917 11,902 15,017Amounts due to related companies 19 1,630 1,881 2,041Amount due to a director 19 – 1,589 12,974Contract liabilities 22 4,690 26,806 1,389Tax payables 4,318 6,509 10,283Bank borrowings 23 37,063 26,621 33,666Bank overdrafts 23 10,505 15,336 14,384Lease liability 24 20 128 22

121,235 96,360 110,935

Net current assets 6,054 5,822 23,316

Total assets less current liabilities 20,046 23,645 23,614



– I-5 –

As at 31 March2019 2020 2021

NOTES HK$’000 HK$’000 HK$’000

Non-current liabilityLease liability 24 – 22 –

20,046 23,623 23,614

Capital and reservesShare capital 25 2,073 2,073 2,073Reserves 17,973 21,550 21,541

Total equity 20,046 23,623 23,614



– I-6 –

COMBINED STATEMENTS OF CHANGES IN EQUITY

Sharecapital

Legalreserve

Retainedprofits Total

HK$’000 HK$’000 HK$’000 HK$’000(Note)

At 1 April 2018 2,073 36 13,527 15,636Profit and total comprehensive income

for the year – – 12,677 12,677Dividends (Note 13) – – (8,267) (8,267)

At 31 March 2019 and 1 April 2019 2,073 36 17,937 20,046Profit and total comprehensive income


At 31 March 2020 and 1 April 2020 2,073 36 21,514 23,623Profit and total comprehensive income


At 31 March 2021 2,073 36 21,505 23,614

Note: In accordance with the Article 377 of the Commercial Code of Macau Special Administrative Region of thePeople’s Republic of China (“Macau”), the subsidiaries of the Company registered in Macau are required totransfer part of their profits of each accounting period of not less than 25% to legal reserve, until theamount reaches an amount equal to half of the respective share capital.



– I-7 –

COMBINED STATEMENTS OF CASH FLOWS


HK$’000 HK$’000 HK$’000

Operating activitiesProfit before taxation 14,778 22,221 29,933Adjustments for:

Depreciation of property, plant and equipment 106 174 89Depreciation of right-of-use asset 114 124 124Impairment losses under expected credit loss

model, net of reversal 366 19 213Finance costs 1,476 2,023 1,643Bank interest income –* (77) (41)

Operating cash flows before movements in workingcapital 16,840 24,484 31,961

(Increase) decrease in trade receivables (3,863) 2,624 (3,960)(Increase) decrease in deposits, prepayments and

other receivables (9,385) (6,655) 16,321(Increase) decrease in contract assets (30,893) 37,661 (48,890)Increase (decrease) in trade payables 36,713 (42,504) 15,571Increase (decrease) in accruals and other payables 10,649 (2,984) 2,976(Decrease) increase in contract liabilities (7,610) 22,116 (25,417)

Cash generated from (used in) operations 12,451 34,742 (11,438)Hong Kong Profits Tax (paid) refund (927) (69) 46Macau Complementary Income Tax paid – (350) –

Net cash from (used in) operating activities 11,524 34,323 (11,392)

Investing activitiesAdvances to directors (26,701) (36,669) (23,650)Repayment from directors 5,966 36,818 15,619Purchases of property, plant and equipment (31) (357) (56)Repayment from related companies – 400 5,800Advances to related companies (402) (570) (6,422)New pledged bank deposits placed (3,845) (11,290) (12,311)Release of pledged bank deposits – 3,845 11,290Interest received –* 77 41

Net cash used in investing activities (25,013) (7,746) (9,689)



– I-8 –


HK$’000 HK$’000 HK$’000

Financing activitiesRepayment of lease liability (116) (119) (128)Advances from related companies 180 280 180Repayment to related companies (128) (29) (20)Repayment to a director – – (1,722)Interest paid (1,478) (2,054) (1,643)[REDACTED] – – [REDACTED]Repayment of bank borrowings (33,723) (58,759) (41,642)Bank borrowings raised 52,117 48,317 48,687Addition (repayment) of bank overdrafts 1,316 4,831 (952)

Net cash from (used in) financing activities 18,168 (7,533) 1,857

Net increase (decrease) in cash and cash equivalents 4,679 19,044 (19,224)Cash and cash equivalents at beginning of the year 1,084 5,763 24,807





– I-9 –

NOTES TO HISTORICAL FINANCIAL INFORMATION

1. GENERAL INFORMATION

The Company was incorporated and registered as an exempted company with limited liability in theCayman Islands under the Companies Act, (as revised) of the Cayman Islands on 14 May 2021. Its ultimatecontrolling shareholders are Mr. Chan Yun Wun (“Mr. Y. W. Chan”) and Ms. Wan Sau Mui (“Ms. Wan”) who arethe chief executives of the Company and are acting in concert. The address of the Company’s registered officeand principal place of business is disclosed in the section headed “Corporate Information” in the Document.

The Company acts as an investment holding company and its subsidiaries are principally engaged in theprovision of fitting-out works in Hong Kong and Macau.

The Historical Financial Information is presented in Hong Kong dollars (“HK$”), which is the same as thefunctional currency of the Company.

2. GROUP REORGANISATION AND BASIS OF PREPARATION AND PRESENTATION OFHISTORICAL FINANCIAL INFORMATION

The Historical Financial Information has been prepared based on the accounting policies set out in Note 4which conform with Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the HKICPA and theprinciples of merger accounting under Accounting Guideline 5 “Merger Accounting for Common ControlCombinations” issued by the HKICPA.

In preparation for the [REDACTED] of the Company’s shares on the Stock Exchange, the companies nowcomprising the Group underwent a group reorganisation as more fully explained in the section headed “History,Development and Reorganisation” in the Document (the “Reorganisation”), which included the following steps:

(i) Immediately before the Reorganisation, Mr. Y. W. Chan and Ms. Wan legally and beneficially owned800,000 and 200,000 ordinary shares respectively in Wang Hing Interior Design Company Limited(“Wang Hing Interior Design”), representing the entire issued share capital of Wang Hing InteriorDesign. Beijing Yongxing Global Construction Engineering Company Limited (“Beijing Yongxing”)is a wholly-owned subsidiary of Wang Hing Interior Design. Each of Mr. Y. W. Chan and Ms. Wanlegally and beneficially owned 500,000 ordinary shares in Wang Hing Interior Engineering CompanyLimited (“Wang Hing Interior Engineering”), representing the entire issued share capital of WangHing Interior Engineering. Each of Mr. Y. W. Chan and Ms. Wan legally and beneficially owned onequota in Wang Hing Lain Fung Interior Design Engineering Company Limited (“Wang Hing LainFung”), representing the entire capital of Wang Hing Lain Fung. Each of Mr. Y. W. Chan and Ms.Wan legally and beneficially owned one quota in L & F Interior Engineering Company Limited (“L& F Interior Engineering”), representing the entire capital of L & F Interior Engineering.

(ii) On 18 September 2020, Grateful Luck was incorporated in the British Virgin Islands (“BVI”) withlimited liability. As at the date of incorporation, Grateful Luck was authorised to issue a maximum of50,000 shares of one class with a par value of United State Dollars (“US$”) 1.00 each. On 5 January2021, one share of Grateful Luck was allotted and issued to each of Mr. Y. W. Chan and Ms. Wanrespectively.

(iii) On 8 January 2021, Faithful Trinity Limited (“Faithful Trinity”) was incorporated in the BVI withlimited liability and will act as the intermediate holding company of the Company upon completionof the Reorganisation. As at the date of incorporation, Faithful Trinity was authorised to issue amaximum of 50,000 shares of one class with a par value of US$1.00 each. On 27 March 2021, oneshare of Faithful Trinity was allotted and issued to each of Mr. Y. W. Chan and Ms. Wan respectively.

(iv) On 14 May 2021, the Company was incorporated under the laws of the Cayman Islands as anexempted company and will act as the holding company of the companies comprising the Group. Asat the date of incorporation, the Company was authorised to issue a maximum of 38,800,000 sharesof one class with a par value of HK$0.01 each (the “Share”), of which one Share was allotted andissued to the third party initial subscriber which was subsequently transferred to Faithful Trinity onthe same date at par value. Immediately upon the completion, the Company became a wholly-ownedsubsidiary of Faithful Trinity.



– I-10 –

(v) On 18 August 2021, Mr. Y. W. Chan, Ms. Wan and Grateful Luck entered into a quota purchaseagreement pursuant to which Grateful Luck acquired one and one quota in Wang Hing Lain Fung atpar value of MOP12,500 per quota from Mr. Y. W. Chan and Ms. Wan, respectively.

On 18 August 2021, Mr. Y. W. Chan, Ms. Wan and Grateful Luck entered into a quota purchaseagreement pursuant to which Grateful Luck acquired one and one quota in L & F InteriorEngineering at par value of MOP25,000 per quota from Mr. Y. W. Chan and Ms. Wan, respectively.

On 23 August 2021, Mr. Y. W. Chan, Ms. Wan and Grateful Luck entered into a share swapagreement pursuant to which Mr. Y. W. Chan and Ms. Wan transferred 500,000 and 500,000 shares inWang Hing Interior Engineering to Grateful Luck, respectively. In consideration thereat, GratefulLuck alloted and issued one and one share, credited as fully paid, to Mr. Y. W. Chan and Ms. Wanrespectively.

On 8 September 2021, Mr. Y. W. Chan, Ms. Wan and Grateful Luck entered into a share swapagreement pursuant to which Mr. Y. W. Chan and Ms. Wan transferred 800,000 and 200,000 shares inWang Hing Interior Design to Grateful Luck, respectively. In consideration thereat, Grateful Luckalloted and issued 67 and 29 new shares, credited as fully paid, to Mr. Y. W. Chan and Ms. Wanrespectively.

Upon completion of the above, each of Wang Hing Interior Design, Wang Hing Interior Engineering,Wang Hing Lain Fung and L & F Interior Engineering became direct wholly-owned subsidiaries ofGrateful Luck and Beijing Yongxing became indirect wholly-owned subsidiary of Grateful Luck.

(vi) On 8 September 2021, 68 and 30 shares of Faithful Trinity were alloted and issued to Mr. Y. W.Chan and Ms. Wan respectively.

[(vii) On [�], Beijing Yongxing was deregistered.

(viii) On [�] 2021, Mr. Y. W. Chan and Ms. Wan as transferors, the Company as transferee, Grateful Luckentered into a share swap agreement and executed the relevant instrument of transfer, pursuant towhich the Company acquired 69 and 31 shares in Grateful Luck from Mr. Y. W. Chan and Ms. Wan,representing the entire issued share capital of Grateful Luck. In consideration of the transfer of theshares in Grateful Luck from Mr. Y. W. Chan and Ms. Wan to the Company, the Company allottedand issued 99 Shares with a par value of HK$0.01 each, credited as fully paid, to Faithful Trinity atthe direction of Mr. Y. W. Chan and Ms. Wan. Upon completion of this transfer, each of Wang HingInterior Design, Wang Hing Interior Engineering, and Wang Hing Lain Fung and L & F InteriorEngineering became indirect wholly-owned subsidiaries of the Company.]

The Reorganisation was completed on [�] and since then, the Company became the holding company of thecompanies comprising the Group.

The Group comprising the Company and its subsidiaries resulting from the Reorganisation have been underthe common control of Mr. Y. W. Chan and Ms. Wan throughout the Track Record Period or since the dateof incorporation where there is a shorter period.

The combined statements of profit or loss and other comprehensive income, combined statements ofchanges in equity and combined statements of cash flows of the Group for the Track Record Period areprepared to present the results, changes in equity and cash flows of the companies now comprising theGroup as if the current group structure had been in existence throughout the Track Record Period or sincethe date of incorporation where there is a shorter period. The combined statements of financial position ofthe Group as at 31 March 2019, 2020 and 2021 have been prepared to present the assets and liabilities ofthe companies now comprising the Group as at the respective dates as if the current group structure hadbeen in existence at those dates taking into account the respective date of incorporation, where applicable.

No statutory financial statements of the Company have been prepared since its date of incorporation as it isincorporated in the jurisdiction where there are no statutory audit requirements.



– I-11 –

3. APPLICATION OF NEW AND AMENDMENTS TO HKFRSS

New and amendments to HKFRSs that are mandatory effective for the Track Record Period

For the purpose of preparing and presenting the Historical Financial Information for the Track RecordPeriod, the Group has consistently applied HKFRSs, Hong Kong Accounting Standards (“HKASs”),amendments and interpretations issued by HKICPA that are effective for the accounting period beginning on1 April 2020 throughout the Track Record Period including HKFRS 16 “Leases”. The accounting policiesare set out in Note 4 below.

New and amendments to HKFRSs in issue but not yet effective

The Group has not early applied the following new and amendments to HKFRSs that have beenissued but are not yet effective:

HKFRS 17 Insurance Contracts and the related Amendments5

Amendments to HKFRS 3 Reference to the Conceptual Framework4

Amendments to HKFRS 9, HKAS 39,HKFRS 7, HKFRS 4 and HKFRS 16

Interest Rate Benchmark Reform – Phase 22

Amendments to HKFRS 10 andHKAS 28

Sale or Contribution of Assets between an Investor andits Associate or Joint Venture6

Amendment to HKFRS 16 Covid-19-Related Rent Concessions1

Amendment to HKFRS 16 Covid-19-Related Rent Concessions beyond 30 June20213

Amendments to HKAS 1 Classification of Liabilities as Current or Non-current andrelated amendments to Hong Kong Interpretation 5(2020)5

Amendments to HKAS 1 and HKFRSPractice Statement 2

Disclosure of Accounting Policies5

Amendments to HKAS 8 Definition of Accounting Estimates5

Amendments to HKAS 12 Deferred Tax related to Assets and Liabilities arising froma Single Transaction5

Amendments to HKAS 16 Property, Plant and Equipment – Proceeds before IntendedUse4

Amendments to HKAS 37 Onerous Contracts – Cost of Fulfilling a Contract4

Amendments to HKFRSs Annual Improvements to HKFRSs 2018-20204

1 Effective for annual periods beginning on or after 1 June 20202 Effective for annual periods beginning on or after 1 January 20213 Effective for annual periods beginning on or after 1 April 20214 Effective for annual periods beginning on or after 1 January 20225 Effective for annual periods beginning on or after 1 January 20236 Effective for annual periods beginning on or after a date to be determined

The directors of the Company anticipate that the application of all the new and amendments toHKFRSs will have no material impact on the Group’s financial statements in the foreseeable future.

4. SIGNIFICANT ACCOUNTING POLICIES

The Historical Financial Information has been prepared in accordance with the following accountingpolicies which conform with HKFRSs issued by the HKICPA. For the purpose of preparation of the HistoricalFinancial Information, information is considered material if such information is reasonably expected to influencedecisions made by primary users. In addition, the Historical Financial Information includes applicable disclosuresrequired by the Rules Governing the Listing of Securities on the Stock Exchange and by the Hong KongCompanies Ordinance.

The Historical Financial Information has been prepared on the historical cost basis at the end of eachreporting period as explained in the accounting policies set out below.



– I-12 –

Historical cost is generally based on the fair value of the consideration given in exchange for goods andservices.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants at the measurement date, regardless of whether that price is directlyobservable or estimated using another valuation technique. In estimating the fair value of an asset or a liability,the Group takes into account the characteristics of the asset or liability if the market participants would take thosecharacteristics into account when pricing the asset or liability at the measurement date. Fair value formeasurement and/or disclosure purposes in the Historical Financial Information is determined on such a basis,except for share-based payment transactions that are within the scope of HKFRS 2 “Share-based Payments”,leasing transactions that are accounted for in accordance with HKFRS 16 “Leases”, and measurements that havesome similarities to fair value but are not fair value, such as net realisable value in HKAS 2 “Inventories” orvalue in use in HKAS 36 “Impairment of Assets”.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3based on the degree to which the inputs to the fair value measurements are observable and the significance of theinputs to the fair value measurement in its entirety, which are described as follows:

� Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities thatthe entity can access at the measurement date;

� Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable forthe asset or liability, either directly or indirectly; and

� Level 3 inputs are unobservable inputs for the asset or liability.

The principal accounting policies are set out below:

Basis of combination

The Historical Financial Information incorporates the financial statements of [the Company] and theentities controlled by the Company and its subsidiaries. Control is achieved when the Company:

� has power over the investee;

� is exposed, or has rights, to variable returns from its involvement with the investee; and

� has the ability to use its power to affect its returns.

The Group reassesses whether or not it controls an investee if facts and circumstances indicate thatthere are changes to one or more of the three elements of control listed above.

Combination of a subsidiary begins when the Group obtains control over the subsidiary and ceaseswhen the Group loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquiredor disposed of during the year are included in the combined statements of profit or loss and othercomprehensive income from the date the Group gains control until the date when the Group ceases tocontrol the subsidiary.

When necessary, adjustments are made to the financial statements of subsidiaries to bring theiraccounting policies in line with the Group’s accounting policies.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactionsbetween members of the Group are eliminated in full on combination.

Merger accounting for business combination involving businesses under common control

The Historical Financial Information incorporates the financial statements items of the combiningbusinesses in which the common control combination occurs as if they had been combined from the datewhen the combining businesses first came under the control of the controlling entity.



– I-13 –

The net assets of the combining businesses are combined using the existing carrying values from thecontrolling party’s perspective. No amount is recognised in respect of goodwill or bargain purchase gain atthe time of common control combination.

The combined statements of profit or loss and other comprehensive income include the results ofeach of the combining businesses from the earliest date presented or since the date when the combiningbusinesses first came under the common control, where this is a shorter period.

Revenue from contracts with customers

The Group recognises revenue when (or as) a performance obligations is satisfied, i.e. when “control”of the goods or services underlying the particular performance obligations is transferred to customers.

A performance obligations represents a goods or service (or a bundle of goods or services) that isdistinct or a series of distinct services that are substantially the same.

Control is transferred over time and revenue is recognised over time by reference to the progresstowards complete satisfaction of relevant performance obligation if one of the following criteria is met:

� the customer simultaneously receives and consumes the benefits provided by the Group’sperformance as the Group performs;

� the Group’s performance create or enhances an asset that the customer controls as the Groupperforms; or

� the Group’s performance does not create an asset with an alternative use to the Group and theGroup has an enforceable right to payment for performance completed to date.

Otherwise, revenue is recognised at a point in time when the customer obtains control of the distinctgoods or service.

A contract asset represents the Group’s right to consideration in exchange for goods or services thatthe Group has transferred to a customer that is not yet unconditional. It is assessed for impairment inaccordance with HKFRS 9 “Financial Instruments (“HKFRS 9”)”. In contrast, a receivable represents theGroup’s unconditional right to consideration, i.e. only the passage of time is required before payment ofthat consideration is due.

A contract liability represents the Group’s obligation to transfer goods or services to a customer forwhich the Group has received consideration (or an amount of consideration is due) from the customer.

A contract asset and a contract liability relating to the same contract are accounted for and presentedon a net basis.

Specifically, revenue is recognised as follows:

Over time revenue recognition: measurement of progress towards complete satisfaction of a performanceobligation

Input method

The progress towards complete satisfaction of a performance obligation is measured based on inputmethod, which is to recognise revenue on the basis of the Group’s efforts or inputs to the satisfaction of aperformance obligation relative to the total expected inputs to the satisfaction of that performanceobligation, that best depict the Group’s performance in transferring control of goods or services.



– I-14 –

Revenue from construction contracts

The Group provides fitting-out works based on contracts entered with customers. Such contracts areentered into before the services begin. Under the terms of the contracts, the Group is contractually requiredto perform fitting-out works at the customers’ specified sites that the Group creates or enhances an assetthat the customer controls as the Group performs. Revenue is therefore recognised over time using inputmethod, i.e. based on the proportion that costs incurred for work performed by the Group to date relative tothe estimated total costs in measuring the percentage of completion for the revenue recognised during eachof the reporting period. The management of Group considers that input method would faithfully depict theGroup’s performance towards complete satisfaction of these performance obligation under HKFRS 15“Revenue from Contracts with Customers (“HKFRS 15”)”.

For contracts that contain variable consideration (i.e. variation order), the Group estimates the amountof consideration to which it will be entitled using the most likely amount, which better predicts the amountof consideration to which the Group will be entitled.

The estimated amount of variable consideration is included in the transaction price only to the extentthat it is highly probable that such an inclusion will not result in a significant revenue reversal in the futurewhen the uncertainty associated with the variable consideration is subsequently resolved.

At the end of each reporting period, the Group updates the estimated transaction price to representfaithfully the circumstances present at the end of each reporting period and the change in circumstancesduring the reporting period.

For warranty embedded to the construction contracts, the Group accounts for the warranty inaccordance with HKAS 37 “Provisions, Contingent Liabilities and Contingent Assets” unless the warrantyprovides the customer with a service in addition to the assurance that the contracting work complies withthe agreed-upon specifications.

If at any time the unavoidable costs of meeting contractual obligations are estimated to exceed theremaining amount of the economic benefits expected to be received under the contract, then a provision isrecognised in accordance with policy set out in “Onerous contracts” below.

Property, plant and equipment

Property, plant and equipment are tangible assets that are held for use in the production or supply ofgoods or services, or for administrative purpose. Property, plant and equipment are stated in the combinedstatements of financial position at cost less subsequent accumulated depreciation and subsequentaccumulated impairment losses, if any.

Depreciation is recognised so as to write off the cost of items of assets less their residual values overtheir estimated useful lives, using the straight-line method. The estimated useful lives, residual values anddepreciation method are reviewed at the end of each reporting period, with the effect of any changes inestimate accounted for on a prospective basis.

An item of property, plant and equipment is derecognised upon disposal or when no future economicbenefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposalor retirement of an item of property, plant and equipment is determined as the difference between the salesproceeds and the carrying amount of the asset and is recognised in profit or loss.

Leases

Definition of a lease

A contract is, or contains, a lease if the contract conveys the right to control the use of an identifiedasset for a period of time in exchange for consideration.



– I-15 –

For contracts entered into or modified on or after the date of initial application or arising frombusiness combinations, the Group assesses whether a contract is or contains a lease based on the definitionunder HKFRS 16 at inception, modification date or acquisition date, as appropriate. Such contract will notbe reassessed unless the terms and conditions of the contract are subsequently changed. As a practicalexpedient, leases with similar characteristics are accounted on a portfolio basis when the Group reasonablyexpects that the effects on the consolidated financial statements would not differ materially from individualleases within the portfolio.

The Group as a lessee

Allocation of consideration to components of a contract

For a contract that contains a lease component and one or more additional lease or non-leasecomponents, the Group allocates the consideration in the contract to each lease component on the basis ofthe relative stand-alone price of the lease component and the aggregate stand-alone price of the non-leasecomponents.

Non-lease components are separated from lease component on the basis of their relative stand-aloneprices.

Short-term leases

The Group applies the short-term lease recognition exemption to leases of buildings that have a leaseterm of 12 months or less from the commencement date and do not contain a purchase option. Leasepayments on short-term leases are recognised as expense on a straight-line basis or another systematic basisover the lease term.

Right-of-use assets

The cost of right-of-use asset includes:

� the amount of the initial measurement of the lease liability;

� any lease payments made at or before the commencement date, less any lease incentivesreceived;

� any initial direct costs incurred by the Group; and

� an estimate of costs to be incurred by the Group in dismantling and removing the underlyingassets, restoring the site on which it is located or restoring the underlying asset to thecondition required by the terms and conditions of the lease.

Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses,and adjusted for any remeasurement of lease liabilities.

Right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful lifeand the lease term.

The Group presents right-of-use assets as a separate line item on the combined statements offinancial position.

Refundable rental deposits

Refundable rental deposits paid are accounted under HKFRS 9 and initially measured at fair value.Adjustments to fair value at initial recognition are considered as additional lease payments and included inthe cost of right-of-use assets.



– I-16 –

Lease liabilities

At the commencement date of a lease, the Group recognises and measures the lease liability at thepresent value of lease payments that are unpaid at that date. In calculating the present value of leasepayments, the Group uses the incremental borrowing rate at the lease commencement date if the interestrate implicit in the lease is not readily determinable.

The lease payments include:

� fixed payments (including in-substance fixed payments) less any lease incentives receivable;

� variable lease payments that depend on an index or a rate, initially measured using the indexor rate as at the commencement date;

� amounts expected to be payable by the Group under residual value guarantees;

� the exercise price of a purchase option if the Group is reasonably certain to exercise theoption; and

� payments of penalties for terminating a lease, if the lease term reflects the Group exercising anoption terminate the lease.

After the commencement date, lease liabilities are adjusted by interest accretion and lease payments.

The Group presents lease liabilities as a separate line item on the combined statements of financialposition.

Lease modifications

The Group accounts for a lease modification as a separate lease if:

� the modification increases the scope of the lease by adding the right to use one or moreunderlying assets; and

� the consideration for the leases increases by an amount commensurate with the stand-aloneprice for the increase in scope and any appropriate adjustments to that stand-alone price toreflect the circumstances of the particular contract.

For a lease modification that is not accounted for as a separate lease, the Group remeasures the leaseliability, less any lease incentives receivable, based on the lease term of the modified lease by discountingthe revised lease payments using a revised discount rate at the effective date of the modification.

The Group accounts for the remeasurement of lease liabilities by making corresponding adjustmentsto the relevant right-of-use asset. When the modified contract contains a lease component and one or moreadditional lease or non-lease components, the Group allocates the consideration in the modified contract toeach lease component on the basis of the relative stand-alone price of the lease component and theaggregate stand-alone price of the non-lease components.

Impairment on property, plant and equipment and right-of-use assets

At the end of each reporting period, the Group reviews the carrying amounts of its property, plantand equipment and right-of-use assets to determine whether there is any indication that those assets havesuffered an impairment loss. If any such indication exists, the recoverable amount of the relevant asset isestimated in order to determine the extent of the impairment loss, if any.

The recoverable amount of property, plant and equipment and right-of-use assets are estimatedindividually. When it is not possible to estimate the recoverable amount individually, the Group estimatesthe recoverable amount of the cash-generating unit to which the asset belongs.



– I-17 –

In testing a cash-generating unit for impairment, corporate assets are allocated to the relevantcash-generating unit when a reasonable and consistent basis of allocation can be established, or otherwisethey are allocated to the smallest group of cash generating units for which a reasonable and consistentallocation basis can be established. The recoverable amount is determined for the cash-generating unit orgroup of cash-generating units to which the corporate asset belongs, and is compared with the carryingamount of the relevant cash-generating unit or group of cash-generating units.

Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessingvalue in use, the estimated future cash flows are discounted to their present value using a pre-tax discountrate that reflects current market assessments of the time value of money and the risks specific to the assetfor which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than itscarrying amount, the carrying amount of the asset (or a cash-generating unit) is reduced to its recoverableamount. For corporate assets or portion of corporate assets which cannot be allocated on a reasonable andconsistent basis to a cash-generating unit, the Group compares the carrying amount of a group ofcash-generating units, including the carrying amounts of the corporate assets or portion of corporate assetsallocated to that group of cash-generating units, with the recoverable amount of the group ofcash-generating units. In allocating the impairment loss, the impairment loss is allocated first to reduce thecarrying amount of any goodwill (if applicable) and then to the other assets on a pro-rata basis based on thecarrying amount of each asset in the unit or the group of cash-generating units. The carrying amount of anasset is not reduced below the highest of its fair value less costs of disposal (if measurable), its value inuse (if determinable) and zero. The amount of the impairment loss that would otherwise have been allocatedto the asset is allocated pro rata to the other assets of the unit or the group of cash-generating units. Animpairment loss is recognised immediately in profit or loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or acash-generating unit) is increased to the revised estimate of its recoverable amount, but so that theincreased carrying amount does not exceed the carrying amount that would have been determined had noimpairment loss been recognised for the asset (or a cash-generating unit) in prior years. A reversal of animpairment loss is recognised immediately in profit or loss.

Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies otherthan the functional currency of that entity (foreign currencies) are recognised at the rates of exchangesprevailing on the dates of the transactions. At the end of each reporting period, monetary items denominatedin foreign currencies are retranslated at the rates prevailing at that date.

Exchange differences arising on the settlement of monetary items, and on the retranslation ofmonetary items, are recognised in profit or loss in the period in which they arise.

For the purposes of presenting the Historical Financial Information, the assets and liabilities of theGroup’s foreign operations are translated into the presentation currency of the Group (i.e. HK$) usingexchange rates prevailing at the end of each reporting period. Income and expenses items are translated atthe average exchange rates for the reporting period, unless exchange rates fluctuate significantly during thatperiod, in which case the exchange rates at the date of transactions are used. Exchange differences arising,if any, are recognised in other comprehensive income and accumulated in equity under the heading oftranslation reserve.

Government grants

Government grants are not recognised until there is reasonable assurance that the Group will complywith the conditions attaching to them and that the grants will be received.

Government grants are recognised in profit or loss on a systematic basis over the periods in whichthe Group recognises as expenses the related costs for which the grants are intended to compensate.



– I-18 –

Government grants related to income that are receivable as compensation for expenses or lossesalready incurred or for the purpose of giving immediate financial support to the Group with no futurerelated costs are recognised in profit or loss in the period in which they become receivable. Governmentgrants are presented under “other income”.

Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of qualifyingassets, which are assets that necessarily take a substantial period of time to get ready for their intended useor sale, are added to the cost of these assets until such time as the assets are substantially ready for theirintended use or sale.

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

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a resultof a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimatecan be made of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle thepresent obligation at the end of each reporting period, taking into account the risks and uncertaintiessurrounding the obligation. When a provision is measured using the cash flows estimated to settle thepresent obligation, its carrying amount is the present value of those cash flows (where the effect of the timevalue of money is material).

Onerous contracts

Present obligations arising under onerous contracts are recognised and measured as provisions. Anonerous contract is considered to exist where the Group has a contract under which the unavoidable costs ofmeeting the obligations under the contract exceed the economic benefits expected to be received from thecontract.

Employee benefits

Retirement benefit costs

Payments to Social Security Fund Contribution in Macau and the Mandatory Provident Fund Schemein Hong Kong are recognised as an expense when employees have rendered service entitling them to thecontributions.

Short-term employee benefits

Short-term employee benefits are recognised at the undiscounted amount of the benefits expected tobe paid as and when employees rendered the services. All short-term employee benefits are recognised as anexpense unless another HKFRS requires or permits the inclusion of the benefit in the cost of an asset.

A liability is recognised for benefits accruing to employees (such as wages and salaries) afterdeducting any amount already paid.

Taxation

Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profitbefore taxation because of income or expense that are taxable or deductible in other years and items thatare never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that havebeen enacted or substantively enacted by the end of each reporting period.



– I-19 –

Deferred tax is recognised on temporary differences between the carrying amounts of assets andliabilities in the Historical Financial Information and the corresponding tax bases used in the computationof taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences.Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it isprobable that taxable profits will be available against which those deductible temporary differences can beutilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises fromthe initial recognition of assets and liabilities in a transaction that affects neither the taxable profit nor theaccounting profit.

Deferred tax liabilities are recognised for taxable temporary differences associated with investmentsin subsidiaries, except where the Group is able to control the reversal of the temporary difference and it isprobable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arisingfrom deductible temporary differences associated with such investments are only recognised to the extentthat it is probable that there will be sufficient taxable profits against which to utilise the benefits of thetemporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period andreduced to the extent that it is no longer probable that sufficient taxable profits will be available to allowall or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in theperiod in which the liability is settled or the asset is realised, based on tax rate (and tax laws) that havebeen enacted or substantively enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would followfrom the manner in which the Group expects, at the end of each reporting period, to recover or settle thecarrying amount of its assets and liabilities.

For the purposes of measuring deferred tax for leasing transactions in which the Group recognises theright-of use assets and the related lease liabilities, the Group first determines whether the tax deductions areattributable to the right-of-use assets or the lease liabilities.

For leasing transactions in which the tax deductions are attributable to the lease liabilities, the Groupapplies HKAS 12 “Income Taxes” requirements to the leasing transaction as a whole. Temporary differencesrelating to right-of-use assets and lease liabilities are assessed on a net basis. Excess of depreciation onright-of-use assets over the lease payments for the principal portion of lease liabilities resulting in netdeductible temporary differences.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off currenttax assets against current tax liabilities and when they relate to income taxes levied to the same taxableentity by the same taxation authority.

Current and deferred tax are recognised in profit or loss, except when they relate to items that arerecognised in other comprehensive income or directly in equity, in which case, the current and deferred taxare also recognised in other comprehensive income or directly in equity, respectively.

Financial instruments

Financial assets and financial liabilities are recognised when a group entity becomes a party to thecontractual provisions of the instrument. All regular way purchases or sales of financial assets arerecognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales offinancial assets that require delivery of assets within the time frame established by regulation or conventionin the market place.

Financial assets and financial liabilities are initially measured at fair value except for tradereceivables arising from contracts with customers which are initially measured in accordance with HKFRS15. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial



– I-20 –

liabilities are added to or deducted from the fair value of the financial assets or financial liabilities, asappropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financialassets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

The effective interest method is a method of calculating the amortised cost of a financial asset orfinancial liability and of allocating interest income and interest expense over the relevant period. Theeffective interest rate is the rate that exactly discounts estimated future cash receipts and payments(including all fees and points paid or received that form an integral part of the effective interest rate,transaction costs and other premiums or discounts) through the expected life of the financial asset orfinancial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Financial assets

Classification and subsequent measurement of financial assets

Financial assets that meet the following conditions are subsequently measured at amortised cost:

� the financial asset is held within a business model whose objective is to collect contractualcash flows; and

� the contractual terms give rise on specified dates to cash flows that are solely payments ofprincipal and interest on the principal amount outstanding.

All other financial assets are subsequently measured at fair value.

Amortised cost and interest income

Interest income is recognised using the effective interest method for financial assets measuredsubsequently at amortised cost. Interest income is calculated by applying the effective interest rate to thegross carrying amount of a financial asset, except for financial assets that have subsequently becomecredit-impaired. For financial assets that have subsequently become credit-impaired, interest income isrecognised by applying the effective interest rate to the amortised cost of the financial asset from the nextreporting period. If the credit risk on the credit-impaired financial instrument improves so that the financialasset is no longer credit-impaired, interest income is recognised by applying the effective interest rate to thegross carrying amount of the financial asset from the beginning of the reporting period following thedetermination that the asset is no longer credit impaired.

Impairment of financial assets and contract assets

The Group performs impairment assessment under expected credit loss (“ECL”) model on financialassets (including trade receivables, other receivables, amounts due from related companies, amounts duefrom directors, pledged bank deposits and bank balances) and contract assets which are subject toimpairment assessment under HKFRS 9. The amount of ECL is updated at each reporting date to reflectchanges in credit risk since initial recognition.

Lifetime ECL represents the ECL that will result from all possible default events over the expectedlife of the relevant instrument. In contrast, 12-month ECL (“12m ECL”) represents the portion of lifetimeECL that is expected to result from default events that are possible within 12 months after the reportingdate. Assessments are done based on the Group’s historical credit loss experience, adjusted for factors thatare specific to the debtors, general economic conditions and an assessment of both the current conditions atthe reporting date as well as the forecast of future conditions.

The Group always recognises lifetime ECL for trade receivables and contract assets.

For all other instruments, the Group measures the loss allowance equal to 12m ECL, unless whenthere has been a significant increase in credit risk since initial recognition, in which case the Grouprecognises lifetime ECL. The assessment of whether lifetime ECL should be recognised is based onsignificant increases in the likelihood or risk of a default occurring since initial recognition.



– I-21 –

(i) Significant increase in credit risk

In assessing whether the credit risk has increased significantly since initial recognition, the Groupcompares the risk of a default occurring on the financial instrument as at the reporting date with the risk ofa default occurring on the financial instrument as at the date of initial recognition. In making thisassessment, the Group considers both quantitative and qualitative information that is reasonable andsupportable, including historical experience and forward-looking information that is available without unduecost or effort.

In particular, the following information is taken into account when assessing whether credit risk hasincreased significantly:

� an actual or expected significant deterioration in the financial instrument’s external (ifavailable) or internal credit rating;

� significant deterioration in external market indicators of credit risk, e.g. a significant increasein the credit spread, the credit default swap prices for the debtor;

� existing or forecast adverse changes in business, financial or economic conditions that areexpected to cause a significant decrease in the debtor’s ability to meet its debt obligations;

� an actual or expected significant deterioration in the operating results of the debtor;

� an actual or expected significant adverse change in the regulatory or economic environment ofthe debtor that results in a significant decrease in the debtor’s ability to meet its debtobligations.

Irrespective of the outcome of the above assessment, the Group presumes that the credit risk hasincreased significantly since initial recognition when contractual payments are more than 30 days past due,unless the Group has reasonable and supportable information that demonstrates otherwise.

A financial instrument is determined to have low credit risk if i) the financial instrument has a lowrisk of default, ii) the borrower has a strong capacity to meet its contractual cash flow obligations in thenear term and iii) adverse changes in economic and business conditions in the longer term may, but will notnecessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations.

The Group regularly monitors the effectiveness of the criteria used to identify whether there has beena significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable ofidentifying significant increase in credit risk before the amount becomes past due.

(ii) Definition of default

For internal credit risk management, the Group considers an event of default occurs wheninformation developed internally or obtained from external sources indicates that the debtor is unlikely topay its creditors, including the Group, in full (without taking into account any collaterals held by theGroup).

Irrespective of the above, the Group considers that default has occurred when a financial asset ismore than 90 days past due unless the Group has reasonable and supportable information to demonstratethat a more lagging default criterion is more appropriate.

(iii) Credit-impaired financial assets

A financial asset is credit-impaired when one or more events that have a detrimental impact on theestimated future cash flows of that financial asset have occurred. Evidence that a financial asset iscredit-impaired includes observable data about the following events:

� significant financial difficulty of the issuer or the borrower;



– I-22 –

� a breach of contract, such as a default event;

� the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’sfinancial difficulty, having granted to the borrower a concession(s) that the lender(s) would nototherwise consider; or

� it is becoming probable that the borrower will enter bankruptcy or other financialreorganisation.

(iv) Write-off policy

The Group writes off a financial asset when there is information indicating that the counterparty is insevere financial difficulty and there is no realistic prospect of recovery, for example, when the counterpartyhas been placed under liquidation or has entered into bankruptcy proceedings. Financial assets written offmay still be subject to enforcement activities under the Group’s recovery procedures, taking into accountlegal advice where appropriate. A write-off constitutes a derecognition event. Any subsequent recoveries arerecognised in profit or loss.

(v) Measurement and recognition of ECL

The measurement of ECL is a function of the probability of default, loss given default (i.e. themagnitude of the loss if there is a default) and the exposure at default. The assessment of the probability ofdefault and loss given default is based on historical data and forward-looking information. Estimation ofECL reflects an unbiased and probability-weighted amount that is determined with the respective risks ofdefault occurring as the weights.

Generally, the ECL is the difference between all contractual cash flows that are due to the Group inaccordance with the contract and the cash flows that the Group expects to receive, discounted at theeffective interest rate determined at initial recognition.

Where ECL is measured on a collective basis or cater for cases where evidence at the individualinstrument level may not yet be available, the financial instruments are grouped on the following basis:

� Past-due status;

� Nature, size and industry of debtors; and

� External credit ratings where available.

The grouping is regularly reviewed by management to ensure the constituents of each group continueto share similar credit risk characteristics.

Interest income is calculated based on the gross carrying amount of the financial asset unless thefinancial asset is credit-impaired, in which case interest income is calculated based on amortised cost of thefinancial asset.

The Group recognises an impairment gain or loss in profit or loss for all financial instruments byadjusting their carrying amount, with the exception of trade receivables and contract assets where thecorresponding adjustment is recognised through a loss allowance account.

Financial liabilities and equity

Classification as debt or equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordancewith the substance of the contractual arrangements and the definitions of a financial liability and an equityinstrument.



– I-23 –

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity afterdeducting all of its liabilities. Equity instruments issued by the Company are recognised at the proceedsreceived, net of direct [REDACTED].

Financial liabilities at amortised cost

Financial liabilities including trade payables, other payables, amounts due to related companies,amount due to a director, bank overdrafts and bank borrowings are subsequently measured at amortisedcost, using the effective interest method.

Derecognition

The Group derecognises a financial asset only when the contractual rights to the cash flows from theasset expire, or when it transfers the financial assets and substantially all the risks and rewards ofownership of the asset to another entity.

On derecognition of a financial asset measured at amortised cost, the difference between the asset’scarrying amount and the sum of the consideration received and receivable is recognised in profit or loss.

The Group derecognises financial liabilities when, and only when, the Group’s obligations aredischarged, cancelled or have expired. The difference between the carrying amount of the financial liabilityderecognised and the consideration paid and payable is recognised in profit or loss.

5. KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, which are described in Note 4, the directors of theCompany are required to make judgements, estimates and assumptions about the carrying amounts of assets andliabilities that are not readily apparent from other sources. The estimates and associated assumptions are based onhistorical experience and other factors that are considered to be relevant. Actual results may differ from theseestimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accountingestimates are recognised in the period in which the estimate is revised if the revision affects only that period, orin the period of the revision and future periods if the revision affects both current and future periods.

The followings are the key assumptions concerning the future, and other key sources of estimationuncertainty at the end of each reporting period that have a significant risk of causing a material adjustment to thecarrying amounts of assets within the next twelve months.

Estimated outcome of provision of fitting out works

The Group reviews and revises the estimated total costs to complete the satisfaction of these servicesand the profit margin of each construction contract as the contract progresses. Budgeted contract costs andprofit margin are prepared by the management of the Group on the basis of quotations from time to timeprovided by the major subcontractors, suppliers or vendors involved and the experience of the managementof the Group. In order to keep the budget accurate and up-to-date, management of the Group conductsperiodic reviews of the budgets of contracts by comparing the budgeted amounts to the actual amountsincurred. Such significant estimate may have impact on the profit recognised in each period.

Recognised amounts of contract revenue from provision of fitting-out works and related contractassets and receivables reflect management’s best estimate of each contract’s outcome and value of workscompleted, which are determined on the basis of a number of estimates. This includes the assessment of theprofitability of on-going construction contracts. For more complex contracts in particular, costs to completeand contract profitability are subject to significant estimation uncertainty. The actual outcomes in terms oftotal cost or revenue may be higher or lower than estimated at the end of each reporting period, whichwould affect the revenue and profit or loss recognised in future years as an adjustment to the amountsrecorded to date.



– I-24 –

Estimated impairment of trade receivables and contract assets

The management of the Group estimates the amount of impairment loss for ECL on trade receivablesand contract assets based on the credit risk of trade receivables and contract assets. The amount of theimpairment loss based on ECL model is measured as the difference between all contractual cash flows thatare due to the Group in accordance with the contract and all the cash flows that the Group expects toreceive, discounted at the effective interest rate determined at initial recognition. Where the future cashflows are less than expected, or being revised downward due to changes in facts and circumstances, amaterial impairment loss may arise.

As at 31 March 2019, 2020 and 2021, the carrying amounts of trade receivables are HK$7,792,000,HK$5,010,000 and HK$9,109,000 (net of allowance for doubtful debts of HK$26,000, HK$184,000 andHK$45,000) respectively and the carrying amounts of contract assets are HK$60,973,000, HK$23,451,000and HK$71,989,000 (net of allowance for doubtful debts of HK$352,000, HK$213,000 and HK$565,000),respectively.

6. REVENUE AND SEGMENT INFORMATION

Revenue

Revenue represented the fair value of amounts received and receivable from the provision offitting-out works in Hong Kong and Macau during the Track Record Period.

The Group’s revenue from external customers based on their nature are detailed below:


HK$’000 HK$’000 HK$’000Recognised over timeContract revenue from fitting-out works 196,609 250,702 294,216

Performance obligations for contracts with customers – revenue from construction works

The Group’s construction contracts include payment schedules which require stage payments over theconstruction period once certain specified milestones are reached. When the Group receives a deposit beforeconstruction work commences, this will give rise to contract liabilities at the start of a contract, until therevenue recognised on the specific contract exceeds the amount of the deposit.

A contract asset, net of contract liability related to the same contract, is recognised over the period inwhich the work are performed representing the Group’s right to consideration for the services performedbecause the rights are conditional on the Group’s future performance in achieving specified milestones. Thecontract assets are transferred to trade receivables when the rights become unconditional.

Transaction price allocated to the remaining performance obligations

The following table shows the aggregate amount of the transaction price allocated to performanceobligations that are unsatisfied (or partially unsatisfied) as at the end of each reporting period.


HK$’000 HK$’000 HK$’000

Fitting-out works 262,306 246,582 201,509



– I-25 –

Based on the information available to the Group at the end of each reporting period, the managementof the Group expects the transaction price allocated to the remaining performance obligations (unsatisfied orpartially unsatisfied) as of 31 March 2019, 2020 and 2021 will be recognised as revenue in respect offitting-out works during the period from 1 April 2019 to 31 March 2022, the period from 1 April 2020 to31 March 2022 and the period from 1 April 2021 to 31 March 2023 respectively.

Segment information

The Group’s operating activities are attributable to a single operating segment focusing on provisionof fitting-out works during the Track Record Period. For the purposes of resources allocation andperformance assessment, the chief operating decision maker (i.e. the chief executive officer) reviews theoverall results and financial position of the Group as a whole prepared based on same accounting policiesas set out in Note 4. Accordingly, the Group has only one single operating segment and no further analysisof this single segment is presented.

Geographical information

The Group’s revenue from external customers based on the location of fitting-out works rendered,and information about its non-current assets by geographical location of the assets are detailed below:

Revenue from external customers Non-current assets (note)Year ended 31 March As at 31 March

2019 2020 2021 2019 2020 2021HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Hong Kong 79,304 72,196 39,333 116 302 255Macau 117,305 178,506 254,883 31 153 43

196,609 250,702 294,216 147 455 298

Note: Non-current assets excluded those financial assets.

Information about major customers

Revenue from customers contributing over 10% of the total revenue of the Group are as follows:


HK$’000 HK$’000 HK$’000

Customer A 101,712 61,786 N/A1

Customer B N/A1 53,436 N/A1

Customer C N/A1 39,489 47,185Customer D – N/A1 88,682Customer E – – 69,606Customer F – – 32,671

1 The corresponding revenue did not contribute over 10% of total revenue of the Group for therespective years.



– I-26 –

7. OTHER INCOME/OTHER LOSS


HK$’000 HK$’000 HK$’000

Other income– Bank interest income –* 77 41– Government subsidies (note) – – 770– Sundry income 14 85 –

14 162 811


Note: During the year ended 31 March 2021, the government subsidies of HK$648,000 and HK$122,000(2020 and 2019: Nil) to the Group in respective of Covid-19 related-subsidies, which relate toEmployment Support Scheme provided by the Hong Kong and Macau government respectively, wererecognised.

Other loss– Net foreign exchange loss (20) (9) (196)

8. IMPAIRMENT LOSSES UNDER EXPECTED CREDIT LOSS MODEL, NET OF REVERSAL


HK$’000 HK$’000 HK$’000

Net impairment losses under ECL model recognised(reversed) on:– Trade receivables 25 158 (139)– Contract assets 341 (139) 352

366 19 213

9. FINANCE COSTS


HK$’000 HK$’000 HK$’000

Interest on bank borrowings 1,098 1,358 1,204Interest on bank overdrafts 374 654 436Interest on lease liability 4 11 3

1,476 2,023 1,643



– I-27 –

10. PROFIT BEFORE TAXATION


HK$’000 HK$’000 HK$’000

Profit before taxation has been arrived at after charging:

Directors’ and chief executive’s emoluments (Note 12) 619 689 877Other staff costs 8,693 13,050 14,026Retirement benefit schemes contributions to other staff 206 251 271

Total staff costs 9,518 13,990 15,174Less: Staff costs included in cost of sales (5,807) (10,344) (10,933)

3,711 3,646 4,241

Auditor’s remuneration 58 58 64Depreciation of property, plant and equipment 106 174 89Depreciation of right-of-use asset 114 124 124

11. INCOME TAX EXPENSE


HK$’000 HK$’000 HK$’000Current tax:

Hong Kong Profits TaxProvision for the year 1,088 822 175

Macau Complementary Income TaxProvision for the year 1,013 1,788 3,553

2,101 2,610 3,728

Under the two-tiered profits tax rates regime of Hong Kong Profits Tax, the first HK$2 million of profits ofthe qualifying group entity will be taxed at 8.25%, and profits above HK$2 million will be taxed at 16.5%. Theprofits of group entities not qualifying for the two-tiered profits tax rates regime will continue to be taxed at a flatrate of 16.5%.

Macau Complementary Income Tax is calculated at 12% of the estimated annual assessable profitsexceeding MOP600,000 for the Track Record Period.

Accordingly, the Hong Kong Profits Tax of the qualifying group entity is calculated at 8.25% on the firstHK$2 million of the estimated assessable profits and at 16.5% on the estimated assessable profits above HK$2million.



– I-28 –

The income tax expense for the Track Record Period can be reconciled to the profit before taxation per thecombined statements of profit or loss and other comprehensive income as follows:


HK$’000 HK$’000 HK$’000


Tax charge at domestic income tax rate 2,084 2,890 3,490Tax effect of expenses not deductible for tax purpose 281 320 851Tax effect of income not taxable for tax purpose – (17) (132)Tax effect of tax exemption under Macau Complementary

Income Tax (70) (70) (70)Tax effect of deductible temporary differences not

recognised 11 – –Utilisation of deductible temporary differences previously

not recognised – (17) –Tax effect of two-tiered profits tax rates regime (165) (165) (100)Tax concessions (40) (331) (311)

Income tax expense for the year 2,101 2,610 3,728

12. DIRECTORS’, CHIEF EXECUTIVE’S AND EMPLOYEES’ EMOLUMENTS

(a) Directors’ and chief executive’s emoluments

The emoluments paid or payable to the directors and the chief executive of the Company (includingemoluments for services as employee/director of the group entities prior to becoming directors or chiefexecutive of the Company) by the entities comprising the Group during the Track Record Period as follows:

For the year ended 31 March 2019

Fee

Salaries andother

benefits

Performancerelated

incentivepayments

(note)

Retirementbenefit

schemescontributions Total

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Executive directorsMr. Y. W. Chan – 601 – 18 619Ms. Wan – – – – –

– 601 – 18 619



– I-29 –


Fee

Salaries andother

benefits

Performancerelated

incentivepayments

(note)

Retirementbenefit


HK$’000 HK$’000 HK$’000 HK$’000 HK$’000


– 671 – 18 689


Fee

Salaries andother

benefits

Performancerelated

incentivepayments

(note)

Retirementbenefit


HK$’000 HK$’000 HK$’000 HK$’000 HK$’000


Chief executiveMr. Ng Wing

Cheong Stephen(“Mr. Ng”) – 240 – 8 248

– 851 – 26 877

Note: The performance related incentive payments are determined with reference to the operating resultsand individual performance during the Track Record Period.

The directors’ emoluments are for their services in connection to the management of the affairs ofthe companies now comprising the Group.

All the executive directors and the chief executive of the Company were appointed on 17 September2021.

No emoluments were paid or payable to independent non-executive directors, namely Cheng ChingYee, Lam Chi Wing and Leung Hoi Ki, during the Track Record Period. These independent non-executivedirectors are newly appointed by the Company on [Date].



– I-30 –

(b) Employees’ emoluments

Of the five individuals with the highest emoluments in the Group, 1, 1 and 1 was the director of theCompany for the years ended 31 March 2019, 2020 and 2021, respectively. The emolument is included inNote 12 (a) above. The emoluments of the 4, 4 and 4 individuals who are neither a director nor chiefexecutive for the years ended 31 March 2019, 2020 and 2021, respectively are as follows:


HK$’000 HK$’000 HK$’000

Salaries and other benefits 2,480 3,020 3,214Performance related incentive payments (note) – – –Retirement benefit schemes contributions 54 41 36

2,534 3,061 3,250

Note: The performance related incentive payments are determined with reference to the operating resultsand individual performance during the Track Record Period.

The number of the five highest paid employees who are not the directors nor the chief executive ofthe Company whose emoluments fell within the following bands are as follows:

Number of individualsYear ended 31 March

2019 2020 2021

Nil to HK$1,000,000 4 4 4

During the Track Record Period, no emoluments were paid by the Group to the directors, chiefexecutive and the five highest paid individuals, as an inducement to join or upon joining the Group or ascompensation for loss in office. In addition, no director, chief executive and staff waived or agreed to waiveany emoluments during the Track Record Period.

13. DIVIDENDS


HK$’000 HK$’000 HK$’000

Dividends declared to the then shareholders during theTrack Record Period:

– by Wang Hing Interior Design 500 500 –– by L & F Interior Engineering 7,767 15,534 26,214

8,267 16,034 26,214

The rate of dividends and the number of shares ranking for the above dividends are not presented as suchinformation is not considered meaningful having regard to the purpose of the report.

Save as disclosed above, no dividends were declared or paid by the companies now comprising the Groupduring the Track Record Period.



– I-31 –

14. EARNINGS PER SHARE

No earnings per share information is presented for the purpose of this report as its inclusion is notconsidered meaningful having regard to the Reorganisation of the Group and the result of the Group for the TrackRecord Period that is prepared on a combined basis as set out in Note 2.

15. PROPERTY, PLANT AND EQUIPMENT

Leaseholdimprovements

Furnitureand fixtures

Officeequipment

Motorvehicles Total

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

COSTAt 1 April 2018 329 117 866 446 1,758Additions – – 31 – 31

At 31 March 2019 329 117 897 446 1,789Additions – – – 357 357

At 31 March 2020 329 117 897 803 2,146Additions – 6 50 – 56

At 31 March 2021 329 123 947 803 2,202

DEPRECIATIONAt 1 April 2018 329 117 841 268 1,555Provided for the year – – 17 89 106

At 31 March 2019 329 117 858 357 1,661Provided for the year – – 13 161 174

At 31 March 2020 329 117 871 518 1,835Provided for the year – 1 17 71 89

At 31 March 2021 329 118 888 589 1,924

CARRYING VALUEAt 31 March 2019 – – 39 89 128

At 31 March 2020 – – 26 285 311

At 31 March 2021 – 5 59 214 278

The above items of property, plant and equipment are depreciated on a straight-line basis at the followingrates per annum.

Leasehold improvements 20% or over the shorter of the terms of the leasesFurniture and fixtures 20%Office equipment 20%Motor vehicles 20%



– I-32 –

16. RIGHT-OF-USE ASSET

Leasedproperties

HK$’000

As at 1 April 2018Carrying amount 133

As at 31 March 2019Carrying amount 19



For the year ended 31 March 2019Depreciation charge 114

Expenses related to short-term leases 180

Total cash outflow for leases 300




Addition to right-of-use asset 249




During the Track Record Period, the Group leases various offices and staff dormitories for its operations.Lease contracts were entered into for fixed term of 12 – 24 months. Lease terms were negotiated on an individualbasis and contained a wide range of different terms and conditions. In determining the lease term and assessingthe length of the non-cancellable period, the Group applies the definition of a contract and determines the periodfor which the contract is enforceable.



– I-33 –

17. TRADE RECEIVABLES, DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES

As at 31 March2019 2020 2021

HK$’000 HK$’000 HK$’000

Trade receivables 7,818 5,194 9,154Less: Allowance for credit losses (26) (184) (45)

7,792 5,010 9,109

Deposits, prepayments and other receivables– Deposits 20 74 96– Advances paid to subcontractors and suppliers 12,920 22,196 5,269– Surety bond 2,900 – –– [REDACTED] – – [REDACTED]– [REDACTED] – – [REDACTED]– Advances to staff 44 269 571

15,884 22,539 7,260

The aging of trade receivables presented based on the dates of work certified. The Group allows generally acredit period ranging from 0 to 30 days to its customers at the end of each reporting period, net of allowance fordoubtful debts, is as follows:

As at 31 March2019 2020 2021

HK$’000 HK$’000 HK$’000

0 – 30 days 454 2,640 5,81431 – 60 days – – 2,36661 – 90 days 5,636 1,923 –Over 90 days 1,702 447 929

7,792 5,010 9,109

As at 1 April 2018, trade receivables from contracts with customers amounted to HK$3,954,000.

As at 31 March 2019, 2020 and 2021, included in the Group’s trade receivables balance are debtors with anaggregate carrying amount of HK$7,338,000, HK$2,370,000 and HK$3,294,000 which are past due as at thereporting date. Out of the past due balances approximately nil, HK$447,000 and nil have been past due over 90days or more and are not considered as in default as there has not been a significant change in credit quality andamounts are still considered as receivable based on historical experience.

The Group applies the simplified approach to provide for ECL prescribed by HKFRS 9. To measure theECL of trade receivables, trade receivables have been assessed on individual basis. The Group provided forimpairment on other receivables based on 12m ECL on individual basis.

Details of impairment assessment are set out in Note 30.



– I-34 –

18. CONTRACT ASSETS

As at1 April As at 31 March

2018 2019 2020 2021HK$’000 HK$’000 HK$’000 HK$’000

Contract assets 30,432 61,325 23,664 72,554Less: Allowance for credit losses (11) (352) (213) (565)

30,421 60,973 23,451 71,989

As at 31 March 2019, 2020 and 2021, contract assets include retention receivables held by customers forcontract works amounting to HK$17,017,000, HK$21,463,000 and HK$26,235,000, respectively.

Retention receivables represent the money retained by the Group’s customers to secure the due performanceof the contracts. The customers normally withhold 10% of the certified amount payable to the Group as retentionmoney, 50% of which is normally recoverable upon completion of respective projects and the remaining 50% isrecoverable after the completion of defects liability period of the relevant contracts or in accordance with theterms specified in the relevant contracts, ranging from 3 months to 2 years from the date of completion ofrespective projects. The amount is unsecured and non-interest bearing.

The changes in contract assets are due to (i) adjustments arising from changes in the measurement ofprogress of fitting-out works, or (ii) reclassification to trade receivables when the Group has unconditional right tothe consideration.

The Group applies the simplified approach to provide for ECL prescribed by HKFRS 9.

Details of impairment assessment of contract assets are set out in Note 30.

19. AMOUNTS DUE FROM (TO) RELATED COMPANIES/DIRECTORS

Amounts due from related companies

Details of amounts due from related companies are stated as follows:


Maximum amountoutstanding during the year

ended 31 March2018 2019 2020 2021 2019 2020 2021

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Non-trade nature:– Smart City (China)

Limited (note) – 2 2 24 2 2 24– Million Fine

Engineering Limited(“Million Fine”)(note) 1,519 1,871 2,041 2,641 1,871 2,041 2,641

– L & F Construction &Decoration (HongKong) Limited (note) 451 499 499 499 499 499 499

1,970 2,372 2,542 3,164

Note: These companies are under common control of Mr. Y. W. Chan, the controlling shareholderand director of the Company.



– I-35 –

Amounts due to related companies

Details of amounts due to related companies are stated as follows:

As at 31 March2019 2020 2021

HK$’000 HK$’000 HK$’000Non-trade nature:

– L & F Construction & Decoration (Shanghai)Company Limited (note) 1,256 1,357 1,357

– On Fine Investment Limited (“On Fine”) (note) 374 524 684

1,630 1,881 2,041

Note: These companies are under common control of Mr. Y. W. Chan, the controlling shareholder anddirector of the Company.

The amounts due from (to) related companies are non-trade, unsecured, non-interest bearing andrepayable on demand.

Amounts due from directors

Details of amounts due from directors are stated as follows:


Maximum amountoutstanding during the year

ended 31 March2018 2019 2020 2021 2019 2020 2021

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Non-trade nature:– Mr. Y. W. Chan 24,702 38,653 29,911 24,835 38,653 38,653 29,911– Ms. Wan 7,335 5,852 – – 7,335 5,852 –

32,037 44,505 29,911 24,835

Analysed for reportingpurposes as:

Non-current 10,000 10,000 10,000 –Current 22,037 34,505 19,911 24,835

32,037 44,505 29,911 24,835

The amounts due from directors are unsecured, non-interest bearing and repayable on demand. Asrepresented by the directors of the Company, the amounts will be settled in full upon the [REDACTED] ofshares of the Company on the Main Board of The Stock Exchange of Hong Kong Limited(“[REDACTED]”).

Details of impairment assessment of amounts due from related companies and amounts due fromdirectors are set out in Note 30.



– I-36 –

Amount due to a director

Details of amount due to a director are stated as follows:

As at 31 March2019 2020 2021

HK$’000 HK$’000 HK$’000

Non-trade nature:– Ms. Wan – 1,589 12,974

The amount due to a director is non-trade, unsecured, non-interest bearing and repayable on demand.

20. PLEDGED BANK DEPOSITS/BANK BALANCES AND CASH

Pledged bank deposits carry interest at the prevailing market rate ranging from approximately 0.45% to1.8% per annum at the end of each reporting period.

At 31 March 2019, 2020 and 2021, the entire pledged bank deposits represent deposits pledged to banks tosecure certain banking facilities and surety bonds of the Group.

Bank balances and cash comprise cash held and short term bank deposits with an original maturity of threemonths or less and carry interest at prevailing market rates at 0.01% per annum at the end of each reportingperiod.

Included in bank balances and cash are the following amounts denominated in currencies other thanfunctional currency of the group entities which it relates:

As at 31 March2019 2020 2021

HK$’000 HK$’000 HK$’000

HK$ 82 2,151 150US$ 6 6 6

Details of impairment assessment are set out in Note 30.

21. TRADE PAYABLES, ACCRUALS AND OTHER PAYABLES

As at 31 March2019 2020 2021

HK$’000 HK$’000 HK$’000

Trade payables 48,092 5,588 21,159

Retention payables 11,824 9,326 11,229Accruals 637 115 612[REDACTED] – – [REDACTED]Surety bond received 2,427 2,427 2,427Other payables 29 34 32

Total accruals and other payables 14,917 11,902 15,017



– I-37 –

The credit period on trade payables ranging from 0 to 30 days during the Track Record Period. The agingof trade payables presented based on the certified period at the end of each reporting period, is as follows:

As at 31 March2019 2020 2021

HK$’000 HK$’000 HK$’000

0 to 30 days 5,767 3,191 21,10731 to 60 days 37,195 1,664 –61 to 90 days 2,107 723 –Over 90 days 3,023 10 52

48,092 5,588 21,159

Retention payables to sub-contractors of contract works are non-interest bearing and payable by the Groupafter the completion of defects liability period of the relevant contracts or in accordance with the terms specifiedin the relevant contracts, ranging from 3 months to 1 year from the completion date of the respective servicecontracts.

The retention payables are to be settled, based on the expiry of defects liability period, at the end of eachreporting period as follows:

As at 31 March2019 2020 2021

HK$’000 HK$’000 HK$’000

Within one year 5,395 3,365 4,580After one year 6,429 5,961 6,649

11,824 9,326 11,229

22. CONTRACT LIABILITIES

As at 1April As at 31 March2018 2019 2020 2021

HK$’000 HK$’000 HK$’000

Advances received from customers 12,300 4,690 26,806 1,389

For the contract liabilities as of 1 April 2018, 2019 and 2020, the entire balances are recognised as revenuein the profit or loss during the years ended 31 March 2019, 2020 and 2021, respectively.



– I-38 –

23. BANK BORROWINGS AND BANK OVERDRAFTS

As at 31 March2019 2020 2021

HK$’000 HK$’000 HK$’000Secured

– Bank borrowings 37,063 26,621 33,666– Bank overdrafts 10,505 15,336 14,384

47,568 41,957 48,050

The carrying amounts of the above borrowings arerepayable*:– Within one year – – 6,600

The carrying amounts of the above borrowings that containa repayable on demand clause (shown under currentliabilities) but repayable:– Within one year 26,739 16,930 16,964– Within a period of more than one year but not

exceeding two years 633 650 1,727– Within a period of more than two years but not

exceeding five years 2,000 2,052 2,106– Within a period of more than five years 7,692 6,989 6,269

Amount due within one year shown under current liabilities 37,063 26,621 33,666

The bank borrowings comprise of:Variable rate borrowings 37,063 26,621 33,666

* The amounts due are based on scheduled repayment dates set out in the loan agreements.

Bank borrowings carry variable interest ranging from the prevailing best lending rates quoted by the banksin Hong Kong (the “Prime Rate”) minus 2.65% per annum to the Prime Rate during the Track Record Period. Theweighted average effective interest rate on the bank borrowings as at 31 March 2019, 2020 and 2021 is 4.34%,3.97% and 4.10% per annum, respectively.

Secured bank overdrafts carry variable interest ranging from one month Hong Kong Interbank Offered Rateplus 1.4% per annum to the Prime Rate plus 2.5% per annum and is repayable on demand.

Mr. Y. W. Chan, Ms. Wan and Ms. Chan Kit Ying (“Ms. Chan”), daughter of Mr. Y. W. Chan and Ms. Wan,have provided unlimited personal guarantees to banks for banking facilities granted to the Group as at 31 March2019, 2020 and 2021. Properties owned by On Fine, Ms. Wan and Ms. Chan, life insurance policy of Mr. Y. W.Chan of which he is the policy owner and pledged bank deposits of Million Fine were charged as securities tobanks for banking facilities granted to the Group as at 31 March 2019, 2020 and 2021. At 31 March 2021, thebalances of the SME Financing Guarantee Loan was HK$3,561,000, which was 100% guarantee by Hong Konggovernment and Mr. Y. W. Chan.

The directors of the Company have represented that they expect that such personal guarantee, pledgedproperties owned by related parties, pledged life insurance policy of Mr. Y. W. Chan and pledged bank deposits ofMillion Fine will be released upon the [REDACTED].



– I-39 –

24. LEASE LIABILITY

As at 31 March2019 2020 2021

HK$’000 HK$’000 HK$’000Lease liability payable

Within one year 20 128 22Within a period of more than one year

but not more than two years – 22 –

20 150 22Less: Amount due for settlement within

12 months shown under current liabilities (20) (128) (22)

Amount due for settlement after 12 months shown undernon-current liabilities – 22 –

The weighted average incremental borrowing rate applied to lease liability was 5.5% per annum during theTrack Record Period.

25. SHARE CAPITAL

The share capital as at 31 March 2019 and 2020 represents the aggregate amount of share capital of WangHing Interior Design, Wang Hing Interior Engineering, L & F Interior Engineering and Wang Hing Lain Fung.

The share capital as at 31 March 2021 represents the aggregate amount of share capital/registered capital ofWang Hing Interior Design, Wang Hing Interior Engineering, L & F Interior Engineering, Wang Hing Lain Fungand Grateful Luck.

26. NON-CASH TRANSACTIONS

During the years ended 31 March 2019, 2020 and 2021, final dividends amounting to HK$8,267,000,HK$16,034,000 and HK$26,214,000 declared by Wang Hing Interior Design and L & F Interior Engineering weresettled through the current accounts with directors.

Right-of-use asset for office premises with a total capital value of HK$249,000, and the same amount oflease liability was recognised during the year ended 31 March 2020.

27. RETIREMENT BENEFITS SCHEMES

Eligible employees of the Group are covered by a government-mandated defined contribution plan pursuantto which a fixed amount of retirement benefit would be determined and paid by the Macau Government.Contributions are generally made by both employees and employers by paying a fixed amount on a monthly basisto the Social Security Fund Contribution managed by the Macau Government. The Group funds the entirecontribution and has no further commitments beyond its monthly contributions.

The Group has established the Mandatory Provident Fund Scheme (the “MPF Scheme”) for its Hong Kongemployees. The assets of the scheme are held separately in funds which are under the control of independenttrustees. The retirement benefit scheme contributions charged to profit or loss represent contributions paid orpayable by the Group to the scheme at 5% of each of the employees’ monthly relevant income capped atHK$30,000.

The total cost of HK$220,000, HK$269,000 and HK$297,000 for the years ended 31 March 2019, 2020 and2021 respectively charged to combined statements of profit or loss and other comprehensive income representscontribution paid or payable to the above retirement benefit plans by the Group.



– I-40 –

28. RELATED PARTY TRANSACTIONS

(a) In addition to the transactions and balances disclosed elsewhere in the Historical FinancialInformation, the Group entered into the following transactions with related parties during the TrackRecord Period as follows:


HK$’000 HK$’000 HK$’000

Short-term lease expenses paid toOn Fine 180 180 180

Salaries and allowance paid to related parties(note) 578 996 1,076

Note: These related parties (company secretary and deputy project director of the Group) are closefamily members of Mr. Y. W. Chan, the controlling shareholder and director of the Company.

(b) Compensation of key management personnel

The compensation to key management personnel of the Group during the Track Record Period wereas follows:


HK$’000 HK$’000 HK$’000

Short-term benefits 1,906 2,666 3,051Post-employment benefits 36 36 43

1,942 2,702 3,094

29. CAPITAL RISK MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue as a goingconcern while maximising the return to stakeholders through the optimisation of the debt and equity balances. TheGroup’s overall strategy remains unchanged throughout the Track Record Period.

The capital structure of the Group consists of debt balance and equity balance. Equity balance consists ofequity attributable to owners of the Group, comprising issued share capital, retained profits and reserves. Debtbalance consists of bank borrowings, bank overdrafts, amounts due to related companies and amount due to adirector.

The management of the Group reviews the capital structure on a regular basis. As part of this review, themanagement of the Group considers the cost of capital and the risks associated with the capital. Based onrecommendations of the management of the Group, the Group will balance its overall capital structure through thepayment of dividends, new share issues as well as the issues of new debt.



– I-41 –

30. FINANCIAL INSTRUMENTS

a. Categories of financial instruments

As at 31 March2019 2020 2021

HK$’000 HK$’000 HK$’000

Financial assetsAmortised cost 67,241 73,903 55,669

Financial liabilitiesAmortised cost 111,570 62,802 98,490

b. Financial risk management objectives and policies

The Group’s financial instruments include bank balances and cash, pledged bank deposits, tradereceivables, other receivables, amounts due from related companies, amounts due from directors, tradepayables, other payables, amounts due to related companies, amount due to a director, bank overdrafts andbank borrowings. Details of these financial instruments are disclosed in the respective notes to theHistorical Financial Information. The risks associated with these financial instruments and the policies onhow to mitigate these risks are set out below. The management manages and monitors these exposures toensure appropriate risk management measures are implemented on a timely and effective manner.

Market risk

Interest rate risk management

The cash flows interest rate risk of the Group relates primarily to variable rate bankborrowings, bank overdrafts and bank balances with details as set out in Notes 23 and 20respectively.

The Group is exposed to fair value interest risk in relation to pledged bank deposits and leaseliability, with details as set out in Notes 20 and 24. The management continues to monitor the fairvalue interest rate exposure of the Group.

Sensitivity analysis

The sensitivity analysis includes only variable rate bank borrowings and bank overdraftsoutstanding at the end of each reporting period as the management expects the fluctuation of interestrates for bank balances is not significant. A 100 basis points is the sensitivity rate used whenreporting interest rate risk internally to key management personnel and represents management’sassessment of the reasonably possible change in interest rates.

As at 31 March 2019, 2020 and 2021, the Group is exposed to cash flow interest rate inrelation to the variable rate bank borrowings and bank overdrafts. If interest rate had been 50 basispoints higher/lower, the profit for the year attributable to owners of the Group for the years ended 31March 2019, 2020 and 2021 would decrease/increase by HK$199,000, HK$175,000 and HK$201,000respectively.



– I-42 –

Currency risk

The Group has foreign currency assets, which expose the Group to foreign currency risk. TheGroup currently does not have a foreign currency hedging policy. However, the management of theGroup monitors foreign exchange exposure and will consider hedging significant foreign currencyexposure should the need arise.

The carrying amount of the Group’s foreign currency denominated monetary assets at the endof each reporting period are as follows:

AssetsAs at 31 March

2019 2020 2021HK$’000 HK$’000 HK$’000

HK$ 82 2,151 150US$ 6 6 6

As the exchange rate of HK$/MOP is relatively stable, the management of the Group does notexpect any significant foreign currency exposure arising from the fluctuation of the HK$/MOPexchange rates. As a result, the management of the Group considers that the sensitivity of theGroup’s exposure towards the change in foreign exchange rate between HK$/MOP is minimal.

No sensitivity analysis on US$ denominated financial assets is presented as, in the opinion ofdirectors of the Company, HK$ has been pegged to US$ and the impact of movement in US$/HK$exchange rates to profits or loss is immaterial.

Credit risk and impairment assessment

Credit risk refers to the risk that the Group’s counterparties default on their contractualobligations resulting in financial losses to the Group. The Group’s credit risk exposures are primarilyattributable to trade receivables, contract assets, other receivables, amounts due from relatedcompanies, amounts due from directors, pledged bank deposits and bank balances. The Group doesnot hold any collateral or other credit enhancements to cover its credit risks associated with itsfinancial assets.

Trade receivables and contract assets arising from contracts with customers

For trade receivables and contract assets, in order to minimise the credit risk, the managementhas delegated a team responsible for determination of credit limits, credit approvals and othermonitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition,the Group calculates ECL for the trade receivables and contract assets individually. The tradereceivables and contract assets are accessed for impairment individually after considering internalcredit ratings of trade debtors, ageing, repayment history and/or past due status of respective tradereceivables. Estimated loss rates are based on historical observed default rates over the expected lifeof the debtors and are adjusted for supportable forward-looking information that is reasonable andsupportable available without undue costs or effort. At every reporting date, the historical observeddefault rates are reassessed and changes in the forward-looking information are considered. In thisregard, the directors of the Company consider that the Group’s credit risk is significantly reduced.

The Group has concentration of credit risk as 48%, 52% and 64% of the total gross tradereceivables was due from the Group’s largest debtor as at 31 March 2019, 2020 and 2021 and 100%,100% and 100% the total gross trade receivables was due from the five largest debtors as at 31March 2019, 2020 and 2021.



– I-43 –

Other receivables, amounts due from related companies and amounts due from directors

The directors of the Company make periodic individual assessment on the recoverability ofother receivables, amounts due from related companies and amounts due from directors based onhistorical settlement records, past experience, and also quantitative and qualitative information that isreasonable and supportable forward-looking information. The directors of the Company believe thatthere are no significant increase in credit risk of these amounts since initial recognition and theGroup provided impairment based on 12m ECL. For the years ended 31 March 2019, 2020 and 2021,the Group assessed the ECL for other receivables, amounts due from related companies and amountsdue from directors were insignificant and thus no loss allowance was recognised.

Bank balances and pledged bank deposits

Credit risk on bank balances and pledged bank deposits is limited because the counterpartiesare reputable banks with high credit ratings assigned by international credit agencies. The Groupassessed 12m ECL for bank balances and pledged bank deposits by reference to information relatingto probability of default and loss given default of the respective credit rating grades published byexternal credit rating agencies. Based on the average loss rates, the 12m ECL on bank balances andpledged bank deposits is considered to be insignificant.

The table below detail the credit risk exposures of the Group’s financial assets at amortisedcost, which are subject to ECL assessment:

31 March 2019External creditrating

Internalcreditrating

12m orlifetime ECL

Grosscarryingamount

HK$’000

Financial assets at amortised costTrade receivables N/A note 1 Lifetime ECL 7,818Other receivables N/A note 2 12m ECL 2,964Amounts due from related companies N/A note 2 12m ECL 2,372Amounts due from directors N/A note 2 12m ECL 44,505Pledged bank deposits Baa or higher N/A 12m ECL 3,845Bank balances Baa or higher N/A 12m ECL 5,684Other itemContract assets N/A note 1 Lifetime ECL 61,325



12m orlifetime ECL

Grosscarryingamount

HK$’000

Financial assets at amortised costTrade receivables N/A note 1 Lifetime ECL 5,194Other receivables N/A note 2 12m ECL 343Amounts due from related companies N/A note 2 12m ECL 2,542Amounts due from directors N/A note 2 12m ECL 29,911Pledged bank deposits Baa or higher N/A 12m ECL 11,290Bank balances Baa or higher N/A 12m ECL 24,688Other itemContract assets N/A note 1 Lifetime ECL 23,664



– I-44 –



12m orlifetime ECL

Grosscarryingamount

HK$’000

Financial assets at amortised costTrade receivables N/A note 1 Lifetime ECL 9,154Other receivables N/A note 2 12m ECL 667Amounts due from related companies N/A note 2 12m ECL 3,164Amounts due from directors N/A note 2 12m ECL 24,835Pledged bank deposits Baa or higher N/A 12m ECL 12,311Bank balances Baa or higher N/A 12m ECL 5,508Other itemContract assets N/A note 1 Lifetime ECL 72,554

Notes:

(1) For trade receivables and contract assets, the Group has applied the simplified approachin HKFRS 9 to measure the loss allowance at lifetime ECL. The Group determines theECL based on individual assessment. The expected credit loss rate was ranging from0.01% to 7.25%, 0.08% to 6.12% and 0.01% to 3.44% as at 31 March 2019, 2020 and2021 respectively.

The estimated loss rates are estimated based on historical observed default rates over theexpected life of the debtors and are adjusted for forward-looking information that isavailable without undue cost or effort. The grouping is regularly reviewed by themanagement to ensure relevant information about specific debtors is updated.

Lifetime ECL (not credit-impaired)Trade

receivablesContract

assets TotalHK$’000 HK$’000 HK$’000

At 1 April 2018 1 11 12Changes due to financial

instruments recognised as at1 April 2018:– Impairment losses reversed (1) (8) (9)– Impairment losses recognised – – –

New financial assets originated 26 349 375

At 31 March 2019 26 352 378Changes due to financial

instruments recognised as at1 April 2019:– Impairment losses reversed (26) (309) (335)– Impairment losses recognised – 129 129


At 31 March 2020 184 213 397Changes due to financial

instruments recognised as at1 April 2020:– Impairment losses reversed (184) (37) (221)– Impairment losses recognised – 195 195


At 31 March 2021 45 565 610



– I-45 –

(2) For the purpose of internal credit risk management, the Group uses past due informationto assess whether credit risk has increased significantly since initial recognition.

31 March 2019 Past due

Not past due/no fixed

repaymentterms Total

HK$’000 HK$’000 HK$’000

Other receivables – 2,964 2,964Amounts due from related companies – 2,372 2,372Amounts due from directors – 44,505 44,505




HK$’000 HK$’000 HK$’000

Other receivables – 343 343Amounts due from related companies – 2,542 2,542Amounts due from directors – 29,911 29,911




HK$’000 HK$’000 HK$’000

Other receivables – 667 667Amounts due from related companies – 3,164 3,164Amounts due from directors – 24,835 24,835



– I-46 –

Liquidity risk

In the management of liquidity risk, the Group monitors and maintains a level ofcash and cash equivalents deemed adequate by the management to finance the Group’soperations and mitigate the effects of fluctuations in cash flows. The managementbelieves that the Group will have sufficient working capital for its future operationalrequirement.

Liquidity and interest risk analyses

Non-derivative financial liabilities

The following table details the remaining contractual maturity for non-derivativefinancial liabilities. The tables have been drawn up based on the undiscounted cashflows of financial liabilities based on the earliest date on which the Group can berequired to pay. Specifically, bank borrowings with a repayment on demand clause areincluded in the earliest time band regardless of the probability of the banks choosing toexercise their rights. The maturity dates for other non-derivative financial liabilities arebased on the agreed repayment dates. The table includes both interest and principal cashflows.

Liquidity risk tables

Weightedaverageeffectiveinterest

rate

Ondemand

or lessthan 1

yearMore than

1 year

Totalundiscounted

cash flowsCarryingamounts

% HK$’000 HK$’000 HK$’000 HK$’000

31 March 2019Non-derivative financial

liabilitiesTrade payables N/A 48,092 – 48,092 48,092Other payables N/A 14,280 – 14,280 14,280Amounts due to related

companies N/A 1,630 – 1,630 1,630Bank borrowings 4.34 37,063 – 37,063 37,063Bank overdrafts 3.29 10,505 – 10,505 10,505

111,570 – 111,570 111,570

Lease liability 5.5 20 – 20 20



companies N/A 1,881 – 1,881 1,881Amount due to a director N/A 1,589 – 1,589 1,589Bank borrowings 3.97 26,621 – 26,621 26,621Bank overdrafts 4.95 15,336 – 15,336 15,336

62,802 – 62,802 62,802

Lease liability 5.5 132 22 154 150



– I-47 –

Weightedaverageeffectiveinterest

rate

Ondemand

or lessthan 1

yearMore than

1 year

Totalundiscounted

cash flowsCarryingamounts

% HK$’000 HK$’000 HK$’000 HK$’000



companies N/A 2,041 – 2,041 2,041Amount due to a director N/A 12,974 – 12,974 12,974Bank borrowings 4.00 33,753 – 33,753 33,666Bank overdrafts 4.73 14,384 – 14,384 14,384

98,557 – 98,557 98,490

Lease liability 5.5 22 – 22 22

Bank borrowings with a repayment on demand clause are included in the “ondemand or less than 1 year” time band in the above maturity analysis. As at 31 March2019, 2020 and 2021, the aggregate carrying amounts of these bank borrowingsamounted to HK$37,063,000, HK$26,621,000 and HK$27,066,000 respectively. Takinginto account the Group’s financial position, the management does not believe that it isprobable that the banks will exercise their discretionary rights to demand immediaterepayment. The management believes that such bank borrowings will be repaid in oneyear to over five years after the end of the reporting period in accordance with thescheduled repayment dates set out in the loan agreements, details of which are set out inthe table below:

Less than1 year 1 – 2 years 2 – 5 years

Over 5years

Totalundiscounted

cash flowsCarrying

amountHK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 31 March2019 28,022 894 2,681 8,717 40,314 37,063

At 31 March2020 17,798 894 2,681 7,823 29,196 26,621

At 31 March2021 17,845 1,969 2,681 6,929 29,424 27,066

c. Fair value of financial assets and financial liabilities

The management considers that the carrying amounts of financial assets and financial liabilitiesrecorded at amortised cost in the Historical Financial Information approximate their fair values because theeffect of discounting is immaterial.



– I-48 –

31. PARTICULARS OF SUBSIDIARIES

As at the date of this report, the Company has the following subsidiaries comprising the Group:

Names of subsidiary

Place and date ofincorporation/establishment

Place ofoperation

Issued and fullypaid sharecapital/registeredcapital

Attribute equity interest ofthe Group as at

Principalactivities

31 March Date ofthis

report2019 2020 2021

Wang Hing Interior Design(Note (ii))

Hong Kong14 March 1989

Hong Kong HK$1,000,000 100% 100% 100% 100% Provision offitting-outworks in HongKong

Beijing Yongxing(Note (iii))

The People’sRepublic of China(the “PRC”)30 July 2003

The PRC HK$5,000,000 100% 100% 100% 100% Inactive

Wang Hing InteriorEngineering (Note (ii))

Hong Kong30 March 2006

Hong Kong HK$1,000,000 100% 100% 100% 100% Provision offitting-outworks in HongKong

L & F Interior Engineering(Note (i))

Macau22 March 2007

Macau MOP50,000 100% 100% 100% 100% Provision ofancillaryservices inrelation tofitting-outworks in Macau

Wang Hing Lain Fung(Note (i))

Macau23 May 2016

Macau MOP25,000 100% 100% 100% 100% Provision offitting-outworks in Macau

Grateful Luck (Note (i)) BVI18 September2020

BVI HK$1 N/A N/A 100% 100% Investmentholding

Notes:

(i) No audited financial statements have been prepared for the subsidiaries since their respective date ofincorporation as they were incorporated in jurisdictions where there are no statutory auditrequirements.

(ii) The financial statements of Wang Hing Interior Design and Wang Hing Interior Engineering for theyears ended 31 March 2019 and 2020 were audited by Roy Kyaw CPA Limited, a firm of certifiedpublic accountants registered in Hong Kong. The financial statements of these entities were preparedin accordance with Small and Medium-sized Entity Financial Reporting Framework and FinancialReporting Standard issued by the HKICPA. The financial statements for year ended 31 March 2021for these entities were not yet issued as they are not yet due for issuance.

(iii) No audited financial statements have been issued for Beijing Yongxing.

Each of the Company and the entities comprising the Group has adopted 31 March as their financial yearend date.



– I-49 –

32. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES

The table below details changes in the Group’s liabilities arising from financing activities, including bothcash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, orfuture cash flows will be, classified in the Group’s combined statements of cash flows as cash flows fromfinancing activities.

Leaseliability

Bankborrowings

Interestpayable

Amountsdue to

relatedcompanies

Amountdue to adirector[REDACTED]

Dividendpayables

Bankoverdrafts Total

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000(Note 24) (Note 23) (Note 19) (Note 19)

At 1 April 2018 136 18,669 33 1,578 – – – 9,189 29,605Financing cash flows

(Note) (120) 18,394 (1,100) 52 – – – 942 18,168Interest expense 4 – 1,098 – – – – 374 1,476Dividends recognised as

distribution (Note 13) – – – – – – 8,267 – 8,267Set-off with amounts due

from directors – – – – – – (8,267) – (8,267)

At 31 March 2019 20 37,063 31 1,630 – – – 10,505 49,249Financing cash flows

(Note) (130) (10,442) (1,389) 251 – – – 4,177 (7,533)New lease entered 249 – – – – – – – 249Interest expense 11 – 1,358 – – – – 654 2,023Dividends recognised as


from/to directors – – – – 1,589 – (16,034) – (14,445)

At 31 March 2020 150 26,621 – 1,881 1,589 – – 15,336 45,577Financing cash flows

(Note) (131) 7,045 (1,204) 160 (1,722) [REDACTED] – (1,388) 1,857Interest expense 3 – 1,204 – – – – 436 1,643[REDACTED] – – – – – [REDACTED] – – 1,042Dividends recognised as


from/to directors – – – – 13,107 – (26,214) – (13,107)

At 31 March 2021 22 33,666 – 2,041 12,974 139 – 14,384 63,226

Note: The cash flows make up the net amount of repayment of lease liability, (repayment to) advances fromrelated companies, repayment to a director, interest paid, [REDACTED], bank borrowings raised,repayment of bank borrowings and addition (repayment) of bank overdrafts in the combinedstatements of cash flows.



– I-50 –

33. SURETY BONDS

Certain customers of construction contracts undertaken by the Group require the group entity to issueguarantees for the performance of contract works in the form of surety bonds. The surety bonds are released whenthe construction contracts are completed or substantially completed.

At the end of each reporting period, the Group had outstanding surety bonds as follows:

As at 31 March2019 2020 2021

HK$’000 HK$’000 HK$’000

Issued to the customers by banks on behalf of the Group 11,892 41,463 26,367

As at 31 March 2019, 2020 and 2021, the Group has obtained credit facilities for the issuance of suretybonds and these credit facilities were secured by properties and unlimited personal guarantees provided by thedirectors of the Company and related parties of the Group and pledged bank deposits of a related company. Thedirectors of the Company have represented that they expect such personal guarantees, pledged properties andpledged bank deposits will be released upon the [REDACTED].

34. EVENTS AFTER THE END OF THE REPORTING PERIOD

Saved as disclosed elsewhere in the Historical Financial Information, subsequent events of the Group aredetailed as below:

(a) On [�], the Group Reorganisation set out in Note 2 was completed.

(b) On [�], written resolutions of the sole shareholder, Faithful Trinity, were passed to approve thematters as follows:

� the authorised share capital of the Company was increased from HK$388,000 divided into38,800,000 shares to HK$30,000,000 divided into 3,000,000,000 shares by the creation of2,961,200,000 shares of the Company;

� conditionally adopted a share option scheme where eligible participants may be granted optionsentitling them to subscribe for the Company’s shares. No share has been granted since theadoption of the scheme. The principal terms of the share option scheme are summarised in thesection headed “D. Share Option Scheme” in Appendix IV to the Document; and

� conditional upon the share premium account of the Company being credited as a result of the[REDACTED] of the Company’s shares, the directors of the Company were authorised to[REDACTED] the amount of HK$[REDACTED] from the amount standing to the credit ofthe share premium account of the Company and to apply such amount to pay up in full at par[REDACTED] new shares of the Company for allotment and issue Faithful Trinity, as the soleshareholder of the Company at the close of business on [�].

35. SUBSEQUENT FINANCIAL STATEMENTS

No audited financial statements of the Group, the Company or any of the companies now comprising theGroup have been prepared in respect of any period subsequent to 31 March 2021.



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[REDACTED]

APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION


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[REDACTED]



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[REDACTED]



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[REDACTED]



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[REDACTED]



– II-5 –

Set out below is a summary of certain provisions of the Memorandum and Articles ofAssociation of the Company and of certain aspects of Cayman Islands company law.

The Company was incorporated in the Cayman Islands as an exempted company withlimited liability on 14 May 2021 under the Companies Act. The Company’s constitutionaldocuments consist of its Amended and Restated Memorandum of Association(Memorandum) and its Amended and Restated Articles of Association (Articles).

1. MEMORANDUM OF ASSOCIATION

(a) The Memorandum provides, inter alia, that the liability of members of theCompany is limited and that the objects for which the Company is established areunrestricted (and therefore include acting as an investment company), and that theCompany shall have and be capable of exercising any and all of the powers at anytime or from time to time exercisable by a natural person or body corporatewhether as principal, agent, contractor or otherwise and, since the Company is anexempted company, that the Company will not trade in the Cayman Islands withany person, firm or corporation except in furtherance of the business of theCompany carried on outside the Cayman Islands.

(b) By special resolution the Company may alter the Memorandum with respect toany objects, powers or other matters specified in it.

2. ARTICLES OF ASSOCIATION

The Articles were adopted on [�] [with effect from the [REDACTED]]. A summary ofcertain provisions of the Articles is set out below.

(a) Shares

(i) Classes of shares

The share capital of the Company consists of ordinary shares.

(ii) Variation of rights of existing shares or classes of shares

Subject to the Companies Act, if at any time the share capital of theCompany is divided into different classes of shares, all or any of the specialrights attached to any class of shares may (unless otherwise provided for by theterms of issue of the shares of that class) be varied, modified or abrogated eitherwith the consent in writing of the holders of not less than three-fourths in nominalvalue of the issued shares of that class or with the sanction of a special resolutionpassed at a separate general meeting of the holders of the shares of that class. Theprovisions of the Articles relating to general meetings shall mutatis mutandisapply to every such separate general meeting, but so that the necessary quorum(other than at an adjourned meeting) shall be not less than two persons togetherholding (or, in the case of a member being a corporation, by its duly authorized

APPENDIX III SUMMARY OF THE CONSTITUTION OFOUR COMPANY AND CAYMAN ISLANDS COMPANY LAW


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representative) or representing by proxy not less than one-third in nominal valueof the issued shares of that class. Every holder of shares of the class shall beentitled on a poll to one vote for every such share held by him, and any holder ofshares of the class present in person or by proxy may demand a poll.

Any special rights conferred upon the holders of any shares or class ofshares shall not, unless otherwise expressly provided in the rights attaching to theterms of issue of such shares, be deemed to be varied by the creation or issue offurther shares ranking pari passu therewith.

(iii) Alteration of capital

The Company may, by an ordinary resolution of its members: (a) increase itsshare capital by the creation of new shares of such amount as it thinks expedient;(b) consolidate or divide all or any of its share capital into shares of larger orsmaller amount than its existing shares; (c) divide its unissued shares into severalclasses and attach to such shares any preferential, deferred, qualified or specialrights, privileges or conditions; (d) subdivide its shares or any of them into sharesof an amount smaller than that fixed by the Memorandum; (e) cancel any shareswhich, at the date of the resolution, have not been taken or agreed to be taken byany person and diminish the amount of its share capital by the amount of theshares so cancelled; (f) make provision for the allotment and issue of shareswhich do not carry any voting rights; and (g) change the currency ofdenomination of its share capital.

(iv) Transfer of shares

Subject to the Companies Act and the requirements of The Stock Exchangeof Hong Kong Limited (the “Stock Exchange”), all transfers of shares shall beeffected by an instrument of transfer in the usual or common form or in suchother form as the Board may approve and may be under hand or, if the transferoror transferee is a Clearing House or its nominee(s), under hand or by machineimprinted signature, or by such other manner of execution as the Board mayapprove from time to time.

Execution of the instrument of transfer shall be by or on behalf of thetransferor and the transferee, provided that the Board may dispense with theexecution of the instrument of transfer by the transferor or transferee or acceptmechanically executed transfers. The transferor shall be deemed to remain theholder of a share until the name of the transferee is entered in the register ofmembers of the Company in respect of that share.

The Board may, in its absolute discretion, at any time and from time to timeremove any share on the principal register to any branch register or any share onany branch register to the principal register or any other branch register. Unlessthe Board otherwise agrees, no shares on the principal register shall be removedto any branch register nor shall shares on any branch register be removed to the



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principal register or any other branch register. All removals and other documentsof title shall be lodged for registration and registered, in the case of shares on anybranch register, at the relevant registration office and, in the case of shares on theprincipal register, at the place at which the principal register is located.

The Board may, in its absolute discretion, decline to register a transfer ofany share (not being a fully paid up share) to a person of whom it does notapprove or on which the Company has a lien. It may also decline to register atransfer of any share issued under any share option scheme upon which arestriction on transfer subsists or a transfer of any share to more than four jointholders.

The Board may decline to recognise any instrument of transfer unless acertain fee, up to such maximum sum as the Stock Exchange may determine to bepayable, is paid to the Company, the instrument of transfer is properly stamped (ifapplicable), is in respect of only one class of share and is lodged at the relevantregistration office or the place at which the principal register is locatedaccompanied by the relevant share certificate(s) and such other evidence as theBoard may reasonably require is provided to show the right of the transferor tomake the transfer (and if the instrument of transfer is executed by some otherperson on his behalf, the authority of that person so to do).

The register of members may, subject to the Listing Rules, be closed at suchtime or for such period not exceeding in the whole 30 days in each year as theBoard may determine.

Fully paid shares shall be free from any restriction on transfer (except whenpermitted by the Stock Exchange) and shall also be free from all liens.

(v) Power of the Company to purchase its own shares

The Company may purchase its own shares subject to certain restrictions andthe Board may only exercise this power on behalf of the Company subject to anyapplicable requirement imposed from time to time by the Articles or any, code,rules or regulations issued from time to time by the Stock Exchange and/or theSecurities and Futures Commission of Hong Kong.

Where the Company purchases for redemption a redeemable Share, purchasesnot made through the market or by tender shall be limited to a maximum priceand, if purchases are by tender, tenders shall be available to all members alike.

(vi) Power of any subsidiary of the Company to own shares in the Company

There are no provisions in the Articles relating to the ownership of shares inthe Company by a subsidiary.



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(vii) Calls on shares and forfeiture of shares

The Board may, from time to time, make such calls as it thinks fit upon themembers in respect of any monies unpaid on the shares held by them respectively(whether on account of the nominal value of the shares or by way of premium)and not by the conditions of allotment of such shares made payable at fixedtimes. A call may be made payable either in one sum or by instalments. If thesum payable in respect of any call or instalment is not paid on or before the dayappointed for payment thereof, the person or persons from whom the sum is dueshall pay interest on the same at such rate not exceeding 20% per annum as theBoard shall fix from the day appointed for payment to the time of actual payment,but the Board may waive payment of such interest wholly or in part. The Boardmay, if it thinks fit, receive from any member willing to advance the same, eitherin money or money’s worth, all or any part of the money uncalled and unpaid orinstalments payable upon any shares held by him, and in respect of all or any ofthe monies so advanced the Company may pay interest at such rate (if any) notexceeding 20% per annum as the Board may decide.

If a member fails to pay any call or instalment of a call on the dayappointed for payment, the Board may, for so long as any part of the call orinstalment remains unpaid, serve not less than 14 days’ notice on the memberrequiring payment of so much of the call or instalment as is unpaid, together withany interest which may have accrued and which may still accrue up to the date ofactual payment. The notice shall name a further day (not earlier than theexpiration of 14 days from the date of the notice) on or before which the paymentrequired by the notice is to be made, and shall also name the place wherepayment is to be made. The notice shall also state that, in the event ofnon-payment at or before the appointed time, the shares in respect of which thecall was made will be liable to be forfeited.

If the requirements of any such notice are not complied with, any share inrespect of which the notice has been given may at any time thereafter, before thepayment required by the notice has been made, be forfeited by a resolution of theBoard to that effect. Such forfeiture will include all dividends and bonusesdeclared in respect of the forfeited share and not actually paid before theforfeiture.

A person whose shares have been forfeited shall cease to be a member inrespect of the forfeited shares but shall, nevertheless, remain liable to pay to theCompany all monies which, at the date of forfeiture, were payable by him to theCompany in respect of the shares together with (if the Board shall in its discretionso require) interest thereon from the date of forfeiture until payment at such ratenot exceeding 20% per annum as the Board may prescribe.



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(b) Directors

(i) Appointment, retirement and removal

At any time or from time to time, the Board shall have the power to appointany person as a Director either to fill a casual vacancy on the Board or as anadditional Director to the existing Board subject to any maximum number ofDirectors, if any, as may be determined by the members in general meeting. AnyDirector so appointed to fill a casual vacancy shall hold office only until the firstgeneral meeting of the Company after his appointment and be subject tore-election at such meeting. Any Director so appointed as an addition to theexisting Board shall hold office only until the first annual general meeting of theCompany after his appointment and be eligible for re-election at such meeting.Any Director so appointed by the Board shall not be taken into account indetermining the Directors or the number of Directors who are to retire by rotationat an annual general meeting.

At each annual general meeting, one third of the Directors for the time beingshall retire from office by rotation. However, if the number of Directors is not amultiple of three, then the number nearest to but not less than one third shall bethe number of retiring Directors. The Directors to retire in each year shall bethose who have been in office longest since their last re-election or appointmentbut, as between persons who became or were last re-elected Directors on the sameday, those to retire shall (unless they otherwise agree among themselves) bedetermined by lot.

No person, other than a retiring Director, shall, unless recommended by theBoard for election, be eligible for election to the office of Director at any generalmeeting, unless notice in writing of the intention to propose that person forelection as a Director and notice in writing by that person of his willingness to beelected has been lodged at the head office or at the registration office of theCompany. The period for lodgment of such notices shall commence no earlierthan the day after despatch of the notice of the relevant meeting and end no laterthan seven days before the date of such meeting and the minimum length of theperiod during which such notices may be lodged must be at least seven days.

A Director is not required to hold any shares in the Company by way ofqualification nor is there any specified upper or lower age limit for Directorseither for accession to or retirement from the Board.

A Director may be removed by an ordinary resolution of the Companybefore the expiration of his term of office (but without prejudice to any claimwhich such Director may have for damages for any breach of any contractbetween him and the Company) and the Company may by ordinary resolutionappoint another in his place. Any Director so appointed shall be subject to the“retirement by rotation” provisions. The number of Directors shall not be lessthan two.



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The office of a Director shall be vacated if he:

(aa) resigns;

(bb) dies;

(cc) is declared to be of unsound mind and the Board resolves that hisoffice be vacated;

(dd) becomes bankrupt or has a receiving order made against him orsuspends payment or compounds with his creditors generally;

(ee) is prohibited from being or ceases to be a director by operation of law;

(ff) without special leave, is absent from meetings of the Board for sixconsecutive months, and the Board resolves that his office is vacated;

(gg) has been required by the stock exchange of the Relevant Territory (asdefined in the Articles) to cease to be a Director; or

(hh) is removed from office by the requisite majority of the Directors orotherwise pursuant to the Articles.

From time to time the Board may appoint one or more of its body to bemanaging director, joint managing director or deputy managing director or to holdany other employment or executive office with the Company for such period andupon such terms as the Board may determine, and the Board may revoke orterminate any of such appointments. The Board may also delegate any of itspowers to committees consisting of such Director(s) or other person(s) as theBoard thinks fit, and from time to time it may also revoke such delegation orrevoke the appointment of and discharge any such committees either wholly or inpart, and either as to persons or purposes, but every committee so formed shall, inthe exercise of the powers so delegated, conform to any regulations that may fromtime to time be imposed upon it by the Board.

(ii) Power to allot and issue shares and warrants

Subject to the provisions of the Companies Act, the Memorandum andArticles and without prejudice to any special rights conferred on the holders ofany shares or class of shares, any share may be issued with or have attached to itsuch rights, or such restrictions, whether with regard to dividend, voting, return ofcapital or otherwise, as the Company may by ordinary resolution determine (or, inthe absence of any such determination or so far as the same may not makespecific provision, as the Board may determine). Any share may be issued onterms that, upon the happening of a specified event or upon a given date andeither at the option of the Company or the holder of the share, it is liable to beredeemed.



– III-6 –

The Board may issue warrants to subscribe for any class of shares or othersecurities of the Company on such terms as it may from time to time determine.

Where warrants are issued to bearer, no certificate in respect of suchwarrants shall be issued to replace one that has been lost unless the Board issatisfied beyond reasonable doubt that the original certificate has been destroyedand the Company has received an indemnity in such form as the Board thinks fitwith regard to the issue of any such replacement certificate.

Subject to the provisions of the Companies Act, the Articles and, whereapplicable, the rules of any stock exchange of the Relevant Territory (as definedin the Articles) and without prejudice to any special rights or restrictions for thetime being attached to any shares or any class of shares, all unissued shares in theCompany shall be at the disposal of the Board, which may offer, allot, grantoptions over or otherwise dispose of them to such persons, at such times, for suchconsideration and on such terms and conditions as it in its absolute discretionthinks fit, but so that no shares shall be issued at a discount.

Neither the Company nor the Board shall be obliged, when making orgranting any allotment of, offer of, option over or disposal of shares, to make, ormake available, any such allotment, offer, option or shares to members or otherswhose registered addresses are in any particular territory or territories where, inthe absence of a registration statement or other special formalities, this is or may,in the opinion of the Board, be unlawful or impracticable. However, no memberaffected as a result of the foregoing shall be, or be deemed to be, a separate classof members for any purpose whatsoever.

(iii) Power to dispose of the assets of the Company or any of its subsidiaries

While there are no specific provisions in the Articles relating to the disposalof the assets of the Company or any of its subsidiaries, the Board may exerciseall powers and do all acts and things which may be exercised or done or approvedby the Company and which are not required by the Articles or the Companies Actto be exercised or done by the Company in general meeting, but if such power oract is regulated by the Company in general meeting, such regulation shall notinvalidate any prior act of the Board which would have been valid if suchregulation had not been made.

(iv) Borrowing powers

The Board may exercise all the powers of the Company to raise or borrowmoney, to mortgage or charge all or any part of the undertaking, property anduncalled capital of the Company and, subject to the Companies Act, to issuedebentures, debenture stock, bonds and other securities of the Company, whetheroutright or as collateral security for any debt, liability or obligation of theCompany or of any third party.



– III-7 –

(v) Remuneration

The Directors shall be entitled to receive, as ordinary remuneration for theirservices, such sums as shall from time to time be determined by the Board or theCompany in general meeting, as the case may be, such sum (unless otherwisedirected by the resolution by which it is determined) to be divided among theDirectors in such proportions and in such manner as they may agree or, failingagreement, either equally or, in the case of any Director holding office for only aportion of the period in respect of which the remuneration is payable, pro rata.The Directors shall also be entitled to be repaid all expenses reasonably incurredby them in attending any Board meetings, committee meetings or generalmeetings or otherwise in connection with the discharge of their duties asDirectors. Such remuneration shall be in addition to any other remuneration towhich a Director who holds any salaried employment or office in the Companymay be entitled by reason of such employment or office.

Any Director who, at the request of the Company, performs services whichin the opinion of the Board goes beyond the ordinary duties of a Director may bepaid such special or extra remuneration as the Board may determine, in additionto or in substitution for any ordinary remuneration as a Director. An executiveDirector appointed to be a managing director, joint managing director, deputymanaging director or other executive officer shall receive such remuneration andsuch other benefits and allowances as the Board may from time to time decide.Such remuneration shall be in addition to his ordinary remuneration as a Director.

The Board may establish, either on its own or jointly in concurrence oragreement with subsidiaries of the Company or companies with which theCompany is associated in business, or may make contributions out of theCompany’s monies to, any schemes or funds for providing pensions, sickness orcompassionate allowances, life assurance or other benefits for employees (whichexpression as used in this and the following paragraph shall include any Directoror former Director who may hold or have held any executive office or any officeof profit with the Company or any of its subsidiaries) and former employees ofthe Company and their dependents or any class or classes of such persons.

The Board may also pay, enter into agreements to pay or make grants ofrevocable or irrevocable, whether or not subject to any terms or conditions,pensions or other benefits to employees and former employees and theirdependents, or to any of such persons, including pensions or benefits additional tothose, if any, to which such employees or former employees or their dependentsare or may become entitled under any such scheme or fund as mentioned above.Such pension or benefit may, if deemed desirable by the Board, be granted to anemployee either before and in anticipation of, or upon or at any time after, hisactual retirement.



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(vi) Compensation or payments for loss of office

Payments to any present Director or past Director of any sum by way ofcompensation for loss of office or as consideration for or in connection with hisretirement from office (not being a payment to which the Director is contractuallyor statutorily entitled) must be approved by the Company in general meeting.

(vii) Loans and provision of security for loans to Directors

The Company shall not directly or indirectly make a loan to a Director or adirector of any holding company of the Company or any of their respective closeassociates, enter into any guarantee or provide any security in connection with aloan made by any person to a Director or a director of any holding company ofthe Company or any of their respective close associates, or, if any one or more ofthe Directors hold(s) (jointly or severally or directly or indirectly) a controllinginterest in another company, make a loan to that other company or enter into anyguarantee or provide any security in connection with a loan made by any personto that other company.

(viii) Disclosure of interest in contracts with the Company or any of itssubsidiaries

With the exception of the office of auditor of the Company, a Director mayhold any other office or place of profit with the Company in conjunction with hisoffice of Director for such period and upon such terms as the Board maydetermine, and may be paid such extra remuneration for that other office or placeof profit, in whatever form, in addition to any remuneration provided for by orpursuant to any other Articles. A Director may be or become a director, officer ormember of any other company in which the Company may be interested, and shallnot be liable to account to the Company or the members for any remuneration orother benefit received by him as a director, officer or member of such othercompany. The Board may also cause the voting power conferred by the shares inany other company held or owned by the Company to be exercised in suchmanner in all respects as it thinks fit, including the exercise in favour of anyresolution appointing the Directors or any of them to be directors or officers ofsuch other company.

No Director or intended Director shall be disqualified by his office fromcontracting with the Company, nor shall any such contract or any other contractor arrangement in which any Director is in any way interested be liable to beavoided, nor shall any Director so contracting or being so interested be liable toaccount to the Company for any profit realised by any such contract orarrangement by reason only of such Director holding that office or the fiduciaryrelationship established by it. A Director who is, in any way, materially interestedin a contract or arrangement or proposed contract or arrangement with theCompany shall declare the nature of his interest at the earliest meeting of theBoard at which he may practically do so.



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There is no power to freeze or otherwise impair any of the rights attachingto any share by reason that the person or persons who are interested directly orindirectly in that share have failed to disclose their interests to the Company.

A Director shall not vote or be counted in the quorum on any resolution ofthe Board in respect of any contract or arrangement or proposal in which he orany of his close associate(s) has/have a material interest, and if he shall do so hisvote shall not be counted nor shall he be counted in the quorum for thatresolution, but this prohibition shall not apply to any of the following matters:

(aa) the giving of any security or indemnity to the Director or his closeassociate(s) in respect of money lent or obligations incurred orundertaken by him or any of them at the request of or for the benefit ofthe Company or any of its subsidiaries;

(bb) the giving of any security or indemnity to a third party in respect of adebt or obligation of the Company or any of its subsidiaries for whichthe Director or his close associate(s) has/have himself/themselvesassumed responsibility in whole or in part whether alone or jointlyunder a guarantee or indemnity or by the giving of security;

(cc) any proposal concerning an offer of shares, debentures or othersecurities of or by the Company or any other company which theCompany may promote or be interested in for subscription or purchase,where the Director or his close associate(s) is/are or is/are to beinterested as a participant in the [REDACTED] or [REDACTED] ofthe offer;

(dd) any proposal or arrangement concerning the benefit of employees of theCompany or any of its subsidiaries, including the adoption,modification or operation of either: (i) any employees’ share scheme orany share incentive or share option scheme under which the Director orhis close associate(s) may benefit; or (ii) any of a pension fund orretirement, death or disability benefit scheme which relates toDirectors, their close associates and employees of the Company or anyof its subsidiaries and does not provide in respect of any Director orhis close associate(s) any privilege or advantage not generally accordedto the class of persons to which such scheme or fund relates; and

(ee) any contract or arrangement in which the Director or his closeassociate(s) is/are interested in the same manner as other holders ofshares, debentures or other securities of the Company by virtue only ofhis/their interest in those shares, debentures or other securities.



– III-10 –

(ix) Proceedings of the Board

The Board may meet anywhere in the world for the despatch of business andmay adjourn and otherwise regulate its meetings as it thinks fit. Questions arisingat any meeting shall be determined by a majority of votes. In the case of anequality of votes, the chairman of the meeting shall have a second or casting vote.

(c) Alterations to the constitutional documents and the Company’s name

To the extent that the same is permissible under Cayman Islands law and subjectto the Articles, the Memorandum and Articles of the Company may only be altered oramended, and the name of the Company may only be changed, with the sanction of aspecial resolution of the Company.

(d) Meetings of member

(i) Special and ordinary resolutions

A special resolution of the Company must be passed by a majority of notless than three-fourths of the votes cast by such members as, being entitled so todo, vote in person or by proxy or, in the case of members which are corporations,by their duly authorised representatives or, where proxies are allowed, by proxy ata general meeting of which notice specifying the intention to propose theresolution as a special resolution has been duly given.

Under the Companies Act, a copy of any special resolution must beforwarded to the Registrar of Companies in the Cayman Islands within 15 days ofbeing passed.

An “ordinary resolution”, by contrast, is a resolution passed by a simplemajority of the votes of such members of the Company as, being entitled to doso, vote in person or, in the case of members which are corporations, by theirduly authorised representatives or, where proxies are allowed, by proxy at ageneral meeting of which notice has been duly given.

A resolution in writing signed by or on behalf of all members shall betreated as an ordinary resolution duly passed at a general meeting of the Companyduly convened and held, and where relevant as a special resolution so passed.

(ii) Voting rights and right to demand a poll

Subject to any special rights, restrictions or privileges as to voting for thetime being attached to any class or classes of shares at any general meeting: (a)on a poll every member present in person or by proxy or, in the case of a memberbeing a corporation, by its duly authorised representative shall have one vote forevery share which is fully paid or credited as fully paid registered in his name inthe register of members of the Company but so that no amount paid up or



– III-11 –

credited as paid up on a share in advance of calls or instalments is treated for thispurpose as paid up on the share; and (b) on a show of hands every member whois present in person (or, in the case of a member being a corporation, by its dulyauthorised representative) or by proxy shall have one vote. Where more than oneproxy is appointed by a member which is a Clearing House (as defined in theArticles) or its nominee(s), each such proxy shall have one vote on a show ofhands. On a poll, a member entitled to more than one vote need not use all hisvotes or cast all the votes he does use in the same way.

At any general meeting a resolution put to the vote of the meeting is to bedecided by poll save that the chairman of the meeting may, pursuant to theListing Rules, allow a resolution to be voted on by a show of hands. Where ashow of hands is allowed, before or on the declaration of the result of the showof hands, a poll may be demanded by (in each case by members present in personor by proxy or by a duly authorised corporate representative):

(A) at least two members;

(B) any member or members representing not less than one-tenth of thetotal voting rights of all the members having the right to vote at themeeting; or

(C) a member or members holding shares in the Company conferring aright to vote at the meeting on which an aggregate sum has been paidequal to not less than one-tenth of the total sum paid up on all theshares conferring that right.

Should a Clearing House or its nominee(s) be a member of the Company,such person or persons may be authorised as it thinks fit to act as itsrepresentative(s) at any meeting of the Company or at any meeting of any class ofmembers of the Company provided that, if more than one person is so authorised,the authorisation shall specify the number and class of shares in respect of whicheach such person is so authorised. A person authorised in accordance with thisprovision shall be deemed to have been duly authorised without further evidenceof the facts and be entitled to exercise the same rights and powers on behalf ofthe Clearing House or its nominee(s) as if such person were an individual memberincluding the right to vote individually on a show of hands.

Where the Company has knowledge that any member is, under the ListingRules, required to abstain from voting on any particular resolution or restricted tovoting only for or only against any particular resolution, any votes cast by or onbehalf of such member in contravention of such requirement or restriction shallnot be counted.



– III-12 –

(iii) Annual general meetings

The Company must hold an annual general meeting each year other than theyear of the Company’s adoption of the Articles. Such meeting must be held notmore than 15 months after the holding of the last preceding annual generalmeeting, or such longer period as may be authorised by the Stock Exchange atsuch time and place as may be determined by the Board.

(iv) Requisition of general meetings

Extraordinary general meetings may be convened on the requisition of one ormore members holding, at the date of deposit of the requisition, not less than onetenth of the paid up capital of the Company having the right of voting at generalmeetings. Such requisition shall be made in writing to the Board or the secretaryof the Company for the purpose of requiring an extraordinary general meeting tobe called by the Board for the transaction of any business specified in suchrequisition. Such meeting shall be held within two months after the deposit ofsuch requisition. If within 21 days of such deposit, the Board fails to proceed toconvene such meeting, the requisitionist(s) himself (themselves) may do so in thesame manner, and all reasonable expenses incurred by the requisitionist(s) as aresult of the failure of the Board shall be reimbursed to the requisitionist(s) by theCompany.

(v) Notices of meetings and business to be conducted

An annual general meeting of the Company shall be called by at least 21days’ notice in writing, and any other general meeting of the Company shall becalled by at least 14 days’ notice in writing. The notice shall be exclusive of theday on which it is served or deemed to be served and of the day for which it isgiven, and must specify the time, place and agenda of the meeting and particularsof the resolution(s) to be considered at that meeting and, in the case of specialbusiness, the general nature of that business.

Except where otherwise expressly stated, any notice or document (includinga share certificate) to be given or issued under the Articles shall be in writing,and may be served by the Company on any member personally, by post to suchmember’s registered address or (in the case of a notice) by advertisement in thenewspapers. Any member whose registered address is outside Hong Kong maynotify the Company in writing of an address in Hong Kong which shall bedeemed to be his registered address for this purpose. Subject to the CompaniesAct and the Listing Rules, a notice or document may also be served or deliveredby the Company to any member by electronic means.



– III-13 –

Although a meeting of the Company may be called by shorter notice than asspecified above, such meeting may be deemed to have been duly called if it is soagreed:

(i) in the case of an annual general meeting, by all members of theCompany entitled to attend and vote thereat; and

(ii) in the case of any other meeting, by a majority in number of themembers having a right to attend and vote at the meeting holding notless than 95% of the total voting rights in the Company.

All business transacted at an extraordinary general meeting shall be deemedspecial business. All business shall also be deemed special business where it istransacted at an annual general meeting, with the exception of certain routinematters which shall be deemed ordinary business.

(vi) Quorum for meetings and separate class meetings

No business shall be transacted at any general meeting unless a quorum ispresent when the meeting proceeds to business, and continues to be present untilthe conclusion of the meeting.

The quorum for a general meeting shall be two members present in person(or in the case of a member being a corporation, by its duly authorisedrepresentative) or by proxy and entitled to vote. In respect of a separate classmeeting (other than an adjourned meeting) convened to sanction the modificationof class rights the necessary quorum shall be two persons holding or representingby proxy not less than one-third in nominal value of the issued shares of thatclass.

(vii) Proxies

Any member of the Company entitled to attend and vote at a meeting of theCompany is entitled to appoint another person as his proxy to attend and voteinstead of him. A member who is the holder of two or more shares may appointmore than one proxy to represent him and vote on his behalf at a general meetingof the Company or at a class meeting. A proxy need not be a member of theCompany and shall be entitled to exercise the same powers on behalf of amember who is an individual and for whom he acts as proxy as such membercould exercise. In addition, a proxy shall be entitled to exercise the same powerson behalf of a member which is a corporation and for which he acts as proxy assuch member could exercise if it were an individual member. On a poll or on ashow of hands, votes may be given either personally (or, in the case of a memberbeing a corporation, by its duly authorized representative) or by proxy.



– III-14 –

The instrument appointing a proxy shall be in writing under the hand of theappointor or of his attorney duly authorised in writing, or if the appointor is acorporation, either under seal or under the hand of a duly authorised officer orattorney. Every instrument of proxy, whether for a specified meeting or otherwise,shall be in such form as the Board may from time to time approve, provided thatit shall not preclude the use of the two-way form. Any form issued to a memberfor appointing a proxy to attend and vote at an extraordinary general meeting orat an annual general meeting at which any business is to be transacted shall besuch as to enable the member, according to his intentions, to instruct the proxy tovote in favour of or against (or, in default of instructions, to exercise hisdiscretion in respect of) each resolution dealing with any such business.

(e) Accounts and audit

The Board shall cause proper books of account to be kept of the sums of moneyreceived and expended by the Company, and of the assets and liabilities of theCompany and of all other matters required by the Companies Act (which include allsales and purchases of goods by the company) necessary to give a true and fair view ofthe state of the Company’s affairs and to show and explain its transactions.

The books of accounts of the Company shall be kept at the head office of theCompany or at such other place or places as the Board decides and shall always beopen to inspection by any Director. No member (other than a Director) shall have anyright to inspect any account, book or document of the Company except as conferred bythe Companies Act or ordered by a court of competent jurisdiction or authorised by theBoard or the Company in general meeting.

The Board shall from time to time cause to be prepared and laid before theCompany at its annual general meeting balance sheets and profit and loss accounts(including every document required by law to be annexed thereto), together with acopy of the Directors’ report and a copy of the auditors’ report, not less than 21 daysbefore the date of the annual general meeting. Copies of these documents shall be sentto every person entitled to receive notices of general meetings of the Company underthe provisions of the Articles together with the notice of annual general meeting, notless than 21 days before the date of the meeting.

Subject to the rules of the stock exchange of the Relevant Territory (as defined inthe Articles), the Company may send summarized financial statements to members whohave, in accordance with the rules of the stock exchange of the Relevant Territory,consented and elected to receive summarized financial statements instead of the fullfinancial statements. The summarized financial statements must be accompanied by anyother documents as may be required under the rules of the stock exchange of theRelevant Territory, and must be sent to those members that have consented and electedto receive the summarised financial statements not less than 21 days before the generalmeeting.



– III-15 –

The Company shall appoint auditor(s) to hold office until the conclusion of thenext annual general meeting on such terms and with such duties as may be agreed withthe Board. The auditors’ remuneration shall be fixed by the Company in generalmeeting or by the Board if authority is so delegated by the members.

The members may, at a general meeting remove the auditor(s) by a specialresolution at any time before the expiration of the term of office of the auditor(s) andshall, by an ordinary resolution, at that meeting appoint new auditor(s) in place of theremoved auditor(s) for the remainder of the term.

The auditors shall audit the financial statements of the Company in accordancewith generally accepted accounting principles of Hong Kong, the InternationalAccounting Standards or such other standards as may be permitted by the StockExchange.

(f) Dividends and other methods of distribution

The Company in general meeting may declare dividends in any currency to bepaid to the members but no dividend shall be declared in excess of the amountrecommended by the Board.

Except in so far as the rights attaching to, or the terms of issue of, any share mayotherwise provide:

(i) all dividends shall be declared and paid according to the amounts paid up onthe shares in respect of which the dividend is paid, although no amount paidup on a share in advance of calls shall for this purpose be treated as paid upon the share;

(ii) all dividends shall be apportioned and paid pro rata in accordance with theamount paid up on the shares during any portion(s) of the period in respectof which the dividend is paid; and

(iii) the Board may deduct from any dividend or other monies payable to anymember all sums of money (if any) presently payable by him to theCompany on account of calls, instalments or otherwise.

Where the Board or the Company in general meeting has resolved that a dividendshould be paid or declared, the Board may resolve:

(aa) that such dividend be satisfied wholly or in part in the form of an allotmentof shares credited as fully paid up, provided that the members entitled tosuch dividend will be entitled to elect to receive such dividend (or partthereof) in cash in lieu of such allotment; or



– III-16 –

(bb) that the members entitled to such dividend will be entitled to elect to receivean allotment of shares credited as fully paid up in lieu of the whole or suchpart of the dividend as the Board may think fit.

Upon the recommendation of the Board, the Company may by ordinary resolutionin respect of any one particular dividend of the Company determine that it may besatisfied wholly in the form of an allotment of shares credited as fully paid up withoutoffering any right to members to elect to receive such dividend in cash in lieu of suchallotment.

Any dividend, bonus or other sum payable in cash to the holder of shares may bepaid by cheque or warrant sent through the post. Every such cheque or warrant shall bemade payable to the order of the person to whom it is sent and shall be sent at theholder’s or joint holders’ risk and payment of the cheque or warrant by the bank onwhich it is drawn shall constitute a good discharge to the Company. Any one of two ormore joint holders may give effectual receipts for any dividends or other moniespayable or property distributable in respect of the shares held by such joint holders.

Whenever the Board or the Company in general meeting has resolved that adividend be paid or declared, the Board may further resolve that such dividend besatisfied wholly or in part by the distribution of specific assets of any kind.

The Board may, if it thinks fit, receive from any member willing to advance thesame, and either in money or money’s worth, all or any part of the money uncalled andunpaid or instalments payable upon any shares held by him, and in respect of all orany of the monies so advanced may pay interest at such rate (if any) not exceeding20% per annum, as the Board may decide, but a payment in advance of a call shall notentitle the member to receive any dividend or to exercise any other rights or privilegesas a member in respect of the share or the due portion of the shares upon whichpayment has been advanced by such member before it is called up.

All dividends, bonuses or other distributions unclaimed for one year after havingbeen declared may be invested or otherwise used by the Board for the benefit of theCompany until claimed and the Company shall not be constituted a trustee in respectthereof. All dividends, bonuses or other distributions unclaimed for six years afterhaving been declared may be forfeited by the Board and, upon such forfeiture, shallrevert to the Company.

No dividend or other monies payable by the Company on or in respect of anyshare shall bear interest against the Company.

The Company may exercise the power to cease sending cheques for dividendentitlements or dividend warrants by post if such cheques or warrants remain uncashedon two consecutive occasions or after the first occasion on which such a cheque orwarrant is returned undelivered.



– III-17 –

(g) Inspection of corporate records

For so long as any part of the share capital of the Company is [REDACTED] onthe Stock Exchange, any member may inspect any register of members of the Companymaintained in Hong Kong (except when the register of members is closed) withoutcharge and require the provision to him of copies or extracts of such register in allrespects as if the Company were incorporated under and were subject to the HongKong Companies Ordinance.

(h) Rights of minorities in relation to fraud or oppression

There are no provisions in the Articles concerning the rights of minority membersin relation to fraud or oppression. However, certain remedies may be available tomembers of the Company under Cayman Islands law, as summarized in paragraph 3(f)of this Appendix.

(i) Procedures on liquidation

A resolution that the Company be wound up by the court or be wound upvoluntarily shall be a special resolution.

Subject to any special rights, privileges or restrictions as to the distribution ofavailable surplus assets on liquidation for the time being attached to any class orclasses of shares:

(i) if the Company is wound up, the surplus assets remaining after payment toall creditors shall be divided among the members in proportion to the capitalpaid up on the shares held by them respectively; and

(ii) if the Company is wound up and the surplus assets available for distributionamong the members are insufficient to repay the whole of the paid-upcapital, such assets shall be distributed, subject to the rights of any shareswhich may be issued on special terms and conditions, so that, as nearly asmay be, the losses shall be borne by the members in proportion to thecapital paid up on the shares held by them, respectively.

If the Company is wound up (whether the liquidation is voluntary or compelledby the court), the liquidator may, with the sanction of a special resolution and anyother sanction required by the Companies Act, divide among the members in specie orkind the whole or any part of the assets of the Company, whether the assets consist ofproperty of one kind or different kinds, and the liquidator may, for such purpose, setsuch value as he deems fair upon any one or more class or classes of property to be sodivided and may determine how such division shall be carried out as between themembers or different classes of members and the members within each class. Theliquidator may, with the like sanction, vest any part of the assets in trustees upon such



– III-18 –

trusts for the benefit of members as the liquidator thinks fit, but so that no membershall be compelled to accept any shares or other property upon which there is aliability.

(j) Subscription rights reserve

Provided that it is not prohibited by and is otherwise in compliance with theCompanies Act, if warrants to subscribe for shares have been issued by the Companyand the Company does any act or engages in any transaction which would result in thesubscription price of such warrants being reduced below the par value of the shares tobe issued on the exercise of such warrants, a subscription rights reserve shall beestablished and applied in paying up the difference between the subscription price andthe par value of such shares.

3. CAYMAN ISLANDS COMPANY LAW

The Company was incorporated in the Cayman Islands as an exempted company on 14May 2021 subject to the Companies Act. Certain provisions of Cayman Islands company laware set out below but this section does not purport to contain all applicable qualificationsand exceptions or to be a complete review of all matters of the Companies Act and taxation,which may differ from equivalent provisions in jurisdictions with which interested partiesmay be more familiar.

(a) Company operations

An exempted company such as the Company must conduct its operations mainlyoutside the Cayman Islands. An exempted company is also required to file an annualreturn each year with the Registrar of Companies of the Cayman Islands and pay a feewhich is based on the amount of its authorised share capital.

(b) Share capital

Under the Companies Act, a Cayman Islands company may issue ordinary,preference or redeemable shares or any combination thereof. Where a company issuesshares at a premium, whether for cash or otherwise, a sum equal to the aggregateamount or value of the premiums on those shares shall be transferred to an account, tobe called the “share premium account”. At the option of a company, these provisionsmay not apply to premiums on shares of that company allotted pursuant to anyarrangements in consideration of the acquisition or cancellation of shares in any othercompany and issued at a premium. The share premium account may be applied by thecompany subject to the provisions, if any, of its memorandum and articles ofassociation, in such manner as the company may from time to time determineincluding, but without limitation, the following:

(i) paying distributions or dividends to members;



– III-19 –

(ii) paying up unissued shares of the company to be issued to members as fullypaid bonus shares;

(iii) any manner provided in section 37 of the Companies Act;

(iv) writing-off the preliminary expenses of the company; and

(v) writing-off the expenses of, or the commission paid or discount allowed on,any issue of shares or debentures of the company.

Notwithstanding the foregoing, no distribution or dividend may be paid tomembers out of the share premium account unless, immediately following the date onwhich the distribution or dividend is proposed to be paid, the company will be able topay its debts as they fall due in the ordinary course of business.

Subject to confirmation by the court, a company limited by shares or a companylimited by guarantee and having a share capital may, if authorised to do so by itsarticles of association, by special resolution reduce its share capital in any way.

(c) Financial assistance to purchase shares of a company or its holding company

There are no statutory prohibitions in the Cayman Islands on the granting offinancial assistance by a company to another person for the purchase of, or subscriptionfor, its own, its holding company’s or a subsidiary’s shares. Therefore, a company mayprovide financial assistance provided the directors of the company, when proposing togrant such financial assistance, discharge their duties of care and act in good faith, fora proper purpose and in the interests of the company. Such assistance should be on anarm’s-length basis.

(d) Purchase of shares and warrants by a company and its subsidiaries

A company limited by shares or a company limited by guarantee and having ashare capital may, if so authorised by its articles of association, issue shares which areto be redeemed or are liable to be redeemed at the option of the company or a memberand, for the avoidance of doubt, it shall be lawful for the rights attaching to any sharesto be varied, subject to the provisions of the company’s articles of association, so as toprovide that such shares are to be or are liable to be so redeemed. In addition, such acompany may, if authorised to do so by its articles of association, purchase its ownshares, including any redeemable shares; an ordinary resolution of the companyapproving the manner and terms of the purchase will be required if the articles ofassociation do not authorise the manner and terms of such purchase. A company maynot redeem or purchase its shares unless they are fully paid. Furthermore, a companymay not redeem or purchase any of its shares if, as a result of the redemption orpurchase, there would no longer be any issued shares of the company other than sharesheld as treasury shares. In addition, a payment out of capital by a company for the



– III-20 –

redemption or purchase of its own shares is not lawful unless, immediately followingthe date on which the payment is proposed to be made, the company shall be able topay its debts as they fall due in the ordinary course of business.

Shares that have been purchased or redeemed by a company or surrendered to thecompany shall not be treated as cancelled but shall be classified as treasury shares ifheld in compliance with the requirements of Section 37A(1) of the Companies Act.Any such shares shall continue to be classified as treasury shares until such shares areeither cancelled or transferred pursuant to the Companies Act.

A Cayman Islands company may be able to purchase its own warrants subject toand in accordance with the terms and conditions of the relevant warrant instrument orcertificate. Thus there is no requirement under Cayman Islands law that a company’smemorandum or articles of association contain a specific provision enabling suchpurchases. The directors of a company may under the general power contained in itsmemorandum of association be able to buy, sell and deal in personal property of allkinds.

A subsidiary may hold shares in its holding company and, in certaincircumstances, may acquire such shares.

(e) Dividends and distributions

Subject to a solvency test, as prescribed in the Companies Act, and the provisions,if any, of the company’s memorandum and articles of association, a company may paydividends and distributions out of its share premium account. In addition, based uponEnglish case law which is likely to be persuasive in the Cayman Islands, dividendsmay be paid out of profits.

For so long as a company holds treasury shares, no dividend may be declared orpaid, and no other distribution (whether in cash or otherwise) of the company’s assets(including any distribution of assets to members on a winding up) may be made, inrespect of a treasury share.

(f) Protection of minorities and shareholders’ suits

It can be expected that the Cayman Islands courts will ordinarily follow Englishcase law precedents (particularly the rule in the case of Foss v. Harbottle and theexceptions to that rule) which permit a minority member to commence a representativeaction against or derivative actions in the name of the company to challenge acts whichare ultra vires, illegal, fraudulent (and performed by those in control of the Company)against the minority, or represent an irregularity in the passing of a resolution whichrequires a qualified (or special) majority which has not been obtained.



– III-21 –

Where a company (not being a bank) is one which has a share capital divided intoshares, the court may, on the application of members holding not less than one-fifth ofthe shares of the company in issue, appoint an inspector to examine the affairs of thecompany and, at the direction of the court, to report on such affairs. In addition, anymember of a company may petition the court, which may make a winding up order ifthe court is of the opinion that it is just and equitable that the company should bewound up.

In general, claims against a company by its members must be based on thegeneral laws of contract or tort applicable in the Cayman Islands or be based onpotential violation of their individual rights as members as established by a company’smemorandum and articles of association.

(g) Disposal of assets

There are no specific restrictions on the power of directors to dispose of assets ofa company, however, the directors are expected to exercise certain duties of care,diligence and skill to the standard that a reasonably prudent person would exercise incomparable circumstances, in addition to fiduciary duties to act in good faith, forproper purpose and in the best interests of the company under English common law(which the Cayman Islands courts will ordinarily follow).

(h) Accounting and auditing requirements

A company must cause proper records of accounts to be kept with respect to: (i)all sums of money received and expended by it; (ii) all sales and purchases of goodsby it and (iii) its assets and liabilities.

Proper books of account shall not be deemed to be kept if there are not kept suchbooks as are necessary to give a true and fair view of the state of the company’saffairs and to explain its transactions.

If a company keeps its books of account at any place other than at its registeredoffice or any other place within the Cayman Islands, it shall, upon service of an orderor notice by the Tax Information Authority pursuant to the Tax Information AuthorityAct (2013 Revision) of the Cayman Islands, make available, in electronic form or anyother medium, at its registered office copies of its books of account, or any part orparts thereof, as are specified in such order or notice.

(i) Exchange control

There are no exchange control regulations or currency restrictions in effect in theCayman Islands.



– III-22 –

(j) Taxation

Pursuant to section 6 of the Tax Concessions Act (2018 Revision) of the CaymanIslands, the Company has obtained an undertaking from the Financial Secretary that:

(i) no law which is enacted in the Cayman Islands imposing any tax to belevied on profits or income or gains or appreciations shall apply to theCompany or its operations; and

(ii) no tax be levied on profits, income, gains or appreciations or which is in thenature of estate duty or inheritance tax shall be payable by the Company:

(aa) on or in respect of the shares, debentures or other obligations of theCompany; or

(bb) by way of the withholding in whole or in part of any relevant paymentas defined in section 6(3) of the Tax Concessions Act (2018 Revision).

The undertaking for the Company is for a period of 30 years from 2 June 2021.

The Cayman Islands currently levy no taxes on individuals or corporations basedupon profits, income, gains or appreciations and there is no taxation in the nature ofinheritance tax or estate duty. There are no other taxes likely to be material to theCompany levied by the Government of the Cayman Islands save for certain stampduties which may be applicable, from time to time, on certain instruments.

(k) Stamp duty on transfers

No stamp duty is payable in the Cayman Islands on transfers of shares of CaymanIslands companies save for those which hold interests in land in the Cayman Islands.

(l) Loans to directors

There is no express provision prohibiting the making of loans by a company toany of its directors. However, the company’s articles of association may provide for theprohibition of such loans under specific circumstances.

(m) Inspection of corporate records

The members of a company have no general right to inspect or obtain copies ofthe register of members or corporate records of the company. They will, however, havesuch rights as may be set out in the company’s articles of association.



– III-23 –

(n) Register of members

A Cayman Islands exempted company may maintain its principal register ofmembers and any branch registers in any country or territory, whether within or outsidethe Cayman Islands, as the company may determine from time to time. There is norequirement for an exempted company to make any returns of members to the Registrarof Companies in the Cayman Islands. The names and addresses of the members are,accordingly, not a matter of public record and are not available for public inspection.However, an exempted company shall make available at its registered office, inelectronic form or any other medium, such register of members, including any branchregister of member, as may be required of it upon service of an order or notice by theTax Information Authority pursuant to the Tax Information Authority Act (2013Revision) of the Cayman Islands.

(o) Register of Directors and officers

Pursuant to the Companies Act, the Company is required to maintain at itsregistered office a register of directors, alternate directors and officers which is notavailable for inspection by the public. A copy of such register must be filed with theRegistrar of Companies in the Cayman Islands and any change must be notified to theRegistrar within 30 days of any change in such directors or officers, including a changeof the name of such directors or officers.

(p) Winding up

A Cayman Islands company may be wound up by: (i) an order of the court; (ii)voluntarily by its members; or (iii) under the supervision of the court.

The court has authority to order winding up in a number of specifiedcircumstances including where, in the opinion of the court, it is just and equitable thatsuch company be so wound up.

A voluntary winding up of a company (other than a limited duration company, forwhich specific rules apply) occurs where the company resolves by special resolutionthat it be wound up voluntarily or where the company in general meeting resolves thatit be wound up voluntarily because it is unable to pay its debt as they fall due. In thecase of a voluntary winding up, the company is obliged to cease to carry on itsbusiness from the commencement of its winding up except so far as it may bebeneficial for its winding up. Upon appointment of a voluntary liquidator, all thepowers of the directors cease, except so far as the company in general meeting or theliquidator sanctions their continuance.

In the case of a members’ voluntary winding up of a company, one or moreliquidators are appointed for the purpose of winding up the affairs of the company anddistributing its assets.



– III-24 –

As soon as the affairs of a company are fully wound up, the liquidator must makea report and an account of the winding up, showing how the winding up has beenconducted and the property of the company disposed of, and call a general meeting ofthe company for the purposes of laying before it the account and giving an explanationof that account.

When a resolution has been passed by a company to wind up voluntarily, theliquidator or any contributory or creditor may apply to the court for an order for thecontinuation of the winding up under the supervision of the court, on the grounds that:(i) the company is or is likely to become insolvent; or (ii) the supervision of the courtwill facilitate a more effective, economic or expeditious liquidation of the company inthe interests of the contributories and creditors. A supervision order takes effect for allpurposes as if it was an order that the company be wound up by the court except that acommenced voluntary winding up and the prior actions of the voluntary liquidator shallbe valid and binding upon the company and its official liquidator.

For the purpose of conducting the proceedings in winding up a company andassisting the court, one or more persons may be appointed to be called an officialliquidator(s). The court may appoint to such office such person or persons, eitherprovisionally or otherwise, as it thinks fit, and if more than one person is appointed tosuch office, the court shall declare whether any act required or authorized to be doneby the official liquidator is to be done by all or any one or more of such persons. Thecourt may also determine whether any and what security is to be given by an officialliquidator on his appointment; if no official liquidator is appointed, or during anyvacancy in such office, all the property of the company shall be in the custody of thecourt.

(q) Reconstructions

Reconstructions and amalgamations may be approved by a majority in numberrepresenting 75% in value of the members or creditors, depending on thecircumstances, as are present at a meeting called for such purpose and thereaftersanctioned by the courts. Whilst a dissenting member has the right to express to thecourt his view that the transaction for which approval is being sought would notprovide the members with a fair value for their shares, the courts are unlikely todisapprove the transaction on that ground alone in the absence of evidence of fraud orbad faith on behalf of management, and if the transaction were approved andconsummated the dissenting member would have no rights comparable to the appraisalrights (i.e. the right to receive payment in cash for the judicially determined value oftheir shares) ordinarily available, for example, to dissenting members of a UnitedStates corporation.

(r) Take-overs

Where an offer is made by a company for the shares of another company and,within four months of the offer, the holders of not less than 90% of the shares whichare the subject of the offer accept, the offeror may, at any time within two months after



– III-25 –

the expiration of that four-month period, by notice require the dissenting members totransfer their shares on the terms of the offer. A dissenting member may apply to theCayman Islands courts within one month of the notice objecting to the transfer. Theburden is on the dissenting member to show that the court should exercise itsdiscretion, which it will be unlikely to do unless there is evidence of fraud or bad faithor collusion as between the offeror and the holders of the shares who have accepted theoffer as a means of unfairly forcing out minority members.

(s) Indemnification

Cayman Islands law does not limit the extent to which a company’s articles ofassociation may provide for indemnification of officers and directors, save to the extentany such provision may be held by the court to be contrary to public policy, forexample, where a provision purports to provide indemnification against theconsequences of committing a crime.

4. GENERAL

Appleby, the Company’s legal adviser on Cayman Islands law, has sent to the Companya letter of advice which summarises certain aspects of Cayman Islands company law. Thisletter, together with a copy of the Companies Act, is available for inspection as referred toin the paragraph headed “Documents Delivered to the Registrar of Companies in Hong Kongand Available for Inspection — Documents available for inspection” in Appendix V to thisdocument. Any person wishing to have a detailed summary of Cayman Islands company lawor advice on the differences between it and the laws of any jurisdiction with which he ismore familiar is recommended to seek independent legal advice.



– III-26 –

A. FURTHER INFORMATION ABOUT OUR GROUP

1. Incorporation of our Company

Our Company was incorporated in the Cayman Islands under the Companies Act as anexempted company with limited liability on 14 May 2021.

Our Company was registered as a non-Hong Kong company under Part 16 of theCompanies Ordinance on 29 June 2021 and the principal place of business in Hong Kong isUnit C&D, 13/F., Max Share Centre, 373 King’s Road, North Point, Hong Kong. Inconnection with such registration, our Company has appointed Mr. Y. W. Chan, and Ms.Chan Ying Yu (having their address at our principal place of business in Hong Kong) as theauthorised representatives for the acceptance of service of process and notices on ourCompany’s behalf in Hong Kong.

As our Company was incorporated in the Cayman Islands, it is subject to theCompanies Act and the constitution, which comprises the Memorandum and the Articles. Asummary of the relevant aspects of Cayman Islands company law and certain provisions ofthe Articles is set out in Appendix III to this document.

2. Changes in the share capital of our Company

(a) As at the date of incorporation, the authorised share capital of our Company wasHK$388,000 divided into 38,800,000 Shares with a par value of HK$0.01 each.Upon incorporation, one subscriber Share in our Company with a par value ofHK$0.01 was allotted and issued as fully paid to a nominee subscriber, who onthe same day transferred the said one Share to Faithful Trinity for a considerationof HK$0.01. Upon completion of the above transfer and share issue, FaithfulTrinity became the sole Shareholder of our Company.

(b) On [�], the authorised share capital of our Company was increased fromHK$388,000 divided into 38,800,000 Shares to HK$[REDACTED] divided into[REDACTED] Shares by the creation of an additional [REDACTED] Shares, allof which shall rank equally in all respects with the existing Shares.

Immediately after completion of the [REDACTED] and the [REDACTED] (withouttaking into account any Share to be allotted and issued upon the exercise of any optionwhich may be granted under the Share Option Scheme), the authorised share capital of ourCompany will be HK$[REDACTED] divided into [REDACTED] Shares, of which[REDACTED] Shares will be allotted and issued fully paid or credited as fully paid and[REDACTED] Shares will remain unissued.

Other than pursuant to the general mandate to allot and issue Shares as referred to inthe paragraphs headed “A. Further information about our Group — 5. Written resolutions ofour sole Shareholder passed on [�]” and “A. Further information about our Group — 6.Repurchase by our Company of our own securities” under this appendix, the exercise of theoptions which may be granted under the Share Option Scheme, and our Directors do not

APPENDIX IV STATUTORY AND GENERAL INFORMATION


– IV-1 –

have any present intention to allot and issue any of the authorised but unissued share capitalof our Company and, without prior approval of our Shareholders in general meeting, noissue of Shares will be made which would effectively alter the control of our Company.

Save as disclosed in this appendix and the paragraph headed “History, Developmentand Reorganisation — Reorganisation” in this document, there has been no alteration in ourCompany’s share capital since its incorporation.

3. Reorganisation

Our Group underwent the Reorganisation in preparation for the [REDACTED]. Pleasesee the paragraph headed “History, Development and Reorganisation — Reorganisation” inthis document for details of the Reorganisation.

4. Changes in the share capital of the subsidiaries of our Company

The subsidiaries of our Company are set out in the Accountants’ Report, the text ofwhich is set out in Appendix I to this document.

Save as disclosed in the paragraph headed “History, Development and Reorganisation— Reorganisation” in this document, there has been no alteration in the share capital orregistered capital of any of the subsidiaries of our Company within the two yearsimmediately preceding the date of this document.

5. Written resolutions of our sole Shareholder passed on [�]

Written resolutions of our sole Shareholder were passed on [�] approving, amongstothers, the following:

(a) the Memorandum and the Articles were adopted as the new memorandum ofassociation and articles of association of our Company, conditional upon the[REDACTED];

(b) the authorised share capital of our Company was increased from HK$388,000divided into 38,800,000 Shares of HK$0.01 each to HK$[REDACTED] dividedinto [REDACTED] Shares of HK$0.01 each by the creation of additional[REDACTED] Shares, all of which shall rank equally in all respects with theexisting Shares; and

(c) conditional upon the same conditions to be satisfied and/or waived as stated in thesection headed “Structure and Conditions of the [REDACTED] in this document

(i) the [REDACTED] and the grant of the [REDACTED] by our Companywere approved and our Directors were authorised to (aa) allot and issue the[REDACTED] and the Shares as may be required to be allotted and issuedupon the exercise of the [REDACTED] on and subject to the terms andconditions stated in this document and in the relevant [REDACTED]; (bb)implement the [REDACTED] and the [REDACTED] of Shares on Main



– IV-2 –

Board; and (cc) do all things and execute all documents in connection withor incidental to the [REDACTED] and the [REDACTED] with suchamendments or modifications (if any) as our Directors may considernecessary or appropriate;

(ii) conditional upon the share premium account of our Company being creditedas a result of the [REDACTED], our Directors were authorised to capitalisethe amount of HK$[REDACTED] from the amount standing to the credit ofthe share premium account of our Company by applying such sum to pay upin full at par a total of [REDACTED] Shares for allotment and issue to theholders of Shares whose names appear on the register of members of ourCompany at the close of business on [�], or as each of them may direct inwriting, in proportion (or as near as possible without involving the issue offractions of Shares) to their then existing respective shareholdings in ourCompany and the Shares to be allotted and issued pursuant to this resolutionshall rank equally in all respects with the then existing issued Shares;

(iii) the rules of the Share Option Scheme and our Board or any committeethereof established by our Board was authorised, at its sole discretion, to(aa) administer the Share Option Scheme; (bb) modify or amend the rules ofthe Share Option Scheme from time to time as may be acceptable or notobjected to by the Stock Exchange; (cc) grant options to subscribe for Sharesthereunder and to allot, issue and deal with the Shares pursuant to theexercise of subscription rights attaching to any option(s) granted thereunder;and (dd) take all such actions as it considers necessary or desirable toimplement or give effect to the Share Option Scheme;

(iv) a general unconditional mandate was given to our Directors to exercise allthe powers of our Company to allot, issue and deal with (otherwise thanpursuant to, or in consequence of, the [REDACTED], the [REDACTED],the exercise of any options which may be granted under the Share OptionScheme or any other share option scheme or similar arrangement for thetime being adopted by our Company, or by way of rights issue, scripdividend schemes or similar arrangements in accordance with the Articles, ora specific authority granted by our Shareholders in general meetings, or anyissue of Shares upon exercise of rights of subscription or conversionattaching to warrants of our Company of any securities (if any) which areconvertible into Shares), Shares with an aggregate nominal amount notexceeding 20% of the aggregate nominal amount of the share capital of ourCompany in issue immediately after completion of the [REDACTED] andthe [REDACTED] (assuming the [REDACTED] is not exercised andwithout taking into account any Share to be allotted and issued upon theexercise of any options which may be granted under the Share OptionScheme), until the conclusion of the next annual general meeting, or the dateby which the next annual general meeting is required by the Articles or anyapplicable law(s) to be held, or the passing of an ordinary resolution byShareholders in general meeting revoking or varying the mandate given toour Directors, whichever occurs first;



– IV-3 –

(v) a general unconditional mandate was given to our Directors to exercise allthe powers of our Company to repurchase, on the Stock Exchange and/or onany other stock exchange on which the securities of our Company may be[REDACTED] and which is recognised by the SFC and the Stock Exchangefor this purpose in accordance with all applicable laws and requirements ofthe Listing Rules (or of such other stock exchange), Shares with anaggregate nominal amount not exceeding 10% of the aggregate nominalamount of the share capital of our Company in issue immediately aftercompletion of the [REDACTED] and the [REDACTED] (assuming the[REDACTED] is not exercised and without taking into account any Share tobe allotted and issued upon the exercise of any options which may begranted under the Share Option Scheme), until the conclusion of ourCompany’s next annual general meeting, or the date by which the nextannual general meeting is required by the Articles or any applicable law(s)to be held, or the passing of an ordinary resolution by Shareholders ingeneral meeting revoking or varying the mandate given to our Directors,whichever occurs first; and

(vi) a general unconditional mandate mentioned in sub-paragraph (iv) above wasextended by the addition to the aggregate nominal amount of the sharecapital of our Company which may be allotted and issued or agreed(conditionally or unconditionally) to be allotted or issued by our Directorspursuant to such general mandate of an amount representing the aggregatenominal amount of the share capital of our Company repurchased by ourCompany pursuant to the mandate to repurchase Shares referred to insub-paragraph (v) above, provided that such extended amount shall notexceed 10% of the aggregate nominal amount of the share capital of ourCompany in issue immediately after completion of the [REDACTED] andthe [REDACTED] (assuming the [REDACTED] is not exercised andwithout taking into account any Share to be allotted and issued upon theexercise of any options which may be granted under the Share OptionScheme).



– IV-4 –

6. Repurchase by our Company of our own securities

This paragraph sets out information required by the Stock Exchange to be included inthis document concerning the repurchase by our Company of its own securities.

(a) Provisions of the Listing Rules

The Listing Rules permit companies with a primary listing on the Stock Exchange topurchase their own securities on the Stock Exchange subject to certain restrictions, the mostimportant of which are summarised below:

(i) Shareholders’ approval

All proposed repurchases of securities (which must be fully paid in the case ofshares) by a company with a primary listing on the Stock Exchange must be approvedin advance by an ordinary resolution of the shareholders, either by way of generalmandate or by specific approval of a particular transaction.

Note: Pursuant to the written resolutions of our sole Shareholder passed on [�], conditional uponthe same conditions to be satisfied and/or waived as stated in the section headed “Structureand Conditions of the [REDACTED] in this document, a general unconditional mandate (the“Repurchase Mandate”) was given to our Directors to exercise all the powers of our Companyto repurchase, on the Stock Exchange and/or on any other stock exchange on which thesecurities of our Company may be [REDACTED] and which is recognised by the SFC andthe Stock Exchange for this purpose in accordance with all applicable laws and requirementsof the Listing Rules (or of such other stock exchange), Shares with an aggregate nominalvalue not exceeding 10% of the aggregate nominal amount of the share capital of ourCompany in issue immediately after completion of the [REDACTED] and the [REDACTED](assuming the [REDACTED] is not exercised and without taking into account any Share tobe allotted and issued upon the exercise of any options which may be granted under the ShareOption Scheme). The Repurchase Mandate will remain effective until the conclusion of thenext annual general meeting of our Company, or the date by which the next annual generalmeeting of our Company is required by the Articles or any applicable law(s) to be held, orthe passing of an ordinary resolution by Shareholders in general meeting revoking or varying

the mandate given to our Directors, whichever occurs first.

(ii) Source of funds

Repurchases must be funded out of funds legally available for the purpose inaccordance with the Memorandum, the Articles, the Listing Rules and the applicablelaws of Hong Kong and the Companies Act. A listed company must not repurchase itsown securities on the Stock Exchange for a consideration other than cash or forsettlement otherwise than in accordance with the trading rules of the Stock Exchange.Subject to the foregoing, any repurchases by our Company may be made out of profitsof our Company, out of share premium, or out of the proceeds of a fresh issue ofshares made for the purpose of the repurchase or, subject to the Companies Act, out ofcapital. Any amount of premium payable on the purchase over the par value of theshares to be repurchased must be out of profits of our Company, out of our Company’sshare premium account before or at the time the Shares are repurchased, or, subject tothe Companies Act, out of capital.



– IV-5 –

(iii) Trading restrictions

The total number of shares which a listed company may repurchase on the StockExchange is the number of shares representing up to a maximum of 10% of theaggregate number of shares in issue. A company may not issue or announce a proposedissue of new securities for a period of 30 days immediately following a repurchase(other than an issue of securities pursuant to an exercise of warrants, share options orsimilar instruments requiring the company to issue securities which were outstandingprior to such repurchase) without the prior approval of the Stock Exchange.

Further, a listed company is prohibited from repurchasing its shares on the StockExchange if the purchase price is 5% or more than the average closing market price forthe five preceding days on which its shares were traded on the Stock Exchange.

In addition, the Listing Rules prohibits a listed company from repurchasing itssecurities which are in the hands of the public falling below the relevant prescribedminimum percentage as required by the Stock Exchange. A company is required toprocure that the broker appointed by it to effect a repurchase of securities discloses tothe Stock Exchange such information with respect to the repurchase as the StockExchange may require.

(iv) Status of repurchased shares

All repurchased securities (whether effected on the Stock Exchange or otherwise)will be automatically delisted and the certificates for those securities must be cancelledand destroyed.

Under the Companies Act, a company’s repurchased shares may be treated ascancelled and, if so cancelled, the amount of that company’s issued share capital shallbe reduced by the aggregate nominal value of the repurchased shares accordinglyalthough the authorised share capital of the company will not be reduced.

(v) Suspension of repurchase

A listed company may not make any repurchase of securities after insideinformation has come to its knowledge until the inside information has been madepublicly available. In particular, during the period of one month immediately precedingthe earlier of: (aa) the date of the board meeting (as such date is first notified to theStock Exchange in accordance with the Listing Rules) for the approval of a listedcompany’s results for any year, half-year, quarterly or any other interim period(whether or not required under the Listing Rules); and (bb) the deadline for publicationof an announcement of a listed company’s results for any year or half-year under theListing Rules, or quarterly or any other interim period (whether or not required underthe Listing Rules) and ending on the date of the results announcement, the listedcompany may not repurchase its shares on the Stock Exchange other than inexceptional circumstances. In addition, the Stock Exchange may prohibit a repurchaseof securities on the Stock Exchange if a listed company has breached the Listing Rules.



– IV-6 –

(vi) Reporting requirements

Certain information relating to repurchases of securities on the Stock Exchange orotherwise must be reported to the Stock Exchange not later than 30 minutes before theearlier of the commencement of the morning trading session or any pre-opening sessionon the following business day.

In addition, a listed company’s annual report is required to disclose detailsregarding repurchases of securities made during the year, including a monthly analysisof the number of securities repurchased, the purchase price per share or the highest andlowest price paid for all such purchases, where relevant, and the aggregate prices paid.

(vii) Connected parties

A listed company is prohibited from knowingly repurchasing securities on theStock Exchange from a “core connected person”, which includes a director, chiefexecutive or substantial shareholder of the company or any of its subsidiaries or anassociate of any of them and a core connected person shall not knowingly sell hissecurities to the company.

(b) Reasons for repurchase

Our Directors believe that it is in the best interests of our Company and ourShareholders for our Directors to have a general authority from our Shareholders to enableour Company to repurchase Shares in the market. Such repurchases may, depending onmarket conditions and funding arrangements at the time, lead to an enhancement of the netasset value per Share and/or earnings per Share and will only be made when our Directorsbelieve that such repurchases will benefit our Company and our Shareholders.

(c) Funding of repurchase

In repurchasing Shares, our Company may only apply funds legally available for suchpurpose in accordance with the Articles, the Listing Rules and the applicable laws of HongKong and the Cayman Islands.

On the basis of our Company’s current financial position as disclosed in this documentand taking into account the current working capital position, our Directors consider that, ifthe Repurchase Mandate were to be exercised in full, it might have a material adverse effecton the working capital and/or the gearing position as compared with the position disclosedin this document. However, our Directors do not propose to exercise the RepurchaseMandate to such an extent as would, in the circumstances, have a material adverse effect onthe working capital requirements or the gearing levels which in the opinion of our Directorsare from time to time appropriate for our Company.



– IV-7 –

(d) General

None of our Directors nor, to the best of their knowledge having made all reasonableenquiries, any of their close associates currently intends to sell any Share to our Companyor our Company’s subsidiaries. Our Directors have undertaken to the Stock Exchange that,so far as the same may be applicable, they will exercise the Repurchase Mandate inaccordance with the Listing Rules, the Articles and the applicable laws of Hong Kong andthe Cayman Islands.

If, as a result of a repurchase of Shares, a Shareholder’s proportionate interest in ourCompany’s voting rights increases, such increase will be treated as an acquisition for thepurposes of the Takeovers Code. Accordingly, a Shareholder or a group of Shareholdersacting in concert (within the meaning of the Takeovers Code), depending on the level ofincrease of our Shareholders’ interest, could obtain or consolidate control of our Companyand become obliged to make a mandatory offer in accordance with Rule 26 of the TakeoversCode. Save as aforesaid, our Directors are not aware of any consequence which would ariseunder the Takeovers Code as a result of any repurchase pursuant to the Repurchase Mandate.

Our Directors will not exercise the Repurchase Mandate if the repurchase would resultin the number of Shares which are in the hands of the public falling below 25% of the totalnumber of Shares in issue (or such other percentage as may be prescribed as the minimumpublic shareholding under the Listing Rules).

Our Company have not made any repurchases of its securities since its incorporation.

No core connected person has notified our Company that he has a present intention tosell Shares to our Company, or has undertaken not to do so, if the Repurchase Mandate isexercised.

B. FURTHER INFORMATION ABOUT THE BUSINESS OF OUR GROUP

1. Summary of material contracts

The following contracts (not being contracts entered into in the ordinary course ofbusiness) have been entered into by members of our Group within the two yearsimmediately preceding the date of this document and are or may be material:

(a) a quota purchase agreement dated 18 August 2021 entered into among Mr. Y. W.Chan, Ms. Wan, and Grateful Luck relating to the acquisition of the entire capitalof L & F Interior Engineering from Mr. Y. W. Chan and Ms. Wan at the par valueof MOP25,000 each quota;

(b) a quota purchase agreement dated 18 August 2021 entered into among Mr. Y. W.Chan, Ms. Wan, and Grateful Luck relating to the acquisition of the entire issuedshare capital of Wang Hing Lain Fung from Mr. Y. W. Chan and Ms. Wan at thepar value of MOP12,500 per quota;



– IV-8 –

(c) a share purchase agreement dated 23 August 2021 entered into among Mr. Y. W.Chan, Ms. Wan, and Grateful Luck relating to the acquisition of the entire issuedshare capital of Wang Hing Interior Engineering from Mr. Y. W. Chan and Ms.Wan, in consideration of Grateful Luck allotting and issuing one and one share toMr. Chan and Ms. Wan, credited as fully-paid, respectively;

(d) a share purchase agreement dated 8 September 2021 entered into among Mr. Y. W.Chan, Ms. Wan and Grateful Luck relating to the acquisition of the entire issuedshare capital of Wang Hing Interior Design from Mr. Y. W. Chan and Ms. Wan inconsideration of Grateful Luck allotting and issuing 67 and 29 shares to Mr. Y. W.Chan and Ms. Wan, credited as fully paid, respectively;

(e) a share purchase agreement dated [�] entered into among Mr. Y. W. Chan, Ms.Wan and our Company relating to the acquisition of the entire issued share capitalof Grateful Luck from Mr. Y. W. Chan and Ms. Wan, in consideration of ourCompany allotting and issuing 99 Shares, credited as fully paid, to FaithfulTrinity at the direction of Mr. Y. W. Chan and Ms. Wan;

(f) the Deed of Indemnity;

(g) the Deed of Non-Competition; and

(h) the [REDACTED].

2. Intellectual property rights

(a) Trademark

As at the Latest Practicable Date, our Group has applied for registration the followingtrademark which is, in the opinion of our Directors, material to our Group’s business:

TrademarkRegisteredOwner Classes

Place ofRegistration

ApplicationNumber Application Date


37, 42 Hong Kong 305634063 24 May 2021


37 PRC 56343609 25 May 2021


42 PRC 56349798 25 May 2021



– IV-9 –

TrademarkRegisteredOwner Classes

Place ofRegistration

ApplicationNumber Application Date


37 Macau N/187629(433) 10 September 2021


42 Macau N/187630(166) 10 September 2021

(b) Domain name

As at the Latest Practicable Date, our Group has registered the following domain namewhich is, in the opinion of our Directors, material to our Group’s business:

Domain NameRegisteredOwner Registration Date Expiry Date

www.wanghinggroup.com Wang HingInterior Design

5 January 2021 5 January 2022



– IV-10 –

C. FURTHER INFORMATION ABOUT OUR DIRECTORS AND SUBSTANTIALSHAREHOLDERS

1. Disclosure of Interests

(a) Interests and short positions of our Directors and chief executives of our Companyin the Shares, underlying Shares and debentures of our Company and its associatedcorporations after completion of the [REDACTED] and the [REDACTED]

Immediately after the completion of the [REDACTED] and the [REDACTED](without taking into account any Share to be allotted and issued upon the exercise of anyoption which may be granted under the Share Option Scheme), the interests or shortpositions of our Directors and chief executive of our Company in the Shares, underlyingShares or debentures of our Company or any of the associated corporations (within themeaning of Part XV of the SFO) which will have to be notified to our Company and theStock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interestsand short positions in which they are taken or deemed to have under such provisions of theSFO), or which will be required, pursuant to section 352 of the SFO, to be entered in theregister as referred to therein, or which will be required to be notified to our Company andthe Stock Exchange pursuant to the Model Code for Securities Transactions by Directors ofListed Companies contained in the Listing Rules, will be as follows:

Name of Director/chief executive

Capacity/Nature of interest

Number of Shares(Note 1)

Approximatepercentage ofshareholding

Mr. Y. W. Chan Interest in a controlledcorporation (Note 2)

[REDACTED] (L) [REDACTED]%

Ms. Wan Interest in a controlledcorporation (Note 2)

[REDACTED] (L) [REDACTED]%

Mr. Ng Wing CheongStephen

Chief executive officer – –

Notes:

(1) The letter “L” denotes a person’s “long position” (as defined under Part XV of the SFO) in suchShares.

(2) The [REDACTED] Shares are registered in the name of Faithful Trinity, which is owned as to 69%and 31% by Mr. Y. W. Chan and Ms. Wan. Under the SFO, each of Mr. Y. W. Chan and Ms. Wan isdeemed to be interested in all the Shares registered in the name of Faithful Trinity.



– IV-11 –

(b) Interests and/or short positions of our substantial shareholders under the SFO

Please see the section headed “Substantial Shareholders” in this document for details ofthe persons (other than a Director or a chief executive of our Company)/corporations who/which will have an interest or short position in the Shares and underlying Shares whichwould fall to be disclosed to our Company pursuant to Divisions 2 and 3 of Part XV of theSFO, or who/which is, directly or indirectly, to be interested in 10% or more of the issuedvoting shares of any other member of our Group.

Our Directors are not aware of any persons who will immediately after completion ofthe [REDACTED] and the [REDACTED] (without taking into account any Share that maybe allotted and issued upon the exercise of the options that may be granted under the ShareOption Scheme) have a notifiable interest (for the purposes of the SFO) in the Shares or,having such a notifiable interest, have any short positions (within the meaning of the SFO)in the Shares, other than those as disclosed above.

2. Particulars of Directors’ service agreements and appointment letters

(a) Executive Directors

Each of our executive Directors has entered into a service agreement with ourCompany for an initial term of three years commencing from the [REDACTED]. The termof service shall be renewed and extended automatically by three years on the expiry of suchinitial term and on the expiry of every successive period of three years thereafter, unlessterminated by either party thereto giving at least three months’ written notice of non-renewalbefore the expiry of the then existing term.

(b) Independent non-executive Directors

Each of the independent non-executive Directors has entered into a letter ofappointment with our Company for an initial fixed term of one year commencing from the[REDACTED]. The term of service shall be renewed and extended automatically by oneyear on the expiry of such initial term and on the expiry of every successive period of oneyear thereafter, unless terminated by either party thereto giving at least one month’s writtennotice of non-renewal before the expiry of the then existing term.

Save as disclosed in this document, none of our Directors has or is proposed to haveentered into any service agreement or letter of appointment with any member of our Group(excluding agreements expiring or determinable by any member of our Group within oneyear without the payment of compensation other than statutory compensation).



– IV-12 –

3. Remuneration of our Directors

During FY2019, FY2020 and FY2021, the aggregate emoluments paid and benefits inkind granted by our Group to our Directors was approximately HK$0.6 million HK$0.7million and HK$0.6 million, respectively.

During each of FY2019, FY2020 and FY2021, the aggregate of contributions topension schemes for our Directors was approximately HK$18,000, HK$18,000, andHK$18,000, respectively.

During each of FY2019, FY2020 and FY2021, the aggregate of bonuses paid to orreceivable by our Directors which are discretionary or are based on our Company’s, ourGroup’s or any member of our Group’s performance was nil, nil, and nil, respectively.

Under the arrangements currently in force, our Company estimates that the aggregateremuneration payable to, and benefits in kind receivable by, our Directors (including theindependent non-executive Directors) for FY2022 will be approximately HK$0.7 million.

None of our Directors or any past director(s) of any member of our Group has beenpaid any sum of money for each of FY2019, FY2020 and FY2021 (a) as an inducement tojoin or upon joining our Company; or (b) for loss of office as a director of any member ofour Group or of any other office in connection with the management of the affairs of anymember of our Group.

There has been no arrangement under which a Director has waived or agreed to waiveany emolument for each of FY2019, FY2020 and FY2021.

Under the arrangements currently proposed, conditional upon the [REDACTED], thebasic annual remuneration (excluding payment pursuant to any discretionary benefit or bonusor other fringe benefits) payable by our Company to each of our Directors will be asfollows:

Executive Directors HK$

Mr. Y. W. Chan 840,000Ms. Wan 360,000


Ms. Cheng Ching Yee 120,000Mr. Lam Chi Wing 120,000Mr. Leung Hok Ki 120,000



– IV-13 –

Each of the executive Directors and independent non-executive Directors is entitled toreimbursement of all necessary and reasonable out-of-pocket expenses properly incurred inrelation to all business and affairs carried out by our Company from time to time or forproviding services to our Company or executing their functions in relation to our Company’sbusiness and operations.

Save as disclosed in this document, no other emoluments have been paid or arepayable, in respect of each of FY2019, FY2020 and FY2021 by our Company to ourDirectors.

4. Related Party Transactions

Details of the related party transactions are set out under Note 28 to the accountants’report set out in Appendix I to this document.

5. Disclaimers

Save as disclosed in this document:

(a) none of our Directors or chief executive has any interest or short position in anyof the Shares, underlying Shares or debentures of our Company or any of theassociated corporation (within the meaning of Part XV of the SFO), immediatelyafter the completion of the [REDACTED] and the [REDACTED], without takinginto account any Share to be allotted and issued upon the exercise of any optionswhich may be granted under the Share Option Scheme, which will have to benotified to our Company and the Stock Exchange pursuant to Divisions 7 and 8 ofPart XV of the SFO (including interests and short positions which any of them isdeemed to have under such provisions of the SFO) or which will be required,pursuant to section 352 of the SFO, to be entered in the register as referred totherein or which will be required to be notified to our Company and the StockExchange pursuant to the Model Code for Securities Transactions by Directors ofListed Companies, in each case once [REDACTED];

(b) our Directors are not aware of any person (other than our Directors or the chiefexecutive of our Company) who will, immediately after the completion of the[REDACTED] and the [REDACTED] (without taking into account any Share tobe allotted and issued upon the exercise of any options which may be grantedunder the Share Option Scheme) have an interest or short position in the Sharesor underlying Shares which will have to be notified to our Company and theStock Exchange pursuant to Divisions 2 and 3 of Part XV of the SFO, or whowill, directly or indirectly, be interested in 10% or more of the nominal value ofany class of share capital carrying rights to vote in all circumstances at generalmeetings of any other member of our Group;



– IV-14 –

(c) none of our Directors or the experts under the paragraph headed “E. OtherInformation — 7. Qualifications of experts” in this appendix has been directly orindirectly interested in the promotion of, or in any asset(s) which has or havebeen, within the two years immediately preceding the date of this document,acquired or disposed of by or leased to any member of our Group, or areproposed to be acquired or disposed of by or leased to any member of our Group;

(d) none of our Directors nor the experts named under the paragraph headed “E.Other Information — 7. Qualifications of experts” in this appendix below ismaterially interested in any contract or arrangement subsisting at the date of thisdocument which is significant in relation to our Company’s business;

(e) none of the experts named under the paragraph headed “E. Other Information —7. Qualifications of experts” in this appendix below has any shareholding in anymember of our Group or the right (whether legally enforceable or not) tosubscribe for or to nominate persons to subscribe for securities in any member ofour Group; and

(f) so far as is known to our Directors, none of our Directors, their respective closeassociates or Shareholders who are interested in more than 5% of the share capitalhave any interests in the five largest customers, the five largest suppliers or thefive largest subcontractors of our Group.

D. SHARE OPTION SCHEME

1. Summary of terms of the Share Option Scheme

(a) Purpose of the Share Option Scheme

The purpose of the Share Option Scheme is to enable our Group to grant options to theeligible participants as incentive or rewards for their contribution to our Group and/or toenable our Group to recruit and retain high-calibre employees and attract human resourcesthat are valuable to our Group or any entity in which any member of our Group holds anyequity interest (the “Invested Entity”). As at the Latest Practicable Date, there is no“Invested Entity” other than members of our Group, and our Group has not identified anypotential “Invested Entity” for investment.



– IV-15 –

(b) Who may join

Our Directors shall, in accordance with the provisions of the Share Option Scheme andthe Listing Rules, be entitled but shall not be bound at any time within a period of 10 yearscommencing from the date of the adoption of the Share Option Scheme to make an offer toany of the following classes:

(i) any employee (whether full time or part time, including our Directors (includingany non-executive Director and independent non-executive Director)) of ourCompany, any of its subsidiaries (within the meaning of the CompaniesOrdinance) or any Invested Entity (an “eligible employee”);

(ii) any supplier of goods or services to any member of our Group or any InvestedEntity;

(iii) any customer of any member of our Group or any Invested Entity;

(iv) any person or entity that provides research, development or other technologicalsupport to any member of our Group or any Invested Entity;

(v) any shareholder of any member of our Group or any Invested Entity or any holderof any securities issued by any member of our Group or any Invested Entity;

(vi) any adviser (professional or otherwise), consultant, individual or entity who in theopinion of our Directors has contributed or will contribute to the growth anddevelopment of our Group; and

(vii) any other group or classes of participants who have contributed or may contributeby way of joint venture, business alliance or other business arrangement to thedevelopment and growth of our Group.

and, for the purpose of the Share Option Scheme, the offer for the grant of an option maybe made to any company wholly owned by one or more eligible participants.

For the avoidance of doubt, the grant of any options by our Company for thesubscription of Shares or other securities of our Group to any person who falls within any ofthe above classes of eligible participants shall not, by itself, unless our Directors otherwisedetermine, be construed as a grant of option under the Share Option Scheme.

The eligibility of any of the eligible participants to an offer shall be determined by ourDirectors from time to time on the basis of our Directors’ opinion as to his contribution tothe development and growth of our Group.



– IV-16 –

(c) Maximum number of Shares

(i) The maximum number of Shares which may be issued upon exercise of alloutstanding options granted and yet to be exercised under the Share OptionScheme and any other share option schemes of our Group shall not exceed 30%of the share capital of our Company in issue from time to time.

(ii) The total number of Shares which may be allotted and issued upon exercise of alloptions (excluding, for this purpose, options which have lapsed in accordancewith the terms of the Share Option Scheme and any other share option schemes ofour Group) to be granted under the Share Option Scheme and any other shareoption schemes of our Group shall not in aggregate exceed 10% of the totalnumber of Shares (assuming the [REDACTED] and the Share Option Scheme arenot exercised) in issue at the time [REDACTED] in the Shares first commence onthe Stock Exchange, being [REDACTED] Shares (“General Scheme Limit”).

(iii) Subject to (i) above and without prejudice to (iv) below, our Company may seekapproval of our Shareholders in general meeting to refresh the General SchemeLimit provided that the total number of Shares which may be allotted and issuedupon exercise of all options to be granted under the Share Option Scheme and anyother share option schemes of our Group shall not exceed 10% of the Shares inissue (assuming the [REDACTED] and the Share Option Scheme are notexercised) as at the date of the approval of the limit and for the purpose ofcalculating the limit, options (including options outstanding, cancelled, lapsed orexercised in accordance with the Share Option Scheme and any other share optionschemes of our Group) previously granted under the Share Option Scheme andany other share option schemes of our Group will not be counted.

(iv) Subject to (i) above and without prejudice to (iii) above, our Company may seekseparate shareholders’ approval in general meeting to grant options under theShare Option Scheme beyond the General Scheme Limit, or if applicable, theextended limit referred to in (iii) above to eligible participants identified by ourCompany before such approval is sought.

(d) Maximum entitlement of each eligible participant

Subject to (e) below, the total number of Shares issued and which may fall to be issuedupon exercise of the options under the Share Option Scheme and the options granted underany other share option schemes of our Group (including both exercised or outstandingoptions) to each Grantee in any 12-month period shall not exceed 1% of the issued sharecapital of our Company for the time being. Where any further grant of options under theShare Option Scheme to a grantee under the Share Option Scheme would result in theShares issued and to be issued upon exercise of all options granted and proposed to begranted to such person (including exercised, cancelled and outstanding options) under theShare Option Scheme and any other share option schemes of our Group in the 12-monthperiod up to and including the date of such further grant representing in aggregate over 1%



– IV-17 –

of the Shares in issue, such further grant must be separately approved by our Shareholdersin general meeting with such grantee and his close associates (or his associates if theparticipant is a connected person) abstaining from voting.

(e) Grant of options to core connected persons

(i) Without prejudice to (ii) below, the making of an offer under the Share OptionScheme to any Director, chief executive or substantial shareholder of ourCompany or any of their respective associates must be approved by theindependent non-executive Directors (excluding any independent non-executiveDirector who is the grantee of an option under the Share Option Scheme).

(ii) Without prejudice to (i) above, where any grant of options under the Share OptionScheme to a substantial shareholder or an independent non-executive Director orany of their respective associates, would result in the Shares issued and to beissued upon exercise of all options under the Share Option Scheme alreadygranted and to be granted (including options exercised, cancelled and outstanding)to such person in the 12-month period up to and including the date of such grant:

(1) representing in aggregate over 0.1% of the Shares in issue; and

(2) having an aggregate value, based on the closing price of the Shares on theoffer date of each grant, in excess of HK$5 million;

such further grant of options must be approved by our Shareholders in generalmeeting. The grantee, his associates and all core connected persons of ourCompany must abstain from voting in favour at such general meeting.

For the purpose of seeking the approval of the shareholders under paragraphs (c), (d)and (e) above, our Company must send a circular to the shareholders containing theinformation required under the Listing Rules and where the Listing Rules shall so require,the vote at the shareholders’ meeting convened to obtain the requisite approval shall betaken on a poll with those persons required under the Listing Rules abstaining from voting.

(f) Time of acceptance and exercise of an option

An offer under the Share Option Scheme may remain open for acceptance by theeligible participants concerned (and by no other person) for a period of up to 21 days fromthe date, which must be a Business Day, on which the offer is made.

An option may be exercised in accordance with the terms of the Share Option Schemeat any time during a period to be determined and notified by our Directors to the granteethereof, and in the absence of such determination, from the date of acceptance of the offerof such option to the earlier of (i) the date on which such option lapses under the relevantprovisions of the Share Option Scheme; and (ii) the date falling 10 years from the offer dateof that option.



– IV-18 –

An offer shall have been accepted by an eligible participant in respect of all Shareswhich are offered to such eligible participant when the duplicate letter comprisingacceptance of the offer duly signed by the eligible participant together with a remittance infavour of our Company of HK$1.00 by way of consideration for the grant thereof isreceived by our Company within such time as may be specified in the offer (which shall notbe later than 21 days from the offer date). Such remittance shall in no circumstances berefundable.

Any offer may be accepted by an eligible participant in respect of less than the numberof Shares which are offered provided that it is accepted in respect of a board lot for[REDACTED] in the Shares on the Main Board or an integral multiple thereof and suchnumber is clearly stated in the duplicate letter comprising acceptance of the offer dulysigned by such eligible participant and received by our Company together with a remittancein favour of our Company of HK$1.00 by way of consideration for the grant thereof withinsuch time as may be specified in the offer (which shall not be later than 21 days from theoffer date). Such remittance shall in no circumstances be refundable.

(g) Performance targets

Unless otherwise determined by our Directors and stated in the offer to a grantee, agrantee is not required to hold an option for any minimum period nor achieve anyperformance targets before the exercise of an option granted to him.

(h) Subscription price for Shares

The subscription price in respect of any option shall, subject to any adjustments madepursuant to paragraph(s) below, be at the discretion of our Directors, provided that it shallnot be less than the highest of:

(i) the closing price of the Shares as stated in the Stock Exchange’s daily quotationssheet for trade in one or more board lots of the Shares on the offer date;

(ii) the average closing price of the Shares as stated in the Stock Exchange’s dailyquotations sheets for the five Business Days immediately preceding the offer date;and

(iii) the nominal value of a Share.

(i) Ranking of Shares

Shares to be allotted and issued upon the exercise of an option will be subject to allthe provisions of the Articles of Association of our Company for the time being in force andwill rank equally in all respects with the then existing fully paid Shares in issue on the dateon which the option is duly exercised or, if that date falls on a day when the register ofmembers of our Company is closed, the first day of the re-opening of the register ofmembers (the “Exercise Date”) and accordingly will entitle the holders thereof to participatein all dividends or other distributions paid or made on or after the Exercise Date other thanany dividend or other distribution previously declared or recommended or resolved to be



– IV-19 –

paid or made if the record date therefor shall be before the Exercise Date. A Share allottedand issued upon the exercise of an option shall not carry voting rights until the name of thegrantee has been duly entered on the register of members of our Company as the holderthereof.

(j) Restrictions on the time of grant of options

For so long as the [REDACTED] on the Stock Exchange, an offer may not be madeafter inside information has come to our Company’s knowledge until it has announced theinformation. In particular, during the period commencing one month immediately precedingthe earlier of (i) the date of the board meeting (as such date is first notified to the StockExchange in accordance with the Listing Rules) for the approval of our Company’s resultfor any year, half-year, quarter-year or any other interim period (whether or not requiredunder the Listing Rules); and (ii) the deadline for our Company to publish announcements ofits results for any year, half-year, quarter-year period or any other interim period (whether ornot required under the Listing Rules), and ending on the date of the results announcement,no offer for the grant of an option may be made.

Our Directors may not make any offer to an eligible participant who is a Directorduring the periods or times in which our Directors are prohibited from dealing in Sharesunder such circumstances as prescribed by the Listing Rules or any corresponding code orsecurities dealing restrictions adopted by our Company.

(k) Period of the Share Option Scheme

The Share Option Scheme will remain in force for a period of 10 years commencing onthe date on which the Share Option Scheme is adopted.

(l) Rights of ceasing employment

If the grantee is an eligible employee and in the event of his ceasing to be an eligibleemployee for any reason other than his death, ill-health or retirement in accordance with hiscontract of employment or the termination of his employment on one or more of the groundsspecified in (n) below before exercising the option in full, the option (to the extent notalready exercised) shall lapse on the date of cessation or termination and not be exercisableunless our Directors otherwise determine in which event the grantee may exercise the option(to the extent not already exercised) in whole or in part within such period as our Directorsmay determine following the date of such cessation or termination. The date of cessation ortermination as aforesaid shall be the last day on which the grantee was actually at work withour Company or the relevant subsidiary or the Invested Entity whether salary is paid in lieuof notice or not.

(m) Rights on death, ill-health or retirement

If the Grantee is an eligible employee and in the event of his ceasing to be an eligibleemployee by reason of his death, ill-health or retirement in accordance with his contract ofemployment before exercising the option in full, his personal representative(s) or, asappropriate, the grantee may exercise the option (to the extent not already exercised) in



– IV-20 –

whole or in part within a period of 12 months following the date of cessation ofemployment which date shall be the last day on which the grantee was at work with ourCompany or the relevant subsidiary or the Invested Entity whether salary is paid in lieu ofnotice or not.

(n) Rights on dismissal

In respect of a grantee who is an eligible employee, the date on which the granteeceases to be an eligible employee by reason of termination of his employment on thegrounds that he has been guilty of persistent or serious misconduct, or has committed anyact of bankruptcy or has become insolvent or has made any arrangement or compositionwith his creditors generally, or has been convicted of any criminal offence (other than anoffence which in the opinion of our Directors does not bring the grantee or our Group intodisrepute), such option (to the extent not already exercised) shall lapse automatically andshall not in any event be exercisable on or after the date of cessation to be an eligibleemployee.

(o) Rights on breach of contracts

In respect of a grantee other than an eligible employee, the date on which our Directorsshall at their absolute discretion determine that (i) (1) such grantee has committed anybreach of any contract entered into between such grantee on the one part and our Group orany Invested Entity on the other part; or (2) such grantee has committed any act ofbankruptcy or has become insolvent or is subject to any winding-up, liquidation oranalogous proceedings or has made any arrangement or composition with his creditorsgenerally; or (3) such grantee could no longer make any contribution to the growth anddevelopment of our Group by reason of the cessation of its relations with our Group or byany other reason whatsoever; and (ii) the option shall lapse as a result of any event specifiedin sub-paragraph (i)(1) to (3).

(p) Rights on a general offer, a compromise or arrangement

If a general or partial offer, whether by way of take-over offer, share re-purchase offer,or scheme of arrangement or otherwise in like manner is made to all the holders of theShares, or all such holders other than the offeror and/or any person controlled by the offerorand/or any person acting in association or concert with the offeror, our Company shall useall reasonable endeavours to procure that such offer is extended to all the Grantees on thesame terms, mutatis mutandis, and assuming that they will become, by the exercise in full ofthe options granted to them, our Shareholders. If such offer becomes or is declaredunconditional or such scheme of arrangement is formally proposed to our Shareholders, thegrantee shall, notwithstanding any other terms on which his/her option was granted, beentitled to exercise the option (to the extent not already exercised) to its full extent or to theextent specified in the grantee’s notice to our Company in exercise of his option at any timethereafter and up to the close of such offer (or any revised offer) or the record date forentitlements under scheme of arrangement, as the case may be. Subject to the above, anoption will lapse automatically (to the extent not exercised) on the date on which such offer(or, as the case may be, revised offer) closes.



– IV-21 –

(q) Rights on winding-up

In the event of a resolution being proposed for the voluntary winding-up of ourCompany during the option period, the grantee may, subject to the provisions of allapplicable laws, by notice in writing to our Company at any time not less than two BusinessDays before the date on which such resolution is to be considered and/or passed, exercisehis option (to the extent not already exercised) either to its full extent or to the extentspecified in such notice in accordance with the provisions of the Share Option Scheme andour Company shall allot and issue to the grantee the Shares in respect of which such granteehas exercised his option not less than one Business Day before the date on which suchresolution is to be considered and/or passed whereupon he shall accordingly be entitled, inrespect of the Shares allotted and issued to him in the aforesaid manner, to participate in thedistribution of the assets of our Company available in liquidation equally with the holders ofthe Shares in issue on the day prior to the date of such resolution. Subject thereto, alloptions then outstanding shall lapse and determine on the commencement of the winding-upof our Company.

(r) Grantee being a company wholly owned by eligible participants

If the grantee is a company wholly owned by one or more eligible participants:

(i) the provisions of paragraphs (m), (l), (n) and (o) above shall apply to the granteeand to the option granted to such grantee, mutatis mutandis, as if such option hadbeen granted to the relevant eligible participant, and such option shall accordinglylapse or fall to be exercisable after the event(s) referred to in paragraphs (m), (l),(n) and (o) above shall occur with respect to the relevant eligible participant; and

(ii) the options granted to the grantee shall lapse and determine on the date thegrantee ceases to be wholly owned by the relevant eligible participant providedthat our Directors may in their absolute discretion decide that such options or anypart thereof shall not so lapse or determine subject to such conditions orlimitations as they may impose.

(s) Adjustment of the subscription price

In the event of any alteration in the capital structure of our Company whilst any optionremains exercisable or the Share Option Scheme remains in effect, and such event arisesfrom a capitalisation issue, rights issue, consolidation or sub-division of the Shares, orreduction of the share capital of our Company, then, in any such case our Company shallinstruct the auditors or an independent financial adviser to certify in writing the adjustment,if any, that ought in their opinion fairly and reasonably to be made either generally or asregards any particular grantee, to:

(i) the number or nominal amount of Shares to which the Share Option Scheme orany option(s) relate(s) (insofar as it is/they are unexercised); and/or

(ii) the subscription price of any option; and/or



– IV-22 –

(iii) (unless the relevant grantee elects to waive such adjustment) the number of Sharescomprised in an option or which remain comprised in an option,

and an adjustment as so certified by the auditors or such independent financial advisershall be made, provided that:

(i) any such adjustment shall give the grantee the same proportion of the issued sharecapital of our Company (as interpreted in accordance with the supplementalguidance attached to the letter from the Stock Exchange dated 5 September 2005to all issuers relating to share option schemes) for which such grantee would havebeen entitled to subscribe had he exercised all the options held by himimmediately prior to such adjustment;

(ii) no such adjustment shall be made the effect of which would be to enable a Shareto be issued at less than its nominal value;

(iii) the issue of Shares or other securities of our Group as consideration in atransaction shall not be regarded as a circumstance requiring any such adjustment;and

(iv) any such adjustment shall be made in compliance with the Listing Rules and suchrules, codes and guidance notes of the Stock Exchange from time to time.

In respect of any adjustment referred to above, other than any adjustment made on acapitalisation issue, the auditors or such independent financial adviser must confirm to ourDirectors in writing that the adjustments satisfy the relevant provisions of the Listing Rulesand the supplemental guidance attached to the letter from the Stock Exchange dated 5September 2005 to all issuers relating to share option schemes.

(t) Cancellation of options

Subject to the provisions in the Share Option Scheme and the Listing Rules, any optiongranted but not exercised may not be cancelled except with the prior written consent of therelevant grantee and the approval of our Directors.

Where our Company cancels any option granted to a grantee but not exercised andissues new option(s) to the same grantee, the issue of such new option(s) may only be madewith available unissued options (excluding, for this purpose, the options so cancelled) withinthe General Scheme Limit or the limits approved by our Shareholders pursuant to paragraph(c)(ii) or (c)(iv) above.

(u) Termination of the Share Option Scheme

Our Company by an ordinary resolution in general meeting may at any time terminatethe operation of the Share Option Scheme and in such event no further options will beoffered but in all other respects the provision of the Share Option Scheme shall remain inforce to the extent necessary to give effect to the exercise of any options (to the extent notalready exercised) granted prior thereto or otherwise as may be required in accordance with



– IV-23 –

the provisions of the Share Option Scheme and options (to the extent not already exercised)granted prior to such termination shall continue to be valid and exercisable in accordancewith the Share Option Scheme.

(v) Rights are personal to grantee

An option shall be personal to the grantee and shall not be transferable or assignable,and no grantee shall in any way sell, transfer, charge, mortgage, encumber or otherwisedispose of or create any interest whatsoever in favour of any third party over or in relationto any option or enter into any agreement so do so. Any breach of the foregoing by agrantee shall entitle our Company to cancel any option granted to such grantee to the extentnot already exercised.

(w) Lapse of option

An option shall lapse automatically (to the extent not already exercised) immediatelyon the earliest of (i) the expiry of the option period in respect of such option; (ii) the expiryof the periods or dates referred to in paragraphs (l), (m), (n), (o), (p), (q) and (r) above; or(iii) the date on which our Directors exercise our Company’s right to cancel the option byreason of paragraph (v) above.

(x) Others

(i) The Share Option Scheme is conditional upon:

(1) the Stock Exchange granting the [REDACTED] of and permission to deal insuch number of Shares representing the General Scheme Limit to be allottedand issued by our Company pursuant to the exercise of options inaccordance with the terms and conditions of the Share Option Scheme; and

(2) the passing of the necessary resolution to approve and adopt the ShareOption Scheme in general meeting or by way of written resolution of ourShareholders of our Company.

(ii) The provisions of the Share Option Scheme relating to the matters governed byRule 17.03 of the Listing Rules shall not be altered to the advantage of granteesor prospective grantees except with the prior sanction of a resolution of ourCompany in general meeting, provided that no such alteration shall operate toaffect adversely the terms of issue of any option granted or agreed to be grantedprior to such alteration except with the consent or sanction of such majority of thegrantees as would be required of the holders of the Shares under the Articles ofAssociation for the time being of our Company for a variation of the rightsattached to the Shares.

(iii) any alterations to the terms and conditions of the Share Option Scheme which areof a material nature or any change to the terms of options granted shall beapproved by our Shareholders except where the alterations take effectautomatically under the existing terms of the Share Option Scheme.



– IV-24 –

(iv) The terms of the Share Option Scheme and/or any options amended must complywith the applicable requirements of the Listing Rules.

(v) Any change to the authority of our Directors or the administrators of the ShareOption Scheme in relation to any alteration to the terms of the Share OptionScheme must be approved by our Shareholders in general meeting.

2. Present status of the Share Option Scheme

Application has been made to the Stock Exchange for the [REDACTED] of andpermission to deal in the Shares to be within the General Scheme Limit pursuant to theexercise of options which may be granted under the Share Option Scheme.

As at the date of this document, no option has been granted or agreed to be grantedunder the Share Option Scheme.

E. OTHER INFORMATION

1. Tax and other indemnities

The Controlling Shareholders (collectively, the “Indemnifiers”) have, under a Deed ofIndemnity as referred to in paragraph (c) of the paragraph headed “B. Further informationabout the business of our Group — 1. Summary of material contracts” in this appendix,given joint and several indemnities to our Company (for ourselves and as trustee for and onbehalf of our Company’s subsidiaries) in connection with, among other things:

(a) any taxation (including estate duty) falling on any member of our Group:

(i) in respect of or by reference to any income, profits or gains earned, accruedor received or deemed or alleged to have been earned, accrued or receivedon or before the date on which the [REDACTED] becomes unconditional; or

(ii) in respect of or by reference to any transaction, act, omission or evententered into or occurring or deemed to enter into or occur on or before thedate on which the [REDACTED] becomes unconditional;

(b) all claims, proceedings, judgments, losses, liabilities, fines, payments, damagesand any associated costs suffered by or incurred by any member of our Group asa result of:

(i) any litigation, arbitrations, claims (including counter-claims) and/or legalproceedings instituted by or against any member of our Group which wasarising from any act, non-performance, omission or otherwise of any memberof our Group on or before the date on which the [REDACTED] becomesunconditional;



– IV-25 –

(ii) any relocation due to any irregularities in relation to any of the tenancyagreements or licence agreements of any member of our Group entered intoon or before the date on which the [REDACTED] becomes unconditional,including but not limited to all relocation costs, loss of profit and business,penalties and fines and all losses and damages which may be suffered by anymember of our Group as a result thereof;

(iii) any business disruptions, claims, legal proceedings arising from anyinfringement of intellectual property of others caused by any non-registrationor non-filing on or before the date on which the [REDACTED] becomesunconditional of any of the trademarks or intellectual property rights ownedor used by any member of our Group;

(iv) any non-compliance with the applicable laws, rules or regulations, includingbut not limited to the Predecessor Companies Ordinance and the CompaniesOrdinance, by any member of our Group on or before the date on which the[REDACTED] becomes unconditional;

(v) any irregularities in relation to any corporate documents of any member ofour Group;

(vi) the Reorganisation for any losses or liabilities payable by our Company; and

(vii) any unlawful use of real properties leased by any member of our Group ofany relevant land, construction or user regulations applicable to theproperties leased by the relevant member of our Group prior to the date onwhich the [REDACTED] becomes unconditional.

The Indemnifiers will, however, not be liable under the Deed of Indemnity to theextent that, among others:

� in relation to items (a) and (b) above, specific provision, reserve or allowance hasbeen made for such liability in the audited combined accounts of our Company orany member of our Group for the Track Record Period;

� in relation to item (a) above, the taxation liability arises or is incurred as a resultof a retrospective change in law or a retrospective increase in tax rates cominginto force after the date on which the [REDACTED] becomes unconditional; or

� in relation to item (a) above, the taxation liability arises in the ordinary course ofbusiness of any member of our Group or in the ordinary course of acquiring anddisposing of capital assets after the date on which the [REDACTED] becomesunconditional.

Our Directors have been advised that no material liability for estate duty under thelaws of Macau, the Cayman Islands and BVI is likely to fall on our Group, and the estateduty under the laws of Hong Kong has been abolished.



– IV-26 –

2. Legal proceedings / Litigation

To the best knowledge of our Directors, save as disclosed in this document, as at theLatest Practicable Date, neither our Company nor any of our Company’s subsidiaries wasengaged in any litigation, arbitration or claims of material importance, and no litigation,arbitration or claim of material importance is known to our Directors to be pending orthreatened by or against our Company or any member of our Group, that would have amaterial adverse effect on the results of operations or financial condition.

3. Application for [REDACTED]

Our Company have applied to the [REDACTED] for the [REDACTED] of, and thepermission to deal in, the Shares in issue and to be issued pursuant to the [REDACTED]and the [REDACTED] as mentioned herein (including the additional Shares which may beissued upon full exercise of the [REDACTED] and the Shares to be issued upon exercise ofany options which may be granted under the Share Option Scheme). All necessaryarrangements have been made to enable the securities to be admitted into CCASS.

4. Compliance adviser

In accordance with the requirements of the Listing Rules, our Company has agreed toengage [Advent Corporate Finance Limited] as the compliance adviser to provide advisoryservices to our Company to ensure compliance with the Listing Rules for a periodcommencing on the [REDACTED] and ending on the date on which our Company complieswith Rule 13.46 of the Listing Rules in respect of the financial results for the first fullfinancial year commencing after the [REDACTED].

5. Preliminary expenses

The estimated preliminary expenses are approximately HK$62,185 and have beenpayable by our Company.

6. Promoter

(a) Our Company do not have any promoter.

(b) Within the two years immediately preceding the date of this document, no amountor benefit has been paid or given to any promoter of our Company in connectionwith the [REDACTED] or the related transactions described in this document.



– IV-27 –

7. Qualifications of experts

The following are the qualifications of the experts who have given opinion or advicewhich are contained in this document, and have given and have not withdrawn their writtenconsent to the issue of this document with the inclusion of their letter, report, and/orvaluation certificate opinion and/or references to their names (as the case may be), all ofwhich are dated the date of this document, in the form and context in which theyrespectively appear in this document:

Name Qualifications

Advent Corporate FinanceLimited

A licensed corporation under the SFO to engagein type 6 (advising on corporate finance)regulated activity as defined under the SFO

Deloitte Touche Tohmatsu Certified Public AccountantsRegistered Public Interest Entity Auditors

Fan, Mitchell Risk AdvisoryServices Limited

Internal control consultant

Frost & Sullivan Limited Industry consultant

Appleby Legal advisers to our Company as to CaymanIslands law

Ms. Queenie W. S. Ng Barrister-at-law of Hong Kong, our Legal Counsel

STA Lawyers Legal advisers to our Company as to Macau law

Valplus Consulting Limited Property valuer

8. Consents of experts

Each of the abovementioned experts has given and has not withdrawn their respectiveconsent to the issue of this document with the inclusion of its report and/or letter and/orlegal opinion (as the case may be) and reference to its name included in the form andcontext in which it respectively appears.



– IV-28 –

9. Fees of the Sole Sponsor

The Sole Sponsor will receive a sponsorship, financial advisory and documentation feeof a total amount of HK$4.5 million in relation to the [REDACTED] and will bereimbursed for their expenses.

10. Independence of the Sole Sponsor

Neither the Sole Sponsor nor any of its close associates has accrued any materialbenefit as a result of the successful outcome of the [REDACTED], other than the following:

(a) by way of sponsorship, financial advisory and documentation fee to be paid to theSole Sponsor for acting as the sponsor of the [REDACTED]; and

(b) by way of the compliance advisory fee to be paid to [Advent Corporate FinanceLimited] as our Company’s compliance adviser pursuant to the requirements underRule 3A.19 of the Listing Rules.

No director or employee of the Sole Sponsor who is involved in providing advice toour Company has or may have, as a result of the [REDACTED], any interest in any class ofsecurities of our Company or any of our Company’s subsidiaries. None of the directors andemployees of the Sole Sponsor has any directorship in our Company or any member of ourGroup. The Sole Sponsor is independent from our Group under Rule 3A.07 of the ListingRules.

11. Binding effect

This document shall have the effect, if an application is made in pursuance hereof, ofrendering all persons concerned bound by all of the provisions (other than the penalprovisions) of sections 44A and 44B of the Companies (Winding Up and MiscellaneousProvisions) Ordinance so far as applicable.

12. Miscellaneous

Save as disclosed herein:

(a) within the two years immediately preceding the date of this document:

(i) no share or loan capital of our Company or any of its subsidiaries has beenallotted and issued, agree to be allotted and issued or is proposed to beallotted and issued fully or partly paid either for cash or for a considerationother than cash;

(ii) no commission, discounts, brokerages or other special terms have beengranted in connection with the issue or sale of any share or loan capital ofour Company or any of our Company’s subsidiaries and no commission



– IV-29 –

(excluding [REDACTED]) has been paid or payable for subscribing oragreeing to subscribe or procuring or agreeing to procure subscription forany Share or any of our Company’s subsidiaries;

(b) no founder, management or deferred shares of our Company have been allottedand issued or agreed to be allotted and issued;

(c) no share, warrant or loan capital of our Company or any of its subsidiaries isunder option or is agreed conditionally or unconditionally to be put under option;

(d) our Directors confirm that, up to the Latest Practicable Date, there has been nomaterial adverse change in the financial or trading position or prospects of ourGroup since 31 March 2021, being the date on which the latest audited financialinformation of our Group was reported in the accountants’ report set out inAppendix I to this document; and

(e) our Directors confirm that there has not been any interruption in the business ofour Group which may have or have had a significant effect on the financialposition of our Group in the 12 months immediately preceding the date of thisdocument.

13. Bilingual Document

Pursuant to section 4 of the Company (Exemption of Companies and Prospectuses fromCompliance with Provisions) Notice (Chapter 32L of the Laws of Hong Kong), the Englishlanguage and Chinese language versions of this document are being published separately butare available to the public at the same time at each place where this document is distributedby or on behalf of our Company.



– IV-30 –

DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES IN HONGKONG

The documents attached to the copy of this document delivered to the Registrar ofCompanies in Hong Kong for registration were:

1. a copy of the [REDACTED];

2. the written consents as referred to in the paragraph headed “Statutory and GeneralInformation — E. Other information — 8. Consents of experts” in Appendix IV tothis document; and

3. a copy of each of the material contracts as referred to in the paragraph headed“Statutory and General Information — B. Further information about the businessof our Group — 1. Summary of material contracts” in Appendix IV to thisdocument.

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection at the office of ZMLawyers at 20th Floor, Central 88, 88-98 Des Voeux Road Central, Hong Kong, duringnormal business hours up to and including the date which is 14 days from the date of thisdocument:

1. the Memorandum and the Articles of Association;

2. the accountants’ report of our Group from Deloitte Touche Tohmatsu, the text ofwhich is set out in Appendix I to this document;

3. the audited financial statements of Grateful Luck and its subsidiaries during theTrack Record Period;

4. the report from Deloitte Touche Tohmatsu on the unaudited pro forma financialinformation of our Group, the text of which is set out in Appendix II to thisdocument;

5. the letter of advice prepared by Appleby summarising certain aspects of CaymanIslands company law as referred to in Appendix III to this document;

6. the legal opinion prepared by the Legal Counsel as to certain aspects of HongKong law relating to our Group;

7. the legal opinion prepared by STA-Lawyers as to certain aspects of Macau lawrelating to our Group;

8. the F&S Report;

APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OFCOMPANIES IN HONG KONG AND AVAILABLE FOR INSPECTION


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9. the rental valuation report prepared by Valplus Consulting Limited;

10. the Companies Act;

11. the rules of the Share Option Scheme;

12. the material contracts as referred to in the paragraph headed “Statutory andGeneral Information – B. Further information about the business of our Group —1. Summary of material contracts” in Appendix IV to this document;

13. the service contracts and letters of appointment with each of our Directorsreferred to in the paragraph headed “Statutory and General Information — C.Further information about our directors and substantial Shareholders — 2.Particulars of Directors’ service agreements and appointment letters” in AppendixIV to this document; and

14. the written consents as referred to in the paragraph headed “Statutory and GeneralInformation — E. Other information — 8. Consents of experts” in Appendix IV tothis document.

APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR OFCOMPANIES IN HONG KONG AND AVAILABLE FOR INSPECTION


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