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IMPORTANT: If you are in any doubt about any of the contents of this prospectus, you should obtain independent professional advice.
Lung Fung Group Holdings Limited
龍 豐 集 團 控 股 有 限 公 司
(Incorporated in the Cayman Islands with limited liability)
GLOBAL OFFERING
Number of Offer Shares under
the Global Offering
: 125,000,000 Shares (subject to the Over-
allotment Option)
Number of Hong Kong Offer Shares : 12,500, 000 Shares (subject to reallocation)
Number of International Offer Shares : 112,5 00,000 Shares (subject to reallocation and
the Over-allotment Option)
Maximum Offer Price : HK$6.38 per Offer Share plus brokerage of
1.0%, SFC transaction levy of 0.0027%,
Stock Exchange trading fee of 0.00565%,
and AFRC transaction levy of 0.00015%
(payable in full on application in Hong Kong
dollars, subject to refund)
Nominal value : HK$0.0001 per Share
Stock code : 2290
Sole Sponsor, Overall Coordinator, Sole Global Coordinator,
Joint Bookrunner and Joint Lead Manager
Joint Bookrunners and Joint Lead Managers
(in alphabetical order)
Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Li mited and Hong Kong Securities Clearing Company Limited take no responsib ility for the
contents of this prospectus, make no representation as to its accuracy or com pleteness and expressly disclaim any liability whatsoever for any loss h owsoever arising from or
in reliance upon the whole or any part of the contents of this prospectus.
A copy of this prospectus, having attached thereto the documents specified in ‘‘Appendix VI — Documents Delivered to the Registrar of Companies and Available on
Display ’’in this prospectus, has been registered by the Registrar of Companies in Hong Kong as required by Section 342C of the Companies (Winding up and Miscella neous
Provisions) Ordinance, Chapter 32 of the Laws of Hong Kong. The Securities and Futures Commission of Hong Kong and the Registrar of Companies in Hong Ko ng take no
responsibility as to the contents of this prosp ectus or any other documents referred to above.
The Offer Price is expected to be fixed by agreement between the Overall Coordinator (for itself and on behalf of the Hong Kong Underwriters) and us on th e Price Determination
Date. The Price Determination Date is expected to be on or around Wednesday, 3 June 2026 (Hong Kong time) and, in any event, not later than 12:00 noon on We dnesday, 3 June
2026 (Hong Kong time). The Offer Price will be not more than HK$6.38 per Share and is currently expected to be not less than HK$5.18 per Share. If, for any r eason, the Offer
Price is not agreed by 12:00 noon on Wednesday, 3 June 2026 (Hong Kong time) between the Overall Coordinator (for itself and on behalf of the Hong Kong Und erwriters) and
our Company, the Global Offering (including the Hong Kong Public Offering) will not proceed and will lapse.
Applicants for Hong Kong Offer Share may be required to pay, on application (subject to application channels), the maximum Offer Price of HK$6.38 for e ach Share together
with a brokerage fee of 1.0%, a SFC transaction levy of 0.0027%, AFRC transaction levy of 0.00015% and a Hong Kong Stock Exchange trading fee of 0.00565% , subject to
refund if the Offer Price as finally determined is less than HK$6.38 per Share.
The Overall Coordinator (for itself and on behalf of the Underwriters) may, w here considered appropriate and with our consent, reduce the number of Ho ng Kong
Offer Shares being offered under the Global Offering and/or the Offer Price th at is stated in this prospectus at any time prior to the morning of the last day for
lodging applications under the Hong Kong Public Offering. In such a case, not i c e so ft h er e d u c t i o ni nt h en u m b e ro fH o n gK o n gO f f e rS h a r e sa n d / o rt h eO f fer Price
and the cancellation of the Global Offering and rel aunch of the offer at the revised number of offer sha res and/or the revised offer price will be publis h e do no u r
Company ’s website at www.lungfung.hk and the Stock Exchange ’s website at www.hkexnews.hk as soon as practicable following the decision to make such reduction,
and in any event not later than the morning of the day which is the last day for lodging applications under the Hong Kong Public Offering. In the absence of any
such notices, the Offer Price will be fixed as state d in this prospectus and the number of Offer Shares a s stated in this prospectus will be final and conc lusive.
Further details are set forth in ‘‘Structure of the Global Offering ’’and ‘‘How to Apply for Hong Kong Offer Shares ’’.
Prior to making an investment decision, prospective investors should consi der carefully all of the information set out in this prospectus, includin g the risk factors set
out in ‘‘Risk Factors ’’. The obligations of the Hong Kong Underwriters under the Hong Kong Underwriting Agreement are subject to termination by the Overall
Coordinator (for itself and on behalf of the Hong Kong Underwriters) if certain grounds arise prior to 8:00 a.m. on the Listing Date. See ‘‘Underwriting — Grounds
for Termination ’’.
The Offer Shares have not been and will not be registered under the U.S. Secu rities Act or any state securities law i n the United States and may not be offe red, sold, pledged
or transferred within the United States. The Offer Shares may be offered and so ld outside the United States in offsho re transactions in accordance wit h Regulation S under the
U.S. Securities Act.
ATTENTION
We have adopted a fully electronic application process for the Hong Kong Pub lic Offering. We will not provide printed copies of this prospectus to the p ublic in
relation to the Hong Kong Public Offering.
This prospectus is available at the website of th e Hong Kong Stock Exchange at www.hkexnews.hk and our website at www.lungfung.hk. If you require a
printed copy of this prospectus, you may download and print from the website addresses above.
IMPORTANT
28 May 2026


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IMPORTANT NOTICE TO INVESTORS:
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electro nic application process for the Hong Kong Public Offering.
We will not provide printed copies of this Prospectus to the public in relation to the Hong Kong
Public Offering.
This Prospectus is available at the website of the Stock Exchange at www.hkexnews.hk
under the ‘‘HKEXnews > New Listings > New Listing Information ’’section, and our website at
www.lungfung.hk. If you require a printed copy of this Prospectus, you may download and print
from the website addresses above.
To apply for the Hong Kong Offer Shares, you may:
(1) apply online via the HK eIPO White Form service at www.hkeipo.hk ;o r
(2) apply electronically through the HKSCC EIPO channel and cause HKSCC Nominees to
apply on your behalf by instructing your broker or custodian who is a HKSCC Participant
to give electronic application instructions via HKSCC ’s FINI system to apply for the Hong
Kong Offer Shares on your behalf.
We will not provide any physical channels to a ccept any application for the Hong Kong Offer
Shares by the public. The contents of the electronic version of this Prospectus are identical to the
printed document as registered with the Registrar of Companies in Hong Kong pursuant to Section
342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance.
If you are an intermediary , broker or agent , please remind your cu stomers, clients or
principals, as applicable, that this Prospectus is available online at the website addresses above.
See the section headed ‘‘How to Apply for Hong Kong Offer Shares ’’for further details on the
procedures through which you can apply for the Hong Kong Offer Shares electronically.
IMPORTANT
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Your application through the HK eIPO White Form service or the HKSCC EIPO channel must
be for a minimum of 500 Hong Kong Offer Shares and in one of the numbers set out in the table.
If you are applying through the HK eIPO White Form service, you may refer to the table below
for the amount payable for the number of Shares you have selected. You must pay the respective
maximum amount payable on application in full upon application for Hong Kong Offer Shares.
If you are applying through the HKSCC EIPO channel, your broker or custodian may require you
to pre-fund your application in such amount as determined by the broker or custodian, based on the
applicable laws and regulations in Hong Kong. You are responsible for complying with any such pre-
funding requirement imposed by your broker or custodian with respect to the Hong Kong Offer Shares
you applied for.
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
HK$ HK$ HK$ HK$
500 3,222.17 7,000 45,110.40 50,000 322,217.11 700,000 4,511,039.61
1,000 6,444.34 8,000 51,5 54.74 60,000 386,660.54 800,000 5,155,473.85
1,500 9,666.51 9,000 57,9 99.08 70,000 451,103.96 900,000 5,799,908.06
2,000 12,888.68 10,000 64,4 43.42 80,000 515,547.39 1,000,000 6,444,342.30
2,500 16,110.85 15,000 96,6 65.13 90,000 579,990.80 2,000,000 12,888,684.60
3,000 19,333.03 20,000 128,8 86.85 100,000 644,434.24 3,000,000 19,333,026.90
3,500 22,555.19 25,000 161,1 08.56 200,000 1,288,868.45 4,000,000 25,777,369.20
4,000 25,777.37 30,000 193,3 30.27 300,000 1,933,302.69 5,000,000 32,221,711.50
4,500 28,999.54 35,000 225,551.98 400,000 2,577,736.92 6,250,000 (1) 40,277,139.38
5,000 32,221.71 40,000 257,7 73.69 500,000 3,222,171.16
6,000 38,666.05 45,000 289,9 95.40 600,000 3,866,605.38
(1) Maximum number of Hong Kong Offer Shares you may apply f or and this is 50% of the Hong Kong Offer Shares initially
offered.
(2) The amount payable is inclusive of brokerage, SFC transac tion levy, the Stock Exchange trading fee and AFRC transaction
levy. If your application is successful, brokerage will be paid to the Exchange Participants (as defined in the Listing Rules)
or to the HK eIPO White Form Service Provider (for applications made through the application channel of the HK eIPO
White Form service) while the SFC transaction levy, the Stock Ex change trading fee and the AFRC transaction levy will
be paid to the SFC, the Stock Exchange and the AFRC, respectively.
No application for any other number of the Hong Kong Offer Shares will be considered and any
such application is liable to be rejected.
IMPORTANT
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If there is any change in the following expected timetable (1) of the Hong Kong Public Offering,
we will issue an announcement in Hong Kong to be published on the Company ’s website at,
www.lungfung.hk , and the website of the Stock Exchange at www.hkexnews.hk .
H o n g K o n g P u b l i c O f f e r i n g c o m m e n c e s ............................................. 9 : 0 0 a . m . o n
Thursday, 28 May 2026
Latest time to complete electronic applications under
the HK eIPO White Form service at www.hkeipo.hk (2) ...........................1 1 : 3 0 a . m . o n
Tuesday, 2 June 2026
Application lists open (3) .........................................................1 1 : 4 5 a . m . o n
Tuesday, 2 June 2026
Latest time for completing payment of
HK eIPO White Form applications by effecting
internet banking transfer(s) or PPS payment
transfer(s) and giving electronic application
instructions to HKSCC
(4) ..................................................... 1 2 : 0 0 n o o n o n
Tuesday, 2 June 2026
If you are instructing your broker or custodian who is a HKSCC Participant to give electronic
application instructions via HKSCC ’s FINI system to apply for the Hong Kong Offer Shares on your
behalf, you are advised to contact your broker or custodian for the latest time for giving such
instructions which may be different from the latest time as stated above.
Application lists close (3) ........................................................ 1 2 : 0 0 n o o n o n
Tuesday, 2 June 2026
Expected Price Determination Date (5) .................................. a t o r b e f o r e 1 2 : 0 0 n o o n o n
Wednesday, 3 June 2026
Announcement of the final Offer Price, the level
of indications of interest in the International
Offering, the level of applications in the
Hong Kong Public Offering and the basis
of allocation of the Hong Kong Public
Offering to be published and on the website
of the Stock Exchange at www.hkexnews.hk
and the Company ’s website at
www.lungfung.hk
(6) a t o r b e f o r e ................................................1 1 : 0 0 p . m . o n
Thursday, 4 June 2026
EXPECTED TIMETABLE
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The results of allocations in the Hong Kong Public
Offering (with successful applicants ’ identification
document numbers, where appropriate) to be
available through a variety of channels, including:
. in the announcement to be posted on our
website and the website of the Stock Exchange at,
www.lungfung.hk ,a n d www.hkexnews.hk r e s p e c t i v e l y .............. a t o r b e f o r e 1 1 : 0 0 p . m . o n
Thursday, 4 June 2026
. from the designated results of allocations
website at www.hkeipo.hk/IPOResult
(or www.tricor.com.hk/ipo/result )
with a ‘‘search by ID ’’f u n c t i o n f r o m.........................................1 1 : 0 0 p . m . o n
Thursday, 4 June 2026
to 12:00 midnight on
Wednesday, 10 June 2026
. from the allocation results telephone enquiry
line by calling +852 3691 8488 between
9 : 0 0 a . m . a n d 6 : 0 0 p . m . f r o m ....................................... F r i d a y , 5 J u n e 2 0 2 6 t o
Wednesday, 10 June 2026
(excluding Saturday, Sunday and
public holiday in Hong Kong)
For those applying through HKSCC EIPO channel,
you may also check with your broker
o r c u s t o d i a n f r o m..............................................................6 : 0 0 p . m . o n
Wednesday, 3 June 2026
Despatch of Share certificates or deposit of the Share certificates
into CCASS in respect of wholly or partially successful applications
pursuant to the Hong Kong Public Offering on or before
(8) ................. T h u r s d a y , 4 J u n e 2 0 2 6
Despatch of HK eIPO White Form e-Auto Refund
payment instructions/refund cheques in respect of
wholly or partially successful applications if the
final Offer Price is less than the maximum
Offer Price per Public Offer Share initially paid
on application (if applicable ) or unsuccessful applications
pursuant to the Public Offer on or before
(7)(8) ................................F r i d a y , 5 J u n e 2 0 2 6
Dealings in the Shares on the Hong Kong
S t o c k E x c h a n g e e x p e c t e d t o c o m m e n c e a t......................................... 9 : 0 0 a . m . o n
Friday, 5 June 2026
EXPECTED TIMETABLE
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Notes:
(1) Unless otherwise stated, all times and da tes refer to Hong Kong local times and dates.
(2) You will not be permitted to submit your application under the HK eIPO White Form service through the designated
website at www.hkeipo.hk after 11:30 a.m. on the last day for submitting applications. If you have already submitted your
application and obtained an application reference number from the designated website prior to 11:30 a.m., you will be
permitted to continue the application process (by completing payment of application monies) until 12:00 noon on the last
day for submitting applications, when the application lists close.
(3) If there is/are a ‘‘black ’’rainstorm warning or a tropical cyclone warning signal number 8 or above and/or Extreme
Conditions in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Tuesday, 2 June 2026, the application
lists will not open or close on that day. For fur ther details, please see the section headed ‘‘How to Apply for Hong Kong
Offer Shares — E. Severe Weather Arrangements ’’in this prospectus.
(4) Applicants who apply for Hong Kong Offer Shares by giving electronic application instructions to HKSCC should refer
to the section headed ‘‘How to Apply for Hong Kong Offer Shares — A. Application for Hong Kong Offer Shares ’’in this
prospectus.
(5) The Price Determination Date is expected to be on or about Wednesday, 3 June 2026 (which, at the earliest, could be
Wednesday, 3 June 2026), and, in any event, not later than 12:00 noon on Wednesday, 3 June 2026. If, for any reason, the
Offer Price is not agreed between the Overall Coordinator (for itself and on behalf of the Underwriters) and us by 12:00
noon on Wednesday, 3 June 2026, the Global Offering will not proceed and will lapse.
(6) None of the websites or any of the information contained on the websites forms part of this prospectus.
(7) HK eIPO White Form e-Auto Refund payment instructions/refund cheques will be issued in respect of wholly or partially
unsuccessful applications pursuant to the Hong Kong Public Offer and also in respect of wholly or partially successful
applications in the event that the fin al Offer Price is less than the price pa yable per Offer Share on application.
(8) Applicants who have applied for Hong Kong Offer Shares through the HKSCC EIPO channel should refer to the section
headed ‘‘How to Apply for Hong Kong Offer Shares — D. Dispatch/Collection of Share Certificates and Refund of
Application Monies ’’in this prospectus for details.
Applicants who have applied through the HK eIPO White Form service and paid their applications monies through single
bank accounts may have refund monies (if any) dispatched to the bank account in the form of, HK eIPO White Form
e-Auto Refund payment instructions. Applicants who have applied through the HK eIPO White Form service and paid
their application monies through multiple bank accounts may have refund monies (if any) dispatched to the address as
specified in their application instructions in the form of refund checks in favor of the applicant (or, in the case of joint
applications, the first-named applicant) by ordinary post at their own risk.
The above expected timetable i s a summary only. For further details of the structure of the
Global Offering, including its conditions, and the procedures for applications for Hong Kong Offer
Shares, please see the sections headed ‘‘Structure of the Global Offering ’’and ‘‘How to Apply for
the Hong Kong Offer Shares ’’in this prospectus, respectively.
If the Global Offering does not become unconditional or is terminated in accordance with its terms,
the Global Offering will not proceed. In such cas e, the Company will make an announcement as soon as
practicable thereafter.
EXPECTED TIMETABLE
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IMPORTANT NOTICE TO INVESTORS
This prospectus is issued by us solely in connection with the Hong Kong Public Offering and the
Hong Kong Offer Shares and does not constitute an offer to sell or a solicitation of an offer to buy
any security other than the Hong Kong Offer Shares offered by this prospectus pursuant to the Hong
Kong Public Offering. This prospectus may not be used for the purpose of making, and does not
constitute, an offer or invitation in any other jurisdiction or in any other circumstance. No action has
been taken to permit a public offering of the Hong Kong Offer Shares in any jurisdiction other than
Hong Kong and no action has been taken to permit the distribution of this prospectus in any
jurisdiction other than Hong Kong. The distribution of this prospectus for purposes of a public
offering and the offering and sale of the Hong Kong Offer Shares in other jurisdictions are subject to
restrictions and may not be made except as permitte d under the applicable securities laws of such
jurisdictions pursuant to registration with or authorization by the relevant securities regulatory
authorities or an exemption therefrom.
You should rely only on the information contained in this prospectus to make your investment
decision. The Hong Kong Public Offering is made solely on the basis of the information contained
and the representations made in this prospectus. We have not authorized anyone to provide you with
information that is different from what is contained in this prospectus. Any information or
representations not contained or made in this prospectus must not be relied on by you as having been
authorized by us, the Sole Sponsor, the Overall Coordinator, the Sole Global Coordinator, the Joint
Bookrunners, the Joint Lead Managers, any of the Underwriters, any of our or their respective
directors, officers, employees, agents or representatives, or any other parties involved in the Global
Offering.
Page
Expected Timetable ................................................................ i i i
Contents .......................................................................... v i
Summary ......................................................................... 1
Definitions ........................................................................ 1 5
Glossary of Technical Terms ........................................................ 2 3
Forward-Looking Statements ....................................................... 2 4
Risk Factors ....................................................................... 2 5
Waiver and Exemption ............................................................. 4 6
Information about this Prospectus and the Global Offering ............................ 4 9
Directors and Parties Invol ved in the Global Offering ................................. 5 2
Corporate Information ............................................................. 5 5
CONTENTS
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Page
Industry Overview ................................................................. 5 7
Regulatory Overview ............................................................... 7 3
History, Reorganization and Corporate Structure ..................................... 8 9
Business ........................................................................... 1 0 1
Relationship with Our Controlling Shareholders ...................................... 1 9 9
Connected Transactions ............................................................ 2 0 3
Directors and Senior Management ................................................... 2 0 7
Substantial Shareholders ........................................................... 2 1 8
Share Capital ...................................................................... 2 1 9
Financial Information .............................................................. 2 2 2
Future Plans and Use of Proceeds ................................................... 2 6 7
Underwriting ...................................................................... 2 7 1
Structure of the Global Offering .................................................... 2 8 4
H o wt oA p p l yf o rH o n gK o n gO f f e rS h a r e s........................................... 2 9 3
Appendix I — Accountants ’ Report .............................................. I - 1
Appendix IIA — Unaudited Pro Forma Fin ancial Information ........................ I I A - 1
Appendix IIB — Profit Estimate ................................................... I I B - 1
Appendix III — Valuation Report ................................................. I I I - 1
Appendix IV — Summary of the Constitution of Our Company and
Cayman Islands Company Law .................................. I V - 1
Appendix V — Statutory and General Information ................................ V - 1
Appendix VI — Documents Delivered to the Registrar of Companies and
Available on Display ............................................ V I - 1
CONTENTS
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This summary aims to give you an overview of the information contained in this prospectus,
which does not contain all the information that may be important to you. You should read this
prospectus in its entirety before you decide whether to invest in the Offer Shares. There are risks
associated with any investment. Some of the particular risks in investing in the Offer Shares are set
out in the section headed ‘‘Risk Factors ’’in this prospectus. You should read that section carefully
before you decide to invest in the Offer Shares.
OVERVIEW
We are a leading Hong Kong-bas ed chain retail store of beauty, health and pharmaceutical
products. According to Frost & Sullivan, in FY2025, our Group ranked third among beauty, health and
pharmaceutical product retailers with a market share of 5.8% in terms of retail sales value in Hong
Kong; and we were the largest pharmaceutical product retailer by retail sales value in Hong Kong, with
a market share of 5.2% and also the third largest ph armaceutical and health pro duct retailer by revenue
in Hong Kong, with a market share of approximately 4.2%. We focus on offering a wide variety of
value-for-money products to our customers through our 31 retail stores in operation in Hong Kong under
our ‘‘Lung Fung ’’(龍豐) brand as at the Latest Practicable Date and our various online sale platforms.
Our flagship store at Gala Place in Mong Kok offers a spacious shopping environment with GFA of
approximately 17,500 sq.ft..
We offer a wide variety of beauty products, heal th products, pharmaceutical products and other
consumer goods such as household and daily essentials and food products, covering 11 categories,
namely proprietary Chinese medicines, western med icines, health supplements, skincare, cosmetics,
fragrances, personal care, maternal and infant products, food, pet food and household daily necessities.
We procure products from a large number of suppliers from around the world. As at 30 November
2025, we had over 600 suppliers including local distributors in Hong Kong, and overseas suppliers
mainly located in Japan, South Korea, Southeast Asi a, Europe and the U.S.. We strive to source quality
products that cater to the popular demands of our target customers in a timely manner and we have set
up a procurement office in Fukuoka, Japan to source local products that we believe appeal to our target
customers. We strive to foster sustainable and collab orative partnerships with our suppliers to ensure
product quality and stability of supply. Our Directors believe that our diversified network of suppliers
gives us an edge in maintaining a quality, trendy and broad product mix at competitive prices which in
turn strengthens our leverage in the market. We ensure the quality and authenticity of such products
through our well-established suppliers network and stringent quality control procedure. We have
maintained amicable direct business relationship with well-known brands. For instance, based on
information provided by the relevant suppliers, we were the top purchaser of Friso ’s infant formula
products in 2022 to 2024 in terms of the relevant supplier ’s annual total sales value to traditional sales
channels in Hong Kong such as pharmacies, and we were the top purchaser of Fortune Pharmacal ’s
Coltalin 36S and Coltalin-GP Extra 36S products in 2022 to 2024 in terms of Fortune Pharmacal ’s
annual total sales value to pharmacies in Hong Kong.
For FY2023, FY2024, FY2025 and 8MFY2026, our total revenue was HK$1,094.0 million,
HK$2,020.7 million, HK$2,460.5 million and HK$2,035.1 million, respectively, representing a CAGR of
50.0% over the three full financial years. Our year-on-year same-store sales growth amounted to 64.2%
from FY2023 to FY2024, while a same-store sales drop of 6.0% was recorded from FY2024 to FY2025.
Our same-store sales remained stable for 8MFY2026 compared to 8MFY2025. Our revenue growth was
primarily attributed to the opening of new stores and we have opened one, three, nine and six new stores
in FY2023, FY2024, FY2025 and from 1 April 2025 to the Latest Practicable Date, respectively. We
recorded a growth of 95.8% in terms of the revenue generated from the beauty, health and
pharmaceutical product sector between FY2023 and FY2024, significantly outpacing the industry
average growth rate for the sector of 19.0%. We rel ied on bank borrowings to finance the expansion of
our store network. For details of our indebtedness, please refer to the section ‘‘Financial Information —
Indebtedness ’’for further information. Please a lso refer to the paragraph headed ‘‘Selected data from our
consolidated statements of financial position ’’of this section for further information in relation to the
Group ’s net current liabi lities position.
SUMMARY
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BUSINESS MODEL
We operate a chain of retail stores focusing on beauty, health and pharm aceutical products and
other consumer goods such as household and daily essentials and food products under our ‘‘Lung Fung ’’
(龍豐) brand. We operate retail stores in Hong Kong an d various online sales ch annels including our
official online store (https://eshop.lungfung.hk/) and stores on major Chinese e-commerce platforms such
as TMall, WeChat Mini-Program and JD.com. We procure products from a large number of suppliers
around the world, including brand manufact urers, authorised ag ents and the brands ’ distributors in Hong
Kong, wholesalers and OEM and ODM manufacturers.
Our retail stores
Our retail business is supported by our well-estab lished network of strategically located retail
stores in Hong Kong. As at the Latest Practicable Date, we operated 31 retail stores in Hong Kong with
an aggregate UFA exceeding 123,000 sq.ft., covering major tourism and shopping areas, residential areas
and office commercial areas. Our network of retail stores consists of 6 retail stores located on Hong
Kong Island, 11 retail stores located in Kowloon and 1 4 retail stores located in the New Territories. The
majority of our retail stores are street-level shops which offer the benefit of high pedestrian flow and
provide convenience to customers. We typically opt for physical stores with larger floor area — the
UFA of our retail stores in operation ranges from approximately 570 sq.ft. to 12,900 sq.ft., with an
average of over 4,180 sq.ft. per store as at the Lates t Practicable Date. Please refer to the section headed
‘‘Business — Our Retail Network ’’in this prospectus for further information about our retail stores.
Our online sales platforms
Apart from our network of physical retail stores in Hong Kong, we have established online sales
channels to facilitate our customers ’ purchases without the constraints of opening hours and location.
We operate our official online store, which primar ily serves local Hong Kong customers, and online
stores on three major e-commerce platforms in the PRC under an e-commerce trader business model on
TMall, WeChat Mini-Program and JD.com. Please refer to the section headed ‘‘Business — Online Sales
Platforms ’’in this prospectus for further information about our online sales platforms.
Our products
We strive to offer a wide variety of products to our customers beyond the scope of a typical
pharmacy and we constantly evaluat e market trends to satisfy customers ’ needs. Originated as a
pharmacy focusing on beauty products, health pro ducts and pharmaceutical products, we have gradually
expanded to provide other consum er products such as snacks and pet food to attract a wider range of
customers, such as the younger generation. We sold over 49,000 SKUs over the Track Record Period.
We sold approximately 28,800 SKUs in FY2025, of which over 6,800 SKUs were beauty products, over
4,200 SKUs were health products , over 3,000 SKUs were pharmaceu tical products, and over 14,000
SKUs were other consumer products, demonstrating the breadth and depth of our product offerings. We
typically stock over 9,000 SKUs per store, with some larger stores carrying up to around 13,000 SKUs.
Leveraging on our established retail store network and our experience in sales of consumer products, we
have been developing and offering our private label products. As at 30 November 2025, we had
established over 40 private label brands. As at the Latest Practicable Date, we had over 700 SKUs
available for sale under our private label brands. Please refer to the section headed ‘‘Business — Our
products ’’in this prospectus for further information about our products.
SUMMARY
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--- page 12 ---
Our customers
The vast majority of our customers are walk-in reta il customers at our retail stores and we also sell
to retail customers through our online sales platforms. We also supply, on wholesale basis, beauty,
health and pharmaceutical products and other consumer products to corporate customers, mainly trading
companies and local pharmacies in Hong Kong. Please refer to the section headed ‘‘Business —
Customers ’’in this prospectus for details.
Our pricing policy
One of our key business strategies is to offer our wide range of products to our customers at
competitive prices. Our pricing str ategy takes into account various factor s including product categories,
uniqueness, supply quantity, current market demand and the strategic goals of our Group. When
determining the prices of our products, we adopt a rigorous approach that utilises both objective data
and judgment depending on the type of products and the brand, as we offer a very diverse range of
products. Please refer to the section headed ‘‘Business — Procurement and Suppliers — Pricing Policy ’’
in this prospectus for further details.
Our suppliers
We centrally procure products from a large number of suppliers from around the world, including
brand owners, manufacturers or their authorised or li censed distributors, dealers or agents or trading
companies in Hong Kong and overseas. Our overs eas suppliers are mainly located in Japan, Korea,
Europe, the U.S. and Australia. For FY2023, FY2024, FY2025 and 8MFY2026, approximately 40.4%,
42.1%, 44.3% and 46.3% of our total purchases, respectively, were from Official Channel Suppliers, and
we also purchase products from suppliers other than Official Channel Suppliers. Please refer to the
section headed ‘‘Business — Procurement and Suppliers — Supply Channels ’’for details.
We have established strong and stable relationship with many of our major suppliers. During the
Track Record Period, three of the five largest s uppliers for each of FY2023 , FY2024 and FY2025 were
suppliers which we have collaborated for over 15 years. For FY2023, FY2024, FY2025 and 8MFY2026,
total purchases from our five largest suppliers for each year/period in aggregate accounted for
approximately 22.8%, 21.6%, 21.7% and 22.4%, respectively, of our total purchase, and our largest
supplier for each year/period account ed for approximately 5.3%, 4.9%, 5 .4% and 6.0%, respectively, of
our total purchases. Please refer to the section headed ‘‘Business — Procurement and Suppliers —
Suppliers ’’in this prospectus for further details.
COMPETITIVE LANDSCAPE
We operate in a highly competitive market. The overall market is highly fragmented, characterized
by numerous small and medium-sized players, including independent p harmaceutical and beauty
retailers. According to Frost & Sullivan, the total retail sales value of consumer goods in Hong Kong
amounted to HK376.8 billion in 2024 and is expected to grow to HK457.5 billion by 2029. In particular,
the beauty, health and pharmaceutical segment which is within the aforesaid consumer goods market
recorded a total market size of HK29,474.9 million in FY2025. Our Group held the third position in the
Hong Kong beauty, health and pharmaceutical retailers market in FY2025, which represents 5.8% of the
market shares within the year. The top five retaile rs collectively held a 27.4% market share in FY2025.
Our Group ’s 95.8% growth in terms of revenue generated from the beauty, health and pharmaceutical
product sector between FY2023 and FY2024 significantly outperformed the industry average growth rate
of 19.0%, reinforcing its strong competitive position and ranking.
SUMMARY
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--- page 13 ---
OUR COMPETITIVE STRENGTHS
We believe that our success is attributable to, among other things, the following competitive
strengths:
. our brand is well trusted and accepted by the Hong Kong retail market
. we have established a well-selected wide portfo lio of product categories complementing our
leading market position
. we offer one-stop shopping experience with comprehensive product offering to maximise
consumer engagement
. we have established a strong and efficient supply chain with stable relationship with our key
suppliers and well-developed modern warehousing and logistics systems
. our founder and management team have extensi ve experience in retail beauty, health and
pharmaceutical products industry and long-term commitment to social and charitable
initiatives contributing to significant brand value for Lung Fung in local community
OUR BUSINESS STRATEGIES
Our objective is to maintain our leading position in Hong Kong ’s retail beauty, health and
pharmaceutical products industry. We plan to furthe r enhance our influence and market share through
the implementation of the following strategies, thereby continuously expanding our business:
. expand our local physical retail network to increase market share
. expand product variety and optimise product mix and continue to strengthen our private
labels
. strengthen our supply chain procurement an d warehousing and logistics capabilities
. further enhance our online sales capabilities and optimise our online-offline omni-channel
sales network
. implement employee recruitment and training strategy to promote sustainable business
development
SHAREHOLDERS INFORMATION
Immediately following the completion of the Global Offering and Capitalisation Issue (assuming
the Over-allotment Option is not exercised), TTK Holding will hold 75% of the Company. TTK Holding
is an investment holding company owned by Mr. Tse, Mrs. Tse and Ms. Tse as to 97.29%, 2.70% and
0.01%, respectively. Therefore, TTK Holding, Mr. Tse, Mrs. Tse and Ms. Tse will be the Controlling
Shareholders of our Company and will continue to hold a controlling interest in our Company upon
completion of the Global Offering and the Capitalisation Issue. Details of the background of our Mr. Tse
and Ms. Tse are set out in the section headed ‘‘Directors and Senior Management ’’in this prospectus.
Our Controlling Shareholders confirmed that, as at the Latest Practicable Date, apart from the
business operated by us, they and their respective clo se associates and/or companies controlled by them
do not hold or conduct any business which compet es, or is likely to compete, either directly or
indirectly, with our business, and would require dis closure pursuant to Rule 8.10 of the Listing Rules.
OUR EXECUTIVE DIRECTORS AND SENIOR MANAGEMENT
Our Board consists of five Directors, comprising two executive Directors and three independent
non-executive Directors. Our man agement team comprises our two executive Directors and other
members of senior management who ar e each responsible for different m aterial aspects of our operation
and management. Please refer to section headed ‘‘Directors and Senior Management ’’in this prospectus
for details of our Directors and senior management team.
SUMMARY
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--- page 14 ---
KEY FINANCIAL INFORMATION
The following is a summary of our key financial information during the Track Record Period. We
have derived the summary from our audited consolidated financial information as set out in the
Accountants ’ Report included as Appendix I to this prospectus. The following summary should be read
together with the audited consolidated financial information in the Accountants ’ Report, including the
accompanying notes, and the informatio n as set forth in the section headed ‘‘Financial Information ’’in
this prospectus.
Selected data from our consolidated statements o f profit or loss and other comprehensive income
FY2023 FY2024 FY2025 8MFY2025 8MFY2026
HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 %
(Unaudited)
Revenue 1,094,011 100.0 2,020,731 100.0 2,460,478 100.0 1,510,369 100.0 2,035,135 100.0
Cost of sales (821,802) (75.1) (1,427,915) (70.7) (1,682,861) (68.4) (1,031,402) (68.3) (1,406,405) (69.1)
Gross profit 272,209 24.9 592,816 29.3 777,617 31.6 478,967 31.7 628,730 30.9
Other income 26,345 2.4 26,629 1.3 30,326 1.2 20,317 1.3 22,822 1.1
Other gains and losses 7 0.0 (471) (0.0) (700) (0.0) (671) (0.0) (578) (0.0)
Decrease in fair value of
investment properties (17,690) (1.6) (16,596) (0.8) (53,482) (2.2) (47,162) (3.1) (11,140) (0.5)
Selling and distribution
expenses (232,462) (21.2) (321,738) (15.9) (431,606) (17.5) (272,806) (18.1) (380,946) (18.7)
Administrative expenses (41,110) (3.8) (47,067) (2.3) (52,584) (2.1) (36,165) (2.4) (41,111) (2.0)
Finance costs (32,506) (3.0) (52,716) (2.6) (51,550) (2.1) (35,329) (2.3) (27,881) (1.4)
Listing expenses —— —— —— —— (11,132) (0.6)
(Loss) profit before tax (25,207) (2.3) 180,857 9.0 218,021 8.9 107,151 7.1 178,764 8.8
Income tax expense (1,933) (0.2) (36,321) (1.8) (47,589) (1.9) (27,277) (1.8) (30,381) (1.5)
(Loss) profit for the year/
period (27,140) (2.5) 144,536 7.2 170,432 7.0 79,874 5.3 148,383 7.3
Set out below the breakdown of revenue by products, sales channels and geographical locations:
FY2023 FY2024 FY2025 8MFY2025 8MFY2026
HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 %
(Unaudited)
Beauty products 306,014 28.0 668,228 33.1 818,044 33.3 499,932 33.1 667,216 32.8
Health products 174,752 16.0 357,656 17.7 433,752 17.6 276,827 18.3 369,039 18.1
Pharmaceutical products 246,529 22.5 398,219 19.7 473,105 19.2 277,446 18.4 354,641 17.4
Other consumer products 366,716 33.5 596,628 29.5 735,577 29.9 456,164 30.2 644,239 31.7
Total 1,094,011 100.0 2,020,731 100.0 2,460,478 100.0 1,510,369 100.0 2,035,135 100.0
SUMMARY
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--- page 15 ---
We believe that the purchase of over-the-counter medicine by the returning Mainland Chinese
tourists in FY2023 contributed to the higher revenue contribution by pharmaceutical products in
FY2023. In addition as the quarantine measures were lifted and daily life resumed after the COVID-19
pandemic, local Hong Kong customers also increas ed their purchases of cosmetics and skin care
products, which contributed to the higher revenue contribution of the beauty products segment for
FY2024, FY2025 and 8MFY2026.
FY2023 FY2024 FY2025 8MFY2025 8MFY2026
HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 %
(Unaudited)
Retail sales through retail
stores 1,027,169 93.9 1,958,982 96.9 2,391,643 97.2 1,464,799 97.0 1,988,312 97.7
Retail sales through
online platforms 44,637 4.1 38,160 1.9 42,682 1.7 27,330 1.8 30,203 1.5
Wholesale sales 22,205 2.0 23,589 1.2 26,153 1.1 18,240 1.2 16,620 0.8
Total 1,094,011 100.0 2,020,731 100.0 2,460,478 100.0 1,510,369 100.0 2,035,135 100.0
FY2023 FY2024 FY2025 8MFY2025 8MFY2026
HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 %
(Unaudited)
Hong Kong 1,042,634 95.3 1,978,086 97.9 2,412,855 98.1 1,481,230 98.1 2,007,398 98.6
Chinese Mainland 51,377 4.7 42,645 2.1 47,623 1.9 29,139 1.9 27,737 1.4
Total 1,094,011 100.0 2,020,731 100.0 2,460,478 100.0 1,510,369 100.0 2,035,135 100.0
Set out below the breakdown of gross profit and gross profit margin by products, sales channels
and geographical locations:
FY2023 FY2024 FY2025 8MFY2025 8MFY2026
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
HK$’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 %
(Unaudited)
Beauty products 89,398 29.2 206,259 30.9 272,992 33.4 165,072 33.0 219,517 32.9
Health products 67,596 38.7 174,955 48.9 238,170 54.9 148,284 53.6 201,479 54.6
Pharmaceutical products 36,728 14.9 73,310 18.4 86,215 18.2 54,548 19.7 64,168 18.1
Other consumer products 78,487 21.4 138,292 23.2 180,240 24.5 111,063 24.3 143,566 22.3
Total/Overall 272,209 24.9 592,816 29.3 777,617 31.6 478,967 31.7 628,730 30.9
SUMMARY
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--- page 16 ---
FY2023 FY2024 FY2025 8MFY2025 8MFY2026
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
HK$’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 %
(Unaudited)
Retail sales through retail
stores 255,897 24.9 578,409 29.5 755,060 31.6 465,439 31.8 611,293 30.7
Retail sales through online
platforms 13,272 29.7 13,036 34.2 20,553 48.2 12,335 45.1 15,177 50.2
Wholesale sales 3,040 13.7 1,371 5.8 2,004 7.7 1,193 6.5 2,260 13.6
272,209 24.9 592,816 29.3 777,617 31.6 478,967 31.7 628,730 30.9
FY2023 FY2024 FY2025 8MFY2025 8MFY2026
HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 %
(Unaudited)
Hong Kong 257,832 24.7 578,786 29.3 756,281 31.3 466,174 31.5 615,599 30.7
Chinese Mainland 14,377 28.0 14,030 32.9 21,336 44.8 12,793 43.9 13,131 47.3
272,209 24.9 592,816 29.3 777,617 31.6 478,967 31.7 628,730 30.9
During the Track Record Period, our revenue represented the sale of goods through our retail
stores, online sales platforms and wholesale. During the Track Record Period, our revenue recorded
significant growth, increasing from HK$1,094.0 million for FY2023 to HK$2,460.5 million for FY2025,
representing a CAGR of 50.0% over the three financial years. Our revenue increased by 34.7% from
HK$1,510.4 million for 8MFY2025, to HK$2,035.1 million for 8MFY2026. Our revenue increased by
HK$926.7 million or 84.7% from HK$1,094.0 million in FY2023 to HK$2,020.7 million in FY2024,
primarily due to the increase in sam e store growth and revenue contributed from our new stores. Our
revenue further increased by HK$439.7 million or 21.8% from HK$2,020.7 million in FY2024 to
HK$2,460.5 million in FY2025, primarily due to the revenue contributed from our new stores and
partially offset by the slight decrease in same-store s ales. Further, following our strategy to expand our
retail network, nine new stores were opened in FY2025, reaching 25 stores in total as at 31 March 2025.
The revenue contribution of the nine new stores amounted to HK$285.0 million in FY2025. Our year-
on-year sales was relatively stable with a modest decrease of 5.9% from FY2024 to FY2025. During the
Track Record Period, our major cost component, being our cost of sales, represents the cost of
inventories sold which was the cost of products charged by our suppliers as determined with reference to
a number of factors including the prevailing market conditions, the volume of orders and the type of
products. We recorded cost of sales of HK$821.8 million, HK$1,427.9 million, HK$1,682.9 million and
HK$1,406.4 million for FY2023, FY2024, FY2025 and 8MFY2026, respectively. A significant year-on-
year same-store sales growth was recorded for FY20 24 as compared to the pr eceding financial year,
primarily driven by the reopening of the border fo llowing COVID-19 and the subsequent recovery in
local consumer confidence during the return to normality. With the reopening of the border, there was
relatively stronger revenue growth in stores which were located in districts popular with tourists,
including our stores in Northern New Territories districts such as Sheung Shui and Fanling (with the
same-store sales growth rate of these stores being approximately 65.1%) and our stores in the
commercial and shopping areas in Kowloon districts such as Mongkok and Tsim Sha Tsui (with the
same-store sales growth rate of these stores being approximately 63.2%). The modest decline in same-
store sales growth observed in FY2025 as compared to the preceding financial year was largely
attributable to the high baseline established in t he preceding year. The revenue from our comparable
stores during 8MFY2026 was general ly stable as compared to the same p eriod of the preceding financial
year, mainly due to a drop in sales recorded by our r etail shops located in th e New Territories which
was offset by growth in sales by our retail shops located in major tourists and shopping areas in
Kowloon and the Hong Kong Island.
SUMMARY
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--- page 17 ---
Our gross profit represented revenue less cost of sales. Our gross profit amounted to HK$272.2
million, HK$592.8 million, HK$777.6 million, HK$479.0 million and HK$628.7 million for FY2023,
FY2024, FY2025, 8MFY2025 and 8MFY2026, respectively, while the gross profit margin was 24.9%,
29.3%, 31.6%, 31.7% and 30.9% in the respective year/period. Our gross profit increased by HK$320.6
million or 117.8% from HK$272.2 million for FY2023 to HK$592.8 million for FY2024 resulting from
increase in revenue and increase in gross profit margin from 24.9% for FY2023 to 29.3% for FY2024,
which was primarily due to (i) increase in profit margin attained by our health products because the new
health products sourced and sold during the year entailed relatively higher gross profit margin following
our strategy to enhance our margin; (ii) the increase in revenue contribution from the health products
which has relatively higher gross profit margin amongst our products following our effort to continue
optimising our product offerings; (iii) price adjus tments with a general increase in the selling price of
our products during the relevant period; and (iv) the decrease in co st per unit purchased because we
obtained more discounts from our suppliers as a result of bulk purchase which was benefited from the
economies of scale with our continuous expansion of r etail network and hence the scale of purchases.
Our gross profit increased by HK$184.8 million or 31.2% from HK$592.8 million for FY2024 to
HK$777.6 million for FY2025. Such increase in gross profit was mainly contributed by the increase in
revenue. Our gross profit margin increased from 29 .3% in FY2024 to 31.6% in FY2025, primarily due to
(i) increase in profit margin attained by our health products; and (ii) the decrease in cost per unit
purchased because we obtained more discounts from our suppliers as a result of bulk purchase which
was benefited from the economies of scale with our continuous expansion of retail network and hence
the scale of purchases. The gross profit margin of our health products increased from 48.9% in FY2024
to 54.9% in FY2025 was primarily due to (i) new health products sourced and sold during the year
which entailed relatively higher gross profit margin following our strategy to enhance our margin; and
(ii) increase in selling price for our existing products following our price adjustment during the year.
Our gross profit increased by HK$149.8 million or 31.3% from HK$479.0 million for 8MFY2025 to
HK$628.7 million for 8MFY2026. Such increase in gross profit was mainly contributed by the increase
in revenue. Our gross profit margin remained relatively stable at 31.7% for 8MFY2025 and 30.9% for
8MFY2026.
We recorded loss for the year of HK$27.1 million for FY2023. Our net loss in FY2023 was mainly
attributable to the COVID-19 pandemic which resulted in lower sales and revenue due to the drastic
drop in the number of tourists visiting Hong Kong. We improved to record profit for the year of
HK$144.5 million for FY2024 with a net profit margin of 7.2%. The turnaround was primarily due to
the opening of the border after the pandemic gradually subsided coupled with the lifting of stringent
travel restrictions and mandatory quarantine measures in FY2023. Our profit for the year increased by
HK$25.9 million or 17.9% from HK$144.5 million for FY2024 to HK$170.4 million for FY2025
primarily due to increase in gross prof it partially offset by increase by selling and distribution expenses.
The net profit margin remained relatively stable at 7.2% for FY2024 and 6.9% for FY2025. Our profit
for the period 8MFY2026 increased by HK$68.5 million or 85.8% from HK$79.9 million for 8MFY2025
to HK$148.4 million for 8MFY2026. The net profit margin increased from 5.3% for 8MFY2025 to 7.3%
for 8MFY2026 primarily due to the reduction in the decrease in fair value of investment properties.
SUMMARY
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--- page 18 ---
Selected data from our consolidated statements of financial position
As at 31 March
As at
30 November
20252023 2024 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Current assets 288,203 393,025 436,597 664,409
Current liabilities 1,082,054 1,066,621 1,080,259 1,061,520
Net current liabilities (793,851) (673,596) (643,662) (397,111)
Non-current assets 891,471 941,936 852,374 672,577
Non-current liabilities 112,672 138,820 164,330 220,035
Total (deficit)/equity (15,052) 129,520 44,382 55,431
We recorded net current liabilities during the Track Record Period primarily due to the current
portion of bank borrowings, which was mainly for our operations as well as the additions of plant and
equipment for our expansion of retail networks which were non-current. Our net current liabilities
decreased from HK$793.9 million as at 31 March 2023 to HK$673.6 million as at 31 March 2024 and
further decreased to HK$643.7 millio n as at 31 March 2025. Our net curre nt liabilities further decreased
to HK$397.1 million as at 30 November 2025. We recorded net liabilities of HK$15.1 million as at 31
March 2023, which was subsequently improved to net asset position as at 31 March 2024 and 31 March
2025 due to accumulation of profits. The decrease in net current liabilities from 31 March 2023 to 31
March 2024 was primarily due to the (i) increase in inventories of HK$49.4 million mainly for
replenishment of inventories in our retail stores; (ii) increase in amounts due from related parties of
HK$22.3 million; and (iii) decrease in b ank overdrafts of HK$20.0 million. The decrease in net current
liabilities from 31 March 2024 to 31 March 2025 was primarily due to (i) increase in inventories of
HK$110.6 million mainly for replenishment of inventories in our retail stores; and (ii) decrease in
amounts due to related parties of HK$35.3 million re sulting from repayment. The decrease in net current
liabilities as at 30 Novemb er 2025 was primarily due to the increase in (i) current portion of amounts
due from related parties of HK$148.5 million following the expected repayment timeline; and (ii)
inventories of HK$66.3 million mainly for replenishment of inventories in our retail stores. The increase
in the net current liabilities to HK$413.2 million as at 31 March 2026 was primarily due to the (i)
decrease in current portion of amount due from related parties of HK$126.5 million; (ii) decrease in
bank overdraft of HK$80.0 million; (iii) increase in inventories of HK$20.0 million mainly from
replenishment of inventories in our retail stores; and (iv) decrease in tax payable of HK$12.8 million.
Please refer to the section ‘‘Financial Information — Net Current Liabilities ’’for further information.
Our net deficit of HK$15.1 million as at 31 March 2023 turned around to net assets of HK$129.5
million as at 31 March 2024 primarily due to the decrease in accumulated losses of HK$144.7 million
mainly attributable to the profit for the year of HK$144.5 million in FY2024.
Our net assets decreased to HK$44.4 million as at 3 1 March 2025 primarily due to the decrease in
retained earnings resulting from the dividends recognized as distribution of HK$255.0 million in
FY2024, partially offset by the profit for the year of HK$170.4 million in FY2025.
Our net assets then increased to HK$55.4 million as at 30 November 2025 primarily due to the
increase in retained earnings attributable to the profit for the year of HK$148.4 million in 8MFY2026,
partially offset by the decrease in other reserve of HK$137.0 million resulting from deemed distribution
arising from cancellation of shares upon group reorganization in FY2025. See ‘‘History, Reorganization
and Corporate Structure — Reorganization — Allotment of shares of capital reduction in LFP ’’for
details.
SUMMARY
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--- page 19 ---
Selected data from our consolidated statements of cash flows
FY2023 FY2024 FY2025 8MFY2025 8MFY2026
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
Net cash from operating
activities 716,180 1,233,920 1,462,415 896,345 1,081,612
Net cash used in investing
activities (17,854) (89,785) (93,548) (51,442) (42,127)
Net cash used in financing
activities (631,732) (1,105,870) (1,350,431) (848,231) (1,038,512)
Net increase/(decrease) in cash
and cash equivalents 66,594 38,265 18,436 (3,328) 973
Total cash and cash equivalents
at beginning of year/period (167,062) (100,548) (62,291) (62,291) (43,867)
Total cash and cash equivalents
at end of year/period (100,548) (62,291) (43,867) (65,614) (42,859)
REPRESENTED BY:
Cash and cash equivalents 43,137 61,408 61,182 31,671 49,896
Bank overdrafts (143,685) (123,699) (105,049) (97,285) (92,755)
We recorded net cash from operating activities of HK$716.2 million, HK$1,233.9 million,
HK$1,462.4 million and HK$1,081.6 million for FY2023, FY2024, FY2025 and 8MFY2026,
respectively. The generation of n et cash and the year-on-year increas e in net cash inflow from operating
activities was contributed by the increase in sale rev enue. We recorded net cash outflow from investing
activities of approximately HK$17.9 million, HK$89.8 million, HK$93.5 million and HK$42.1 million
for FY2023, FY2024, FY2025 and 8MFY2026, respectively. The net cash outflow from investing
activities was primarily contributed by purchase of property, plant and equipment and net advances to
related parties. We recorded net cash outflow from financing activities of approximately HK$631.7
million, HK$1,105.9 million, HK$1,350.4 million and HK$1,038.5 million for FY2023, FY2024,
FY2025 and 8MFY2026, respectively. The net cash outflow from financing activities was primarily
contributed by repayments of lease liabilities, repayments of bank borrowings and to related parties and
interests paid on bank borrowings.
RECENT DEVELOPMENT AND NO MATERIAL ADVERSE CHANGE
Our business operation remained stable after the Track Record Period and up to the date of this
prospectus. There was no material change to our general business model and the economic environment
remained generally stable up to the date of this prospectus.
Our Directors consider that, save for the expenses in connection with the Listing, which are non-
recurring in nature, there had been no material adverse change in the financial or trading position or
prospects of our Group since 30 November 2025 and up to the date of this prospectus.
Since 1 December 2025 and up to the date of thi s prospectus, we have opened two new retail
stores, in Jordan and Admiralty.
We have engaged a third-party service provider which will be responsible for the management,
operation and development of our e-commerce plat forms in the Chinese Mainl and. Please refer to the
section headed ‘‘Business — Online Sales Platforms ’’for details.
SUMMARY
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--- page 20 ---
WORKING CAPITAL
After taking into consideration of the financial resources presently available to us, including our
cash and bank balances, the available facilities to our Group, the expected operating cash flow and the
estimated net proceeds from the Global Offering, our Directors are of the opinion that we have sufficient
working capital to meet our financial obligations for at least 12 months from the date of this prospectus.
DIVIDENDS AND DIVIDEND POLICY
During FY2023, Dragon Mind Creation Limited declared dividends of HK$13.0 million to its
shareholder. During FY2025, LFP, Top Harvest Pharmaceuticals Company Limited and Pearl Lake
Global Limited declared dividends of HK$200.0 million, HK$33.0 million and HK$22.0 million,
respectively, to their respective shareholders. As advised by our Hong Kong Legal Counsel, the
aforesaid dividends were declared and settled out of profits available for distribution of Dragon Mind
Creation Limited, LFP and Top Harvest Pharmaceuti cals Company Limited at the material time, in
compliance with the Companies Ordinance (Cap. 622) and the respective articles of association of the
relevant subsidiaries
(Note) . On 10 February 2026 and 21 May 2026, our Company declared dividends of
HK$130 per share totaling HK$130,000,000 and HK$23 per share totaling HK$23,000,000, respectively,
which were settled by way of an offsetting with our Group ’s amounts due from related parties. Except
t h ea f o r e s a i d ,o u rC o m p a n yd i dn o td e c l a r eo rp a ya n yd i v i d e n dd u r i n gt h eT r a c kR e c o r dP e r i o da n du p
to the Latest Practicable Date.
Our Company does not have any formal dividend policy or pre-determined dividend payout ratio.
However, subject to the relevant laws and our constitutional documents, the Board intends to, following
the Listing, recommend an annual dividend of no less than 50% of our profit for the year available for
distribution to the Shareholders, subject to consideration of various factors, including our operations and
earnings, capital requirements and sur plus, general financial condition, contractual restrictions, capital
expenditure and future development requirements, shareholders ’ interests and other factors which they
may deem relevant at the material time. Notwithst anding the aforesaid, our Company may not be able to
distribute any dividend or may reduc e or cease any dividend di stribution in certain circumstances where
our Company has net cash outflow from operating activities in the year of the consolidated statement of
accounts, or the amount of p roposed investments or acquisiti ons of our Company during the year
exceeds its operating cash inflow in the same year. A ny declaration and payment as well as the amount
of dividends will be subject to our constitutional documents and the Cayman Islands Companies Act
including, save for interim dividend, the approval of our Shareholders. Under the Articles of
Association, the Company may declare dividends i na n yc u r r e n c yt ob ep a i dt ot h em e m b e r sb u tn o
dividend shall be declared in excess of the amount re commended by the board. Any future declarations
of dividends may or may not reflect our historical declarations of dividends and will be at the absolute
discretion of our Directors.
Note: Under the laws of the British Virgin Islands, the place of incorporation of Pearl Lake Global Limited ( ‘‘PLG’’), and the
memorandum and articles of association of PLG, the direct ors of PLG may by resolution authorise a distribution by the
company as they think fit if they are satisfied on reasonable grounds that, immediately after the distribution, (i) the value
of the company ’s assets exceeds its liabilities, and (ii) the company is ab le to pay its debts as they fall due. Our Directors
confirmed that at the material time when PLG declared the relevant dividends, the directors of PLG were satisfied on
reasonable grounds that the value of PLG ’s assets exceeded its liabilities and PLG was able to pay its debts as they fell
due.
SUMMARY
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OFFERING STATISTICS
B a s e do nt h e
Offer Price of
HK$5.18 per
Offer Share
B a s e do nt h e
Offer Price of
HK$6.38 per
Offer Share
Market capitalisation (Note 1) HK$2,590 million HK$3,190 million
Unaudited pro forma adjusted consolidated net tangible assets
of the Group as at 30 November 2025 per Share (Note 2, 3) HK$1.33 HK$1.62
Notes:
(1) The calculation of market capitalisation is based on 500,000,000 Shares expected to be in issue immediately following the
completion of the Global Offering and the Capitalisation Issue.
(2) The number of shares used for the calculation of unaudited pro forma adjusted consolidated net tangible assets of the Group
per Share is based on 500,000,000 Shares, being Shares in issue immediately following the Reorganization and after the
completion of the Capitalization Issue and the Global Offeri ng, assuming the Reorganization, the Capitalization and the
Global Offering had been completed on 30 November 2025. It does not take into account (i) any Shares which may be
allotted and issued upon the exercise of the Over-allotment Option, or (ii) any Shares which may be issued or repurchased
by the Company pursuant to the general mandates.
(3) Our Company declared dividends of HK$130,000,000 on 10 February 2026 and HK$23,000,000 on 21 May 2026 which
were settled by way of offsetting with the Group ’s amounts due from related parties. Accordingly, the unaudited pro forma
adjusted consolidated net tangible assets of the Gr oup as at 30 November 2025 per Share would have decreased to
approximately HK$1.03 and HK$1.32, based on Offer Price of HK$5.18 and HK$6.38 per Offer Share, respectively.
USE OF PROCEEDS
We estimate that we will receive net proceeds f rom the Global Offering of approximately
HK$672.1 million, after deducting underwriting commissions, fees and estimated expenses payable by us
in connection with the Global Offering, assuming an Offer Price of HK$5.78 per Share, being the mid-
point of the Offer Price. We currently intend to apply these net proceeds for the following intended
purposes in the amounts set forth below:
(i) Approximately HK$245.9 million, representing 36.6% of the net proceeds, is expected to be
used for expanding, enhancing and optimising our physical and online sales network, among
which approximately HK$81.7 million is expected to be used for expanding our physical
retail store network by opening up to 11 new retail stores in Hong Kong during the period
from the Listing Date to 31 March 2029; approximately HK$127.0 million is expected to be
used for inventory procurement for the opening of additional retail stores; approximately
HK$23.8 million is expected to be used for recruitment and training of store staff, beauty
consultants and registered pharmacists to be stationed at the new retail stores; and
approximately HK$13.4 million is expected to be used for expanding our online sales
channels;
(ii) Approximately HK$23.5 million, represen ting 3.5% of the net proceeds, is expected to be
used for brand management and marketing to increase mass awareness of our Group and the
effectiveness of our marketing activities, among which approximately HK$13.4 million is
expected to be used for engaging entertainers and KOLs as ambassadors for our Group and
placing commercial advertisement on major television channels; and approximately HK$10.1
million is expected to be used for implementing our online marketing and promotion
activities;
SUMMARY
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--- page 22 ---
(iii) Approximately HK$23.5 million, represen ting 3.5% of the net proceeds, is expected to be
used for strengthening our supply chain capability through expanding and upgrading our
existing procurement office and ware house in Japan and w arehouse in Korea;
(iv) Approximately HK$76.8 million, representing 11.4% of the net proceeds, is expected to be
used for upgrading and enhancing our information technology systems, mainly for
implementing a new warehouse management system and upgrading our point-of-sales system;
(v) Approximately HK$134.4 million, representing 20.0% of the net proceeds, is expected to be
used to repay our outstanding loans;
(vi) Approximately HK$100.8 million, representing 15.0% of the net proceeds, is expected to be
used to pursue selective strategic investme nt and acquisition opportunities and further
develop strategic partnerships to expand our business scale and our geographic coverage; and
(vii) Approximately HK$67.2 million, representing 10.0% of the net proceeds, is expected to be
used as general working capital of our Group.
PROFIT ESTIMATE FOR THE YEAR ENDED 31 MARCH 2026
The following profit estimate has been prepared based on the audited consolidated results of our
Group for the eight months ended 30 November 2025 and the unaudited consolidated results based on
the management accounts of our Group for the four months ended 31 March 2026. The Profit Estimate
has been prepared on a basis consistent in all mater ial respects with the accounting policies normally
adopted by our Group as set out in the Accountants ’ Report as set out in Appendix I to this Prospectus.
See Appendix IIB to this Prospectus for further details. The estimated consolidated profit attributable to
owners of the Company for the year ended 31 March 2026 is not less than HK$265 million.
LISTING EXPENSES
Listing expenses represent professional fees, underwriting commissions and other fees incurred in
connection with the Global Offering. We estimate that our listing expenses will be approximately
HK$50.4 million (assuming an Offer Price of HK$5.78 per Offer Share (being the mid-point of the
indicative Offer Price range) and no exercise of th e Over-allotment Option), of which approximately
HK$30.6 million is directly attributable to the issue of our Offer Shares and will be deducted from
equity, HK$11.1 million has been expensed in ou r consolidated statements of profit or loss in
8MFY2026 and approximately HK$8.7 million is expected to be expensed after the Track Record
Period. Our estimated listing expenses include: under writing-related expenses, representing underwriting
commission and fees of approximately HK$24.4 million; non-underwriting-related professional fees of
approximately HK$23.0 million, and other fees and expenses of app roximately HK$3.0 million. The
listing expenses above are the best estimate as of th e Latest Practicable Date and for reference only and
the actual amount may differ from this estimate.
SUMMARY OF RISK FACTORS
There are certain risks involved in our operations which may be beyond our control. These risks
are further described in the section headed ‘‘Risk Factors ’’in this prospectus. You should read that
entire section carefully before deciding whether to invest in the Offer Shares. The following are some of
the principal risk factors that we face:
. We face the risk of market cannibalization b etween our existing retail stores and any new
locations we open
. our business and operational results could be m aterially and adversely affected if we are
unable to offer the products at prices that are attractive to consumers or maintain competitive
pricing
SUMMARY
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. any negative publicity, allegations, complaints or claims made against us may adversely
affect our reputation, business, financial position, results of operations and price of our
Shares as our success hinges on the strong recognition of our brand, ‘‘Lung Fung, ’’within
Hong Kong ’s retail market
. our financial results rely on th e performance of both our existi ng and new retail stores, which
can be impacted by various factors, many of which may be beyond our control
. our historical financial and operational results may not reliably predict future performance,
and we may not be able to maintain the levels of revenue and profitability we have
previously achieved
. we recorded net current liabilities and net liab ilities during the Track Record Period, and we
cannot assure you that we will not have net current liabilities and net liabilities in the future
. we face potential liabilities or cl aims related to intellectual property rights infringement and
false trade descriptions concerning our parallel-imported products
SUMMARY
– 14 –


--- page 24 ---
In this prospectus, unless the context otherwise requires, the following terms shall have the
meanings set out below.
‘‘8MFY2025 ’’ the eight months ended 30 November 2024
‘‘8MFY2026 ’’ the eight months ended 30 November 2025
‘‘Accountants ’ Report ’’ the accountants ’ report of our Company, details of which are set
out in Appendix I to this prospectus
‘‘affiliate(s) ’’ any other person, directly or indirectly, controlling or controlled
by or under direct or indirect common control with such specified
person
‘‘AFRC ’’ the Accounting and Financial Reporting Council of Hong Kong
‘‘Articles ’’or ‘‘Articles of
Association ’’
the amended and restated articles of association of our Company
conditionally, adopted on 18 May 2026 effective upon the Listing,
a summary of which is set out in ‘‘Appendix IV — Summary of
the Constitution of our Company and Cayman Islands Company
Law’’, as amended from time to time
‘‘associate(s) ’’ has the meaning ascribed to it under the Listing Rules
‘‘Audited Financial Statements ’’ the audited consolidated financial statements of our Company for
the Track Record Period, as included in ‘‘Accountants ’ Report ’’
in Appendix I
‘‘Board ’’or ‘‘Board of Directors ’’ the board of directors of our Company
‘‘business day ’’or ‘‘Business Day ’’ any day (other than a Saturday, Sunday, or public holiday in
Hong Kong) on which banks in Hong Kong are generally open for
normal banking business
‘‘BVI’’ the British Virgin Islands
‘‘Capitalization Issue ’’ the issue of 374,000,000 Shares to be made upon capitalization of
certain sums standing to the credit of the share premium account
of our Company as referred to in ‘‘Appendix V — Statutory and
General Information — A. Further Information About Our Group
— 3. Resolutions in writing of our sole Shareholder passed on 18
May 2026 ’’
‘‘Capital Market Intermediaries ’’ the capital market intermediari es as named in the section headed
‘‘Directors and Parties Involved in the Global Offering ’’in this
prospectus
‘‘Cayman Islands Companies Act ’’
or ‘‘Companies Act ’’
the Companies Act (As Revised) of the Cayman Islands
DEFINITIONS
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--- page 25 ---
‘‘CCASS ’’ the Central Clearing and Settle ment System established and
o p e r a t e db yH K S C C
‘‘China ’’or ‘‘the PRC ’’or
‘‘Chinese Mainland ’’
People ’s Republic of China, and, unless the context requires
otherwise and solely for the purpose of this prospectus such as
describing legal or tax matters, authorities, entities, or persons,
excluding Hong Kong Special Administrative Region, Macao
Special Administrative Region, and Taiwan region of the People ’s
Republic of China
‘‘Companies Ordinance ’’ the Companies Ordinance (Chapter 622 of the Laws of Hong
Kong), as amended or supplemented or otherwise modified from
time to time
‘‘Companies (Winding Up and
Miscellaneous Provisions)
Ordinance ’’
the Companies (Winding Up and Miscellaneous Provisions)
Ordinance (Chapter 32 of the Laws of Hong Kong), as amended
or supplemented or otherwise modified from time to time
‘‘Company ’’or ‘‘our Company ’’ Lung Fung Group Holdings Limited 龍豐集團控股有限公司,t h e
holding company of our Group after the Reorganization and the
listing vehicle for the Listing , which is an exempted company
with limited liability incorporated on 3 October 2025 in the
Cayman Islands and the Shares of which are to be listed on the
Main Board of the Stock Exchange
‘‘connected person(s) ’’ has the meaning ascribed to it under the Listing Rules
‘‘connected transaction(s) ’’ has the meaning ascribed to it under the Listing Rules
‘‘Controlling Shareholders ’’ has the meaning ascribed thereto in the Listing Rules, and unless
the context otherwise requires, c ollectively refers to, Mr. Tse,
Mrs. Tse, Ms. Tse and TTK Holdin g (for more details, see the
section headed ‘‘Relationship with the Controlling Shareholders ’’
in this prospectus); and ‘‘Controlling Shareholder ’’means any one
of them
‘‘COVID-19 ’’ a novel strain of coronavirus
‘‘Deed of Indemnity ’’ t h ed e e do fi n d e m n i t yd a t e d2 5M a y2 0 2 6a n de n t e r e di n t ob yt h e
Controlling Shareholders in favor of our Company (for ourselves
and as trustee for our subsidiaries), particulars of which are set
out in
‘‘Appendix V — Statutory and General Information — D.
Other Information — 12. Estate duty, tax and other indemnity ’’
‘‘Director(s) ’’ the director(s) of our Company
‘‘ESG’’ environmental, social and governance
‘‘Extreme Conditions ’’ extreme weather conditions caused by a super typhoon as
announced by the Hong Kong government
‘‘F&S’’or ‘‘Frost & Sullivan ’’ Frost & Sullivan Limited, our industry consultant and an
Independent Third Party
DEFINITIONS
– 16 –


--- page 26 ---
‘‘F&S Report ’’ an independent market research report commissioned by us and
prepared by Frost & Sullivan
‘‘FINI ’’ ‘‘ Fast Interface for New Issuance, ’’an online platform operated
by HKSCC that is mandatory for admission to trading and, where
applicable, the collection and pro cessing of specified information
on subscription in and settl ement for all new listings
‘‘FY’’ unless as otherwise defined, any financial year ended 31 March
‘‘FY2023 ’’ the financial year ended 31 March 2023
‘‘FY2024 ’’ the financial year ended 31 March 2024
‘‘FY2025 ’’ the financial year ended 31 March 2025
‘‘FY2026 ’’ the financial year ended 31 March 2026
‘‘General Rules of HKSCC ’’ the General Rules of HKSCC as may be amended or modified
from time to time and where the context so permits, shall include
the HKSCC Operational Procedures
‘‘Global Offering ’’ the Hong Kong Public Offering and the International Offering
‘‘Government Authority ’’ any government, regulatory, or administrative commission, board,
body, authority, or agency, or any stock exchange, self-regulatory
organization, or other non-government regulatory authority, or
any court, judicial body, tribunal, or arbitrator, in each case
whether national, central, federal, provincial, state, regional,
municipal, local, domestic, foreign, or supranational
‘‘Group ’’, ‘‘our Group ’’, ‘‘we’’,
‘‘our’’or ‘‘us’’
our Company and its subsidiaries (or our Company and any one
or more of its subsidiaries, as the context may require)
‘‘Guide ’’ the Guide for New Listing Applicants published by the Stock
Exchange effective from 1 January 2024 (as amended,
supplemented or otherwise modified from time to time)
‘‘HK$’’, ‘‘Hong Kong dollars ’’,
‘‘HK dollars ’’, ‘‘HKD’’or
‘‘cents ’’
Hong Kong dollars and cents respectively, the lawful currency of
Hong Kong
‘‘HKFRS ’’ Hong Kong Financial Reporting Standards issued by the Hong
Kong Institute of Certified Public Accountants
‘‘HK eIPO White Form ’’ the application for Hong Kong Offer Shares to be issued in the
applicant ’s own name, submitted online through the designated
website at www.hkeipo.hk
‘‘HK eIPO White Form Service
Provider ’’
the HK eIPO White Form service provider designated by our
Company as specified on the designated website at
www.hkeipo.hk
DEFINITIONS
– 17 –


--- page 27 ---
‘‘HKSCC ’’ Hong Kong Securities Clearing Company Limited, a wholly
owned subsidiary of Hong Kong Exchanges and Clearing Limited
‘‘HKSCC EIPO ’’ t h ea p p l i c a t i o nf o rt h eH o n gK o n gO f f e rS h a r e st ob ei s s u e di n
the name of HKSCC Nominees and deposited directly into
CCASS to be credited to your designated HKSCC Participant ’s
stock account through causing HKSCC Nominees to apply on
your behalf, including by instructing your broker or custodian
who is a HKSCC Participant to give electronic application
instructions via HKSCC ’s FINI system to apply for the Hong
Kong Offer Shares on your behalf
‘‘HKSCC Nominees ’’ HKSCC Nominees Limited, a wholly-owned subsidiary of
HKSCC
‘‘HKSCC Operational Procedures ’’ the operational procedures of HKSCC, containing the practices,
procedures and administrative or other requirements relating to
HKSCC ’s services and the operations and functions of HKSCC
Systems, as from time to time in force
‘‘HKSCC Participant(s) ’’ a participant admitted to participate in CCASS as a direct clearing
participant, a general clearing participant or a custodian
participant
‘‘HKSCC Rules ’’ the General Rules of HKSCC as may be amended or modified
from time to time and where the context so permits, shall include
the HKSCC Operational Procedures
‘‘HKSCC Systems ’’ CCASS, FINI or any other platform, facility or system
established, operated and/or otherwise provided by or through
HKSCC
‘‘Hong Kong ’’or ‘‘HK’’ the Hong Kong Special Administrative Region of the PRC
‘‘Hong Kong Legal Counsel ’’ Ms. Queenie W.S. Ng, barrister-at-law, our Hong Kong legal
advisor with respect to regulatory and compliance matter
‘‘Hong Kong Offer Shares ’’ the 12,500,000 Shares being initially offered by our Company for
subscription pursuant to the Hong Kong Public Offering subject
to adjustments as described in ‘‘Structure of the Global Offering ’’
‘‘Hong Kong Public Offering ’’ the offering of the Hong Kong Offer Shares for subscription by
the public in Hong Kong (subject to adjustment as described in
‘‘Structure of the Global Offering ’’) at the Offer Price (plus
brokerage, SFC transaction levy, AFRC transaction levy and
Hong Kong Stock Exchange trading fee), on and subject to the
terms and conditions described in this prospectus, as further
described in ‘‘Structure of the Global Offering — Hong Kong
Public Offering ’’
‘‘Hong Kong Share Registrar ’’ Tricor Investor Services Limited
DEFINITIONS
– 18 –


--- page 28 ---
‘‘Hong Kong Takeovers Code ’’or
‘‘Takeovers Code ’’
The Codes on Takeovers and Mergers and Share Buy-backs
issued by the SFC, as amended, supplemented or otherwise
modified from time to time
‘‘Hong Kong Underwriters ’’ the underwriters of the Hong Kong Public Offering listed in
‘‘Underwriting — Hong Kong Underwriters ’’
‘‘Hong Kong Underwriting
Agreement ’’
the underwriting agreement dat ed 26 May 2026, relating to the
Hong Kong Public Offering and entered into by us, our
Controlling Shareholders, the executive Directors, the Sole
Sponsor, the Overall Coordinator, the Sole Global Coordinator,
the Joint Bookrunners, the Joint Lead Managers, the Hong Kong
Underwriters and the Capit al Market Intermediaries
‘‘Independent Third Party(ies) ’’ person(s) or company(ies) and their respective ultimate beneficial
owner(s), who/which, to the best of our Directors ’ knowledge,
information and belief, having made all reasonable enquiries, is/
are not our connected persons or associates of our connected
persons as defined under the Listing Rules
‘‘International Offer Shares ’’ the 112,500,000 Shares being initially offered by our Company
for subscription at the Offer Price pursuant to the International
Offering together with, where relevant, any additional Shares
which may be issued by our Company pursuant to the exercise of
the Over-allotment Option subject to adjustments as described in
‘‘Structure of the Global Offering ’’
‘‘International Offering ’’ the offer of the International Offer Shares by the International
Underwriters at the Offer Price outside the United States in
offshore transactions in accordance with Regulation S as
described in ‘‘Structure of the Global Offering ’’
‘‘International Underwriters ’’ the group of underwriters, led by the Sole Global Coordinator,
that is expected to enter into the International Underwriting
Agreement to underwrite the International Offering
‘‘International Underwriting
Agreement ’’
the underwriting agreement relatin g to the International Offering
expected to be entered into by, among others, our Company and
the International Underwriters on or about the Price
Determination Date, as further described in ‘‘Underwriting —
Underwriting Arrangements and Expenses — The International
Offering ’’in this prospectus
‘‘Joint Bookrunners ’’ the joint bookrunners as named in the section headed ‘‘Directors
and Parties Involved in the Global Offering ’’in this prospectus
‘‘Joint Lead Managers ’’ the joint lead managers as named in the section headed ‘‘Directors
and Parties Involved in the Global Offering ’’in this prospectus
‘‘Latest Practicable Date ’’ 19 May 2026, being the latest practicable date prior to the
printing of this prospectus for the purpose of ascertaining certain
information contained in this prospectus
‘‘
LFP’’ Lung Fung Pharmaceutical (Group) Limited ( 龍豐藥業(集團)有限
公司), a company incorporated under the laws of Hong Kong with
limited liability on 8 June 2007 and wholly owned by LF Retail
Holding Limited, and is therefore an indirect wholly-owned
subsidiary of our Company after the Reorganization
DEFINITIONS
– 19 –


--- page 29 ---
‘‘Listing ’’ the listing of the Shares on the Main Board of the Stock
Exchange
‘‘Listing Committee ’’ the Listing Committee of the Stock Exchange
‘‘Listing Date ’’ the date on which dealings in ou r Shares first commence on the
Main Board of the Hong Kong Stock Exchange
‘‘Listing Rules ’’ the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited, as amended or supplemented
from time to time
‘‘Main Board ’’ the stock market (excluding the option market) operated by the
Stock Exchange which is independent from and operated in
parallel with the GEM of the Stock Exchange
‘‘Memorandum ’’or ‘‘Memorandum
of Association ’’
the memorandum of associatio n of our Company adopted on 3
October 2025, a summary of which is set out in ‘‘Appendix IV —
Summary of the Constitution of Our Company and Cayman
Islands Company Law ’’, as amended from time to time
‘‘MPF’’ mandatory provident fund
‘‘Ms. Tse ’’ Ms. Tse Chui Ying ( 謝翠瑩), an executive Director, one of our
Controlling Shareholders and the daughter of Mr. Tse and Mrs.
Tse
‘‘Mr. Tse ’’ Mr. Tse Siu Hoi ( 謝少海), the chairman of our Board, the chief
executive officer of our Company, an executive Director, one of
our Controlling Shareholders, the spouse of Mrs. Tse and the
father of Ms. Tse
‘‘Mrs. Tse ’’ M s .C h a nY u e nF o n gS h i r l e y(陳婉芳), one of our Controlling
Shareholders, the spouse of Mr. Tse and the mother of Ms. Tse
‘‘Offer Price ’’ the final offer price per Offer Share (exclusive of brokerage, SFC
transaction levy, Stock Exchange trading fee, and AFRC
transaction levy)
‘‘Offer Shares ’’ the Hong Kong Offer Shares and the International Offer Shares
together with, where relevant, any additional Shares which may
be issued by our Company pursuant to the exercise of the Over-
allotment Option
‘‘Official Channel Supplier(s) ’’ supplier(s) which are the brand owners, manufacturers or their
authorised or licensed distribut ors, dealers or agents in Hong
Kong for the relevant product(s)
DEFINITIONS
– 20 –


--- page 30 ---
‘‘Over-allotment Option ’’ the option expected to be granted by our Company to the
International Underwriters, exercisable by the Overall
Coordinator (for itself and on behalf of the International
Underwriters), pursuant to which our Company may be required
to allot and issue up to an aggregate of 18,750,000 additional new
Shares at the Offer Price to cover, among other things, over-
allocations in the International Offering, if any
‘‘Overall Coordinator ’’and ‘‘Sole
Global Coordinator ’’
DBS Asia Capital Limited
‘‘PDPO ’’ Personal Data (Privacy) Ordinance (Chapter 486 of the Laws of
Hong Kong)
‘‘PRC Legal Advisor ’’ Jincheng Tongda & Neal Law Firm
‘‘Price Determination Agreement ’’ the agreement to be entered into by the Overall Coordinator (on
behalf of the Underwriters) and our Company on the Price
Determination Date to record and fix the Offer Price
‘‘Price Determination Date ’’ the date, expected to be on or around Wednesday, 3 June 2026
(Hong Kong time) on which the Offer Price is determined by the
Overall Coordinator (for itself and on behalf of the Hong Kong
Underwriters) and us
‘‘Principal Share Registrar and
Transfer Office ’’
Conyers Trust Company (Cayman) Limited, an Independent Third
Party
‘‘prospectus ’’ this prospectus being issued in connection with the Hong Kong
Public Offering
‘‘Receiving Banks ’’ DBS Bank (Hong Kong) Limited and Bank of China (Hong Kong)
Limited
‘‘Regulation S ’’ Regulation S under the U.S. Securities Act
‘‘Relevant Parties ’’ our Group, the Sole Sponsor, the Sole Global Coordinator, the
Joint Bookrunners, the Joint Lead Managers, the Underwriters,
any other capital market intermediaries involved in the Global
Offering, any of our or their respective affiliates or directors,
officers, employees or agents or any other person or party
involved in the Global Offering
‘‘Reorganization ’’ the reorganization of our Group in preparation of the Listing. For
more details, please see ‘‘History, Reorganization and Corporate
Structure ’’
‘‘RMB’’or ‘‘Renminbi ’’ Renminbi, the lawful currency of the PRC
‘‘SFC’’ the Securities and Futures Commission of Hong Kong
‘‘SFO’’or ‘‘Securities and Future
Ordinance ’’
the Securities and Futures Ordinance (Chapter 571 of the Laws of
Hong Kong), as amended or supplemented from time to time
DEFINITIONS
– 21 –


--- page 31 ---
‘‘Shareholder(s) ’’ holder(s) of Shares
‘‘Shares ’’ ordinary shares in the capital of our Company with nominal value
of HK$0.0001 each
‘‘Sole Sponsor ’’ DBS Asia Capital Limited
‘‘Stabilizing Manager ’’ DBS Asia Capital Limited
‘‘Stock Borrowing Agreement ’’ the stock borrowing agreement expected to be entered into on or
about 3 June 2026 between the Stabilization Manager (or its
affiliates acting on its behalf) and TTK Holding, pursuant to
which TTK Holding will agree to lend up to 18,750,000 Shares to
the Stabilization Manager on terms set forth therein
‘‘Stock Exchange ’’ The Stock Exchange of Hong Kong Limited
‘‘subsidiary(ies) ’’ has the meaning ascribed thereto under the Listing Rules
‘‘Top Harvest ’’ Top Harvest Pharmaceuticals Company Limited ( 五豐藥業有限公
司), a company incorporated under the laws of Hong Kong with
limited liability on 26 April 2002 and wholly owned by TH
Wholesale Holding Limited, and is therefore an indirect wholly-
owned subsidiary of our Company after the Reorganization
‘‘Track Record Period ’’ the period comprising FY2023, FY2024, FY2025 and 8MFY2026
‘‘TTK Holding ’’ TTK Holding Limited, a company incorporated under the laws of
the BVI with limited liability on 25 September 2025 and owned
as to 97.29%, 2.7% and 0.01% by Mr. Tse, Mrs. Tse and Ms. Tse,
respectively, and one of ou r Controlling Shareholders
‘‘Underwriters ’’ the Hong Kong Underwriters and the International Underwriters
‘‘Underwriting Agreements ’’ the Hong Kong Underwriting Agreement and the International
Underwriting Agreement
‘‘U.S. ’’or ‘‘United States ’’ the United States of America, its territories, its possessions and
all areas subject to its jurisdiction
‘‘U.S. Securities Act ’’ the United States Securities Act of 1933, as amended and
supplemented or otherwise modified from time to time, and the
rules and regulations promulgated thereunder
‘‘US$’’, ‘‘USD’’or ‘‘U.S. dollars ’’ United State dollars, the lawful currency for the time being of the
United States
In this prospectus, the terms ‘‘associate ’’, ‘‘close associate ’’, ‘‘
connected person ’’, ‘‘connected
transaction ’’, ‘‘core connected person ’’, ‘‘controlling shareholder ’’, ‘‘subsidiary ’’ and ‘‘substantial
shareholder ’’shall have the meanings given to such terms in the Listing Rules, unless the context
otherwise requires.
Certain amounts and percentage figures included in this prospectus have been subject to rounding.
Accordingly, figures shown as totals in certain tables may not be an arithmetic aggregation of the
figures preceding them. Any discrepancies in any table or chart between the total shown and the sum of
the amounts listed are due to rounding.
For ease of reference, the names of Chinese laws and regulations, governmental authorities,
institutions, natural persons or other entities (including certain of our subsidiaries) have been included
in the prospectus in both the Chinese and English languages and in the event of any inconsistency, the
Chinese version shall prevail. English translations of company names and other terms from the Chinese
language are provided for identification purposes only.
DEFINITIONS
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This glossary of technical terms contains explanations of certain technical terms used in this
prospectus. As such, these terms and their meanings may not correspond to standard industry
meanings or usage of these terms.
‘‘CAGR ’’ compound annual growth rate, calculated by subtracting one from
the result of dividing the ending value by its beginning value
raised to the power of one divided by the period length
‘‘EBITDA ’’ earnings before interest, taxes, depreciation and amortisation
‘‘GDP’’ gross domestic product
‘‘GFA’’ gross floor area
‘‘POS system ’’ point of sale system
‘‘SKU’’ acronym for stock keeping unit, a unique identifier for each
distinct product and service that can be purchased
‘‘sq.ft. ’’ square feet
‘‘sq.m. ’’ square metres
‘‘UFA’’ usable floor area
GLOSSARY OF TECHNICAL TERMS
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This prospectus contains certain forward-looking statements and information relating to our
Company and our subsidiaries that are based on the beliefs of our management as well as assumptions
made by and information currently available to our management. When used in this prospectus, the
words ‘‘aim’’, ‘‘anticipate ’’, ‘‘believe ’’, ‘‘could ’’, ‘‘consider ’’, ‘‘continue ’’, ‘‘estimate ’’, ‘‘expect ’’,
‘‘forecast ’’, ‘‘going forward ’’, ‘‘intend ’’, ‘‘is/are likely to ’’, ‘‘may’’, ‘‘might ’’, ‘‘ought to ’’, ‘‘plan ’’,
‘‘predict ’’, ‘‘project ’’, ‘‘propose ’’, ‘‘potential ’’, ‘‘prospects ’’, ‘‘seek ’’, ‘‘should ’’, ‘‘shall ’’, ‘‘
will ’’,
‘‘would ’’, ‘‘with a view to ’’and the negative of these terminologies and other similar expressions, as
they relate to our Group or our management, are intended to identify forward-looking statements. Such
statements reflect the current vi ews of our management with respect to future events, operations,
liquidity and capital resources, s ome of which may not materialise or may change. These forward-
looking statements are not a guarantee of future performance and are subject to certain risks,
uncertainties and assumptions, including the risk factors as described in the section headed ‘‘Risk
Factors ’’in this prospectus. You are strongly cautioned that reliance on any forward-looking statements
involves known and unknown risks and uncertainties. The risks and uncertainties facing by our
Company which could affect the accuracy of forward- looking statements include, but are not limited to,
the following:
. our operations and business prospects;
. our future debt levels and capital needs;
. future developments, trends and conditions in the industry and markets in which we operate;
. our business strategies, plans, objectives an d our various measures to implement or achieve
these strategies, plans and objectives;
. our ability to meet the chang ing needs of our customers;
. general economic, political and business c onditions in the markets in which we operate;
. the effects of the global financial markets and economic crisis;
. the general economic trends and conditions;
. our ability to reduce costs;
. our dividend distribution plan and dividend policy;
. our financial condition and performance;
. our capital expenditure plans;
. changes in competitive conditions and our ability to compete under these conditions;
. the amount and nature of, and potential for, future development of our business;
. our ability to recruit and retain employees and personnel;
. capital market developments;
. the actions and developments of our competitors;
. change or volatility in interest rates, foreign ex change rates, equity prices, volumes, prices,
operations, margins, risk manag ement and overall market trends;
. other statements in this prospect us that are not historical facts;
. realisation of the benefits or our future plans and strategies; and
. other factors beyond our control.
The information and assumptions contained in the forward-looking statements have not been
independently verified by the Relevant Parties a nd no representation is given as to the accuracy or
completeness of such information or assumptions on which the forward-looking statements are made.
Additional factors that could cause actual performance or achievements of our Group to differ materially
include, but are not limited to, those discussed under ‘‘Risk Factors ’’and elsewhere in this prospectus.
Subject to the requirements of applicable laws, rules and regulations, we do not have any and
undertake no obligation to update or otherwise revise the forward-looking statements in this prospectus,
whether as a result of new information, future events or otherwise. As a result of these and other risks,
uncertainties and assumptions, the forward-looking events and circumstances discussed in this
prospectus might not occur in the way we expect or at all. Accordingly, you should not place undue
reliance on any forward-looking statements and information.
In this prospectus, statements of or references to our intentions or those of our Directors are made
as at the date of this prospectus. Any such informatio n may change in light of future developments. All
forward-looking statements and information contained in this prospectus are qualified by reference to the
cautionary statements set out in this section.
FORWARD-LOOKING STATEMENTS
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Investing in our Shares involves risks. Before deciding to invest in the Shares, you should
carefully consider all of the information in this prospectus, including the following risk factors, in
light of the circumstances and your own investment objectives. The occurrence of any of the following
events could materially adversely affect our business, financial condition and results of operations, in
which case the trading price of our Shares could also decline, and you could lose part or all of your
investment. You should pay particular attention to the fact that we are a company incorporated in
Cayman Islands and that our principal operations are conducted in Hong Kong and are governed by
a legal and regulatory environment that may differ significantly from that of other countries.
We believe that there are certain risks involved in our operations, many of which are beyond our
control. These risks can be broadly cat egorized into: (i) risks relating t o our business; (ii) risks relating
to our industry; and (iii) risks relating to the Global Offering. You should consider carefully our
business and prospects in light of the challenges we face, including the ones discussed in this section.
RISKS RELATING TO OUR BUSINESS
We face the risk of market cannibalization between our existing retail stores and any new locations
we open.
Our strategy includes opening additional retail stores in areas where we already have established
stores. However, the capacity and growth potential in some of these target locations, along with demand
from our target customers, may be limited, potentially undermining our expansion plans.
The overlap in geographic areas could lead to unexpected competition between our existing and
new retail stores, resulting in market cannibalisation. For instance, if customers choose to shop at a
newly opened store instead of an existing one, the overall sales performance of the retail network may
not increase as anticipated. Instead, we could see a redistribution of sales that does not contribute
positively to our total revenue.
This cannibalization effect can have several negative consequences. New locations may
underperform due to diminished customer traffic, lead ing to lower-than-expected sales and profitability.
Additionally, if existing stores experience a declin e in sales as a result of new openings, we may face
challenges in maintaining operational efficiency and profitability across our entire retail network.
Moreover, the financial implications of market cannibalization can be significant. Increased
competition between our own stores could lead to higher marketing costs as we attempt to attract
customers to each location. Additionally, any decline in sales at existing stores could necessitate price
reductions or promotional efforts that further erode profit margins.
Consequently, our new locations may not perform as well as anticipated, adversely impacting the
overall performance of our retail network and our profitability.
RISK FACTORS
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If we are unable to offer the products at prices that are attractive to consumers or maintain
competitive pricing, our business and operati onal results could be materially and adversely
affected.
We face challenges in maintaining our prici ng competitiveness. For instance, we may lack
sufficient bargaining power when negotiating terms with our suppliers, which can result in us having to
set higher prices for our products. Even if we can set prices as expected, our profit margins may
decrease. Additionally, increases in cost may be passed on to us by our suppliers, putting further
pressure on us to raise prices. Any increase in product prices could lead to a decline in our sales volume
and, more importantly, damage our brand image and positioning, making us less competitive in the
marketplace. Consequently, any of these factors could ad versely affect our overall profitability, business
operations, financial condition, and results.
Moreover, the prices of the products we sell can be influenced by general economic conditions. For
example, inflation may compel us to raise prices, which could negatively impact our sales. Adverse
economic conditions could also escalate costs for us, including shipping rates, freight costs, and store
occupancy expenses, further reducing our sales or increasing our cost of sales, selling expenses or
general and administrative expenses. Our pricing strategy and competitive pressures may limit our
ability to pass these increased costs onto consume rs without jeopardising our competitive position,
ultimately reducing our profitability and materially affecting our business, financial condition, and
results. Additionally, price reductions by our competitors may force us to lower our prices, leading to a
corresponding decrease in profitability. As a result, we may encounter periods of intense competition in
the future, which could significantly impact our profitability and operational results.
Our success hinges on the stro ng recognition of our brand, ‘‘Lung Fung, ’’within Hong Kong ’s
retail market. Any negative publi city, allegations, complaints or claims made against us may
adversely affect our reputation, business, financial position, results of operations and price of our
Shares.
Our Group may face negative publicity and allegations from our customers and competitors from
time to time, we cannot guarantee that similar alleg ations, complaints, or claims will not arise in the
future, nor can we ensure that we can prevent the r ecurrence of such incidents. Any allegations,
complaints, or claims against us, regardless of their validity, could lead to negative publicity, potential
liability, and adversely impact our reputation and share price. Moreover, addressing these allegations,
complaints, or claims may require us to divert man agement and other resources, which could further
adversely affect our business and operational results . If any complaint escalates into a claim against us,
even if ultimately unsuccessful, we may still need to allocate resources to addres s the claim. Liabilities
arising from such claims could negatively impact our financial position and operational results.
Moreover, as we continue to grow in size, expand our product offerings, and extend our geographic
reach, maintaining high quality, appeal, and a ffordability for the pro ducts we sold may become
increasingly challenging. Should consumers perceive or experience a decline in product quality, or feel
that we fail to deliver consistently high-quality products, our brand value could suffer, which would
have a material and adverse effect on our business.
RISK FACTORS
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As we continue to grow by opening additional retail stores, maintaining the quality and consistency
of our brand image may become increasingly challenging. We cannot guarantee that our customers ’
confidence in our brand will remain unwavering. Therefore, it is imperative that we remain vigilant in
our brand management efforts to ensure s ustained success in a co mpetitive market.
Our financial results rely on the performance of b oth our existing and new retail stores, which can
be impacted by various factors, man y of which may be beyond our control.
Our financial outcomes hinge on our ability to increase sales and efficiently manage costs across
all retail locations. There is no guarantee that the performance of our current stores will remain stable,
nor that our new stores will meet our expectations. S pecifically, the success of our stores largely relies
on our capacity to enhance customer visits and increase the average transaction value per customer visit.
Several significant factors beyond our control could negatively impact customer visits and spending per
transaction, including, but not limited to:
. growing competition in the retail market for beauty, health and pharmaceutical, and other
consumer products;
. shifts in consumer preferences;
. customer sensitivity to price increases for the products we sell;
. our brand ’s reputation and consumer perceptions regarding the variety, quality, and pricing of
our product offering;
. customer experiences while shopping in our retail stores;
. changes in the economy, such as recessions or in flation, can influence consumer spending;
and
. expansion and promotion of competitors
The profitability of our retail stores is also su bject to cost increases that are either entirely or
partially beyond our control, including, but not limited to:
. rental expenses for both existing and new retail locations;
. procurement prices for products acquired from suppliers;
. employee expenses;
. information technology an d logistics costs; and
. costs associated with significant disruptions in our supply chain.
If any of these factors materialize and we are un able to implement effect ive measures to mitigate
their negative impacts, the profitability of our retail stores, as well as our overall financial position and
performance, could be adversely affected.
Our historical financial and op erational results may not reliably p redict future performance, and
we may not be able to maintain the levels of revenue and profitability we have previously achieved.
Historically, our revenue growth has primarily been driven by the expansion of our store network.
Same-store sales represents the revenue from the retail stores ( ‘‘Comparable Stores ’’)t h a tw e r ei n
operation throughout the e ntirety of the relevant financial year ( or period) and the preceding financial
year (or period) being compared.
RISK FACTORS
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Several factors may contribute to fluctuations in our same store sales growth, including:
. the size and geographic location of stores.
. a decrease in new store openings and the closure of existing stores.
. the ability of stores to maintain and increas e sales to existing customers, attract new
consumers, and meet consumer demands.
. the frequency of consumer visits to stores and the variety and quantity of products purchased.
. the pricing of our products, as well as changes in our pricing strategies or those of our
competitors.
. the timing and costs of marketing and promotional programs conducted by us.
. our capability of to manage inventory effectively and deliver an excellent consumer
experience.
. the competitive landscape we face, including th e entry of new competitors, the introduction
of new products or ser vices, and competitors ’ marketing efforts.
. the impact of epidemics and pandemic s, such as the COVID-19 outbreak.
. seasonal variations in consumer demand.
As a result, historical same store sales growth may not be a reliable indicator of our future
performance. Same store sales growth may decline and may not expected to see significant growth in the
near future.
We recorded loss for the year for FY2023 and we c annot assure you that we will not incur net loss
in the future.
We recorded loss for the year of HK$27.1 million for FY2023, which was mainly attributable to
the COVID-19 pandemic which resulted in lower sales and revenue due to the reduced number of
tourists visiting Hong Kong. See ‘‘Financial Information — Results of Operations ’’and ‘‘Financial
Information — Review of Historical Results Of Operation ’’.
We cannot assure you that we will not record net loss in the future. A loss for the year may expose
us to financial and liquidity risk which may affect our operating cash flow and may further affect our
credit rating and shareholder equity, thus our business operations and financial condition could be
materially and adversely affected.
We recorded net current liabilities and net liab ilities during the Track Record Period, and we
cannot assure you that we will not have net current l iabilities and net liab ilities in the future.
As at 31 March 2023, 2024 and 2025 and 30 November 2025, we recorded net current liabilities of
HK$793.9 million, HK$673.6 million, HK$643.7 million and HK$397.1 million, respectively, and net
liabilities of HK$15.1 million, net assets of HK$129.5 million, HK$44.4 million and HK$55.4 million,
respectively. The net current liabilities as at the dates above were mainly due to the current portion of
bank borrowings, which was mainly for our cost of operations as well as the additions of property, plant
and equipment for our expansion of retail networks. In respect of bank loans and bank overdrafts from a
bank with carrying amounts of HK$284.9 million, HK$337.4 million, HK$303.9 million and HK$302.4
million as at 31 March 2023, 2024 and 2025 and 30 November 2025, we breached a financial covenant
of the relevant bank facility stipulating a maximum net value of the related party balances of the
relevant subsidiary of our Group. The relevant bank has agreed to waive its right to demand immediate
repayment of the outstanding bank loans and bank overdrafts as at 31 March 2023, 2024 and 2025. Such
waivers were only related to the respective reporting dates and did not stipulat e a specific waiver period.
As the carrying amounts of such bank loans and bank overdraft have already been classified under
current liabilities as at 31 March 2023, 2024 and 2025 as a result of the repayable on demand clause of
the relevant bank facilities, the breach has not result ed in a change in the classification of the bank loans
and bank overdrafts.
RISK FACTORS
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We cannot assure you that we will not record net current liabilities and net liabilities in the future.
Our net current liabilities and net liabilities may expose us to liquidity risk which could restrict our
ability to make necessary capital expenditures or develop business opportunities, thus our business,
financial condition and results of operations could be materially and adversely affected.
Furthermore, a net current liability position may expose us to the risk of shortfalls in liquidity.
This in turn would require us to seek adequate financ ing from sources such as equity or equity-linked
instruments and external debt, which may not be available on terms favorable or commercially
reasonable to us or at all. We cannot assure you that we will always be able to raise the necessary
funding to finance our current liabilities and other debt obligations. Our ability to arrange financing and
the cost of such financing are dependent on the economic conditions, capital and debt market conditions,
lending policies of banks, and other factors. In the event we are unable to obtain adequate financing to
meet our working capital requirements, we may be forced to delay, adjust, reduce or abandon our
planned strategies. Our business, prospects and financial condition may be materially and adversely
affected if our cash flow and capital resources are insuf ficient to finance our current liabilities or other
debt obligations.
We face intense competition in the retail sector of beauty, health and pharmaceutical products
The retail sector of beauty, health and pharmaceu tical products is highly competitive and we
compete with other offline and online retailers of different scale. According to Frost & Sullivan, in
2024, the Hong Kong retail market for beauty, health and pharmaceutical products featured more than
5,000 participants, with offline chain retail stores occupying a dominant position in the overall market.
Due to the similar nature of products offered, competitors may compete heavily on price which may
compress our profit margins. We may not be able to source certain products, for example, due to
exclusivity arrangements between their suppliers an d our competitors, which may decrease our appeal to
customers. We may also need to compete with other comp etitors for prime locati ons in different areas,
which may drive up our operation costs.
In addition, with the increasing popularity of online shopping, we also compete with domestic or
foreign competitors which do not operate physical stores in Hong Kong. During the Track Record
Period, our revenue was primarily contributed from sales in our retail stores. We may face a loss of
existing customers if they opt to purchase the products through online channels of our existing or
potential competitors, which may subsequently affect our sales volume and profitability. Due to the
intense competition, we may also be unable to increase or maintain the selling prices of our products to
increase or maintain our gross profit margin, which may affect our profitability.
We may encounter significant challenges s temming from shifts in consumer preferences,
perceptions, and spending habits.
The F&S Report highlights that the consumer goods retail market, health products retail market,
pharmaceutical products retail market and beauty pro ducts retail market are particularly susceptible to
variations in market demand and evolving consumer preferences, perceptions , and spending habits.
Additionally, media coverage regarding the safety, quality, and efficacy of beauty and skincare, health
and supplement, pharmaceutical, maternal and infa nt, personal care, food and household daily
products, and the raw materials, ingredients, and manufacturing processes associated with them can
RISK FACTORS
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severely impact consumer confidence in these pr oducts. Negative reports or controversies in these
areas may lead consumers to question the safety and value of the products we sell, ultimately
affecting their purchasing decisions.
In FY2025, we sold approx imately 28,800 SKUs of products. Our success is significantly reliant
on our ability to provide a diverse range of products, identify emerging market trends, and adapt to the
evolving preferences of consumers. The retail la ndscape is dynamic, and consum er interests can shift
rapidly due to various factors, including economic conditions, cultural trends, and competitive actions.
There is no guarantee that our current offerings will consistently meet the changing demands of
consumers.
If there is a shift in consumer preferences at any point, the demand for these products may decline
significantly. This decline could have material adverse effects on our business, financial condition, and
overall operational results. Moreover, our inability to adapt our product offerings in response to these
market changes may lead to a decrease in sales, which could further exacerbate th e situation. In addition
to reduced sales, changes in consumer preferences could place downward pressure on pricing,
compelling us to lower our prices to ma intain competitiveness. This situation may also lead to increased
marketing expenses as we strive to re-e ngage consumers and regain their trust.
Even if we successfully anticipate these shifts i n preferences, we cannot assure you that we will be
able to introduce enhanced or new products in a timely manner that align with consumer demand. The
process of market research to identify new products to bring to the market can be complex and time-
consuming. Delays in bringing new or latest products to market can result in missed opportunities,
allowing competitors to capitaliz e on trends and capture market share.
Additionally, our reliance on consumer feedback and market research to guide product sourcing
carries inherent risks. If our analysis is flawed or if we misinterpret consumer signals, we risk sourcing
products that do not resonate with our target audien ce. This could lead to increased inventory levels of
unsold products, resulting in potential write-downs and negatively impacting o ur financial performance.
If we fail to anticipate or respond to changes in customer preferences, or if we do not bring suitable
products to market promptly, our market shar e, sales, and profitability could suffer.
Additionally, our lack of familiarity with these products may complicate quality inspection and
control, as well as proper handling, storage, and de livery. We may experience higher return rates on new
products, receive more consumer complaints, and face costly product liability claims, all of which could
damage our brand reputation and financial performance.
Furthermore, we may have limited purchasing power in these new product categories, making it
difficult to negotiate favourable terms with suppliers. To gain market share or remain competitive, we
may need to adopt aggressive pricing strategies. Achieving profitability in these new categories may
prove challenging, and our profit margins, if any, could be lower than expected, adversely impacting our
overall profitability and operational results. We cannot guarantee that we will be able to recover our
investments in introducing these new product categories.
RISK FACTORS
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We face potential liabilities or cl aims related to intellectual propert y rights infringement and false
trade descriptions concerning our products.
Our products are sourced from brand owners, ma nufacturers or their authorised or licensed
distributors, dealers or agents in Hong Kong (i.e. suppliers who are authorised by the brand owners
directly or indirectly through the pr imary distributors, dealers or agents as sub-distributors, dealers or
agents), and (ii) other suppliers, which include ov erseas suppliers of products for which, to our
knowledge, there is/are official channels of supply in Hong Kong, which are generally known as
‘‘parallel import ’’product supplier, as well as suppliers of products for which there is no official channel
of supply in Hong Kong.
We have obtained legal opinions from our Hong Kong Legal Counsel regarding the potential
liabilities associated with the buying and selling of parallel-imported products under Hong Kong law.
For further details, please refer to the section titled ‘‘Business — Supply Channels ’’.
We cannot guarantee that our suppliers will not breach the warranty provided by them to us on the
authenticity and legality of the products supplied and on the absence of infringement of trademarks,
copyrights, or other intellectual property rights. Additionally, there may be disputes or legal proceedings
involving our suppliers or our Group regarding the sale of parallel-imported products in Hong Kong.
Furthermore, we cannot assure that any future changes in Hong Kong laws or their interpretations
concerning the legality of parallel import arr angements will not adversely affect our Group ’s operations
and profitability.
We may be involved in legal and other disputes from time to time arising from allegations relating
to intellectual property rights infringement and fa lse trade descriptions co ncerning our products.
It is critical that we operate our business without infringing upon the intellectual property rights of
third parties, including patents, copyrights, trade s ecrets and trademarks. However, we cannot be certain
that our operations or any aspects of our business do not, or will not, infringe upon or otherwise violate
patents, copyrights, trademarks, know-how, trade s ecrets or other intellectual property rights held by
other parties, whether such claims are valid or otherwise. Any claims against us, with or without merit,
could be time-consuming and costly to defend or litigate, divert our management ’s attention and
resources or result in the loss of goodwill associated with our brand. The validity and scope of
intellectual property claims involve complex legal and factual questions and analysis and, therefore,
entail significant risks and uncertainties. If we are found to have violated the intellectual property rights
of any third party, we may be subject to liabilities for our infringement activities, which could result in a
judgment, fine or settlement involving a payment of a material sum of money, prohibitions from using
such intellectual property, or requirements for incurring licensing fees or developing alternatives of our
own. Such significant monetary liabilities and/or restrictions or prohibitions from using the intellectual
property at question may materially disrupt our business, financial condition and results of operations.
RISK FACTORS
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Our Official Channel Suppliers may cease their business relationship with us at any time.
We may be subject to protracted disputes or le gal proceedings involving our supplier(s) or our
Group in relation to our parallel-imported products, in Hong Kong. These disputes may arise from
intellectual property rights infringement and false trade descriptions concerning our parallel-imported
products and could affect our relationship with such Official Channel Supplier(s), which may lead to the
termination of our business relationship with such supplier(s). Even without any ongoing disputes or
legal proceedings, our suppliers, inc luding our Official Channel Suppl iers, could cease their business
relationship with us at any time. Depending on whether we are able to secure alternative sources of
product supply on a timely basis, our business and results of operations may be adversely affected.
Our business and operations are vulnerable to foo d safety issues, product liability claims, and
product recalls.
Like other retailers, we may face product liability claims or recalls if any of the products we sell
are found to be defective, unfit for consumption, or responsible for causing illness. This risk is
particularly relevant for beauty and skincare, h ealth and supplement, pharmaceutical, maternal and
infant, personal care, food and household daily products, which may become unfit due to contamination,
tampering by unauthorized third parties, or other issues arising during production, procurement,
transportation, or storage. As we do not manufacture these products, we could be implicated in legal
proceedings related to product liability if safety or quality issues arise.
We cannot guarantee that we will be able to avoi d product recalls or liability claims due to
deficiencies in product quality, contamination, or other food safety issues in the future. Although we
receive ingredient information for the products w e sell, we cannot guarantee that we will detect all
harmful or prohibited substances in the products we procure and sell.
If any product liability claims are made against us in the future, regardless of their outcome, the
negative publicity could harm our reputation. Additionally, the full extent of our financial liability under
a product liability claim may not be fully covered by our insurance, and any claims could lead to legal
costs and expenses associated with product recall campaigns or rectifying product defects. Such
circumstances could adversely affect our business, operational results, and financial condition.
Expanding our product offeri ng may expose us to new challenges and increased risks.
Introducing new SKUs, expanding into various product categories, and increasing the number of
products can present significant risks and challenges. Our unfamiliarity with these new products,
coupled with a lack of relevant consumer data, may hi nder our ability to accurat ely anticipate consumer
demand and preferences. This misjudgement c ould lead to potential inventory write-off.
Our Group faces the risk of inventory obsolescen ce, which could adversely impact our cash flow
and liquidity.
We are exposed to the risk of inventory obsolescence. Our business is influenced by customer
preferences and behaviours, which are beyond our control. A significant decline in customer demand for
the products we sell may lead to lower sales and a slowdown in inventory consumption, resulting in
RISK FACTORS
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reduced inventory turnover. Our retail business involves the storage and stocking of a variety of beauty
and skincare, health and supplem ent, pharmaceutical, maternal and infant, personal care, food and
household daily products, each with different shelf lives.
Our inventories primarily consis t of beauty and skincare, health an d supplement, pharmaceutical,
maternal and infant, personal care, food and household daily products. As at 31 March 2023, 2024, 2025
and 30 November 2025, our inventories were approximately HK$176.0 million, HK$225.4 million,
HK$336.0 million, and HK$402.4 million, respectively. Our average inventory turnover days were
approximately 63 days, 51 days, 61 days, and 63 days for FY2023, FY2024, FY2025 and 8MFY2026,
respectively.
For FY2023, FY2024 and FY2025 and 8MFY2026, we have written off approximately HK$0.9
million, HK$0.4 million, HK$1.2 million, and HK$0.4 million, respectively, due to the disposal of
damaged, unsold, or expired products, as well as stock loss. However, we have not made any allowances
for inventory resulting from product expiry or damage during the Track Record Period.
We cannot guarantee that customer preferences and economic conditions will remain stable.
Unexpected changes in demand for the products we sell may lead to overstocked inventories, which
could decrease inventory values. Additionally, shifts in economic conditions or customer activity may
render our inventory obsolete.
If we are unable to manage our inventory effectively in the future, our liquidity and cash flow may
be negatively impacted. Additionally, should we fail to source products that align with consumer
preferences, the volume of slow-moving or expired i nventory may increase. This could force us to sell
slow-moving items at reduced prices or dispose of expired products, which would materially and
adversely affect our financial position and operational results.
Our Group faces risks relating to non-ownership of intellectual property rig hts of our private label
products.
Our Group offers a range of private label produ cts which are sourced from and manufactured by
third-party OEM/ODM suppliers. Our Group generally does not acquire the underlying intellectual
property rights in relation to the production of such products or generated from the development of such
products, hence our Group has limited or no exclusivity over such products.
As a result, competitors or other retailers may sour ce and sell substantially similar products from
the same or similar OEM/ODM suppliers, thereby weakening our Group ’s ability to differentiate its
offerings which may adversely affect our profit margins. In addition, our Group is reliant on our OEM/
ODM suppliers for the continued supply of these private label products. Any disruption in supply,
deterioration in product quality, increase in production costs, or refusal by suppliers to continue
manufacturing for us could materially and adversely affect the availability, pricing and profitability of
our private label product lines. Furthermore, our Group have limited ability to prevent third parties from
copying or replicating our private label products, which may diminish brand recognition and adversely
affect the sales of such products.
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We generally do not enter into long-term agreemen ts with our suppliers, which may negatively
impact our business if we fail to secure a stable supply of products.
Generally, we do not enter into long-term contracts with our suppliers, including brand owners.
We may encounter delays in replenishing popular items if they sell out quickly. We cannot
guarantee that our suppliers will provide us with sufficient goods to meet customer demand. Even if we
maintain strong relationships with our suppliers, they may face challenges that prevent them from
remaining in business, such as economic conditions, labour disputes, regulatory or legal issues, natural
disasters, or other factors. If we are unable to procure products at all or obtain favourable terms, our
business, financial condition, and operational results could be adversely affected.
Any failure to adequately address complaints or w arnings from government authorities related to
our business operations or products could materi ally impact our business and operational results.
During the Track Record Period and up to the Latest Practicable Date, our Group has received
several complaints and warning letters from relevant government authorities in Hong Kong. For more
details, please refer to the section titled ‘‘Business — Non-compliance and enquiries from government
authorities ’’in this prospectus.
If there are any future in incidents of non-compliance with any laws and regulations and
enforcement actions are taken by the relevant autho rities, our Group or our Directors may face penalties,
and our Directors could also be held liable for these non-compliances. Additionally, there is no
guarantee that our business, financial position, and future prospects including our reputation and
relationships with customers will not be adversely aff ected by these historical non-compliance incidents.
Furthermore, if similar complaints or claims arise against us in the future, even if they are without
merit or unsuccessful, they could require us to divert management and other resources from our core
business activities. This situation may erode customer confidence in the products we sell, which could
materially and adversely affect our cash flow, profitab ility, financial condition, and overall business
prospects.
Our marketing activities are vital to the succes s of our Group, and any fa ilure to maintain or
enhance our marketing capabilities could mat erially harm the market s hare, brand recognition,
and reputation of our brand.
The effectiveness of our marketing efforts is a significant determinant of our success. We employ a
diverse range of marketing strategies, utilizing both offline and online channels. This includes
collaborating with key opinion leaders (KOLs), and employing sales promoters and product consultants.
We also conduct in-store promotions and have intro duced a membership program to encourage purchase
at our stores. Additionally, we utilize online advertis ements through social media platforms and offline
advertisements to reach a broader a udience. These various ma rketing initiatives are essential not only for
the success of our brand but also fo r the overall success of our Group. For further details, please refer to
the section titled ‘‘Business — Marketing and Promotion ’’in this prospectus.
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However, our ability to sustain or develop our marketing capabilities may be adversely affected by
several factors. This includes our capacity to accurate ly identify consumer preferences and effectively
manage media resources, as well as compliance with government regulations on advertisements. Any
challenges that negatively impact the scale and effec tiveness of our marketing capabilities ma ya d v e r s e l y
affect the market share, brand recognition, and reputation of our brand.
Furthermore, a significant increase in our market ing expenses, whether due to market conditions or
other factors could negatively impact the profitability of our Group.
Our Group faces risks relating to sales concentration at key retail stores.
During the Track Record Period, the Group derived a significant portion of its total revenue
generated from retail stores from a limited number of r etail stores. Specifically, revenue generated from
the Group ’s top three retail stores accounted for 46.3%, 38.0%, 28.0% and 22.1% of its total revenue
generated from retail stores for FY2023, FY2024, FY2025 and 8MFY2026, respectively.
Any material decline in sales performance at these key stores, whether due to reduced foot traffic,
increased local competition, store renovation, temporary closure, labour shortages, or changes in local
economic conditions, could have a disproportionate and adverse impact on the Group ’s overall revenue
and profitability. Furthermore, the loss of any of these top-performing stores due to non-renewal of
leases, adverse regulatory actions, or other unforese en events could materially and adversely affect the
Group ’s business, financial performance and results of operations.
As most of our retail stores are situated on lease d properties, we face risks associated with the
commercial real estate rental market in Hong Kong. Disputes with our landlords may arise, and if
we are unable to secure the renewal of existing le ases on commercially favourable terms, our
business, operational results, and ability to execute our growt h strategy could be adversely
affected.
During the Track Record Period, save for one retail store in Sheung Shui which is located on
premises owned by our Group, we leased the premises for all the other retail stores, offices, and
warehouse. Consequently, rental expenses represent a significant portion of our operating costs. For
FY2023, FY2024 and FY2025 and 8MFY2026, our total cash outflow for leases of retail stores, offices,
and the operational facilities of our warehouses amounted to approximately HK$93.4 million, HK$133.1
million, HK$168.8 million and HK$133.8 million, respectively.
Typically, our lease agreements have an initial term ranging from one to four years. Our
substantial operating lease obligations expose us to significant risks, including increased vulnerability to
adverse economic conditions, limitations on obtaining additional financing, and reduced cash available
for other purposes. Any increase in rental costs in Hong Kong could adversely impact our business,
financial condition, and operational results.
Rents may increase during the lease term or after th e initial period, either at a fixed rate or in line
with prevailing market rates. In instances where we lack the option to renew a lease agreement, we must
negotiate renewal terms with the landlord, who may d emand a rent increase and/or substantial changes
to the lease terms.
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Regarding our existing leases, disputes may arise with landlords concerning our current tenancies,
potentially leading to claims or litigation, and w e may not be able to renew these tenancies. We also
compete with other retailers for prime locations in a highly competitive market for retail premises, and
there is no guarantee that we will successfully enter into new lease agreements for desirable locations or
renew existing leases under favourable terms.
Consequently, any inability to secure leases for a ttractive locations on commercially favourable
terms could have a materially adverse effect on our business, financial condition, or operational results.
Furthermore, if a lease is renewed at a significantly higher rent than our existing terms, or if any
existing favourable conditions are not extended, we will need to assess whether renewing under these
m o d i f i e dt e r m si si no u rb e s ti n t e r e s t .
Should we fail to renew leases for our retail stor es, we may be forced to close or relocate those
stores. This would result in loss of sales during the closure period and could incur installation,
renovation, and other costs and risks associated with new premises. Additionally, revenue and profit
generated at a relocated store may fall short of the previous levels. Therefore, any inability to renew
existing leases on commercially favourable terms could materially adversely affect our business,
financial condition, or operational results.
The current locations of our retail stores may become less attractive, and we may struggle to
identify and secure appealing new sites on reasona ble terms, or potentially at all, due to intense
competition from other retailers for high-quality locations.
As at the Latest Practicable Date, the majority of our retail stores were situated in commercial and
tourist areas across Hong Kong. The success of these locations is heavily influenced by their strategic
positioning and accessibility to consumers. As consumer preferences evolve, the desirability of these
sites may shift, and the competition for locations with high pedestrian traffic is exceptionally fierce.
There is no assurance that our current locations w ill remain favourable, especially as new market
entrants and existing competitor s seek to secure prime real estate.
Should any of our existing locations become less desirable, and if we are unsuccessful in obtaining
new locations that meet our criteria for attractiveness and accessibility on favourable terms, our ability
to implement and execute our growth strategy could be significantly hindered. This situation could lead
to reduced pedestrian traffic, lower sales volu mes, and ultimately impact our overall financial
performance.
If we are forced to accept less advantageous lease terms or higher rental rates, our operating
margins could be negatively affecte d. Moreover, securing locations in emerging or less saturated markets
may require significant investments in marketing a nd brand awareness to attract consumers in those
areas. If any of our existing locations become unattractive and we are unable to secure desirable new
locations on favourable terms, our ability to execute our growth strategy may be adversely impacted.
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The owners of some of our leased properties for retail stores have received building orders or
warning notices. Any necessary rectificatio n work conducted to comply with these orders or
notices may impact our opera tions and performance.
During the Track Record Period, our Group had been charged and pleaded guilty to three counts of
unauthorised building structures involving the construction of signboards on the external wall of the
shopfront of two of our retail stores. Our Group was fined a total of HK$26,941. As at the Latest
Practicable Date, there were unresolved building orders and warning notices pertaining to the premises
for our three retail stores. For more details about t he building order and warning notice, please refer to
the section titled ‘‘Business — Properties — Leased properties ’’and ‘‘Business — Building Order and
Warning Notice Against Our Leased Properties for Our Retail Stores. ’’
There is no assurance that premises on which our retail stores are located are free from
unauthorised structures. If any su ch structures need to be removed or rectified, it could disrupt the
operations of the affected retail stores an d adversely impact our overall performance.
Our warehouse is situated in a single location, ma king us vulnerable to operational breakdowns,
natural disasters, or other events that could disrupt our business.
Our warehouses occupy multiple floors within a single building in Fanling, Hong Kong, which
exposes us to risks of operational breakdowns due to accidents. In the event of a fire, flood, or any other
natural disaster, or any circumstance beyond our control that hampers our ability to operate the
warehouses, we may incur substantial additional expenses to evacuate the premises and relocate to an
alternative site. Any interruptio n or prolonged suspension of operat ions, or damage to or destruction of
our warehouses due to operational breakdowns or catastrophic events, could prevent us from supplying
products to our customers, which may materially and adversely affect our business, financial condition,
or operational results.
Additionally, the products stored in our warehouses are at risk of theft, which could severely
disrupt our operations. We cannot guarantee that our insurance policies in place will adequately
compensate us for any losses resulting from damage to our warehouses or disruptions to our operations.
Any such losses could materially and adversely impact our business, financial condition, or operational
results.
We face certain risks related to the transportation and delivery of the product s, including potential
delays caused by the suspension or interruption of services by our in-house logistic team, as well as
increases in logistics costs.
During the Track Record Period, we sourced th e products from suppliers all over the world.
Generally, these suppliers arrange for the delivery of the products to our warehouse using fleet
transportation and bear the associated transportation costs. For the products, we utilise our own logistics
team to deliver to our retail stores.
For more details on our logistics arrange ments, please refer to the section titled ‘‘Business —
Inventory Management, Warehousing and Logistics — Warehousing and Logistics ’’in this prospectus.
Fleet transportation carries inherent risks, including accidents, property l oss or damage, fires, collisions,
and interruptions due to mechanical failures, adver se traffic conditions, or extreme weather. If any of
RISK FACTORS
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these events occur, we cannot guarantee timely pro curement of the products to meet the customers ’
demand or the ability to deliver products to our retail stores as planned. Should transportation services
for the products from suppliers to our warehouses and/or from our warehouses to the retail stores be
suspended or disrupted, and we are unable to secure alternative transportation options promptly, our
business operations, reputation, and profitabili ty may be significantly and adversely affected.
There is no assurance that our logistics service fees will remain stable or that they will not increase
in the future. If logistics service fees rise and w e are unable to identify alternative providers at
reasonable rates, our net profits may be reduced, thereby adversely affecting our financial condition and
operational results.
Rising global political tensions may negatively impact our business.
Historically, international market conditions and the regulatory environment have been influenced
by geopolitical frictions, regional conflicts, and competition among nations. Changes in trade policies,
treaties, and restrictions, or th e mere perception of such changes, could lead to a decline in economic
conditions in the countries and territories from which we source our products and where we sell them.
This could materially adversely affect our business, operational results, and financial position.
During the Track Record Period, we procured p roducts from various ov erseas countries and
regions. Our activities with foreign suppliers expose us to potential interruptions or cancellations in
sales and procurement, along with increased costs stemming from restrictive trade policies, tariffs, and
duties or the perception that such changes might occur. Growing frictions and tensions in international
relations could also indirectly reduce demand for our products. Any discord between these countries or
regions could render us vulnerable to negative operational, financial, and reputational impacts.
Increased political tensions might lower the level s of cross-border trade, investment, and other
economic activities, which would materially and adversely affect global economic conditions and the
stability of trading and financial markets, ultimately impacting our business, financial health, and
operational results. Potential political tensions and trade disputes may also hinder our ability to develop
or maintain business relationships with our foreign suppliers. If we do not respond to these unexpected
developments promptly and effectively, our business, financial condition, and operational results may be
significantly compromised.
If we are unable to effectively manage our expansio n plans or secure sufficient funding for them,
our business and growth prospects m ay be significantly hindered.
We aim to grow our business by opening additional retail stores in Hong Kong. For more details,
please refer to the section titled ‘‘Business — Our Strategies ’’in this prospectus. Should our expansion
efforts prove to be wholly or partially unsuccessful, or if we struggle to manage our new retail locations,
our cash flow and profitability could be advers ely affected. In such cases, we may need to seek
additional financing to meet our cash requirements.
Taking on debt could increase our financial costs and may impose operating and financing
covenants that restrict our expansion plans and operations, as well as our ability to pay dividends.
Moreover, our ability to secure additional capital o n acceptable terms is subject to various uncertainties
that may be beyond our control. We cannot guarantee that future financing will be available to us in
RISK FACTORS
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amounts or on terms that are acceptable or favourable, or even available at all. If we are unable to obtain
financing on satisfactory terms, our business, financial condition, operational results, and growth
prospects may suffer.
Additionally, our expansion plans may place considerable demands on our management and
various resources, including operational, technological, and financial capacities. To effectively manage
and support our growth, we may need to enhance our existing operational and administrative systems,
strengthen our financial and management controls, improve our ability to recruit, train, and retain
qualified management personnel, as well as front-line staff, administrative, sales, and marketing teams;
and continue nurturing our relationships with suppliers and customers.
All of these efforts will require substantial time and attention from our senior management and
could incur significant additional expenses. We canno t assure you that we will effectively manage future
growth, and our ability to capitalize on new business o pportunities may be materially compromised if we
fail to do so. This, in turn, could adversely impact our business, financial condition, operational results,
and overall prospects.
Our results of operations may experience fluctu ations due to seasonality and other factors.
Various elements can cause our overall results to va ry from period to period, including the timing
of new store openings, associated pre-opening costs, operating expenses for newly launched stores,
losses related to store closures, and seasonal fluctu ations that differ by regi on. Typically, we generate
higher revenue during the months of July and Augus t and from December to February. Our Directors
attribute such spikes to festive promotions in our retail stores during summer holidays and major public
holidays such as Christmas, New Year, and Chinese New Year.
This seasonal pattern can lead to fluctuations in our operating results, making it difficult to use
comparisons of our performance across different periods as reliable indicators of future performance.
Moreover, if our operations are disrupted by unfo reseen events during th ese festive seasons, our
business, financial condition, and results of operations could be adversely affected.
Our success relies heavily on our key personnel, and any loss of their services or inability to
attract suitable replacements could severely d isrupt our business and growth prospects.
The continuous contributions of our executive directors and senior management are essential to our
operations. In particular, we depend on the expertise and experience of Mr. Tse, our Chairman of the
Board and Executive Director, as well as Ms. Tse, our Executive Director, in formulating our group ’s
strategic planning and overall business development. For more details about our key personnel, please
refer to the section titled ‘‘Directors and Senior Management ’’in this prospectus.
If one or more key personnel are unable or unwilling to continue in their roles, we may struggle to
find adequate replacements, which could lead to significant disruptions in our business operations and
strategic implementation. This situation may materially and adversely affect our financial condition and
operational results. Additionally, we may incur substantial costs in recruiting new personnel and training
existing employees, further increasing our operational expenses and negatively impacting our
profitability.
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We operate as an e-commerce trader in the PRC which is subject to different regulatory and
licensing requirements as compared to our operations in Hong Kong.
We operate as an e-commerce trader on major e-commerce platforms in the PRC to conduct cross-
border sales to customers located in the PRC. Such cr oss-border e-commerce tr ading is subject to the
PRC ’s legal and regulatory regime which is different from Hong Kong legal and regulatory
requirements. Under the PRC ’s legal and regulatory regime, there a re specific licensi ng requirements on
the sale, promotion and importation of various pro ducts, including pharmaceu tical products, which we
sell on our e-commerce platforms in the PRC. The regulatory landscape is evolving and subject to
interpretation by relevant PRC authorities, including the State Administration for Market Regulation. In
the past, we have received enquiries from the relevant authorities which required our responses and
actions. There is no assurance that our business model as an e-commerce trader targeting the PRC
market will continue to be permissible in the PRC, or that the regulatory framework will not change
adversely. Any changes in the legal and regulatory re quirements or interpretation of applicable laws and
regulations may affect our scope of business, which may result in a reduction of the range of products
that we may offer in the PRC or the cessation of our business altogether. If additional licences or
approvals are required to operate our existing business or when we expand our business, we may need to
incur additional time and costs to ensure compliance and apply for such licences or approvals, which
may lead to operational disruptions or necessitate a r estructuring of our business model. Furthermore, we
may be subject to regulatory guidance, enquiries, i nvestigations, or enforcement actions by the PRC
authorities, which may be escalated to corrective or punitive orders, administrative penalties and
litigation proceedings, all of which could cause adversely affect our operations, reputation and financial
performance. Any compulsory alterations to our busin ess practices pursuant to a ny such governmental or
court order might also adversely affect our fi nancial performance and growth prospects.
We are exposed to fluctuations in foreign currency exchange rates.
Some of our purchases are made from various overseas suppliers, including Japan and Korea, with
the settlement currency for these transactions predominantly in Japanese yen and Korean won. In
contrast, all our sales are generally conducted in Hong Kong dollars. The foreign currencies we deal
with are not linked to the Hong Kong dollar, leading to potential fluctuations in their exchange rates.
Foreign exchange differences are classified as other gains and losses, and we recorded foreign
exchange gains of approximately HK$75,000, exchange losses of HK$0.3 million, HK$1.0 million, and
HK$0.5 million for FY2023, FY2024, FY2025 and 8MFY2026, respectively. Although the Hong Kong
dollar is currently pegged to the U.S. dollar, there is no guarantee that this policy will remain unchanged
in the future.
Our Group does not have a foreign currency hedging policy in place. Instead, we typically utilize
trust receipt loans, invoice financing, and letters of credit to settle purchases in foreign currencies.
Fluctuations in foreign exchange rates can signif icantly impact our procurement costs in Hong Kong
dollars. To maintain our market competitiveness, we may find it challenging to raise retail prices to
offset losses incurred from the depreciation of the Hong Kong dollar. Consequently, any depreciation of
the Hong Kong dollar against foreign currencies could adversely affect our operational results.
RISK FACTORS
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Our insurance policies may not provide sufficient coverage for liabilities arising from claims and
litigation, and our insurance premiums may increase over time.
We maintain various insurance policies that cover, among other things: (i) statutory employees ’
compensation for all full-time and par t-time employees; (ii) contractors ’ public liability for interior and
exterior decoration, renovation, repairs, maintenan ce, and reinstatement work at our retail stores; (iii)
shop package insurance for contents, stock, and third-party public liability within our retail locations;
(iv) stock coverage for items in our offices and wareh ouses; (v) medical insurance for our full-time
employees; and (vi) marine cargo insurance.
However, there may be situations where we are not covered for certain types of losses, damages, or
liabilities. If we are held liable fo r uninsured losses or if claims for i nsured losses exceed our coverage
limits, our business, financial condition, and operational results could be materially and adversely
affected.
RISKS RELATING TO OUR INDUSTRY
We operate in a highly competitive industry and cannot guarantee that we will be able to compete
successfully.
According to the F&S Report, the retail market is very competitive, with numerous chain retailers
operating 20 or more stores in Hong Kong. Our larger competitors may possess greater financial and
marketing resources, while our smaller competitors may be more agile in responding to changes in
pricing and consumer preferences.
Key competitive factors in our industry include pricing, the ability to keep up with market trends,
and product quality. If we fail to compete effectively or cost-efficiently against our rivals, we risk losing
market share or being unable to expand it, which could materially and adversely affect our business,
operational results, financial condition, and future prospects.
We rely heavily on the Hong Kong retail sales market, and any slowdown in the Hong Kong
economy could adversely impact our business, ope rational results, and fi nancial performance.
During the Track Record Period, the vast majority of our revenue was generated from retail sales
in our retail stores in Hong Kong, with the remainder coming from sales to wholesale customers and
retail sales through online platforms. Our Directors a nticipate that retail sales through retail stores in
Hong Kong will remain our primary source of income following our Listing.
If Hong Kong encounters adverse economic or market conditions due to factors beyond our
control, such as a local economic downturn (including any actual or forecasted recession), a decline in
tourism, natural disasters, outbreaks of contagious dis eases, or terrorist attacks, our overall business and
operational results may be signifi cantly affected. Consequently, an y perceived or actual weakening of
the economic, market, political, or regulatory environment in Hong Kong that impacts consumer
spending could materially and adversely impact our business, financial condition, operational results,
and future prospects.
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O u re m p l o y e ee x p e n s e sm a yr i s ed u et of a c t o r sb eyond our control, such as changes in employee
protection legislation.
For FY2023, FY2024 and FY2025 and 8MFY2026, our employee expenses were approximately
HK$105.2 million, HK$174.0 million, HK$223.4 million, and HK$194.5 million, respectively. Although
we have historically maintained a relatively stable ratio of employee expenses to revenue, this ratio may
increase in the future due to factors beyond our control, including inflation rates, minimum wage
changes, and laws related to employee salaries and benefits.
Specifically, salary levels in Hong Kong ’s retail industry have generally been rising. According to
the F&S Report, from 2020 to 2024, the average monthly salary for all occupations in the retail sector
increased at a CAGR of 2.6%, rising from HK$19,354.0 in 2020 to HK$21,471.0 in 2024. Additionally,
the statutory minimum wage in Hong Kong was increased to HK$42.1 per hour effective 1 May 2025.
Our operations must comply with this minimum wage requirement, and any further increases will lead to
higher employee expenses.
We may not be able to effectively raise our price s to offset these increased employee costs, which
could result in losing some customers due to highe r prices. In such cases, our business, financial
condition, and operational results coul d be materially and adversely affected.
We operate in a regulated industry , which exposes our Group to potential liabilities from litigation
that could impact our business operations and reputation.
The retail business which our Group is principally engaged in, is regulated by various laws and
regulations relating to food safety, food labelling, consumer goods safety and intellectual property rights
in Hong Kong, such as those set out in the ‘‘Regulatory Overview ’’section.
In compliance with relevant legislation and regulations, our Group is required to obtain the
necessary licenses, certificates, o r registrations to oper ate our business. These licenses and certificates
may impose specific requirements regarding labe lling, advertising, and the importation of certain
products. During our regular business operations, we face the risk of liability arising from non-
compliance with these laws and regulations, partic ularly if our employees are not well-versed in the
applicable rules. Such actions could lead to advers e publicity, which may negatively impact our brand
and reputation.
RISKS RELATING TO THE GLOBAL OFFERING
An active trading market for our Shares on the Stock Exchange might not develop or be sustained,
and the market price of our Shares may be volatile.
After the completion of the Global Offering, we cannot guarantee that a vibrant trading market for
our Shares will emerge or remain stable on the Stock Exchange. The Offer Price of our Shares is
established through negotiations between our Company and the Overall Coordinator (acting on behalf of
the Underwriters), which may not reflect the trading price of our Shares after the Global Offering.
Consequently, the market price of our Shares coul d fall below the Offer Price at any time after the
Global Offering.
RISK FACTORS
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Our Controlling Shareholders may have significant influence over our operations, potentially
misaligning with the interests of independent Shareholders.
Immediately following the Global Offering, our Controlling Shareholders will hold approximately
75% of the Shares, excluding the effects of the Over-allotment Option. The interests of our Controlling
Shareholders may differ from those of other Sharehold ers. If conflicts arise between their interests and
those of independent Shareholders, the latter may be adversely affected by the decisions made by the
Controlling Shareholders. Additionally, they may have considerable influence over the outcome of
corporate transactions and other matters requiring Sh areholder approval, such as mergers, asset sales,
and the election of Directors. Our Controlling Shareholders are not obligated to prioritize the interests of
other Shareholders.
The price and trading volume of our Shares may experience volatility, potentially leading to
significant losses for investors participating in the Global Offering.
Various factors, including changes in our revenue, earnings, cash flows, new investments,
regulatory updates, key personnel changes, or competitors ’ actions, could lead to unexpected fluctuations
in the market price or trading volume of our Shares. Stock prices have experienced notable volatility in
recent years, which may not always correlate directly with the performance of the companies involved.
Such volatility, along with broader economic conditions, could adversely impact Share prices, leading to
significant losses for investors.
Investors in our Shares during the Global Offering will face immediate dilution and may encounter
further dilution if we issue ad ditional Shares in the future.
The Offer Price of our Shares exceeds the net tang ible assets value per Share before the Global
Offering, meaning that investors will experience immediate dilution in the pro forma net tangible assets
value per Share. To support business growth, we may consider issuing additional Shares in the future to
raise funds for expansion, ongoing operations, or acquisitions. If these additional funds are raised
through new shares or equity-linked securities issued outside a pro-rata basis to existing Shareholders,
then (i) the ownership percentage of existing Shareholders may decrease, leading to further dilution and
a reduction in earnings per Share, (ii) new securities may have rights, preferences, or privileges that are
superior to those of existing Shareholders, and/or (iii) investors may see further dilution in the net
tangible assets value per Share if additional Shares are issued at a price lower than the net tangible
assets value.
Significant future sales or divestments of Share s by major Shareholders could negatively impact
the prevailing market price of our Shares.
Certain Shareholders are subject to specific lock-up periods, as detailed in the section titled
‘‘Underwriting ’’of this prospectus. However, we cannot ensure that these Shareholders will not sell
Shares after the lock-up periods expire. The sale of large quantities of our Shares in the public market,
or even the perception that such sales may occur , could have a materially adverse effect on the
prevailing market price of our Shares. Consequently, the market price upon trading commencement
could be lower than the Offer Price.
RISK FACTORS
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The Offer Price will be determined on the Price De termination Date, but trading will not begin
until the Shares are delivered.
The Shares will not start trading on the Stock Ex change until delivery, which is anticipated to
occur a few Business Days after the expected Price Determination Date. During this interim period,
investors may be unable to sell or trade their Shares, exposing them to the risk that the price may be
lower when trading begins due to unfavourable market conditions or other adverse developments during
that time.
Investors should be cautious about relying on fact s, forecasts, esti mates, and statistics in this
prospectus related to the economy and our in dustry from official government sources.
The facts, forecasts, estimates, and other statis tics presented in this prospectus regarding the
economy and our industry have been sourced from offi cial government materials. While we have taken
reasonable care to compile and reproduce this information, we cannot guarantee its accuracy or
completeness. The information derived from gover nment publications has not been independently
verified by the Relevant Parties. As such, no as surances are made regar ding its reliability.
It is important to note that due to potential flaws in data collection methods or discrepancies
between published data and actual market conditions, the information may be inaccurate or not directly
comparable to statistics from other countries. The statistics and industry data sourced from official
government publications may also differ from information available from other sources. Consequently,
investors should exercise caution and not place undue reliance on these facts, forecasts, estimates, and
statistics when making i nvestment decisions.
If securities or industry analysts do not publish research reports about our business, or if they
downgrade their recommendations regarding our S hares, the market price and trading volume of
our Shares may decline.
The trading market for our Shares will be influenced by research and reports published by industry
or securities analysts. A downgrade by any of these analysts could lead to a decline in the price of our
Shares. If analysts cease coverage of our Company o r fail to publish reports regularly, we may lose
visibility in the financial markets, potentially c ausing a decrease in our stock price or trading volume.
We may incur increased costs as a res ult of becoming a listed company.
Due to the Global Offering, we may face heighten ed administrative and compliance requirements
that could lead to significant costs. As a public company, our management team will need to develop the
expertise necessary to meet various regulatory obligations, including corporate governance and investor
relations. Our management will need to evaluate our internal controls with new standards and implement
necessary changes. We cannot guara ntee that we will manage these demands effectively and in a timely
manner. Failure to do so could adversely affect our opera tional efficiency, finan cial health, and market
perception.
RISK FACTORS
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--- page 54 ---
We may not be able to distribute dividends to our Shareholders.
We cannot guarantee when or in what form dividends will be paid on our Offer Shares after the
Global Offering. The Board proposes dividends based on several factors, including our financial
performance, capital requirements, and overall business conditions. We may not have sufficient profits
to make dividend distributions in the future, even if our financial statements indicate profitability.
Investors may face challenges in en forcing their Shareholder rights.
Our Company is an exempted company incorporated in the Cayman Islands with limited liability,
and the laws of the Cayman Islands differ in cer tain respects from those of Hong Kong or other
jurisdictions where investors may reside. Our cor porate affairs are governed by the Memorandum and
Articles of Association, the Companies Act, and the common law of the Cayman Islands. The rights of
Shareholders to take legal actions against our Company and/or our Directors, actions by minority
Shareholders, and the fiduciary duties of our Directors to our Company under Cayman Islands law are to
a large extent governed by the common law of the Cayman Islands. The common law of the Cayman
Islands is derived in part from comparatively limit ed judicial precedents in the Cayman Islands, as well
as from English common law, which has persuasive but not binding authority on a court in the Cayman
Islands. The rights of Shareholders and the fiduciary duties of our Directors under Cayman Islands law
may not be as clearly established as they would be u nder statutes or judicial precedents in Hong Kong or
other jurisdictions where investors reside. In particular, the Cayman Islands has a less developed body of
securities laws. As a result of all of the above, Share holders may have more diffi culty in exercising their
rights in the face of actions taken by the management of our Company, Directors or major Shareholders
than they would as shareholders of a Hong Kong company or company incorporated in other
jurisdictions.
Forward-looking information in this prosp ectus is subject to risks and uncertainties.
This prospectus includes certain statements and information that are forward-looking, employing
terminology such as ‘‘anticipate ’’, ‘‘believe ’’, ‘‘could ’’, ‘‘going forward ’’, ‘‘intend ’’, ‘‘plan ’’, ‘‘project ’’,
‘‘seek ’’, ‘‘expect ’’, ‘‘may’’, ‘‘ought to ’’, ‘‘should ’’, ‘‘would ’’,o r ‘‘will ’’, as well as similar expressions.
You are advised that relying on any forward-looking statement entails risks and uncertainties, and that
the assumptions underlying such statements may prove to be inaccurate, which would consequently
render the forward-looking statements themselves incorrect. Given these and other risks and
uncertainties, the presence of forward-looking statem ents in this prospectus should not be interpreted as
representations or guarantees by us that our plans an d objectives will be realized. These statements
should be evaluated in the context of various significant factors, including those outlined in this section.
Subject to the requirements of the Listing Rules, we do not plan to publicly update or revise the
forward-looking statements in this prospectus, whether due to new information, future events, or
otherwise. Therefore, you should not place excessive reliance on any forward-looking information. All
forward-looking statements in this prospectus are qualified by this cautionary statement.
RISK FACTORS
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--- page 55 ---
WAIVER IN RESPECT OF STRICT COMPLIANCE WITH RULE 4.04(1) OF THE LISTING
RULES AND EXEMPTION FROM STRICT COMPLIANCE WITH SECTION 342(1) IN
RELATION TO PARAGRAPH 27 OF PART I AND PARAGRAPH 31 OF PART II OF THE
THIRD SCHEDULE TO THE COMPANIES (WINDING UP AND MISCELLANEOUS
PROVISIONS) ORDINANCE
Rule 4.04(1) of the Listing Rules requires this prospectus to include, among other things, details of
the financial results of th e company for the financial year immediately preceding the issue of this
prospectus, being the year ended 31 March 2026 o r such shorter period as may be acceptable to the
Stock Exchange.
Section 342(1) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance requires,
subject to section 342A of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, all
prospectuses to state the matters specified in Part I o f the Third Schedule to the Companies (Winding Up
and Miscellaneous Provisions) Ordinance and set out the reports specified in Part II of the Third
Schedule to the Companies (Winding Up and Miscellaneous Provisions) Ordinance.
According to paragraph 27 of Part I of the Third Schedule to the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, a listing applicant is required to include in its prospectus a
statement as to the gross trading income or sales turnover (as may be appropriate) of the listing
applicant during each of the three financial years i mmediately preceding the issue of its prospectus, as
well as an explanation of the method used for the computation of such income or turnover and a
reasonable breakdown of the more important trading activities.
According to paragraph 31 of Part II of the Third Schedule to the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, a listing applicant is required to include in its prospectus a report
by the auditors of the listing applicant with respect to profits and losses and assets and liabilities in
respect of each of the three financial years immedi ately preceding the issue of the prospectus.
According to section 342A(1) of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, the SFC may issue, subject to such conditions (if any) as it thinks fit, a certificate of
exemption from compliance with the relevant requirements of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance if, having regard to the circumstances, the SFC considers that the
exemption will not prejudice the interests of the investing public and compliance with the relevant
requirements would be irrelevant or unduly burdensome, or is otherwise unnecessary or inappropriate.
Chapter 1.1A of the Guide for New Listing Applicants has provided the conditions for granting a
waiver from strict compliance with Rule 4.04(1) of the Listing Rules.
The Accountants ’ Report for each of the three years ended 31 March 2025 and the eight months
ended 30 November 2025 has been prepared and is set out in Appendix I to this prospectus.
WAIVER AND EXEMPTION
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Pursuant to the relevant requirements set out above, our Company is required to include three full
years of audited accounts for the three years ende d 31 March 2026 in this prospectus. As such, an
application has been made to the Stock Exchange for a waiver from strict compliance with Rule 4.04(1)
of the Listing Rules, and such waiver has been granted by the Stock Exchange on the conditions that:
(a) this prospectus will be issued on or before 28 May 2026 and the Company ’sS h a r e sw i l lb e
listed on or before 30 June 2026, i.e. three months after the latest financial year-end;
(b) in accordance with Chapter 1.1A of the Guide for New Listing Applicants, a profit estimate
for the financial year ended 31 March 2026 has been included in this prospectus, in
compliance with Rules 11.17 to 11.19 of the Listing Rules and a Directors ’ statement that
there is no material and adverse change to the financial and trading positions or prospects of
our Company, with specific reference to the trading results from 1 December 2025 to 31
March 2026; and
(c) our Company obtains a certificate of exemption from the SFC on strict compliance with
paragraph 27 of Part I and paragraph 31 of Part II of the Third Schedule to the Companies
(Winding Up and Miscellaneous Provisions) Ordinance.
An application has also been made to the SFC for a certificate of exemption from strict compliance
with the requirements under section 342(1)(b) of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance in relation to paragraph 27 of Part I and paragraph 31 of Part II of the Third
Schedule to the Companies (Winding Up and Miscella neous Provisions) Ordin ance and a certificate of
exemption has been granted by the SFC under section 342A(1)(a) of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance on the conditions that:
(a) the particulars of the exemption are disclosed in this prospectus; and
(b) the Prospectus will be issued on or before 28 May 2026 and the Company ’sS h a r e sw i l lb e
listed on the Stock Exchange on or before 30 June 2026, i.e. three months after the latest
financial year-end.
The applications to Stock Exchange for a waiver from strict compliance with Rule 4.04(1) of the
Listing Rules and to the SFC for a certificate of exemp tion from strict compliance with the requirements
under section 342(1)(b) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance in
relation to paragraph 27 of Part I and paragraph 31 of Part II of the Third Schedule to the Companies
(Winding Up and Miscellaneous Provisions) Ordinance have been made on the grounds, among others,
WAIVER AND EXEMPTION
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--- page 57 ---
that strict compliance with the above requirements would be unduly burdensome and the waiver and
exemption would not prejudice the interests of the investing public as:
(a) there would not be sufficient time for our Company and the reporting accountants of our
Company (the ‘‘Reporting Accountants ’’) to finalize the audited financial statements for the
year ended 31 March 2026 for inclusion in this prospectus. If the financial information for
the year ended 31 March 2026 is required to be audited, our Company and the Reporting
Accountants would have to carry out substantial volume of work to prepare, update and
finalize the Accountants ’ Report and this prospectus, and the relevant sections of the
prospectus will need to be updated to cover such additional period. This would involve
additional time and costs since substantial work is required to be carried out for audit
purposes. It would be unduly burdensome for the audited results for the year ended 31 March
2026 to be finalized in a short period of time. Our Directors consider that the benefits of such
work to the existing and prospective shareholders of our Company may not justify the
additional work and expenses involved and the delay of the listing timetable;
(b) our Directors and the Sole Sponsor confirm, after performing sufficient due diligence work
up to the date of this prospectus, that there has been no material adverse change to the
financial and trading positions or pros pects of the Group since 1 December 2025
(immediately following the date of the latest audited statement of financial position in the
Accountants ’ Report set out in Appendix I to this prospectus) up to the date of this
prospectus, and there has been no event sin ce 1 December 2025 which would materially
affect the information contained in the Accountants ’ Report as set out in Appendix I to this
prospectus, the financial information section, the profit estimate as set out in Appendix IIB to
this prospectus and information regarding the Company ’s recent development subsequent to
the Track Record Period and up to the date of this prospectus;
(c) our Company and the Sole Sponsor are of the view that the Accountants ’ Report covering the
three years ended 31 March 2025 and the eight months ended 30 November 2025, together
with the profit estimate for the year ended 31 March 2026 (in compliance with Rules 11.17 to
11.19 of the Listing Rules) included in this prospectus have already provided the potential
investors with adequate and reasonably up-to-date information in the circumstances to form a
view on the track record and earnings trend of our Company; and our Directors confirm that
all information which is necessary for the investing public to make an informed assessment
of the activities assets and liabilities, financial position, trading position, management and
prospects has been included in this prospectus. Therefore, the waiver and exemption would
not prejudice the interests of the investing public; and
(d) our Company will comply with the requirements under Rules 13.46(2) and 13.49(1) of the
Listing Rules in respect of the publication of our annual results and annual report. Our
Company currently expects to issue our annual r esults and annual repor t for the financial year
ended 31 March 2026 on or before 30 June 2026 and 31 July 2026, respectively. In this
regard, our Directors consider that the Shareholders, the investing public as well as potential
investors of our Company will be kept informed of the financial results of our Group for the
financial year ended 31 March 2026.
WAIVER AND EXEMPTION
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--- page 58 ---
DIRECTORS ’ RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS
This prospectus includes particulars given in compliance with the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, the Securities and Futures (Stock Market Listing) Rules (Chapter
571V of the Laws of Hong Kong) and the Listing Rules for the purpose of giving information to the
public with regard to our Group. Our Directors colle ctively and individually accept full responsibility
for the accuracy of the information contained in this p rospectus and confirm, having made all reasonable
enquiries, that to the best of their knowledge and belief, the information contained in this prospectus is
accurate and complete in all material respects an d not misleading or deceptive, and there are no other
matters the omission of which would make this prospectus or any statement herein misleading.
THIS HONG KONG PUBLIC OFFER ING AND THE PROSPECTUS
This prospectus is published solely in connection with the Hong Kong Public Offering, which
forms part of the Global Offering. For applicants under the Hong Kong Public Offering, this prospectus
set out the terms and conditions of the Hong Kong Public Offering. See ‘‘How to Apply for Hong Kong
Offer Shares ’’for details of the procedures for applying for the Hong Kong Offer Shares.
The Hong Kong Offer Shares are offered solely on the basis of the information contained and
representations made in this prospectus and on the terms and conditions set out herein and therein. No
person has been authorised to give any information or make any representations other than those
contained in this prospectus and, if given or made, such information or representations must not be
relied on as having been authorised by any of the Relevant Parties. Neither the delivery of this
prospectus nor any offering, sale or delivery made in connection with our Shares shall, under any
circumstances, constitute a representation that there has been no change or development reasonably
likely to involve a change in our affairs since the date of this prospectus or imply that the information in
this prospectus is correct as of any subsequent time.
STRUCTURE OF THE GLOBAL OFFERING AND UNDERWRITING
See ‘‘Structure of the Global Offering ’’ for details of the structure of the Global Offering,
including its conditions and the arrangements relating to the Over-allotment Option and stabilisation.
The Listing is sponsored by the Sole Sponsor. The Hong Kong Public Offering is fully
underwritten by the Hong Kong Underwriters pursua nt to the Hong Kong Underwriting Agreement. See
‘‘Underwriting ’’for details of the Underwriters and the underwriting arrangements.
RESTRICTIONS ON OFFER OF THE OFFER SHARES
Each person acquiring the Hong Kong Offer Shares under the Hong Kong Public Offering will be
required to confirm, and is deemed by his acquisition of Hong Kong Offer Shares to have confirmed,
that he is aware of the restrictions on offers of the Offer Shares described in this prospectus and that he
is not acquiring, and has not been offered, any Offer Shares in circumstances that contravene any such
restrictions.
INFORMATION ABOUT THIS PROSPE CTUS AND THE GLOBAL OFFERING
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--- page 59 ---
No action has been taken to permit a public offering of the Offer Shares or the distribution of this
prospectus in any jurisdiction other than Hong Kong. Accordingly, without limitation to the following,
this prospectus may not be used for the purpose of, and does not constitute, an offer or invitation in any
jurisdiction or in any circumstances in which such an offer or invitation is not authorised or to any
person to whom it is unlawful to make such an offer or invitation. The distribution of this prospectus
and the offering of the Offer Shares in other jurisdictions are subject to restrictions and may not be
made except as permitted under the securities laws of su ch jurisdiction pursuant to registration with or
an authorisation by the relevant securities re gulatory authorities or an exemption therefrom. In
particular, the Offer Shares have not been publicly offered and sold, and will not be offered or sold,
directly or indirectly in the PRC or the United States.
APPLICATION FOR LISTING ON THE STOCK EXCHANGE
Our Company has applied to the Listing Committee for the granting of the listing of and
permission to deal in the Shares in issue and to be issued pursuant to the Global Offering (including any
additional Shares which may be issued pursuant to the exercise of the Over-allotment Option). Dealings
in the Shares on the Stock Exchange are expected to commence on the Listing Date.
Save as disclosed in this prospectus, no part of our share capital or loan capital is listed on or dealt
in on any other stock exchange and no such listing or permission to list is being or proposed to be
sought in the near future.
SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS
Subject to the Stock Exchange granting the listing of, and permission to deal in, our Shares on the
Stock Exchange and we complying with the stock admission requirements of HKSCC, our Shares will be
accepted as eligible securities by HKSCC for deposit, cl earance and settlement in CCASS with effect
from the Listing Date or any other date as determined by HKSCC.
Settlement of transactions between participants of the Stock Exchange is required to take place in
CCASS on the second settlement day after any tradin g day. All necessary arrangements have been made
for the Shares to be admitted into CCASS. All activiti es under CCASS are subject to the general rules of
HKSCC and HKSCC operational procedures in effect from time to time. You should seek the advice of
your stockbroker or other professional adviser for details of those settlement arrangements as such
arrangements will affect y our rights and interests.
HONG KONG REGISTER OF MEMBERS AND STAMP DUTY
All Shares issued by us pursuant to applications made in the Hong Kong Public Offering will be
registered on our register of members to be maintained by our Hong Kong Share Registrar, Tricor
Investor Services Limited, in Hong Kong. Our principal register of members will be maintained by our
principal share registrar, Conyers Trust Company (Cayman) Limited, in the Cayman Islands.
No stamp duty is payable by applicants in the Global Offering.
Dealings in the Shares registered on our register of members in Hong Kong will be subject to
Hong Kong stamp duty.
INFORMATION ABOUT THIS PROSPE CTUS AND THE GLOBAL OFFERING
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--- page 60 ---
PROFESSIONAL TAX ADVICE RECOMMENDED
Potential investors in the Global Offering are recommended to consult their professional advisers if
they are in any doubt as to the taxation implications of subscribing for, purchasing, holding, disposing
of, dealing in or exercising any rights in relation to, the Shares. None of the Relevant Parties accepts
responsibility for any tax effects on, or liabilities of, any person resulting from the subscription for,
purchase, holding, disposition of, dealing in, or exercising any rights in relation to, the Shares.
EXCHANGE RATE CONVERSION
Solely for your convenience, this prospectus contains translations of certain RMB amounts into
Hong Kong dollars at a specified rate. Unless we indicate otherwise, the translations of RMB into Hong
Kong dollars and vice versa have been made at the r ate of HK$1.00 to RMB0.910 23 in this prospectus.
No representation is made that any amount in RMB or Hong Kong dollars can be or could be, or
have been, converted at the above rate or any other rate or at all.
LANGUAGE
If there is any inconsistency between this prospectus and its Chinese translation, this prospectus
shall prevail. For ease of reference, the names of Chinese laws and regulations, governmental
authorities, institutions, natural persons or other entities (including certain of our subsidiaries) have been
included in this prospectus in both the Chinese and English languages and in the event of any
inconsistency, the Chinese versions shall prevail.
ROUNDING
Amounts and percentage figures, including share ownership, operating and financial data in this
prospectus, may have been subject to rounding adjustments. In this prospectus, where information is
presented in millions, amounts of less than one hundred thousand have been rounded to the nearest
hundred thousand, unless otherwise indicated or the context requires otherwise. Amounts presented as
percentages have been rounded to the nearest tenth of a percent, unless otherwise indicated or the
context requires otherwise. Accordingly, total of rows or columns of numbers in tables may not be equal
to the apparent total of the individual items.
INFORMATION ABOUT THIS PROSPE CTUS AND THE GLOBAL OFFERING
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--- page 61 ---
DIRECTORS
Name Residential address Nationality
Executive Directors
Mr. Tse Siu Hoi ( 謝少海)6 8 , S a n U k T s u e n ,
Lung Yeuk Tau,
New Territories,
Hong Kong
Chinese
Ms. Tse Chui Ying ( 謝翠瑩)6 8 , S a n U k T s u e n ,
Lung Yeuk Tau,
New Territories,
Hong Kong
Chinese
Independent non-executives Directors
Mr. Chu Woon Ming ( 朱煥明) 12 Santa Monica Avenue,
Royal Palms, Phase A,
Yuen Long,
New Territories,
Hong Kong
Chinese
Mr. Yau Sheung Yu ( 尤向宇) Flat D, G/F, Tower 15,
21 Fo Chun Road,
Mayfair by the Sea II,
Pak Shek Kok, Tai Po,
New Territories,
Hong Kong
Chinese
Ms. Woo Pui Yan Joyce ( 胡珮茵)4 G P i n e M a n s i o n ,
Taikoo Shing,
Hong Kong
Chinese
Further information is set out in the section headed ‘‘Directors and Senior Management ’’in this
prospectus.
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
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--- page 62 ---
PARTIES INVOLVED IN THE GLOBAL OFFERING
Sole Sponsor, Overall Coordinator,
Sole Global Coordinator,
Joint Bookrunner, Joint Lead
Manager and Capital Market
Intermediary
DBS Asia Capital Limited
73/F
The Center
99 Queen ’sR o a dC e n t r a l
Hong Kong
Joint Bookrunners, Joint Lead
Managers and Capital Market
Intermediaries
(in alphabetical order)
CMB International Capital Limited
45/F, Champion Tower
3G a r d e nR o a d
Central
Hong Kong
Phillip Securities (H ong Kong) Limited
11/F United Centre
95 Queensway
Hong Kong
SPDB International Capital Limited
33/F, SPD Bank Tower
One Hennessy
1 Hennessy Road
Hong Kong
uSmart Securities Limited
Room 2405 –06, 24/F
308 Central Des Voeux
Sheung Wan
Hong Kong
Legal advisors to our Company As to Hong Kong law:
Deacons
5/F
Alexandra House
18 Chater Road
Central
Hong Kong
As to Hong Kong regulatory and compliance matters:
Ms. Queenie W.S. Ng
Barrister-at-law, Hong Kong
Unit D,
33/F,
United Centre,
95 Queensway,
Admiralty, Hong Kong
As to Cayman Islands law:
Conyers Dill & Pearman
29/F
One Exchange Square
8 Connaught Place
Central
Hong Kong
As to PRC law:
Jincheng Tongda & Neal Law Firm
11th Floor,
China World Tower A,
No. 1 Jianguo Menwai Avenue,
Chaoyang District, Beijing
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 53 –


--- page 63 ---
Legal advisors to the Sole Sponsor and
the Underwriters
As to Hong Kong law:
King & Wood
13/F
Gloucester Tower
The Landmark
15 Queen ’sR o a dC e n t r a l
Central
Hong Kong
Auditor and reporting accountant Deloitte Touche Tohmatsu
Certified Public Accountants and Registered Public Interest
Entity Auditor
35/F, One Pacific Place
88 Queensway
Hong Kong
Compliance Advisor DBS Asia Capital Limited
73/F
The Center
99 Queen ’sR o a dC e n t r a l
Hong Kong
Industry consultant Frost & Sullivan Limited
Suite 3006, Two Exchange Square
8 Connaught Place
Central
Hong Kong
Property Valuer AVISTA Valuation Advisory Limited
Suites 2401 –06, 24/F
Everbright Centre
No. 108 Gloucester Road
Wan Chai, Hong Kong
Receiving bank DBS Bank (Hong Kong) Limited
16/F The Center
99 Queen ’sR o a dC e n t r a l
Hong Kong
Bank of China (Hong Kong) Limited
1G a r d e nR o a d
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE GLOBAL OFFERING
– 54 –


--- page 64 ---
Registered Office Cricket Square
Hutchins Drive
P.O. Box 2681
Grand Cayman
KY1-1111
Cayman Islands
Headquarters and Principal Place of
Business in Hong Kong
5/F, Lung Fung Group Centre,
23 Yip Cheong Street,
Fanling, New Territories,
Hong Kong
Company ’s Website https://www.lungfung.hk (Note: the information on this
website does not form part of this prospectus)
Company Secretary Ms. Lam Yin Ling
31/F, 148 Electric Road,
North Point,
Hong Kong
Authorized Representatives Ms. Lam Yin Ling
31/F, 148 Electric Road,
North Point,
Hong Kong
Mr. Tse Siu Hoi
68, San Uk Tsuen,
Lung Yeuk Tau,
New Territories,
Hong Kong
Audit Committee Ms. Woo Pui Yan Joyce (Chairlady)
Mr. Chu Woon Ming
Mr. Yau Sheung Yu
Remuneration Committee Mr. Yau Sheung Yu (Chairman)
Mr. Chu Woon Ming
Ms. Woo Pui Yan Joyce
Mr. Tse Siu Hoi
Nomination Committee Mr. Chu Woon Ming (Chairman)
Mr. Yau Sheung Yu
Ms. Woo Pui Yan Joyce
Ms. Tse Chui Ying
CORPORATE INFORMATION
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--- page 65 ---
Principal Share Registrar and
Transfer Office
Conyers Trust Company (Cayman) Limited
Cricket Square
Hutchins Drive
P.O. Box 2681
Grand Cayman
KY1-1111
Cayman Islands
Hong Kong Share Registrar Tricor Investor Services Limited
17/F, Far East Finance Centre
16 Harcourt Road
Hong Kong
Principal banks DBS Bank (Hong Kong) Limited
11th Floor, The Center,
99 Queen ’s Road Central,
Hong Kong
Bank of China (Hong Kong) Limited
14th Floor, Bank Of China Tower,
No.1 Garden Road,
Hong Kong
Hang Seng Bank, Limited
Hang Seng Bank Bldg.,
83 Des Voeux Road Central,
Hong Kong
The Hongkong and Shanghai Banking Corporation Limited
1 Queen ’s Road Central,
Hong Kong
Chong Hing Bank Limited
Ground Floor,
Chong Hing Bank Centre,
24 Des Voeux Road Central,
Hong Kong
CORPORATE INFORMATION
– 56 –


--- page 66 ---
The information contained in this section, un less otherwise indicated, have been derived
from various official government publications an d other publications generally believed to be
reliable and the market research report prepa red by Frost & Sullivan which we commissioned.
We believe that the sources of information from official government sources, namely Nominal
GDP in Hong Kong released by IMF, Annual Household Consumption Expenditure in Hong
Kong released by Census and Statistics Depar tment of Hong Kong, Total Visitor Arrivals in
Hong Kong released by Hong Kong Tourism Board and Total Retail Sales of Consumer Goods
in Hong Kong released by Census and Statistic s Department of Hong Kong, are appropriate
sources for information from official governme nt sources and have taken reasonable care in
extracting and reproducing information fro m official government sources. Our Directors and
the Sole Sponsor have exercised reasonable c are in selecting and id entifying the named
information sources, compiling, extracting and reproducing the information, and ensuring no
material omission of the information. We have no reason to believe that information from
official government sources is false or mislead ing in any material respect or that any fact has
been omitted that would render information from official government sources false or
misleading in any material respect. None of the Re levant Parties, except for Frost & Sullivan,
has independently verified in formation from official government sources nor give any
representation as to the accuracy or complete ness of information from official government
sources. As such, you should not unduly rely upo n information from offi cial government sources
in making, or refraining from mak ing, any investment decision.
SOURCE OF INFORMATION
We have commissioned Frost & Sullivan, an indep endent market research and consulting company,
to conduct an analysis of, and to prepare a report on the consumer goods retail industry in Hong Kong.
The report prepared by Frost & Sullivan for us is referred to in this listing document as Industry Report.
We agreed to pay Frost & Sullivan a fee of HKD450,000 which we believe reflects market rates for
reports of this type.
Founded in 1961, Frost & Sullivan has 40 offic es with more than 2,000 industry consultants,
market research analysts, technology analysts and economists globally. Frost & Sullivan ’s services
include technology research, independent market res earch, economic research, corporate best practices
advising, training, client research, competitive intelligence and corporate strategy.
We have included certain information from the Industry Report in this listing document because we
believe this information facilitates an understanding of the consumer goods retail industry in Hong Kong
for the prospective investors. The Industry Report i ncludes information of the consumer goods retail in
Hong Kong as well as other economic data, which have been quoted in the listing document. Frost &
Sullivan ’s independent research consists of both primar y and secondary research obtained from various
sources in respect of the consumer goods retail industry in Hong Kong. Primary research involved in-
depth interviews with leading industry participants and industry experts. Secondary research involved
reviewing company reports, independent research reports and data based on Frost & Sullivan ’so w n
research database. Projected data were obtained from historical data analysis plotted against
macroeconomic data with reference to specific industry-related factors. Except as otherwise noted, all of
the data and forecasts contained in this section are de rived from the Industry Report, various official
government publications and other publications.
In compiling and preparing the research, Frost & S ullivan assumed that the social, economic and
political environments in the relevant markets are l ikely to remain stable in the forecast period, which
ensures the steady development of the consumer goods retail industry in Hong Kong.
INDUSTRY OVERVIEW
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OVERVIEW OF MACRO ECONOMY IN HONG KONG
Nominal GDP (Hong Kong), 2020 –2029E
According to the Census and Statistics Department of the Hong Kong Government, Hong Kong ’s
nominal GDP grew at a CAGR of 4.4%, rising from HK$2,675.8 billion in 2020 to HK$3,177.0 billion
in 2024. This economic growth was primarily driven by the government ’s effective measures to control
recurring COVID-19 outbreaks starting in 2020. However, a 2.1% decline in nominal GDP occurred in
2022 due to a severe COVID-19 outbreak that signifi cantly impacted economic activity and sentiment in
Hong Kong.
Looking forward, Hong Kong authorities are expected to prioritize consistent and stable
macroeconomic policies to ensure sustained economic stability. The ongoing recovery of the tourism
sector is also a key driver of economic growth. Accord ing to projections by the International Monetary
Fund (IMF), Hong Kong ’s nominal GDP is forecasted to increase from HK$3,292.0 billion in 2025 to
HK$3,936.1 billion in 2029, with a CAGR of 4.6%.
Annual Household Consump tion Expenditure, 2020 –2029E
Driven by rising annual disposable income, Hong Kong ’s annual household consumption
expenditure grew from HK$362,760 in 2020 to HK$427,857 in 2024, reflecting a CAGR of 4.2%. With
per capita disposable income projected to increase, annual household consumption expenditure is
expected to reach HK$538,172 by 2029, with a CAGR of 4.9% from 2025 onward.
Total Visitor Arrivals (Hong Kong), 2020 –2029E
According to the Hong Kong Tourism Board, total visitor arrivals plummeted from 3.6 million in
2020 to just 0.1 million in 2021, a 97.5% decline, primarily due to stringent travel restrictions and
mandatory quarantine measures during the COVID-19 pandemic. However, effective government
measures to control the virus led to a significant rebound in tourism in 2023 and 2024, with visitor
arrivals achieving a CAGR of 87.5% from 2020 to 2024. Following the end of the COVID-19 pandemic,
inbound visitor numbers are proj ected to recover steadily, reachin g 67.5 million by 2029, with a CAGR
of 8.3% from 2025 onward.
Total Retail Sales of Consumer Goods (Hong Kong), 2020 –2029E
Hong Kong ’s total retail sales of consumer goods grew moderately from HK$326.5 billion in 2020
to HK$376.8 billion in 2024, achieving a CAGR of 3.6%. The drop in total retail sales of consumer
goods in Hong Kong in 2024 is primarily due to evolving consumption dynamics in the post-pandemic
landscape. Key contributing factors included shifts in spending preferences among mainland Chinese
visitors, who increasingly prioritized experiential, cultural, and entertainment options over traditional
shopping; a relatively strong Hong Kong dollar that influenced regional price competitiveness; and
greater outbound travel by local residents, including cross-border visits to nearby cities in the Greater
Bay Area for leisure and purchases. These developments led to softer performance in certain
discretionary categories, such as luxury goods, jewellery, and durable items. Despite significant
disruptions to economic activities, particularly in offline retail due to the COVID-19 pandemic,
increasing disposable income and effective gove rnment measures have dr iven the recovery of the
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consumption market. With stable economic growth and a strong rebound in the tourism sector, total
retail sales of consumer goods are projected to continue rising, reaching HK$457.5 billion by 2029, with
a CAGR of 4.8% from 2025 to 2029.
Total Retail Sales of Consumer Goods (Hong Kong), 2020 –2029E
Growth Rate (%)
8.1%
16.2%
406.6 376.8
326.5 352.9 350.0 379.3 396.5 415.2 435.5 457.5
-20
0
20
40
60
80
100
200
400
600
0
-0.8% -7.3
0.7% 4.5% 4.7% 4.9% 5.1%
2020 2021 2022 2023 2024 2025E 2026E 2027E 2028E 2029E
Total Retail Sales of Consumer Goods
Growth Rate
Total Retail Sales of Consumer Goods
(HK$ Billion)
CAGR: 3.6%
CAGR: 4.8%
Source: Census and Statistics Depar tment of Hong Kong, Frost & Sullivan
OVERVIEW OF CONSUMER GOODS RETAIL IN HONG KONG
Definition and Segmentation
Consumer Goods Retail refers to the sector encompassing the sale of everyday consumer products
directly to end-users for personal, household, or pet u se, through physical stores, e-commerce platforms,
and hybrid omni-channel models. As a key pillar of the retail industry in Hong Kong, it could be further
divided into (i) beauty products, ( ii) health products and (iii) pharmaceu tical products and (iv) household
and daily essentials and foods.
Value Chain Analysis
In the consumer goods retail markets, the value cha in can be divided into three clearly delineated
tiers that pass materials and inf ormation sequentially downstream.
The industry value chain begins with upstream ag ricultural and marine producers that cultivate or
harvest botanical, animal and algal inputs, as well as mineral and synthetic beauty, health and
pharmaceutical prod ucts precursors.
In the midstream, manufacturing and brand stewardship sector include Original-Equipment
Manufacturers ( ‘‘OEMs ’’) who provide toll production to brand owners that supply their own formulas;
Original-Design Manufact urers (ODMs) offer turnkey, factory-designed formulations. Independent
quality-control laboratories verify compliance with Good Manufacturing Practice ( ‘‘GMP ’’),
microbiological and heavy-metal standards, while Bran d Owners direct formulation strategy, marketing
and intellectual-property management.
Finished goods are then flow to a dual retail architecture. Offline channels comprise consumer
goods retail chain stores, brand owner self-owned stor es, department stores, drugstores/pharmacies and
others, where merchandising fees and in-store promotion determine shelf visibility. Parallel to this,
online channels include brand owner s elf-owned e-commerce sites and m ajor third-party marketplaces,
both of which furnish real-time sell-through data that feeds back to brand and manufacturing partners for
demand planning.
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The final purchasers are domestic residents and a cohort of inbound tourists, whose spending is
often concentrated in flag ship retail districts.
Value Chain of Consumer Goods Retail Market
Upstream Midstream Downstream
Raw material supply Manufacturing and Distribution Consumer market
Authorised
Distributors
Raw material supplier
Agricultural &
Marine Producers
Processors/Exractors
Excipient &
Packaging Suppliers
Manufacturer and
Brand Owners
OEMs
(Original Equipment
Manufacturer)
ODMs (Original Design
Manufacturer)
Quality-Control
Laboratories
Brand Owners
Offline Sales
Consumer Goods Retail Stores
Health e.g. Mannings, Watsons
Beauty e.g. Mannings, Sasa
Department Stores
Drugstores/Pharmacies
Others
Online Sales
Brand Owner Self-Operated
E-commerce Platforms
Third Party E-commerce Platlorms
Brand Owner Self-owned Stores
Customers
Local Residents
Tourists
Direct Sales
Source: Frost & Sullivan
Market Size of Beauty, Health and Pharmaceuti cal, Food, Beverages, and Related Products by
Retail Sales Value in Hong Kong
Retail sales value of beauty, health and pharmaceu tical, food, beverages, and related products in
Hong Kong increased from HK$154,513.0 million in 2020 to HK$175,685.0 million in 2024,
representing a CAGR of 3.3% from 2020 to 2024. The growth is attributed to reopening of borders and
tourism resurgence, economic normalization, digita l transformation and e-co mmerce acceleration. The
reopening of borders in 2023 spurred a tourism surge, particularly from mainland Chinese visitors,
boosting demand for beauty products and daily esse ntials. The rapid shift to e-commerce and omni-
channel models during the pandemic sustained growth, with platforms like Taobao and local apps
thriving. Together these dynamics support the industry revenue to be projected to reach HK$226,581.0
million by 2029, implying an accelerated CAGR of approximat ely 5.2% during 2025 to 2029.
Retail Sales Value of Beauty, Health and Pharmaceutical, Food, Beverages, and
Related Products (Hong Kong), 2020 –2029E
154,513.0 156,294.0 159,257.0
176,843.0 175,685.0 184,820.0 194,616.0 204,346.0 214,972.0 226,581.0
50,000
100,000
150,000
200,000
250,000
0 3.3% 5.2%
2020 2021 2022 2023 2024 2025E 2026E 2027E 2028E 2029E
HK$ Million
Total
CAGR 20–24 CAGR 25–29E
Source: Census and Statistics Depar tment of Hong Kong, Frost & Sullivan
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Market Drivers and Trends
1. Surging demand for one-stop shopping experience
The consumer goods retail market in Hong Kong is experiencing growth due to enhanced
accessibility through both online and physical retail channels. E-commerce platforms have improved
product visibility and expanded customer reach, while companies are increasingly leveraging chain
retailers like Watsons, Mannings and the Group to tap into their convenience and widespread popularity.
Central to this growth is Hong Kong consumers ’ strong preference for one-stop shopping experiences,
where busy urban lifestyles and limited time drive demand for a single retail destination that seamlessly
combines (i) beauty products, (ii) health products and (iii) pharmaceutical products, and (iv) household
and daily essentials and foods under one roof. This integrated approach eliminates the need to visit
multiple specialized outlets, offering convenience for families, working professionals, and elderly
shoppers alike who can pick up vitamins and supplements, over-the-counter medicines, skincare and
cosmetics, as well as groceries, cleaning supplies, a nd pantry staples in a single trip. These stores drive
market expansion by actively bro adening their product categor ies to meet this one-stop demand,
evolving from traditional pharmacy or beauty-focused formats into comprehensive lifestyle hubs. For
instance, retailers now stock extensive ranges of functional foods, nutritional supplements, prescription
and OTC medications, premium beauty lines, and everyd ay household items all str ategically displayed to
encourage cross-category purchas es. In this regards, the Group promotes one-stop shopping experience
by offering spacious and comfortable environment al ong with diverse product offering. Our retail store
at Gala Place in Mong Kok, offers a spacious shopping environment with a GFA of approximately
17,500 sq.ft.. Eye-catching promotions, bundled offers, and loyalty programs further reinforce the
appeal, fostering consumer confidence in the reliability and variety available in one trusted location.
Together, online and off-line channels serve divers e groups, from older adults seeking accessible health
solutions to younger consumers exploring trendy beauty and wellness items, further contributing to the
continued rise of beauty, health and pharmaceuti cal, and daily essentials products in Hong Kong.
2. Continued Product Expansion
The beauty, health and pharmaceutical products industry in Hong Kong is witnessing robust
growth, driven by product diversification. In particular, the introduction of plant-based, organic, and
personalized supplements, which broaden market a ppeal and cater to diverse d emographics, including
health-conscious millennials, fitness enthusiasts, and aging populations seeking targeted solutions like
cognitive or joint health support. Integrated retail strategies are adopted by major retail chain stores such
as Watsons, Mannings, and the Group, as well as var ious e-commerce platform s, offering extensive
product coverage that includes cosmetics, health suppl ements, medicines, foods , personal care items, and
a wide range of household goods. These strategies combine physical and online channels to enhance
customer experience, streamline operations, and optimize inventory management. By leveraging data
analytics, loyalty programs, and o mni-channel approaches, these re tailers ensure seamless access to
diverse products, catering to evolving consumer preferences across beauty, wellness, and everyday
essentials. These offerings intensify competition and spur innovation, aligning with global wellness
trends such as clean-label products and sustainable sourcing.
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3. Recovery of tourism
According to the Hong Kong Tourism Board ’s report, total visitor arrivals has recorded only 3.6
million and continued decreased by 97.5% to 0.1 million in 2021, mainly due to the severe travel
restrictions and mandatory quarantine measures implemented in response to the COVID-19 pandemic.
Tourism activities in Hong Kong rebounded significantly in 2023 and 2024 with the visitor arrival of
34.0 million in 2023 and 44.5 million in 2024. The recovery of Hong Kong ’s tourism sector has driven
sales of beauty, health and pharmaceutical products. Major retail chains benefit from increased tourist
footfall in shopping hubs like Tsim Sha Tsui and Causeway Bay, where visitors, especially from Chinese
Mainland purchase portable items such as skincare, supplements, and medicines due to their quality and
duty-free appeal.
4. Rising popularity of Japanese and Korean consumer products in HK
The rising popularity of Japanese and Korean consum er products, particularly in beauty, health and
pharmaceutical, drives retail sal es in Hong Kong due to their cultura l appeal, perceived quality, and
strong demand from both locals and tourists. K-Beau ty (e.g., Dr.Jart+, Laneige) and J-Beauty (e.g.,
SK-II, Shiseido) products, includ ing skincare, cosmetics, and suppl ements like collagen drinks, are
highly sought after for their innovative formulations and association with Asian beauty trends like
‘‘glass skin, ’’fueled by social media and cultural phenomena like K-pop. Together with the tourism
recovery in Hong Kong, the demand is further enlarged, as mainland Chinese tourists purchase these
products in bulk for their authenticity and duty-free pricing.
Market Challenges
1. Increased competition
Increased competition presents a market challeng e for sales of beauty, health and pharmaceutical
products in Hong Kong, as the influx of local and international brands, e-commerce platforms, and
cross-border platforms, are all vy ing for a share of the market. The c rowded digital advertising space,
including social media and livestreams, requires high marketing budgets to stand out, particularly for
smaller brands competing with large retail chain stores. To succeed, companies must innovate with
unique formulations or niche offerings an d leverage targeted digital strategies.
2. Evolving consumer preferences
Evolving consumer preferences in Hong Kong ’s beauty, health and pharmaceutical products market
underscore the dynamic nature of consumer behavior, shaped by cultural shifts, social media trends, and
growing health consciousness. To stay competitive, brands must show agility by actively tracking market
trends, consumer feedback, and new technologies. Companies need to innovate their product lines, refine
marketing approaches, and enhance real-time custo mer engagement to meet these demands. Brands that
fail to adapt risk losing market share to competitors who more swiftly align with changing consumer
expectations.
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Cost Analysis
The consumer goods retail market in Hong Kong is encountering dynamic cost pressures across
various operational areas. Labor expenses are a key factor, with average monthly wages in the
wholesale, retail, and import/export sectors increasing from HK$19,353.5 in 2020 to HK$21,471.0 in
2024, reflecting a 2.6% CAGR, and projected to rise further at a 2.5% CAGR through 2029 due to a
competitive labor market and deman d for skilled logistics and wholesale professionals. Conversely,
private office rental and private retail costs have declined, with -2.3% and -0.9% CAGR from 2020 to
2024 respectively, and a continued decrease expected at -0.4% and -0.4% CAGR through 2029
respectively, driven by hybrid work models, reduced o ffice footprints post-pan demic, increased supply
in non-core districts, and corporate moves to cost- effective areas, as well as high vacancy rates and
abundant supply of private retail. Meanwhile, warehouse rental costs have remained robust, growing at a
1.9% CAGR from 2020 to 2024 and projected to increase at 1.5% through 2029, fueled by ongoing
demand for logistics and storage facilities to support e-commerce and inventory management needs.
The Merchandise Trade Index Numbers for Imports in Hong Kong showed relative stability with
mild fluctuations from 2020 to 2024, according to t he Census and Statistics Department. During this
period, the import price experienced contained movements influenced by global supply chain dynamics,
commodity price trends, and post-pandemic recove ry factors. Prices were generally subdued in 2020 –
2021 amid COVID-19 disruptions and low global inflation, followed by modest upward pressures in
2022 –2023 from rising commodity costs and supply normalization, before stabilizing or easing slightly
in 2024 due to a strong Hong Kong dollar, competitive sourcing from the Chinese Mainland, and
moderated global inflationary trends. Overall, merchandise trade index numbers for imports in Hong
Kong increased from 100.0 in 2020 to 115.3 in 2024 at a CAGR of 3.6%, contributing to manageable
cost pressures for the economy compared to volume-driven trade growth. Import price index in Hong
Kong is forecasted to exhibit modest and contain ed upward trends from 2025 to 2029 at a CAGR of
3.3% from 2025 to 2029, aligning with the economy ’s stable medium-term outlook and moderate
inflation expectations.
Market Share of Consumer Goods Products Retailer in Hong Kong
In FY2025, the overall consumer goods products retailer market in Hong Kong was relatively
competitive, with the top five retailers accounting for an aggregate market share of 19.6% in terms of
retail sales value. The Group has accounted for a market share of 1.4% in terms of retail sales value of
consumer goods products in Hong Kong in FY2025.
OVERVIEW OF PHARMACEUTICALS PR ODUCTS RETAIL SALES IN HONG KONG
Definition and Segmentation
Pharmaceutical products refer to substances or preparations used for the prevention, diagnosis,
treatment, or alleviation of disease s, disorders, or medical conditions in humans. This category includes:
. Western medicine refers to sci entifically formulated drugs and medications developed
through modern medical research and clinical trials, typically regulated by health authorities
(e.g., Hong Kong ’s Department of Health). These include pr escription drugs (e.g., antibiotics,
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antihypertensives), over-the-counter (OTC) medications (e.g., painkillers like ibuprofen, cold
remedies), and vaccines. They are characteri zed by standardized chemical compositions,
clinical testing, and evidence-based therapeutic claims.
. Chinese medicine refers to traditional Chinese medicinal products derived from herbal,
animal, or mineral sources, based on principl es of Traditional Chinese Medicine (TCM).
These include herbal decoctions, powders, pi lls, tinctures, and topi cal applications (e.g.,
ginseng, astragalus, or proprietary Chinese medicines like Po Chai Pills). In Hong Kong,
these are regulated under the Chinese Medicine Ordinance and include both proprietary
Chinese medicines (pre-packaged) and raw h erbs prescribed by TCM practitioners.
Market Size of Pharmaceuticals Produc ts by Retail Sales Value in Hong Kong
The pharmaceuticals products market in Hong Kong grew from HK$5,788.3 million in FY2021 to
HK$8,507.9 million in FY2025, with a CAGR of 10.1%. This growth is driven by aging population and
rising healthcare expenditure. This demographic sh ift amplified the need for pharmaceuticals, as elderly
patients require more frequent and specialized medications. Enhancements to the drug registration
process by the Department of Health ’s Pharmacy and Poisons Board r educed approval times from 12 –18
months pre-2020 to 9 –15 months by FY2024 –FY2025, facilitating quicker market entry for innovative
therapies. The introduction of the ‘‘1+’’mechanism in 2023 expedited approvals for drugs already
registered in reference markets like the US, EU, o r Japan. The pandemic spurred demand for vaccines,
antivirals, and immune- boosting drugs, with OTC pharmaceutical s seeing uptick. Looking forward, the
market is projected to reach HK$ 11,306.3 million by FY2030, w ith a CAGR of 6.4% from FY2026 to
FY2030.
Retail Sales Value of Pharmaceutic als Products (Hong Kong), FY2021 –FY2030E
5,788.3 6,076.1 6,234.4
5,000
10,000
15,000
0
7,760.5 8,507.9 8,826.9 9,356.5 9,964.7 10,622.4 11,306.3
10.1% 6.4%
FY2030E
HK$ Million CAGR FY21–FY25 CAGR FY26–FY30E
Total
FY2021 FY2022 FY2023 FY2024 FY2025 FY2026E FY2027E FY2028E FY2029E
Source: Census and Statistics Depar tment of Hong Kong, Frost & Sullivan
Market Outlook
Trend in TCM integration — TCM is a cornerstone of Hong Kong ’s healthcare culture, with a
history spanning centuries and widespread use in managing conditions like joint pain, fatigue, and
respiratory issues. Pharmaceutical products incorp orating TCM ingredients such as anti-inflammatory
drugs with turmeric or cough syrups with loquat extract resonate with consumers who trust TCM ’s
natural, holistic benefits. To cap italize, pharmaceutical companies a re investing in R&D for TCM-based
formulations, to ensure regulatory compliance with Hong Kong ’s Pharmacy and Poisons Ordinance, and
leverage digital marketing to highlig ht authenticity and efficacy. The ma rket participants who effectively
blend TCM with pharmaceutical innovation will likely see sustained sales growth, capturing both local
and regional markets.
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Shift towards personalized medicine — Hong Kong consumers, with high health literacy and
access to digital platforms, increas ingly seek pharmaceuticals that add ress their specific needs, such as
OTC drugs for targeted conditions like joint pain or skin health. This demand for customization drives
sales of personalized OTC products a nd prescription drugs, particularly in categories like dermatology
and nutraceuticals.
OVERVIEW OF HEALTH PRODUCTS RETAIL SALES IN HONG KONG
Definition and Segmentation
Health products refer to over-the -counter wellness items that are taken or applied to maintain or
enhance normal bodily functions and to ease everyday discomfort; and over-the-counter aesthetic items
that are taken or applied to refine body shape and enhance visible skin quality. Health products are
categorised into:
. Nutritional and herbal supplements, are orally consumed preparations, such as pills, capsules,
tablets, powders, granules, liquids or semi-solids, formulated to complement the diet and
support internal health. Typical benefit areas include immune defence, cognitive performance,
bone density, eye protection, cardiovascular and hepatic function, blood-vessel elasticity and
overall metabolic balance.
. External analgesic products, ar e topical preparations such as h ydrogel patches, creams, gels,
sprays, that are applied to intact skin, as well a s physical aids such as tourmaline or magnetic
wraps, supports and belts that generate heat or compression to relieve muscular, joint or
neuropathic pain.
. Body-shaping preparations are primarily ingestible formulations such as fibre or enzyme
powders, probiotic and botanical capsules, metabolic booster tablets and similar products
designed to aid fat metabolism, reduce bloating and firm body contours.
. Skin-beautifying nutrients are oral doses delivered as powders, granules, liquids, shots,
tablets, capsules or gummies that supply collagen peptides, ceramides, antioxidants,
coenzymes, carotenoids, vitamins, minerals or NMN.
Market Size of Health Products by Retail Sales Value in Hong Kong
Retail sales value of health product in Hong Kong grew from HK$10,775.1 million in FY2021 to
HK$12,109.0 million in FY2025, achieving a CAGR of about 3.0%, despite retail disruptions caused by
the COVID-19 pandemic. This resili ence stems from several factors, namely increa sing health awareness
post-COVID that has made daily supplementation more common, expanding the consumer base beyond
older demographics; an aging population is boosting per-capita spending on preventive nutrition for
joint, cardiovascular, and cognitive health; the ri se of cross-border e-commerce platforms that has
enhanced product variety and price transparency.
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Supported by increasing awareness of health, aging population and surging demand for
personalized and natural products, the retail sales value of health products in Hong Kong is expected to
rise at a CAGR of 5.2% from FY2026 to FY2030, reaching HK$15,637.6 million in FY2030.
Retail Sales Value of Health Products (Hong Kong), FY2021 –FY2030E
10,775.1 10,543.6 10,813.0
5,000
10,000
15,000
20,000
0
11,460.0 12,109.0 12,760.0 13,539.2 14,220.8 14,878.2 15,637.6
3.0% 5.2%
HK$ Million
Total
FY2030EFY2021 FY2022 FY2023 FY2024 FY2025 FY2026E FY2027E FY2028E FY2029E
CAGR FY21–FY25 CAGR FY26–FY30E
Source: Census and Statistics Depar tment of Hong Kong, Frost & Sullivan
Market Outlook
Dynamic lifestyles and fitness enthusiasts — The growing number of fitness enthusiasts and
athletes in Hong Kong significantly drives demand for health products. The need for convenient,
portable product formats suits the city ’s fast-paced lifestyle, while influencer endorsements and
community-led fitness trends further boost market expansion. As the fitness culture continues to thrive,
brands providing innovative, science-backed supplements tailored to active consumers are ideally
positioned to leverage the increasing demand for health products.
Advancements in Formulation — The demand for health products in Hong Kong is propelled by
the growing trend of innovative formulations. These advanced formulations enhance the effectiveness of
supplements by improving bioavailability, ensuring that key ingredients like glucosamine, chondroitin,
collagen, or curcumin are absorbed more efficiently. By addressing e volving consumer needs, enhancing
product efficacy, and helping brands stand out in a c ompetitive market, innova tive formulations are a
key driver of growth in the health products market in Hong Kong.
OVERVIEW OF BEAUTY PRODUCTS RETAIL SALES IN HONG KONG
Definition and Segmentation
Beauty products encompass a broad category o f personal care items designed to enhance or
maintain appearance, hygiene, or aesthetic appeal. This includes:
. Cosmetics products applied to the face, body, or hair to enhance appearance, such as makeup
(e.g., lipstick, foundation, eyeshadow, mascara), nail polish, and hair styling products (e.g.,
hair dye, gels). These are primarily used for aesthetic purposes, including color, coverage, or
styling.
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. Skincare products formulated to maintain, protect, or improve the condition of the skin,
including cleansers, moisturizers, serums, toners , sunscreens, exfoliants, and treatments (e.g.,
anti-aging creams, acne solutions). These focus on skin health, hydration, protection, or
addressing specific dermatological concerns.
Market Size of Beauty Products by Retail Sales Value in Hong Kong
Hong Kong ’s beauty products retail market expanded from HK$5,651.0 million in FY2021 to
HK$8,858.0 million in FY2025, with a CAGR of approximately 11.9%, and is projected to reach
HK$13,075.5 million by FY2030, representing a CAGR of approximately 8.1% for FY2026 to FY2030.
The robust surge in FY2024 is attributed to the lifting of social-distancing and border controls during
the year, with pent-up demand producing a wave of discretionary purchases that restored store traffic.
Tourist arrivals provided an incremental boost to flagship counters and travel retail. Looking ahead,
measures set out in the Government Development Blueprint for Hong Kong Tourism Industry 2.0 are
expected to sustain a moderate rise in visitor footfall, while the main drivers will remain an affluent
resident base, continued premiumisation and the rapid digitalisation of beauty retail.
Retail Sales Value of Beauty Products (Hong Kong), FY2021 –FY2030E
5,651.0 6,124.5 6,273.2
5,000
10,000
15,000
0
8,520.9 8,858.0 9,566.6 10,379.8 11,231.0 12,107.0
13,075.5
11.9% 8.1%
HK$ Million
Total
FY2030EFY2021 FY2022 FY2023 FY2024 FY2025 FY2026E FY2027E FY2028E FY2029E
CAGR FY21–FY25 CAGR FY26–FY30E
Source: Census and Statistics Depar tment of Hong Kong, Frost & Sullivan
Market Outlook
Diversification of Consumer Base — The beauty products market in Hong Kong, encompassing
cosmetics like makeup and hair sty l i n gp r o d u c t sa sw e l la sskincare items such as serums and anti-aging
creams, is experiencing growth due to a diversifying consumer base that now includes fitness-focused
men and younger consumers alongside the traditional female audience, expanding purchasing power
across gender, age, and lifestyle segments.
Shortening product-launch — The rapid introduction of new beauty products, including
cosmetics like makeup and nail polish and skincare i tems such as serums, sunscreens, and anti-aging
treatments, through cross-border e-commerce supports the growth in Hong Kong ’s beauty market,
enabling brands to swiftly meet the city ’s trend-driven consumer demands.
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COMPETITIVE LANDSCAPE
In FY2025, the Hong Kong retail market for beauty, health and pharmaceutical products is highly
competitive, featuring more than 5,000 participants. In terms of distribution channels, offline chain retail
channels occupy a dominant position in the overall market, with the top 5 chain retailers accounting for
approximately 27.4% of the market share by retail sales value. However, the overall market is highly
fragmented, characterized by num erous small and medium-sized players, including independent beauty
and pharmaceutical retailers. The key players are categorized as follows:
(1) Omni-channel large-scale chain retailers, represented by local players including Mannings,
the Group, and Watsons, etc., mainly offer com prehensive beauty, health and pharmaceutical
product lines, along with professional service s, established online channels, integrated O2O
services, and membership syst ems, together building a compet itive advantage across core
areas of Hong Kong. Furthermore, their cost advantages derived from high purchasing
volumes and mature supply chain s provide them with irreplaceable advantages in the market.
(2) Overseas specialty chain retailers, such a s Donki and Matsukiyo from Japan, enter niche
markets with differentiated positioning, focusing on products and categories from specific
countries. They establish a unique competitive edge by attracting customers with competitive
pricing and distinctive product categories. They also offer one-stop shopping through large
stores, building a reputation through stable supply and unique offline shopping experiences.
(3) Local small and medium-sized chains an d independent pharmacies, such as community
pharmacies, primarily sell pharmaceuticals while offering partial beauty and health products,
and some offer personalized health services . However, such players are deeply rooted in
certain regions or communities in Hong Kong with a limited consumer base, which leads to
difficulties in future business scaling.
Amidst the continued growth of Hong Kong ’s beauty, health and pharmaceutical retail market,
there remains room for new entrants, who will inev itably require overcoming a series of barriers,
including capital investment, establishing a robust supplier network, supply chain management, and
selecting offline store locations, etc.
Ranking and Market Share of Pharmaceu tical Product Retailer in Hong Kong
In FY2025, the pharmaceuticals products market in Hong Kong was relatively competitive, with
the top five retailers accounting for an aggregate ma rket share of 15.5% in terms of retail sales value.
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The Group ranked first among pharmaceutical prod uct retailers with a market share of 5.2% in
terms of retail sales value of pharmaceuticals products in Hong Kong in FY2025
Ranking and Market Share of Top Five Pharmaceutical Product Retailers
by Revenue (Hong Kong), FY2025
Ranking Company
Retail sales value
of Pharmaceuticals
Products Market Share
(HK$ Million) (%)
1 The Group 444.0 5.2
2 Company A 416.0 4.9
3 Company B 298.6 3.5
4 Company C 121.6 1.4
5 Company D 35.3 0.4
Top 5 Sub-total 1,315.5 15.4
Others 7,192.4 84.6
Total Market Size 8,507.9 100.0
Source: Census and Statistics Department of Hong Kong, Annual Reports of Listed Companies, Frost & Sullivan
Note: The revenue of ranking is compiled by the revenue generated for the year ended 31 March 2025.
Company A is operated by a Singapore- and Lond on-listed retail group and is a leading Hong
Kong chain retailer of beauty, health, and personal care products.
Company B is operated by a Hong Kong-listed multinational conglomerate and is one of the largest
Hong Kong chain retailers of beauty, health, and personal care products.
Company C is a private chain pharmacy group in Hong Kong.
Company D is a subsidiary of a Japan-listed drugstore chain and entered the Hong Kong market in
2022, primarily dealing in beauty, h ealth, and personal care products.
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Ranking and Market Share of Top Five Health and Pharmaceutical Products Retailer
by Revenue (Hong Kong), FY2025
Ranking Company
Retail sales value
of Health &
Pharmaceuticals
Products Market Share
(HK$ Million) (%)
1 Company A 2,080.0 10.1
2 Company B 1,876.8 9.1
3 the Group 872.0 4.2
4 Company C 152.0 0.7
5 Company D 88.2 0.4
Top 5 Subtotal 5,069.0 24.5
Others 15,547.9 75.5
Total Market Size 20,616.9 100.0
Source: Census and Statistics Department of Hong Kong, Annual Reports of Listed Companies, Frost & Sullivan
Note: The revenue of ranking is compiled by the revenue generated for the year ended 31 March 2025.
. In FY2025, the health and pharmaceutical products market in Hong Kong was relatively
competitive, with the top five retailers accounting for an aggregate market share of 24.6% in
terms of retail sales value.
. The Group ranked 3rd among health and pharmaceutical product retailers with a market share
of 4.2% in terms of retail sales value of health and pharmaceutical products in Hong Kong in
FY2025.
Ranking and Market Share of Beauty, Health and P harmaceutical Product Retailers in Hong Kong
In FY2025, the overall beauty, health and pharm aceutical product retail er market in Hong Kong
was relatively competitive, with the top five retail ers accounting for an aggregate market share of 27.4%
in terms of retail sales value. The Group ranked thi rd among beauty, health and pharmaceutical product
retailers with a market share of 5.8% in terms of the total retail sales value of beauty, health and
pharmaceutical products in Hong Kong in FY2025.
In terms of the year-on-year growth rate, the Group recorded a growth rate of 95.8% in terms of
the revenue generated from the beauty, health an d pharmaceutical product sector between FY2023 and
FY2024, significantly outpacing the industry average growth for the sector of 19.0%.
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Ranking and Market Share of Top Five Beauty, Health and Pharmaceutical Product Retailers
in terms of Retail Sales Value (Hong Kong), FY2025
Ranking Company
Retail sales value
of Health &
Pharmaceuticals &
beauty products Market Share
(HK$ Million) (%)
1 Company A 3,120.0 10.6
2 Company B 2,888.8 9.8
3 The Group 1,697.0 5.8
4 Company D 195.9 0.7
5 Company C 161.5 0.5
Top 5 Sub-total 8,063.2 27.4
Others 21,411.7 72.6
Total Market Size 29,474.9 100.0
*Note: The ranking includes market players with full coverage of (i) beauty products, (ii) health products and (iii)
pharmaceutical products, in FY2025.
The revenue of the ranking is compiled by the revenue generated for the year ended 31 March 2025.
Source: Census and Statistics Department of Hong Kong, Annual Reports of Listed Companies, Frost & Sullivan
Ranking of Top Five Health & Pharmaceu ticals & Beauty Products Retailer
by Revenue Per Store (Hong Kong), FY2025
Ranking Company
Retail sales value
of health &
pharmaceuticals &
beauty products
per store
(HK$ Million)
1t h e G r o u p 6 0 . 6
2 Company D 16.3
3 Company B 15.7
4 Company A 9.5
5 Company C 8.5
*Note: The ranking includes market players with full coverage of (i) beauty products, (ii) health products and (iii)
pharmaceutical products, in FY2025.
The revenue of the ranking is compiled by the revenue generated for the year ended 31 March 2025.
Source: Census and Statistics Department of Hong Kong, Annual Reports of Listed Companies, Frost & Sullivan
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. In FY2025, the top five overall beauty, health and pharmaceutical product retailers by
revenue per store are the Group, Company D, Company B, Company A and Company C with
approximately HK$60.6 million, HK$16.3 million, HK$15.7 million, HK$9.5 million, and
HK$8.5 million, respectively.
. The Group ranked 1st among beauty, health an d pharmaceutical product retailers in Hong
Kong in terms of the revenue per store in FY2025.
Entry Barriers
1. Retail Network and Store Location
Securing prime retail locations with high foot tr affic is another major entry barrier. The success of
beauty and health chains largely dep ends on accessibility and v isibility within dens ely populated areas,
shopping malls, and transportation hubs. New entrants may find it difficult to obtain comparable sites
without paying significantly higher rents or accepting less favorable lo cations, reducing their ability to
attract consumers and achieve economies of scale.
2. Supply Chain Management
Efficient and large-scale supp ly chain management forms anot her major entry barrier in this
market, especially leading retail ers have established centralized procurement systems, automated
warehouse operations, and advanced logistics networks that allow for fast product replenishment,
accurate inventory control, and cost o ptimization. New entrants typically lack the financial scale, system
integration, and supplier coordination required to build such a supply chain network. Therefore, they are
likely to face higher inventory costs, and reduced ef ficiency, which directly impact profitability and
service quality.
3. Relationships with Upstream Suppliers
Strong and stable relationships with upstream su ppliers, including phar maceutical manufacturers,
health supplement producers, and global beauty brands, are critical for ensuring product authenticity,
stable supply, and competitive pricing. New entran ts, lacking such established networks, often face
higher procurement costs, limited product variety, and longer lead times, which reduce their ability to
attract consumers seeking one-stop shopping experiences for trusted brands.
4. Capital Requirement
Operating in this sector requires substantial capital investment i n inventory procurement, store
renovation, warehouse logistics, and rental of prime retail locations. Therefore, only companies with
strong financial resources and established operatio nal capabilities can sustain profitable operations in
this highly competitive retail environment.
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The following sets out a summary of certain aspects of Hong Kong laws and regulations which are
relevant to our Group ’s business operations in Hong Kong.
(A) LAWS AND REGULATIONS IN RELATION TO FOOD SAFETY AND
PHARMACEUTICAL PRODUCTS
1. Public Health and Municipal Services Ordinance (Chapter 132 of the Laws of Hong Kong)
The legal framework governing food safety in Hong Kong is primarily set out in Part V of the
Public Health and Municipal Services Ordinance (Chapter 132 of the Laws of Hong Kong) ( ‘‘PHMSO ’’)
and its subsidiary legislation. Under the PHMSO, food manufacturers and sellers are required to ensure
that all food intended for sale is fit for human consumption and complies with applicable requirements
on food safety, food standards and labelling.
Given that the Group ’s business encompasses the retail and wholesale sale of, inter alia ,
pharmaceuticals, wellness products, and grocery items (including food and bever ages), its operations fall
within the regulatory ambit of the PHMSO and its subsidiary legislation. The Group is required to
ensure that all such products offered for sale comply with the applicable statutory requirements on food
safety, standards, and labelling.
Section 50 of the PHMSO prohibits the manufacture, advertising and sale in Hong Kong of food
that is injurious to health. A contravention of this provision constitutes an offence punishable by a level
3 fine of HK$10,000 and imprisonment for 3 months. Section 52 provides that, subject to the statutory
defences set out in Section 53 of PHMSO, a seller w ho sells to the prejudice of a purchaser any food
which is not of the nature, substance, or quality demanded commits an offence which likewise carries a
penalty of level 3 fine of HK$10,000 and imprisonment for 3 months. According to Section 54, any
person who sells or offers for sale any food that is intended for, but unfit for, human consumption
commits an offence punishable by a level 5 fine of HK$50,000 and imprisonment for 6 months. Section
61 of the PHMSO makes it an offence for any person for any person to sell or display for sale any food
accompanied by a label that falsely describes the food or is likely to mislead as to its nature, substance,
or quality, unless it can be shown that the person neither knew nor could, with reasonable diligence,
have discovered the false or misleading nature of the label. It is likewise an offence to publish, or to be
involved in the publication of, any a dvertisement that falsely describes food or is likely to mislead as to
its nature, substance, or quality. An offence under Section 61 is punishable by a level 5 fine of
HK$50,000 and imprisonment for 6 months.
The FEHD is the authority responsible for the enforcement of the relevant food safety laws and
regulations. It may take samples of all kinds of food products at their point of entry to Hong Kong. It
may prohibit or restrict their importation. In addition, under Section 59 of the PHMSO, the FEHD may
examine any food which is, or which appears to be, intended for human consumption, and seize and
remove such food or its packaging if appears to be unfit for human consumption.
2. Food and Drugs (Composition and Labellin g) Regulations (Chapter 132W of the Laws of
Hong Kong)
Food and Drugs (Composition and Labelling) Regulations (Chapter 132W of the Laws of Hong
Kong) ( ‘‘FDCLR ’’) is a subsidiary legislation of PHMSO which regulates the advertising and labelling
of food.
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Regulation 3 of the FDCLR requires that food manufactured shall conform to the standards set out
in Schedule 1 thereof. Any person who advertises for sale, sells or manufactures for sale any food which
does not meet these standards commits an offence and is liable to a level 5 fine of HK$50,000 and
imprisonment for 6 months. Regulation 4A provides that unless exempted under Schedule 4,
prepackaged food must be marked and labelled in accordance with Schedule 3. The required particulars
under Schedule 3 to the FDCLR in relation to prepackaged food include:
(i) the food name or designation;
(ii) the list of ingredients;
(iii) durability indication, i.e. ‘‘best before ’’or ‘‘use by ’’date;
(iv) statement of special conditions fo r storage or instructions for use;
(v) name and address of manufacturer or packer;
(vi) count, weight or volume; and
(vii) language requirement, i.e. the marking or labelling of prepackaged food shall be in either
English or Chinese or in both languages.
Regulation 4B further requires that prepackaged food to be marked and labelled with its energy
value and nutrient content as prescribed in Part 1 of Schedule 5, and provides that any nutrient claims
made on the packaging or in advertisement should comply with Part 2 of Schedule 5. Contravention of
Regulations 4A and/or 4B of the FDCLR is an offence punishable by a level 5 fine of HK$50,000 and
imprisonment for 6 months.
3. Food Safety Ordinance (Chapter 612 of the Laws of Hong Kong)
The Food Safety Ordinance (Chapter 612 of the Laws of Hong Kong) ( ‘‘FSO’’) was enacted to
strengthen food safety control in Hong Kong. It establishes a regulatory framework that includes a
mandatory registration scheme for food importers and food distributors under Sections 4 and 5, as well
as record-keeping requirements to facilitate food traceability under Section 2 4. Under the FSO, all food
traders must keep proper documentation of the source and distribution of their food products, enabling
authorities to track food movement throughout the supply chain.
Under Section 8 of the FSO, FEHD may refuse an application for registration of food importer and
food distributor if the applicant has repeatedly contravened the FSO within 12 months immediately
preceding the application, or if the applicant ’s previous registration was revoked within that period.
Further, FEHD, under Section 14, FEHD may revoke an existing registration where the registered person
has repeatedly contravened the FSO in the preceding 12 months, or where the registered person (in the
case of a natural person) has died or (in the case of a corporation) has been wound up.
FEHD has implemented a Demerit Point Syste m in order to provide an objective basis for
exercising its power to revoke a registration under section 14 of the FSO. Under this system, if a
registered food importer or food distributor is convicted of an offence under the FSO in connection with
its business, a prescribed number of demerit points will be imposed and entered against his registration.
Upon conviction of the relevant offences, these points will be recorded by reference to the date of the
offence rather than the date of conviction. Where the same offence is committed within a 12-month
period, the specified demerit points will be doubled, trebled, or quadrupled on the second, third, and
fourth occasions respectively. If a registrant accumu lates 20 or more points within any 12-month period,
its registration may be revoked.
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Sections 21 to 24 of the FSO require that any pe rson who, in the course of business, imports,
acquires, or supplies by wholesale food in Hong Kong to keep record of their transactions. Essentially,
the record must contain, inter alia: (i) the date the food was acquired, imported or supplied; (ii) the
name and contact details of the person from whom the food was acquired or imported, or to whom the
food was supplied; (iii) the place from where the food was imported (in the case of importation); (iv) the
total quantity of the food; and (v) a description of the food. Section 26 of the FSO requires that the
records for food with shelf-life of 3 months or less be kept for at least 3 months, while records for food
with shelf-life ex ceeding 3 months must be kept for 24 months . Under Sections 27 and 28, FEHD may
inspect such records, make use them in exercising its statutory powers or performing its functions under
the FSO, and disclose to the public any information contained in such records when FEHD is satisfied
that public disclosure of the information is necessary for the protection of public health. A contravention
of these provisions constitutes an offence punishable by a level 3 fine of HK$10,000 and imprisonment
for 3 months.
The subsidiary of our Company responsible for importation and wholesaling is registered as a food
importer and a food distributor under the registration scheme, and is therefore subject to the relevant
regulatory requirement under the FSO.
4. Pharmacy and Poisons Ordinance (Chapter 138 of the Laws of Hong Kong)
The Pharmacy and Poisons Ordinance (Chapter 138, Laws of Hong Kong) ( ‘‘PPO’’) regulates the
importation, manufacture, labelling, distribution, and sale of pharmaceutical products and poisons in
Hong Kong, with the primary aim of safeguarding public health. The PPO establishes a licensing and
control framework to ensure that only safe, effectiv e, and properly labelled pharmaceutical products are
supplied in the market. Both PPO and its subsidiary legislation Pharmacy and Poisons Regulations
(‘‘PPR’’) are administered and enforced by the Dr ug Office of the Department of Health ( ‘‘DOH’’).
Under the PPO, pharmaceutical products must gen erally be registered with the Pharmacy and
Poisons Board of Hong Kong before they can be manufactured, imported, or sold. The Board maintains
a register of pharmaceutical products and determines applications for registr ation, taking into account
product safety, efficacy, and quality. PPO f urther classifies certain substances as ‘‘poisons, ’’divided into
Part I and Part II of the Poisons List, as well as specific ‘‘Prescription-only Medicines. ’’Substances
under Part I and all prescription-on ly medicines may only be sold at phar macies under the supervision of
a registered pharmacist and on presentation of a doctor ’s prescription. Part II poisons, while still
restricted, may be sold at pharmacies without prescription, but must be dispensed by or under the
supervision of a registered pharm acist. Licensing requirements ar e also imposed under the PPO. Any
person who wishes to manufacture, wholesale, or re tail pharmaceutical products or poisons must obtain
the appropriate licence (e.g. manufacturer ’s licence, wholesale dealer ’s licence, or retailer ’s licence).
Licensees are subject to ongoing compliance obligations, including proper record-keeping, safe storage,
and accurate labelling. Pursuant to Sections 33 and 34 of the PPO, any person who is guilty of an
offence under the PPO shall unless a penalty is otherwise expressly provided, be liable on conviction to
a level 6 fine of HK$100,000 and to imprisonment for 2 years.
As the Group engages in the retail sale of pharmaceuticals and health products, it must ensure that
all pharmaceutical products offered for sale are dul y registered with the Pharmacy and Poisons Board,
and that prescription-only medicines and Part I poisons are dispensed strictly under the supervision of a
registered pharmacist and in compliance with prescrip tion requirements. The Group must also maintain
valid retail licences where required, implement proper storage and labelling pr actices, and ensure staff
are adequately trained in handling restricted medicines.
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5. Antibiotics Ordinance (Chapter 137 of the Laws of Hong Kong)
The Antibiotics Ordinance and its subsidiary legislation, the Antibiotics Regulations, (Cap. 137A)
regulate the sale and supply of substances as specified in Schedule 1 to the Antibiotics Regulations, both
of which are also administered and enforced by the Drug Office of the DOH. Under Section 4 of the
Antibiotics Ordinance, no person shall sell or otherwise supply any substance to which the Antibiotics
Ordinance applies or any preparation of which any such substance is an ingredient or part unless he falls
within the types of persons listed in Section 4(1)(a) to (c) of the Antibiotics Ordinance. Any person who
contravenes this section commits an offence and is liable to a level 5 fine of HK$50,000 and to
imprisonment for 12 months.
6. Chinese Medicine Ordinance (Chapter 549 of the Laws of Hong Kong)
The Chinese Medicine Ordinance (Chapter 549 of the, Laws of Hong Kong) ( ‘‘CMO’’) establishes
the statutory framework for the regulation of Chinese medicine in Hong Kong. Its objectives are to
safeguard public health, ensure the safety, quality, and efficacy of Chinese medicines, and regulate the
practice of Chinese medicine practitioners. The CMO provides for the regulation of both Chinese herbal
medicines and proprietary Chinese medicines (pCm). Proprietary Chinese medicines must be registered
with the CMC before they can be imported, manufactured, or sold in Hong Kong. The registration
process assesses safety, quality, and efficacy, and requires produ cts to be properly labelled in
accordance with statutory requirements. CMO also i mposes licensing requirem ents for wholesale and
retail sale of proprietary Chinese medicines. Licen sees must comply with conditions relating to storage,
record-keeping, labelling, and safe supply. Under Section 134 of the CMO, no person shall sell or
distribute by way of wholesale; or possess for the purpose of wholesale any propriety Chinese medicine
without a wholesaler licence in prop rietary Chinese medicine, Contr avention of Sectio n 134 constitutes
an offence and is liable to a fine at level 6 of HK$100,000 and imprisonment for 2 years.
As the Group engages in the retail sale of health and wellness products, including Proprietary
Chinese medicines, it must ensure that all proprieta ry Chinese medicines offered for sale are properly
registered under the CMO, and that relevant wholesale or retail licences are maintained. Labelling and
advertising of Chinese medicines must comply with statutory requirements, and products should only be
sourced from licensed manufacturers or distributors.
(B) LAWS AND REGULATIONS IN RELATION TO RETAIL BUSINESS
1. Trade Descriptions Ordinance (Chapter 362 of the Laws of Hong Kong)
The Trade Descriptions Ordinance (Chapter 362 of the Laws of Hong Kong) ( ‘‘TDO’’)s e e k st o
prohibit false trade description, misleading, false or incomplete information, false marks and
misstatements in relation to goods and services supplied in the course of trade. Under Section 2 of the
TDO, the definition of trade description is broad and includes, inter alia , references to quantity, method
of manufacture, composition, fitness for purpose, availability, compliance with a standard specified or
recognised by any person, price, approval by an y person, a person by whom they have been acquired,
the goods being of same kind as goods supplied to a p erson, place or date of manufacture, etc. Section 2
further provides that a trade description which is false to a material degree, or which, though not strictly
false, is misleading such that it is likely to be taken as a materially false description, will be regarded as
a false trade description.
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Section 7 of TDO makes it an offence for any per son who, in the course of any trade or business,
applies a false trade description to any goods or supplies or offer to supply any goods to which a false
description is applied. Section 7A extends this prohibition to services, making it an offence for a trader
to apply a false trade description to a service supplied or offered to a consumer, or to supply or offer
such a service. In addition, Section 12 prohibits the import or export of goods to which a false trade
description or a forged trade mark has been applied. Sections 13E, 13F, 13G, 13H and 13I of TDO
provide that a trader commits an offence if the trader engages, in relation to a consumer, in a
commercial practice that is a mislead ing omission, or is aggressive, or constitutes bait advertising, or
constitutes a bait and switch, or wrongly accepting payment for a product. Any person who commits an
offence under Sections 7, 7A, 13E, 13F, 13G, 13H or 13I shall be liable, on conviction on indictment, to
a fine of HK$500,000 and to imprisonment for 5 years, and on summary conviction, to a level 6 fine of
HK$100,000 and imprisonment for 2 years. However, Sections 30L and 30M empower an officer
authorised by the Commissioner of Customs and Ex cise, with the written consent of the Secretary for
Justice, to accept a written undertaking from a bus iness or individual not to continue, repeat or engage
in conduct constitutin g an offence under the TDO. Upon acceptance of such an undertaking, neither the
Commissioner of Customs and Excise nor the authorised officer may commence or continue an
investigation or proceedings in respect of the matter to which the said undertaking relates.
2. Undesirable Medical Advertisements Ordinance (Chapter 231 of the Laws of Hong Kong)
The Undesirable Medical Advertisements Ordinance (Chapter 231 of the Laws of Hong Kong)
(‘‘UMAO ’’) regulates the advertising of medicines and treatments in Hong Kong, with the purpose of
protecting the public from misleading, false, or poten tially harmful claims relating to medical products
and services. UMAO restricts certain advertisements relating to medical and health matters. It applies to
health and beauty supplements and products companies like our Group to protect public heath through
prohibiting or restricting the publication of advertisements for medicine, surgical appliance or treatment
that may induce the seeking of improper management of certain health conditions. According to Section
3 of the UMAO, unless by or with due authorisation from relevant authorities, no advertisement shall be
published or caused to be published if it is likely to lead to the use of any medic ine, surgical appliance
or treatment for: (a) the treatment or prevention of any disease or condition listed in column 1 of
Schedule 1 to the UMAO, except for a purpose specified in column 2 of the said Schedule; and (b) the
treatment of human beings for any purpose listed in Schedule 2 to the UMAO. Section 2 of the UMAO
defines ‘‘medicine ’’to include any kind of medicament or other curative or preventive substance, and
whether a proprietary medicine, a patent medicine, a Chinese herbal medicine, a proprietary Chinese
medicine, or purported natural remedy. Section 2 of the UMAO further provides that the sale of
medicine in a labelled container or package shall cons titute the publication of an advertisement. Section
3B of the UMAO provides that no person shall publish, or cause to be published, an advertisement for
an orally consumed product which makes for the pr oduct a claim specified in column 1 of Schedule 4 to
the UMAO, or any similar claim, except as allowed und er the provisions in column 2 of that Schedule 4.
Any person who contravenes Section 3 or 3B of the UMAO commits an offence and shall be liable upon
a first conviction to a fine at level 5 of HK$50,000 and imprisonment for 1 year.
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3. Sale of Goods Ordinance (Chapter 26 of the Laws of Hong Kong)
The Sale of Goods Ordinance (Chapter 26 of the Laws of Hong Kong) ( ‘‘SOGO ’’)g o v e r n st h e
formation, performance and enforcement contracts for the sale of goods in Hong Kong and the transfer
of title in goods sold. The SOGO also sets out certain implied terms or conditions and warranties
relating to the safety and suitability of goods supplied under a contract of sale for goods in Hong Kong,
including:
(i) where there is a sale of goods by description, the goods shall correspond with the description;
(ii) where the seller sells goods in the course of a business, the goods shall be of a merchantable
quality, i.e. (a) as fit for the purpose or purposes for which the goods of that kind are
commonly bought; (b) of such standard of app earance and finish; (c) as free from defects
(including minor defects); (d) as safe; and (e) as durable, as it is reasonable to expect having
regard to any description applied to them, the price (if relevant) and all the other relevant
circumstances;
(iii) where the seller sells goods in the course of a business and the buyer makes known to the
seller (whether expressly or by implication) an y particular purpose for which the goods are
being bought, the goods supplied under the contract shall be reasonably fit for that purpose.
Section 55 of the SOGO provides that where a seller is in breach of a warranty, the buyer is not
entitled, solely on that basis, to reject the goods . Instead, the buyer may either rely on the breach of
warranty to reduce or extinguish the price payable, or bring an action against the seller for damages for
such breach of warranty.
4. Consumer Goods Safety Ordinance (Chapter 456 of the Laws of Hong Kong)
The Consumer Goods Safety Ordinance (Chapter 456 of the Laws of Hong Kong) ( ‘‘CGSO ’’)
imposes a statutory duty on manufacturers, importers and suppliers of consumer goods (i.e. goods which
are ordinarily supplied for private use or consum ption) to ensure that such consumer goods are safe.
Section 6 of CGSO provides that no person may suppl y, manufacture or import consumer goods into
Hong Kong unless such consumer goods comply with the general safety requirement under the CGSO or
with any applicable safety standard (s) or safety specification(s) appr oved by the Secretary for Commerce
and Economic Development for that category of consumer goods. A person who contravenes Section 6
commits and offence and is liable (i) on first conviction, to a level 6 fine of HK$100,000 and
imprisonment for 1 year; (ii) on subsequent convicti ons, to a fine of HK$500,000 and to imprisonment
for 2 years; and (iii) in case of a continuing offe nce, a further fine of HK$1,000 for each day during
which the offence continues, in addition to the penalties above. Where the Commissioner of Customs
and Excise reasonably believes that consumer goods do not comply with an approved standard, or with a
safety standard or safety specification established by regulation, the Commissioner is empowered under
the CGSO to (i) serve a prohibition notice prohibiting a person from supplying those consumer goods
for a specified period not exceeding 6 months; and (i i) serve a recall notice requiring the immediate
withdrawal of any consumer goods if there is a significant risk that the consumer goods will cause a
serious injury and do not comply with the approved standard or a safety standard or safety specification
established by regulation. Any person who fails or refuses to comply with such prohibition notice or
recall notice commits an offence and is liable (i) on first conviction, to a level 6 fine of HK$100,000
and imprisonment for 1 year; (ii) on subsequent convictions, to a fine of HK$500,000 and to
imprisonment for 2 years; and (iii) in case of a con tinuing offence, a further fine of HK$1,000 for each
day during which the offence continues, in addition to the penalties above.
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5. Dutiable Commodities Ordinance (Chapter 109 of the Laws of Hong Kong)
The Dutiable Commodities Ordinance (Cap. 109, Laws of Hong Kong) ( ‘‘DCO’’) regulates the
control, importation, manufacture, and sale of dutiable commodities in Hong Kong, including liquor,
tobacco, hydrocarbon oil, and methy l alcohol. Its subsidiary legisla tion, the Dutiable Commodities
(Liquor) Regulations (Cap. 109B) ( ‘‘DCLR ’’) provides under Regulation 37(1) that no person may, in
the course of business, sell or supply intoxicating liquor to a minor. Regulation 37(4) further clarifies
that where a non-alcoholic product is sold together with intoxicating liquor as a gift, the transaction will
be regarded as a supply of liquor. A contravention of Regulation 37(1) constitutes an offence, punishable
on summary conviction by a level 5 fine of HK$50,000.
Regulation 41 of DCLR requires that any person who, in the course of business, (a) sells or
supplies intoxicating liquor in a face- to-face distribution at a place; or ( b) offers to do so, must ensure a
sign containing both the Chinese and English versions of the prescribed notice is displayed at a
prominent position at the place. The prescribed notice must be rectangular in shape, with sides
measuring at least 38 cm by 20 cm, set out in plain and readily legible characters and letters, and in a
colour that contrasts with the background. According to the Schedule of DCLR, the prescribed content
of the notice is ‘‘Under the law of Hong Kong, intoxicating liquor must not be sold or supplied to a
minor in the course of business ’’and ‘‘根據香港法律,不得在業務過程中,向未成年人售賣或供應令人分
醉的酒類.’’A person who contravenes Regulation 41 commits an offence and is liable on summary
conviction to a level 4 fine of HK$25,000.
6. Pesticides Ordinance (Chapter 133 of the Laws of Hong Kong) and Pesticides Regulations
(Chapter 133A of the Laws of Hong Kong)
Section 7 of the Pesticides Ordinance (Chapter 133 of the Laws of Hong Kong) prohibits any
person from importing, causing to import into Hong Kong, manufacturing, selling, offering or exposing
for sale, or supplying or offering to supply any registered pesticide save under and in accordance with a
licence. The Agriculture, Fisheries and Conservation Department ( ‘‘AFCD ’’) maintains a register of
pesticides with Part I listing those in a form ready for immediate use without processing and intended
for general domestic use, and Part II listing all othe r pesticides. Any person w ho contravenes Section 7
commits an offence and is liable on conviction to a level 5 fine of HK$50,000 and imprisonment for 1
year. In addition, any holder of a licence who contravenes any of the conditions of the licence commits
an offence and is liable on conviction to a level 4 fine of HK$25,000 and imprisonment for 6 months.
The Pesticides Regulations (Chapter 133A of the Laws of Hong Kong) provides that a holder of a
pesticide licence shall not sell, expose for sale, or supply any registered pesticide, whether by retail or in
a form ready for retail sale or supply, unless the container or any external packaging near, in a
conspicuous position, a label in both English and Chinese setting forth clearly and distinctly and not in
any way obscured or obliterated, the pr escribed particulars of the pestic ide, including but not limited to,
the word ‘‘Poison ’’and the characters ‘‘毒藥’’, the expression ‘‘Keep out of reach of children ’’and the
characters ‘‘遠離孩童’’, the registration number of the pesticide, the trade name, chemical name and
common name of the pesticide, the composition by per centage of all active ingredients, the net weight
etc. Any person who contravenes these labelling requirements commits an offence and is liable on
conviction to a level 1 fine of HK$2,000 and imprisonment for 6 months. The subsidiaries selling
pesticides have obtained a retail licence for Part I registered pesticides, details of which are set out in
the section headed ‘‘Business — Licence and Registrations ’’hereof.
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7. Personal Data (Privacy) Ordinance (Chapter 486 of the Laws of Hong Kong)
The Personal Data (Privacy) Ordinance (Chapter 486 of the Laws of Hong Kong) ( ‘‘PDPO ’’)a i m s
to safeguard the privacy of individuals in relation to personal data. Section 2 of the PDPO defines
‘‘personal data ’’as any data (i) relating directly or indirectly to a living individual; (ii) from which it is
practicable for the identity of the individual to be directly or indirectly ascertained; and (iii) in a form in
which access to or processing of the data is practicab le. The PDPO regulates the conduct of a data users,
i.e. person who, either alone or jointly or in common with other persons, controls the collection,
holding, processing or use of the personal data. The PDPO sets out six data protection principles which
all data user need to co mply with, namely:
Principle 1 Purpose and manner of collection:
Personal data should be collected by means which are lawful and fair, and
should be collected for a lawful purpose directly related to a function or
activity of the data user. The data collected should be necessary, adequate but
not excessive. The data subject should be informed of the purpose and the
classes of persons to whom th e data may be transferred.
Principle 2 Accuracy and duration of retention:
Practicable steps shall be taken to ensure that the personal data is accurate and
i sn o tk e p tl o n g e rt h a ni sn e c e s s a r y .
Principle 3 Use of personal data:
Unless consent of the data subject is obtained, personal data must only be used
for the purpose for which the data is collected or for a directly related purpose.
Principle 4 Security of personal data:
Practicable steps shall be taken to ensure that the personal data held by a data
user are protected against unauthorised or accidental access, processing,
erasure, loss or use.
Principle 5 Information t o be generally available:
Practicable steps shall be taken to ensure that personal data policies and
practices are generally avai lable to the public regarding the types of personal
data it holds and the main purposes for which the personal data is used.
Principle 6 Access to personal data:
Data subjects must be given access to their personal data and be allowed to
mark corrections of their personal data.
Section 38 of the PDPO empowers the Privacy Commissioner for Personal Data to initiate an
investigation against a data user if a complaint is received, or if there is reasonable ground to believe
that the data user has done an act or practice or engaged in an act or practice in relation to personal data
that may contravene the PDPO. The Commissioner may, under Section 50, issue an enforcement notice
directing the data user to remedy the contravention and/or take steps to prevent its recurrence. A data
user who fails to comply with an enforcement notice commits an offence and is liable, on first
conviction, to a level 5 fine of HK$50,000 and imprisonment for 2 years. As the Group collects personal
information such as names, email addresses and telephone numbers from customers who joined its
membership scheme and via online purchases, it qua lifies as a data user pursuant to the PDPO and is
subject to the principles and requirements as set out therein. In this regard, the Group has established
internal guidelines to ensure compliance with the PDPO.
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8. Competition Ordinance (Chapter 619 of the Laws of Hong Kong)
The Competition Ordinance (Chapter 619 of the Laws of Hong Kong) aims, inter alia ,t op r o h i b i t
conduct that prevents, restricts or distorts competition in Hong Kong, and to prohibit mergers that have
the effect of substantially lessening competition in Hong Kong. There are three competition rules under
the Competition Ordinance, namely, the First Conduct Rule, the Second Conduct Rule and the Merger
Rule. The First Conduct Rule prohibits anti-competitive agreements if the object or effect of the
agreement, concerted practice or decision is to prev ent, restrict or distort competition in Hong Kong.
The Second Conduct Rule prohibits abuse of market power if the object or effect of the conduct is to
prevent, restrict or distort competition in Hong Kong. Penalties for infringement of the First Conduct
Rule and the Second Conduct Rule that may be imposed by the Competition Tribunal include, inter alia ,
financial penalty that may amount to 10% of the turnover of the companies concerned for up to 3 years
in which the contravention occurs (Section 93), disqualification order against a director (Section 101)
and prohibition order (Section 151A) etc.
9. The Business Registration Ordinan ce (Chapter 310 of the Laws of Hong Kong)
The Business Registration Ordinance (Chapter 310 of the Laws of Hong Kong) requires every
entity which carries on a business in Hong Kong to apply for business registration. The Group held valid
business registration certificates throughout the T rack Record Period and as at the Latest Practicable
Date.
10. The Inland Revenue Ordinance (Chapter 112 of the Laws of Hong Kong)
The Inland Revenue Ordinance (Chapter 112 of the Laws of Hong Kong) ( ‘‘IRO’’)i sa no r d i n a n c e
for the purposes of imposing taxes on property, earnings and profits in Hong Kong. The IRO provides,
inter alia , that persons, which include corporations, par tnerships, trustees and bodies of persons,
carrying on any trade, profession or business in Hong Kong are chargeable to tax on all profits
(excluding profits arising from the sale of capital assets) arising in or derived from Hong Kong from
such trade, profession or business. The IRO also contains provisions relating to, among others,
permissible deductions for outgoings and expenses, set-offs for losses and allowances for depreciation.
11. Dangerous Goods Ordinance (Chapter 295 of the Laws of Hong Kong)
The storage, conveyance, manufacture and use of dangerous goods in Hong Kong are principally
governed by the Dangerous Goods Ordinance (Chapter 295 of the Laws of Hong Kong) ( ‘‘DGO’’)a n d
its subsidiary legislation, including the Dangerous Goods (Application and Exemption) Regulation 2012
(Chapter 295E of the Laws of Hong Kong) ( ‘‘DGR’’).
Under section 6 of the DGO, save as otherwise permitted, no person shall manufacture, store,
convey or use any dangerous goods except under an d in accordance with a licence granted under the
DGO. A contravention of Section 6 constitutes an offence under Section 14(1) of the DGO, punishable
on a first conviction by a fine of HK$100,000 and imprisonment for 6 months, and on subsequent
conviction by a fine of HK$200,000 and imprisonment for 12 months.
Perfumery products, spirits and disinfectants with alcohol content sold by the Group are classified
as Class 3 dangerous goods (flammable liquids) under Schedule 2 to the DGO. Accordingly, the storage
of such products in a warehouse and retail shops is, in principle, subject to the licensing requirements
under the DGO unless an applicable exemption applies.
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The DGR, being a subsidiary legislation made under the DGO, provides a specific exemption
regime for dangerous goods stored in consumer packs from the licensing requirements under Section 6
of the DGO. Pursuant to Section 19(2) of the DGR, the storage of dangerous goods in consumer packs in
a warehouse compartment is exempt from the licensing requirement under section 6 of the DGO if (a)
the quantity of each type of dangerous goods does not exceed the prescribed consumer pack (warehouse)
exempt quantity for its class; and (b) the aggregate quantity of such dangerous goods does not exceed
5,000 units. For storage in uninhabited compartments including retail shop premises, under Section 19(1)
of the DGR, the maximum exempted quantity is 1,000 units. For the purposes of the DGR, ‘‘consumer
packs ’’refer to pre-packed dangerous goods where th e receptacle size does not exceed the maximum
package size specified in Schedule 2. In the case of perfumery products and disinfectants with alcohol
content (Class 3), the maximum package size is 1 unit, and where the goods are in liquid form, 1 unit is
equivalent to 1 litre.
The Group stores pre-packed perfume in its ware house, all of which are in consumer pack form.
For warehouse storage, the Group complies with Section 19(2) of the DGR in that the quantity of
perfumery products does not exceed the applicable consumer pack (warehouse) exempt quantity as
prescribed in Schedule 5 of the DGR (being 1,500 units for Packing Group II or 5,000 units for Packing
Group III (Note) , as applicable), and in any event the aggregate quantity does not exceed 5,000 units. For
retail shop storage, disinfectants with alcohol content and spirits, all in consumer pack form, are stored
at the Group ’s retail shop premises for immediate sale in limited quantities at all material times, and in
any event not exceeding the applicable consumer pack exempt quantities under Section 19(1) of the
DGR applicable to uninhabited compartment including retail shop (being 300 units for Packing Group II
or 1,000 units for Packing Group III) (Note) , and the aggregate quantity at each premises does not exceed
1,000 units. As advised by our Hong Kong Legal Counsel, our Group had been in compliance with the
DGO and DGR during the Track Record Period and up to the Latest Practicable Date, and, having
considered the quantity of the relevant products stored at our warehouse and retail shops, no dangerous
goods licence is required under Section 6 of the DGO in respect of the Group ’s operations.
(C) LAWS AND REGULATIONS IN RELATION TO PARALLEL IMPORTATION
1. Copyright Ordinance (Chapter 528 of the Laws of Hong Kong)
Section 30 of the Copyright Ordinance (Chapter 528 of the Laws of Hong Kong) ( ‘‘Copyright
Ordinance ’’) provides that the copyright in a work is infringed if a person, without the licence of the
copyright owner, imports into or exports from Hong Kong, otherwise than for his private or domestic
use, a copy of the work which is, and which he knows or has reason to believe to be, an infringing copy
of the work. Further, Section 31 of the Copyright Ordinance provides that the copyright in a work is
infringed by a person who, without the licence of the copyright owner:
(i) possesses for the purpose of or in the course of any trade or business;
(ii) sells or lets for hire, or offers or exposes for sale or hire;
(iii) exhibits in public or distributes for the purpose of or in the course of any trade or business;
or
Note: Pursuant to Schedule 2 of the DGR, only alcoholic beverage which contain more than 35% alcohol by volume is
subject to the DGO and DGR regimes. Hence, for alcoholic beverage with less than 35% alcohol by volume, storage
of which does not require any licence under the DGO. Spirits with more than 35% but not more than 70% alcohol
by volume are classified as Class 3 dangerous goods under Schedule 2 as ‘‘Alcoholic Beverages/Packing Group III ’’
and are subject to consumer pack exempt if the quantity does not exceed 1,000 units for shop storage and 5,000
units for warehouse storage (if applicable). For spirits with more than 70% alcohol by volume, they are under
‘‘Alcoholic Beverages/Packing Group II ’’and are subject to consumer pack exempt if the quantity does not exceed
300 units for retail shop storage and 1,500 units for warehouse storage (if applicable).
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(iv) distributes (otherwise than for the purpose of or in the course of any trade or business) to
such an extent as to affect prejudi cially the owner of the copyright,
a copy of the work which is, and which he knows or has reason to believe to be, an infringing copy of
the work.
2. Trade Marks Ordinance (Chapter 559 of the Laws of Hong Kong)
The Trade Marks Ordinance (Chapter 559 of the Laws of Hong Kong) ( ‘‘TMO’’) governs the
registration, use and protection of registered tra de marks in Hong Kong. Trade mark protection in Hong
Kong is territorial in nature, ther efore, trade marks registered in other countries or regions do not
automatically enjoy protection in Hong Kong. In order to obtain protection as registered trade marks in
Hong Kong, trade marks must be registered under TMO and the Trade Marks Rules (Chapter 559A of
the Laws of Hong Kong). According to Section 10 of the TMO, a registered trade mark is a property
right obtained by registration under the ordinance, and the owner of a registered trade mark has the
rights and is entitled to the remedies provided by the ordinance. Section 14 further provides that the
owner of a registered trade mark has exclusive rights in the trade mark which are infringed by use of the
trade mark in Hong Kong without his consent. Our Group is the registered owner of the trade marks as
set out in ‘‘Other Information — B. Further Information about our Business — 2. Our material
intellectual property rights ’’ in Appendix V hereto. Conducts which amount to infringement of a
registered trade mark are set out in Section 18 of TMO, which include, inter alia ,( i )t h eu s e ,i nt h e
course of trade or business, of a sign identical to the registered trade mark in relation to goods or
services to those for which it is registered; (ii) the use, in the course of trade or business, of a sign
identical to the trade mark in relation to goods or services which are similar to those for which it is
registered; and the use of the sign in relation to suc h goods or services is likely to cause confusion on
the part of the public. Pursuant to Section 22 of TMO, the registered owner of a trade mark is entitled to
commence infringement proceedings once any infri ngement by third parties occurs, and is entitled to
seek remedies including damages, i njunctions, taking of accounts or such other relief as is available in
respect of infringement of any other property right. The trade mark owner may also apply to the court
for an order for delivery up and an order for disposal pursuant to Sections 23 and 25 of TMO.
3. The Law on Passing Off
Passing off is a common law action available to protect unregistered trade mark rights. To succeed
in an action for passing off, the following elements must be established: (i) that an owner ’s goods or
services have acquired a goodwill or reputation in the market and are known by some distinguishing
feature; (ii) that there is a misrepresentation (wh ether intentional or unintentional) by a third party
leading or likely to lead the public to believe that the goods or services offered by the third party are
goods or services of the owner; and (iii) that damage has been or is likely to be suffered by the owner as
a result of such misrepresentation. Misrepresentati on is an essential element of a passing off action. To
establish a likelihood of deception or confusion in the absence of direct misrepresentation, two factual
elements are generally required: (i) that a name, mar k or other distinctive feature used by the owner has
acquired a reputation among a relevant class of persons; and (ii) that members of that class would
mistakenly infer from a third party ’s use of a name, mark or other feature which is the same or
sufficiently similar that the third party ’s goods or business are from the same source or are connected
with the owner. Examples of misrepresentation recognised in common law passing off cases include:
misrepresentation that the owner ’s goods of one class or quality are of another class or quality,
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misrepresentation that second-hand or used goods of the owner are new, misrepresentation that altered or
adulterated goods are goods of the owner ’s original manufacture, misrepresentation that the goods are
covered by the owner ’s guarantee when they are not so covered, and misrepresentation that a person is
the authorised dealer of the owner when such person is not so authorised. Under the common law,
parallel import, i.e. the importation and resale of genuine goods that were lawfully put on the market
elsewhere in the world by the intellectual property rights owner (or with the owner ’s consent, whether
express or implied) and that such goods are i mported in parallel with the rights owner ’s own authorised
imports into the jurisdiction, does not generally am ount to passing off, as there is no misrepresentation
regarding the origin of the goods. However, where an importer alters the contents, names or labels of the
products, such conduct may give rise to actionable passing off.
4. Import and Export Ordinance (Chapter 60 of the Laws of Hong Kong) and the Import and
Export (General) Regulations (Chapter 60A of the Laws of Hong Kong)
The Import and Export Ordinance (Chapter 60 of the Laws of Hong Kong) ( ‘‘IEO’’) provides for
the regulation and control of, among others, the import of articles into Hong Kong. Under section 6C of
the IEO, no person shall import any article specifi ed in Schedule 1 to the Import and Export (General)
Regulations (Chapter 60A of the Laws of Hong Kong) ( ‘‘IEGR ’’) except under and in accordance with
an import licence. Any person who contravenes this section shall be guilty of an offence and shall be
liable on conviction to a fine of HK$500,000 and to imprisonment of 2 years. Under Schedule 1 of
IEGR, prohibited articles that require a licence for import includes, among others, pesticides.
5. Import and Export (Registration) Regul ations (Chapter 60E of the Laws of Hong Kong)
Regulations 4 and 5 of the Import and Export (Registration) Regulations (Chapter 60E of the Laws
of Hong Kong) provide that every person who imports or exports any article other than an exempted
article shall lodge an accurate and c omplete import or export declaration relating to such article using
services provided by a specific body with the Commissioner of Customs and Excise within 14 days after
the importation or exportation of the article. As t he Group import products from overseas, we are subject
to the Import and Export (Registration) Regulations.
Any person who, without reasonable excuse, fails or neglects to declare within 14 days after
importation or exportation is liable on summary conviction to a fine of HK$1,000, together with a
further fine of HK$100 for each day during which such declaration remains outstanding. Furthermore,
any person who knowingly or recklessly lodges with the Commission of Customs and Excise a
declaration that is inaccurate in any material part icular commits an offence offence and is liable on
summary conviction to a fine of HK$10,000. Further, under Regulation 7, a penalty is payable by any
person who fails to lodge the declaration within 14 days after the importation or exportation. Where the
total value of the articles specified in a declaratio n does not exceed HK$20,000, the penalty payable is:
(i) HK$20 for lodgment after 14 days but within 1 month and 14 days; (ii) HK$40 for lodgment after 1
month and 14 days but within 2 months and 14 days; and (iii) HK$100 for lodgment after 2 months and
14 days. If the total value of articles specified in a declaration exceeds HK$20,000, the penalty amounts
are doubled to HK$40, HK$80 and HK$200 respectively. Any penalty payable under Regulation 7
constitutes a civil debt due to the Government of the HKSAR, recoverable by proceedings at the District
Court, and is payable when the declaration to which the penalty relates is lodged with the Commissioner
of Customs and Excise.
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(D) GENERAL COMPLIANCE
1. Occupiers Liability Ordinance (Chapter 314 of the Laws of Hong Kong)
Our Group conducted our business in leased or licenced properties and we are considered to be the
occupier of such properties under the Occupiers Liability Ordinance (Chapter 314 of the Laws of Hong
Kong) ( ‘‘OLO’’). As such, we are required to comply with the Occupiers Liability Ordinance, which
regulates the obligations of a person occupying or having control of premises on which injury or damage
resulting to persons or goods lawfully on the land or other property from dangers.
2. Occupational Safety and Health Ordinan ce (Chapter 509 of the Laws of Hong Kong)
The purpose of the Occupational Safety and Health Ordinance (Chapter 509 of the Laws of Hong
Kong) ( ‘‘OSHO ’’) is to ensure the safety and health of empl oyees when they are at work; to prescribe
measures that will contribute to making the workplaces of employees safer and healthier for them; to
improve the safety and health standards applicable to certain hazardous process, plant and substances
used or kept in workplaces; and generally to improve the safety and health aspects of working
environments of employees. The employer shall ensure the safety and health at work of all his
employees by (i) providing and maintaining plant and work systems that are safe and without risks to
health; (ii) making arrangements for ensuring safety and absence of risks to health in connection with
the use, handling, storage or transport of plant or substances; (iii) providing all necessary information,
instruction, training and supervision as may be n ecessary to ensure the safety and health at work of his
employees; (iv) maintaining the workplace in a cond ition that is safe and without risks to health; (v)
providing or maintaining safe means of access to and egress from the workplace; and (vi) providing and
maintaining a working environment that is safe and without risks to health.
Failure to comply with the above requirements constitutes an offence and the employer is liable on
conviction to a fine of HK$200,000. An employer who fails to comply intentionally, knowingly or
recklessly commits an offence and is liable on conviction to a fine of HK$200,000 and to imprisonment
for 6 months. Under Sections 9 and 10 of the OSHO, the Commissioner for Labour may serve an
improvement notice on an employer, or an occupier of premises where a workplace is located, if the
employer or occupier contravenes the provisions of the ordinance, or the Commissioner for Labour may
serve a suspension notice to the employer or the occupier of premises where there is an imminent risk of
death or serious bodily injury in the premises. Failure to comply with the improvement notice constitutes
an offence and is liable to a fine of HK$200,000 and to imprisonment for 12 months, while failure to
comply with the suspension notice constitutes an offence and is liable to a fine of HK$500,000 and to
imprisonment for 12 months.
3. Gambling Ordinance (Chapter 148 of the Laws of Hong Kong)
The Gambling Ordinance (Chapter 148 of the Laws of Hong Kong) regulates gambling-related
activities in Hong Kong. Under Section 22(1) of the Gambling Ordinance, any person who promotes,
conducts and/or organizes a lottery, a game of tombola, a game of amusement with prizes or a trade
promotion competition in Hong Kong is required to obtain a licence. In particular, under Section
22(l)(a)(iv) of the Gambling Ordinance, any person engaged in trade or business and organising and
conducting a trade promotion competition is required to obtain a trade promotion competition licence
from the Home Affairs Department. Under Section 2 of the Gambling Ordinance, trade promotion
competition is defined as a competition or other scheme promoted, conducted or managed for the
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purpose of promoting a trade or business or the sale of any product. According to the Licensing
Guidelines in the Guide for Applicants of Trade Promotion Competition Licence ( ‘‘Application Guide ’’)
published by the Office of the Licensing Authority of the Home Affairs Department, typical examples of
a trade promotion competition are lucky draws organised by department stores or restaurants to boost
sales and promote business. Under Section 22(3) of the Gambling Ordinance, the trade promotion
competition licence is subject to the prescribed conditions and to any other conditions which the public
officer appointed by the Secretary for Home Affairs may impose. The prescribed conditions are set out
in Form 4A under the Gambling Regulations (Chapter 148A of the Laws of Hong Kong) ( ‘‘Gambling
Regulations ’’), which include:
(1) no prize offered shall be a money prize;
(2) no fee shall be charged fo r entering the competition;
(3) advertising in respect of the competition shall refer to the licence by stating its number in the
prescribed manner; and
(4) within ten days from the date of the drawing or judging of the competition, details of the
results shall be published in one English and one Chinese newspaper circulating in Hong
Kong, and a copy of the relevant newspaper cuttings shall be forwarded to the public officer
appointed by the Secretary for Home Affairs.
Pursuant to Section 22(2) of the Gambling Ordinan ce, a trade promotion competition licence may
be granted either for a specific competition or for renewable period of 12 months. Nevertheless,
according to the Licensing Guidelines in the Applicatio n Guide, the general rule is that a licence will not
be granted for a period of more than three months, nor will it be extended. So, in essence, the law
permits up to 12 months, but the licensing authority ’s guidelines impose a practical constraint (in most
cases) of no more than three months. As the Group launches non-periodical lucky draw events as part of
our trade promotion activities, we obtained the Trade Promotion Competition Licence issued by the
Secretary for Home Affairs pursuant to the requirements under Gambling Ordinance and Gambling
Regulations based on the nature of the events on short term basis which cover the duration of the lucky
draw events.
4. Employment Ordinance (Chapt er 57 of the Laws of Hong Kong)
The Employment Ordinance (Chapter 57 of the Laws of Hong Kong) ( ‘‘Employment Ordinance ’’)
regulates the general conditions of employment and matters connected t h e r e i ni nH o n gK o n g .I tp r o v i d e s
for the payment of wages, restrictions on deductions from wages, the grant of statutory holidays, and the
termination of contract, among other things. Further , employees under a continuous contract are entitled
to benefits such as maternity leave, sickness allowa nce, paid annual leave, rest days, severance and long
service payment under the Employment Ordinance.
5. Mandatory Provident Fund Schemes Ordinance (Chapter 485 of the Laws of Hong Kong)
The Mandatory Provident Fund Schemes Ordinance (Chapter 485 of the Laws of Hong Kong)
provides for the establishment and regulation of non-governmental mandatory provident fund schemes,
enabling for members of the workforce to accumulate fi nancial benefits for retirement. Unless otherwise
exempted, employers are required to arrange th eir employees who are aged between 18 and 64 and
employed for not less than 60 days to be enrolled as a member of a mandatory provident fund scheme
(‘‘MPF Scheme ’’). An employer who without reasonable excuse fails to enroll his employees in a MPF
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Scheme commits an offence and is liable on conviction to a fine of HK$350,000 and to imprisonment
for 3 years, while an employer who without reasonable excuse fails to comply with the contribution
requirement is liable to a fine of HK$450,000 and to imprisonment for 4 years.
6. Minimum Wage Ordinance (Chapter 608 of the Laws of Hong Kong)
The Minimum Wage Ordinance (Chapter 608 of the Laws of Hong Kong) ( ‘‘MWO’’) provides that
an employee is entitled to be paid wages not less than the minimum wage in respect of any wage period.
The prescribed minimum hourly wage rate at present is HK$42.10 per hour, effective from 1 May 2025.
Pursuant to Section 15, a provision of a contract of employment that purports to extinguish or reduce
any right, benefit or protection conferred on the employee by the MWO is void. The MWO applies to
every employee being engaged under a contract of employment to which the Employment Ordinance
applies, except those who are employed as a domestic worker in, or in connection with, a household and
who dwells in that household free of charge, a student intern, or a work experience student during a
period of exempt student employment.
7. Employees ’ Compensation Ordinance (Chapter 282 of the Laws of Hong Kong)
The Employees ’ Compensation Ordinance (Chapter 282 of the Laws of Hong Kong) ( ‘‘ECO’’)
establishes a no-fault, non-contributory employee c ompensation system for work injuries, and lays down
the rights and obligations of employees and employers respectively in respect of injuries sustained by, or
death of, employees as a result of an accident arising out of and in the course of employment, or in
respect of specified occupational diseases suffered by the employees. If an employee sustains an injury
or dies as a result of an accident arising out of and in the course of his employment, his employer shall
be generally liable to pay compensation in accordan ce with the ECO. The follo wing sets out a summary
of certain aspects of the PRC laws and regulations which are relevant to our Group ’s sales of
pharmaceutical, health and beaut y products to Chinese Mainland via e-commerce platforms.
(E) LAWS AND REGULATIONS IN RELATION TO CROSS-BORDER E-COMMERCE
BUSINESS
According to the Circular on Improving the Regulation for Cross-border E-commerce Retail
Imports ( 《關於完善跨境電子商務零售進口監管有關工作的通知》) promulgated by the Ministry of
Commerce ( ‘‘MOFCOM ’’), the National Developme nt and Reform Commission ( ‘‘NDRC ’’), the
Ministry of Finance ( ‘‘MOF’’), the General Administration of Customs ( ‘‘GAC’’), the State Taxation
Administration ( ‘‘SAT’’) and the State Administration for Market Regulation ( ‘‘SAMR ’’) on November
28, 2018 with effect from January 1, 2019, the cross-border E-commerce retail imports shall be
regulated as goods imported for personal use, which shall not be subject to the license approval,
registration or filing requirements for the first -time importation of the goods. The cross-border E-
commerce retail imports shall satisfy the following criteria: (i) the goods are included in the Cross-
B o r d e rE - C o m m e r c eR e t a i lI m p o r tL i s t(《跨境電子商務零售
進口商品清單》), intended solely for
personal use, and comply with the applicable tax polic ies for cross-border e-commerce retail imports;
(ii) transactions are conducted through e-commerce platforms connected with the customs system,
enabling verification of transaction, payment and logistics electronic information ( ‘‘three-document
matching ’’); (iii) where transactions are not conducted through customs-connected e-commerce
platforms, express delivery operators or postal e nterprises may, upon entr ustment by relevant e-
commerce enterprises or payment enterprises, assume corresponding legal responsibilities and transmit
transaction and payment information to customs.
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According to the Announcement o n Regulatory Matters concerni ng Cross-Border E-commerce
Retail Imports and Exports ( 《關於跨境電子商務零售進出口商品有關監管事宜的公告》)p r o m u l g a t e db y
the GAC on December 10, 2018 and implement ed on January 1, 2019, go ods imported through ‘‘Imports
via Direct Purchase ’’(直購進口) in cross-border e-commerce and those applicable to the import policy
of ‘‘Bonded Imports via Online Shopping ’’(網購保稅進口) are subject to the regulation as inbound items
for personal use but not subject to the requiremen ts for initial import approval, registration and
recordation of relevant goods.
(F) LAWS AND REGULATIONS IN RELATION TO IMPORT OF DRUGS
According to the Drug Administration Law of the PRC ( 《中華人民共和國藥品管理法), which was
promulgated by Standing Committee of the National People ’s Congress on September 20, 1984 and
amended on February 28, 2001, December 28, 2013, April 24, 2015 and August 26, 2019, and took
effect on December 1, 2019, the Regulations for the Implementation of the Drug Administration Law of
the PRC (《中華人民共和國藥品管理法實施條例》), which was promulgated by State Council on August
4, 2002 and amended on February 6, 2016, March 2, 2019, the Administrative Measures for the Import
of Drugs (《藥品進口管理辦法》), which was promulgated by National Medical Products Administration
and GAC on 18 August 2003, as amended with effect from 24 August 2012, the drug importation
enterprise must obtain the Drug Im port Registration Certificate ( 進口藥品註冊證) (or Pharmaceutical
Products Registration Certificate ( 醫藥產品註冊證)) or Approval Document for Import of Drugs ( 進口
藥品批件) before it can make the import filings for the imported drugs. However, according to the
aforementioned regulations, Chinese individuals are allowed to carry or mail small quantities of drugs
into China for personal self-use only and such drugs are not required to obtain the Drug Import
Registration Certificate ( 進口藥品註冊證) or other approval documents. As such, Chinese individuals
may purchase drug products for personal use from c ross-border e-commerce businesses such as the
Group and, thus, the Group is not required to obt ain the Drug Import Regis tration Certificate ( 進口藥品
註冊證) (or Pharmaceutical Products Registration Certificate ( 醫藥產品註冊證)) or Approval Document
f o rI m p o r to fD r u g s(進口藥品批件) before it can sell drug products to customers located in the PRC.
(G) LICENSING AND CUSTOMS REQUIREMENTS FOR CONDUCTING SALES VIA ONLINE
PLATFORMS IN THE PRC
According to the Announcement o n Regulatory Matters concerni ng Cross-Border E-commerce
Retail Imports and Exports ( 《關於跨境電子商務零售進出口商品有關監管事宜的公告》)p r o m u l g a t e db y
the General Administration of Cu stoms on December 10, 2018 and imple mented on January 1, 2019, the
Circular on Improving the Regulation for Cross-border E-commerce Retail Imports ( 《關於完善跨境電子
商務零售進口監管有關工作的通知》) promulgated by the MOFCOM, the NDRC, the MOF, the GAC,
the SAT and the SAMR on November 28, 2018 with effect from January 1, 2019, cross-border e-
commerce platform enterprises, logi stics enterprises, payment enterprises and other enterprises involved
in cross-border e-commerce retail import business shall complete registration procedures with local
customs. Overseas cross-border e-commerce enterpr ises shall entrust agents incorporated in the PRC
(‘‘Domestic Agents ’’) to complete registration procedures wi th the customs where the Domestic Agents
are located. In other words, in order to conduct export sales of relevant products to Chinese Mainland
via e-commerce platforms, the Group shall entrust qualified Domestic Agents, which shall undergo
registration procedures with local customs and complete customs clearance for the Group. The cross-
border e-commerce enterprise and i ts Domestic Agents shall be subject to the regulation and supervision
of customs and other relevant authorities, and shall bear civil liability jointly and severally. The Group,
as an overseas cross-border e-commerce operator, is otherwise generally not required to obtain other
licences to conduct its e-commerce business in the PRC subject to the requirements as described in the
foregoing paragraph headed ‘‘(A) Laws and Regulations In Rela tion To Cross-Border E-Commerce
Business ’’.
REGULATORY OVERVIEW
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OVERVIEW
Our Group ’s history dates back to 1992 when Lung Fung Dispensary ( 龍豐中西大藥房), the
predecessor of our Group, was founded by Mr. Tse, our Founder, Controlling Shareholder, Chief
Executive Officer, executive Director, and Chairman of the Board. We opened the first Lung Fung
pharmacy in Lung Fung Garden, Sheung Shui. From h umble beginnings as a small pharmacy, we have
gradually evolved into a chain retail operator offer ing beauty, health and pharmaceutical products with
31 retail stores in operation in Hong Kong as of the Latest Practicable Date. Our objective is to further
strengthen our leading position in Hong Kong ’s retail beauty, health and pharmaceutical products
industry.
We have built our brands —‘ ‘ Lung Fung, ’’ ‘‘Lung Fung Mall, ’’and ‘‘Lung Fung Cosmetic ’’into
widely recognised retail names across Hong Kong, establishing a robust local store network. Our retail
store network has consistently grown, with new stores opened in late 2024 at Kai Tak Sports Park,
followed by additional stores opened in the first and second quarter of 2025 in Whampoa, Kwun Tong,
Tuen Mun, Fortress Hill, and Aberdeen, along with Kornhill and Sha Tin, as well as new stores in
Jordan and Admiralty opened in 2026, bringing the total number of our stores to 31 as at the Latest
Practicable Date.
In addition to actively expanding our retail net work locally, we established a back office in
Guangzhou, the PRC in 2018 and a procurement office in Japan in 2019. In 2024, we further expanded
our supply chain efforts to include Korea. This enhan ced direct procurement capability has allowed the
Group to exercise more effective control over product quality and pricing, enabling us to offer the public
high-quality products at affordable prices.
On 3 October 2025, our Company was incorporated in the Cayman Islands as an exempted
company with limited liability. and, as part of our R eorganization, became the holding company of our
Group with our business being conducted through our subsidiaries. Over the course of our business
history, our shareholding structure has remained stable, with the Controlling Shareholders maintaining
control over our operating subsidiaries. Certain of our operating subsidiaries were wholly-owned by our
employees on trust for the benefit of Mr. Tse prior t o our Reorganization. For further details on the
shareholding structure of our Group companies, see ‘‘ — Shareholding and Corporate Structure — Group
companies ’’in this section below.
Immediately upon completion of the Capitalization Issue and the Global Offering (assuming the
Over-allotment Option is not exercised), Mr. Tse, Mrs. Tse and Ms. Tse, through TTK Holding, will
together control approximately 75% of the voting rights in our Company and hence are our Controlling
Shareholders.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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OUR MILESTONES
The following is a summary of our Group ’s key development milestones:
Date Event
October 1992 The first Lung Fung pharmacy was opened.
June 2007 The flagship operating company, Lung Fung Pharmaceutic al (Group) Limited,
was incorporated.
January 2010 We set up our headquarters in Lung Fung Group Centre located in Fanling,
where a five-storey building occupies over 120,000 square feet and houses
various back-office departments.
June 2018 Our first flagship store in Kowloon with size over 6,000 square feet opened in
Mong Kok.
May 2019 Procurement office was establish ed in Japan to enhance supply from Japan.
August 2020 The Lung Fung Group flagship stores on Tmall was established.
The Lung Fung Group ’s official online shopping platform was launched.
December 2020 The Lung Fung Group ’s WeChat mini program was launched.
November 2022 Our first branch on Hong Kong Island opened in Central.
November 2023 Lung Fung at the Gala Place, Mong Kok was officially opened, with gross floor
area of approximately 17,500 square feet, which is the largest store of our
Group.
November 2024 The number of members using the Lung Fung mobile application surpassed
200,000.
August 2025 We opened our 29th retail store in Shatin, achieving our highest number of
retail stores since the founding of our Group.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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SHAREHOLDING AND CORPORATE STRUCTURE
Group companies
As at the Latest Practicable Date, our Group comprises our Company and 49 subsidiaries
established in the BVI, Hong Kong, the PRC and Samoa, all of which are, directly and indirectly,
wholly-owned by our Company. The following table sets out information regarding our subsidiaries.
Name
Date and
place of
incorporation
Date of
commencement
of business
Share
capital
(Note 1)
Interest
attributable
to our Group
after the
Reorganization
Principal business
activities during the
Track Record Period
Shareholders prior
to Reorganization
Subsidiaries engaged in our retail business (collectively, ‘‘Retail Companies ’’)
Lung Fung Dispensary
(Main Store) Limited
2 June 2004 (Hong
Kong)
2 June 2004 100 100% Operation of Lung Fung
Dispensary
100% held by Ms. Chan
Yuen Yi, sister of Mrs.
Tse and sister-in-law of
M r .T s e ,o nt r u s tf o r
the benefit of Mr. Tse
Great Harvest Enterprise
Limited
5 June 2006 (Hong
Kong)
5 June 2006 1 100% Operation of Lung Fung
Mall
100% held by Mr. Tse
Lung Fung Dispensary
(3rd Store) Limited
15 October 2007
(Hong Kong)
15 October 2007 100 100% Operation of Lung Fung
Mall
100% held by Mr. Tse
Robust Harvest Asia
Limited
17 April 2008
(Hong Kong)
17 April 2008 100 100% Operation of Lung Fung
P o pU ps t o r e
100% held by Ms. Tse
Best Harvest Enterprises
Limited
13 January 2009
(Hong Kong)
13 January 2009 100 100% Operation of Lung Fung
store
100% held by Ms. Tse
Gain Ocean International
Limited
23 July 2009
(Hong Kong)
23 July 2009 100 100% Operation of Lung Fung
Mall
100% held by Mr. Tse
Tai Tak Pharmacy
Limited
16 October 2009
(Hong Kong)
16 October 2009 100 100% Operation of Lung Fung
Mall
100% held by Kong Yau
Kwan, an employee of
our Group, on trust for
the benefit of Mr. Tse
Forever Rising Worldwide
Limited
30 October 2009
(Hong Kong)
30 October 2009 1,000 100% Operation of Lung Fung
Mall
100% held by Mr. Tse
Tai Fung Medicine
Company Limited
4 June 2010 (Hong
Kong)
4 June 2010 100 100% Operation of Lung Fung
P o pU ps t o r e
9 9 %h e l db yM r .C h a n
Wai Kong (the brother
of Mrs. Tse and
brother-in-law of Mr.
Tse. Mr. Chan Wai
Kong is also a member
of the senior
management of the
Company (purchasing
director of the
Company) and a
director of Tai Fung
Medicine Company
Limited, a wholly-
owned subsidiary of
the Company) on trust
for the benefit of Mr.
Tse
1% held by Mr. Tse
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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Name
Date and
place of
incorporation
Date of
commencement
of business
Share
capital
(Note 1)
Interest
attributable
to our Group
after the
Reorganization
Principal business
activities during the
Track Record Period
Shareholders prior
to Reorganization
True Harvest Dispensary
Company Limited
12 August 2010
(Hong Kong)
12 August 2010 100 100% Operation of Lung Fung
Mall
5 0 %h e l db yM r .T a mS h u
Wing (an employee of
our Group), on trust
for the benefit of Mr.
Tse
5 0 %h e l db yM r s .T s eo n
trust for the benefit of
Mr. Tse
Man Wah Dispensary
Limited
7 June 2011 (Hong
Kong)
7 June 2011 100 100% Operation of Lung Fung
store
100% held by Mr. Tse
Man Fung Dispensary
Limited
3 August 2011
(Hong Kong)
3 August 2011 100 100% Operation of Lung Fung
Dispensary
100% held by Mr. Tse
Great Dragon Industrial
Limited
17 January 2013
(Hong Kong)
17 January 2013 1 100% Operation of Lung Fung
Mall
100% held by Ms. Tse
Able Harvest Asia
Investment Limited
7 March 2013
(Hong Kong)
7 March 2013 1 100% Operation of Lung Fung
Cosmetic
100% held by Ms. Tse
Well Harvest (China)
Limited
1 September 2015
(Hong Kong)
1S e p t e m b e r
2015
100 100% Operation of Lung Fung
Cosmetic
100% held by Mrs. Tse on
trust for the benefit of
Mr. Tse
Allied Way International
Investment Limited
17 June 2016
(Hong Kong)
17 June 2016 100 100% Operation of Lung Fung
Mall
100% held by Ms. Tse
China Smart Capital
Investment Limited
1 November 2016
(Hong Kong)
1N o v e m b e r
2016
10,000 100% Operation of Lung Fung
Mall
100% held by Ms. Tse
Max Dragon Capital
Investment Limited
1 November 2016
(Hong Kong)
1N o v e m b e r
2016
10,000 100% Operation of Lung Fung
Mall
100% held by Ms. Tse
Success Power Industrial
Limited
2 January 2018
(Hong Kong)
2 January 2018 1 100% Operation of Lung Fung
Mall
100% held by Ms. Tse
Full Honest Asia Limited 18 January 2018
(Hong Kong)
18 January 2018 1 100% Operation of Lung Fung
Mall
100% held by Ms. Tse
Great Harvest Asia
Investment Limited
23 May 2018
(Hong Kong)
23 May 2018 1 100% Operation of Lung Fung
Mall
100% held by Mr. Tse
Max Great Corporation
Limited
31 August 2018
(Hong Kong)
31 August 2018 1 100% Operation of Lung Fung
store
100% held by Ms. Tse
Full Well International
Enterprise Limited
18 October 2019
(Hong Kong)
18 October 2019 1 100% Operation of Lung Fung
Mall
100% held by Pearl Lake
Global Limited
Golden Period
Management Limited
28 June 2023
(Hong Kong)
28 June 2023 1 100% Operation of Lung Fung
store
100% held by Ms. Tse
Rich Stand Limited 10 May 2024
(Hong Kong)
10 May 2024 1 100% Operation of Lung Fung
Mall
100% held by Ms. Tse
Rich More Investment
Limited
12 July 2024
(Hong Kong)
12 July 2024 1 100% Operation of Lung Fung
Mall
100% held by Ms. Tse
Harvest Concept
International Limited
15 October 2024
(Hong Kong)
15 October 2024 1 100% Operation of Lung Fung
Mall
100% held by Ms. Tse
Access Holdings Limited 10 January 2025
(Hong Kong)
10 January 2025 1 100% Operation of Lung Fung
Mall
100% held by Ms. Tse
Master Grand Investment
Limited
8 April 2025
(Hong Kong)
8 April 2025 1 100% Operation of Lung Fung
Mall
100% held by LFP
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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Name
Date and
place of
incorporation
Date of
commencement
of business
Share
capital
(Note 1)
Interest
attributable
to our Group
after the
Reorganization
Principal business
activities during the
Track Record Period
Shareholders prior
to Reorganization
Subsidiaries engaged in our wholes ale business (collectively, ‘‘Wholesale Companies ’’)
Top Harvest
Pharmaceuticals
Company Limited
26 April 2002
(Hong Kong)
26 April 2002 100 100% Wholesale 90% held by Mrs. Tse
1 0 %h e l db yM s .C h a n
Yuen Yi on trust for
the benefit of Mr. Tse
Huge Harvest Trading
Limited
16 November 2006
(Hong Kong)
16 November
2006
100 100% Wholesale 100% held by Mr. Tse
Dai Ching Holdings
Company Limited
10 June 2009
(Hong Kong)
10 June 2009 100 100% Wholesale 100% held by Chan Wai
Lung (brother of Mrs.
Tse and brother-in-law
of Mr. Tse and an
employee of our
Group) on trust for the
benefit of Mr. Tse
Lucky Talent Corporation
Limited
13 October 2016
(Hong Kong)
13 October 2016 1 100% Wholesale 100% held by Mr. Tse
Subsidiary engaged in advertisi ng and promotion agency business
Dragon Mind Creation
Limited
3 August 2015
(Hong Kong)
3 August 2015 100 100% Advertising and
promotion agency
100% held by Mr. Tse
Subsidiaries engaged in overseas sourcing and private label business
Pearl Lake (Hong Kong)
Limited
24 October 2016
(Hong Kong)
24 October 2016 1 100% Private label business 100% held by Pearl Lake
Global Limited
Lung Fung Investment
(China) Limited
3 August 2018
(Hong Kong)
3 August 2018 100 100% Investment holding 100% held by LFG
(Note 2)
Lung Fung Investment
(Japan) Limited
22 May 2019
(Hong Kong)
22 May 2019 100 100% Overseas sourcing 100% held by LFG (Note 2)
Pearl Lake Global
Limited
23 October 2019
(BVI)
23 October 2019 1 100% Investment holding 100% held by LFG (Note 2)
Tak Fung International
Trading Development
(Guangzhou) Co., Ltd
(德豐國際貿易發展
(廣州)有限公司)
24 December 2018
(the PRC)
24 December
2018
RMB6.4
million
100% Wholesale 100% held by Lung Fung
Investment (China)
Limited
Subsidiaries engaged in the general management and adm inistrative matters of our Group (collectively, ‘‘Other Companies ’’)
Lung Fung
Pharmaceutical
(Group) Limited
8 June 2007 (Hong
Kong)
8 June 2007 100,000 100% Retail, wholesale and
investment holding
100% held by Mr. Tse
Kidbrooke Group Limited 16 September 1997
(Samoa)
16 September
1997
1 100% Property holding 100% held by LFP
Harvest Smart Holdings
Limited
12 January 2018
(Hong Kong)
12 January 2018 1 100% Property holding 100% held by LFP
S a nF u n gH e a l t hL i m i t e d 3 0A p r i l2 0 0 5
(Hong Kong)
30 April 2005 1 100% Non-operating 100% held by Chan Yuen
Yi on trust for the
benefit of Mr. Tse
Grand Harvest Worldwide
Limited
3 November 2010
(Hong Kong)
3N o v e m b e r
2010
100 100% Lease Management 100% held by LFP
Fancy Mind Corporation
Limited
4 January 2019
(Hong Kong)
4 January 2019 1 100% Non-operating 100% held by Wong Sze
Chun (an employee of
our Group) on trust for
the benefit of Mr. Tse
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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Name
Date and
place of
incorporation
Date of
commencement
of business
Share
capital
(Note 1)
Interest
attributable
to our Group
after the
Reorganization
Principal business
activities during the
Track Record Period
Shareholders prior
to Reorganization
Intermediate holding companies
LF Retail Holding
Limited
9 October 2025
(BVI)
9 October 2025 7 100% Investment holding 100% held by our
Company
TH Wholesale Holding
Limited
9 October 2025
(BVI)
9 October 2025 3 100% Investment holding 100% held by our
Company
PL Beautie Limited 9 October 2025
(BVI)
9 October 2025 2 100% Investment holding 100% held by our
Company
LF Consultancy Limited 9 October 2025
(BVI)
9 October 2025 2 100% Investment holding 100% held by our
Company
Notes:
1. The share capital structure of our subsidiaries incorporated in Hong Kong, the BVI and Samoa refer to their issued shares.
The share capital structure of our subsidiary established in the PRC refer to their registered capital. As at the Latest
Practicable Date, all shares or share capital under the ‘‘Share capital ’’column were fully paid-up.
2. Lung Fung Group Co., Ltd. ( ‘‘LFG’’) is a company incorporated in Hong Kong and is wholly owned by Mr. Tse.
During the Track Record Period, all of our subsidiaries were controlled by our Controlling
Shareholders and, save for our Reorganization, there was no significant change in the beneficial
shareholding of our subsidiaries.
We have adopted a complex group structure with s everal subsidiaries, a common practice in the
retail industry in Hong Kong, where a separate com pany is established for each store outlet. This
approach provides us with flexibi lity regarding licensing, complian ce, and leasing arrangements when
opening and closing store outlet as part of our nor mal business operations. Since each of our operating
subsidiaries manages only one store, our Directors do not view any individual subsidiary as materially
significant in relation to our overall perform ance results.
MAJOR ACQUISITIONS, DISPOSALS AND MERGERS
During the Track Record Period and as at the Latest Practicable Date, save f or the Reorganization,
we did not conduct any acquisitions, disposals or mergers that we consider to be material to us.
SHAREHOLDING CHANGES IN MEMBERS OF OUR GROUP DURING THE TRACK
RECORD PERIOD
On the dates specified below, Mr. Tse, or as the ca se may be, Mrs. Tse transferred his/her entire
interest in the following companies to Ms. Tse at n ominal consideration. Such a matter of family
planning and arrangement among Mr. Tse, Mrs. Tse and Ms. Tse and not a commercial divestment of
his/her interests in th e relevant companies.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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Below is the details of the changes in shareholdings of the members of our Group during the Track
Record Period and before the Reorganization.
Company Transferor Transferee Date of transfer
Number of
share(s)
transferred Consideration
Robust Harvest Asia Limited
(豐業亞太有限公司)
Mr. Tse Ms. Tse 1 April 2025 100 100
Best Harvest Enterprises Limited
(大豐盛企業有限公司)
Mr. Tse Ms. Tse 1 April 2025 100 100
Great Dragon Industrial Limited
(浩龍實業有限公司)
Mr. Tse Ms. Tse 1 April 2025 1 1
Able Harvest Asia Investment Limited
(威豐亞太投資有限公司)
M r .T s e M s .T s e 1M a r c h2 0 2 5 1 1
Allied Way International Investment
Limited
(滙進國際投資有限公司)
Mrs. Tse Ms. Tse 1 April 2025 100 100
China Smart Capital Investment Limited
(華俊創富有限公司)
Mrs. Tse Ms. Tse 24 March 2025 1 1
Sole Blossom Limited
(Note 1)
Ms. Tse 24 March 2025 9,999 9,999
Max Dragon Capital Investment Limited
(盛龍創富有限公司)
Mrs. Tse Ms. Tse 25 February 2025 1 1
Sole Blossom Limited
(Note 1)
Ms. Tse 25 February 2025 9,999 9,999
Success Power Industrial Limited
(
興威實業有限公司)
Mr. Tse Ms. Tse 28 January 2025 1 1
Full Honest Asia Limited
(豐誠亞洲有限公司)
Mr. Tse Ms. Tse 1 April 2025 1 1
Max Great Corporation Limited
(韋豐有限公司)
Mr. Tse Ms. Tse 28 January 2025 1 1
Golden Period Management Limited
(金時管理有限公司)
Mr. Tse Ms. Tse 28 January 2025 1 1
Rich Stand Limited
(富起有限公司)
Mr. Tse Ms. Tse 28 January 2025 1 1
Note:
1. Sole Blossom Limited is a company wholly owned by Mrs. Tse.
REORGANIZATION
Prior to the Reorganization, we were a group of private companies directly or indirectly held by
our Controlling Shareholders. In preparation for the Listing, we undertook a series of restructuring steps
for the purpose of transferring assets and businesses from our Controlling Shareholders to our Company
and streamlining our corporate a nd shareholding structure.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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Reorganization steps
In preparing for the Listing, our Group carried out the Reorganization which involved the
following steps:
Incorporation of our Company
Our Company was incorporated on 3 October 2025 as an exempted company w ith limited liability
under the laws of the Cayman Islands, with an authorized share capital of HK$390,000 divided into
3,900,000,000 ordinary shares with a par value of HK$0.0001 each. It is the holding company of our
subsidiaries, and its principal business activity is investment holding. Upon our Company ’s
incorporation, one fully-paid subscriber ’s share was immediately transferred to TTK Holding. Following
the share transfer, the issued share capital of our Company was wholly owned by TTK Holding.
Our Company was registered as a non-Hong Kong company under Part 16 of the Companies
Ordinance on 12 November 2025.
Incorporation of LF Retail Holding Limited, TH Wholesale Holding Limited, PL Beautie Limited
and LF Consultancy Limited
On 9 October 2025, each of LF Re tail Holding Limited, TH Whol esale Holding Limited, PL
Beautie Limited and LF Consultancy Limited was incorporated in the BVI with an authorized share
capital of US$10,000 divided into 10,000 ordinary shares of a single class with par value of US$1.00
each. Upon the incorporation of these companies, on e share (being 100% of the issued share capital of
each of LF Retail Holding Limited, TH Wholesale Holding Limited, PL Beautie Limited and LF
Consultancy Limited) was issued and allotted to our Company. Upon completion of such issuance, each
of LF Retail Holding Limited, TH Wholesale Holding Limited, PL Beautie Limited and LF Consultancy
Limited became a direct wholly-owned subsidiary of our Company.
Acquisition of the Retail Companies, San Fung Health Limited and Fancy Mind Corporation
Limited
Prior to our Reorganization, each of the Retail C ompanies, San Fung Health Limited and Fancy
Mind Corporation Limited was, either directly or indirectly, wholly-owned by Mr. Tse or Ms. Tse.
On 20 October 2025, our Company, via LF Retail Holding Limited as the purchaser ’s nominee,
acquired all shares of the Retail Companies, San Fung Health Limited and Fancy Mind Corporation
Limited from their respective legal and beneficial owner(s).
The consideration for the transfer of share(s) in five of the Retail Companies was settled by the
allotment and issue of an aggregate of 73 shares in our Company, all credited as fully paid, free from all
encumbrances and together with the benefit of all rights and profits attaching thereto, to TTK Holding.
The determination of the relevant consideration was based on the net asset value of each of these Retail
Companies as at the reference date. For the transfer of share(s) in each of the rest of the Retail
Companies, San Fung Health Limited and Fancy Mind Corporation Limited, the consideration is HK$1
as these companies recorded a net li ability as at the reference date an d the consideration was settled in
cash.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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In consideration of the nomination by our Comp a n yo fL FR e t a i lH o l d i n gL i m i t e dt ot a k eu pt h e
relevant shares in those five Retail Companies, LF Retail Holding Limited allotted and issued five
shares to our Company.
Upon completion of the above, all Retail Companies, San Fung Health Limited and Fancy Mind
Corporation Limited became indirectly who lly-owned subsidiaries of our Company.
Allotment of shares and capital reduction in LFP
Prior to our Reorganization, LFP was directly wholly-owned by Mr. Tse.
On 16 October 2025, LF Retail Holding Limited subscribed for 100,000 shares in LFP. Upon
completion of the shares subscription in LFP, LFP was owned as to 99% by LF Retail Holding Limited
and 1% by Mr. Tse. In consideration of HK$10 for the 100,000 new shares in LFP issued to LF Retail
Holding Limited, LF Retail Holding Limited allotted and issued one share, credited as fully paid, to our
Company.
On 22 October 2025, LFP passed a Shareholder ’sr e s o l u t i o ni nr e l a t i o nt oar e d u c t i o no fi t s
registered capital by repaying HK$137,000,000 paid-up share capital comprising 1,000 ordinary shares
to Mr. Tse, through the offsetting of HK$137,000,000 due from an entity indirectly wholly-owned by
Mr. Tse. In consideration of Mr. Tse agreeing to have his shares in LFP cancelled, Mr. Tse directed
TTK Holding to receive 935,079 new shares as his nominee, all credited as fully paid, issued by our
Company. The capital reduction was completed on 28 November 2025 and LFP became an indirectly
wholly-owned subsidiary of our Company.
Acquisition of the Wholesale Companies
Prior to our Reorganization, each of the Wholesale Companies was, directly or indirectly, wholly
owned by Mr. Tse and/or Mrs. Tse.
On 20 October 2025, our Company, via TH Wholesale Holding Limited as the purchaser ’s
nominee, acquired all shares in the Wholesale Compa nies from their respective legal and beneficial
owner(s).
The consideration for the transfer of shares in tw o of the Wholesale Companies was settled by the
allotment and issue of an aggregate of 34,043 shares in our Company, all credited as fully paid, free
from all encumbrances and together with the benefit of all rights and profits attaching thereto, to TTK
Holding. The determination of the relevant cons ideration was based on the net asset value of each of
these Wholesale Companies as at the reference date. For the transfer of shares in each of the rest of the
Wholesale Companies, the consideration is HK$1 a s these companies recorded a net liability as at the
reference date and the consideration was settled in cash.
In consideration of the nomination by our Company of TH Wholesale Holding Limited to take up
the relevant shares in those two Wholesale Compani es, TH Wholesale Holding Limited allotted and
issued two shares to our Company.
Upon completion of the above, all Wholesale Companies became indirectly wholly-owned
subsidiaries of our Company.
HISTORY, REORGANIZATION AND CORPORATE STRUCTURE
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Acquisition of Pearl Lake Global Limited, Lu ng Fung Investment (China) Ltd and Lung Fung
Investment (Japan) Limited
Prior to our Reorganization, each of Pearl Lake G lobal Limited, Lung Fung Investment (China)
Limited and Lung Fung Investment (Japan) Limited was, directly or indirectly, wholly owned by LFG.
On 20 October 2025, our Company, via PL Beautie Limited as its nominee, acquired all shares in
each of Pearl Lake Global Limited, Lung Fung Invest ment (China) Limited and Lung Fung Investment
(Japan) Limited from LFG.
The consideration for the transfer of share in Pearl Lake Global Limited was settled by the
allotment and issue of an aggregate of 30,592 shares in our Company, all credited as fully paid, free
from all encumbrances and together with the benefit of all rights and profits attaching thereto, to TTK
Holding. The determination of the consideration was based on the net asset value of Pearl Lake Global
Limited as at the reference date. For the transfer of share in each of Lung Fung Investment (China)
Limited and Lung Fung Investment (Japan) Limite d, the consideration is HK$1 as these companies
recorded a net liability as at the reference d ate and the consideration was settled in cash.
In consideration of the nomination by our Company of PL Beautie Limited to take up the shares in
Pearl Lake Global Limited, PL Beautie Limited allotted and issued one share to our Company.
Upon completion of the above, each of Pearl Lake Global Limited, Lung Fung Investment (China)
Limited and Lung Fung Investment (Japan) Limited became an indirectly wholly-owned subsidiary of
our Company.
Acquisition of Dragon Mind Creation Limited
Prior to our Reorganization, Dragon Mind Creation Limited was directly wholly owned by Mr.
Tse.
On 20 October 2025, our Company, via LF Consultancy Limited as its nominee, acquired all shares
of Dragon Mind Creation Limited from Mr. Tse, who was the sole legal and beneficial owner of Dragon
Mind Creation Limited.
The consideration for the transfer of share in Dragon Mind Creation Limited was settled by the
allotment and issue of 212 shares in our Company, all credited as fully paid, free from all encumbrances
and together with the benefit of all rights and p rofits attaching thereto, to TTK Holding. The
determination of the consideration was based on t he net asset value of Dragon Mind Creation Limited as
at the reference date.
In consideration of the nomination by our Comp any of LF Consultancy Limited to take up the
shares in Dragon Mind Creation Limited, LF Consultancy Limited allotted and issued one share to our
Company.
Upon completion of the above, Dragon Mind Creation Limited became an indirectly wholly-owned
subsidiary of our Company.
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Capitalization Issue
On 18 May 2026, our sole Shareholder have resol ved that, conditional upon the share premium
account of our Company being credited as a result of the allotment and issue of the Offer Shares by the
Company pursuant to the Global Offering, our Directors are authorized to capitalize an amount of
HK$37,400 standing to the credit of the share premium account of our Company by applying such sum
thereof towards the paying up in full at par a total of 374,000,000 Shares for allotment and issue to the
holders of Shares whose names appear on the register of members of our Company at the close of
business on 11 May 2026 in proportion (as near as possibl e without involving fractions so that no fraction
of a share shall be allotted and issued) to their then existing respective shareholding in our Company.
Details of the resolutions of our sole Shareholder dated 18 May 2026 are set out in ‘‘Appendix V
— Statutory and General Information — A. Further Information About Our Group — 3. Resolutions in
writing of our sole Shareholder passed on 18 May 2026 ’’in this prospectus.
As at the date of this prospectus, with the excepti on of the Capitalization Issue which will take
place on the Listing Date, all steps of our Reorgani zation have been properly and legally completed and
settled and no approval is required from the relevant regulatory authorities.
Post-Listing corporate structure
The following chart sets out the shareholding and corporate structure of our Group upon
completion of the Capitalization Issue and Global Offering (assuming the Over-allotment Option is not
exercised).
LF Retail
Holding Limited
Our Company
TH Wholesale
Holding Limited PL Beautie Limited LF Consultancy
Limited
TTK Holding Public shareholders
Mr. Tse Mrs. Tse Ms. Tse
Dragon Mind Creation LimitedWell Harvest (China) Limited
True Harvest Dispensary
Company Limited
Tai Tak Pharmacy Limited
Tai Fung Medicine
Company Limited
Man Wah
Dispensary Limited
Success Power
Industrial Limited
Robust Harvest Asia Limited
Rich Stand Limited
Rich More
Investment Limited
Max Great
Corporation Limited
Man Fung
Dispensary Limited
Lung Fung Dispensary
(Main Store) Limited
Lung Fung Dispensary
(3rd Store) Limited
Great Harvest
Enterprise Limited
Great Harvest Asia
Investment Limited
Harvest Concept
International Limited
Great Dragon
Industrial Limited
Golden Period
Management Limited
Full Honest Asia Limited
China Smart Capital
Investment Limited
Gain Ocean
International Limited
Forever Rising
Worldwide Limited
Full Well International
Enterprise Limited
Best Harvest
Enterprises Limited
Allied Way International
Investment Limited
Dai Ching Holdings
Company Limited
Tak Fung International
Trading Development
(Guangzhou) Co., Ltd.
Lung Fung Investment
(Japan) Limited
Lung Fung Investment
(China) Limited
Max Dragon Capital
Investment Limited
Access Holdings Limited
Able Harvest Asia
Investment Limited
Fancy Mind
Corporation Limited
Lung Fung Pharmaceutical
(Group) Limited
Grand Harvest
Worldwide Limited
Kidbrooke Group Limited
Harvest Smart
Holdings Limited
San Fung Health Limited
Master Grand Investment
Limited
Huge Harvest
Trading Limited
Lucky Talent
Corporation Limited
Top Harvest Pharmaceuticals
Company Limited Pearl Lake Global Limited
Pearl Lake
(Hong Kong) Limited
100%
100% 100%100%
75.0% 25.0%
97.29% 2.70% 0.01%
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Public Float
Rule 8.08(1) of the Listing Rules requires that there must be an open market in the securities for
which listing is sought. This will normally mean th at for a class of securities new to listing, at least a
minimum prescribed percentage of that class of securities must be held by the public at the time of
listing. Where the expected market value of the clas s of securities at the time of listing does not exceed
HK$6,000,000,000, the minimum prescribed percentage is 25%.
Based on (i) the indicative Offer Price range being HK$5.18 per Offer Share at the low-end and
HK$6.38 per Offer Share at the high-end, and (ii) 500,000,000 Shares in issue immediately upon
completion of the Global Offering (assuming the Over- allotment Option is not ex ercised), in any event,
where the Offer Price is at HK$6.38, being the high-end of the indicative Offer Price range, it is
expected that the market value of our Shares at the time of Listing will be HK$3,190,000,000.
Accordingly, as the market value of the class of securities at the time of listing will not exceed
HK$6,000,000,000, at least 25% of the total number of issued Shares must be held by the public at the
time of Listing (assuming an Offer P rice of HK$6.38 per Offer Share).
Apart from the 375,000,000 Shares held by TTK Holding Limited, which is owned as to 97.29%,
2.70% and 0.01% by Mr. Tse, Mrs. Tse and Ms. Tse (Mr. Tse and Ms. Tse being our Executive
Directors, with TTK Holding Limited, Mr. Tse, Mrs. Tse and Ms. Tse being our Substantial
Shareholders), representing in aggregate 75% of our total issu ed Shares immediately upon the
completion of the Share Split and the Global Offering (assuming the Over-allotment Option is not
exercised) and which will not count towards the public float for the purpose of Rule 8.08(1) of the
Listing Rules, Shares held by all other Shareholders will be counted towards the public float,
representing 25% of the total issued Shares. Accordingly, the Company will satisfy the public float
requirement under Rule 8.08(1) of the Listing Rules.
Free Float
Rule 8.08A of the Listing Rules provides that, there must be sufficient shares for which listing is
sought by a new applicant that are held by the public and available for trading upon listing. This will
normally mean that the portion of the class of shares for which listing is sought that are held by the
public and not subject to any disposal restrictions (whether under contract, the Listing Rules, applicable
laws or otherwise), at the time of listing, must: (1) represent at least 10% of the total number of issued
shares in the class of shares for which listing is s ought (excluding treasury shares), with an expected
market value at the time of listing of not less than HK$50,000,000; or (2) have an expected market value
at the time of listing of not less than HK$600,000,000.
On the basis that (i) no Offer Shares will be al located under the Global Offering to any core
connected person of our Company or person which is not regarded as a member of the public under Rule
8.24 of the Listing Rules and (ii) all Shares to be issued to the cornerstone investors (if any) are
excluded for the purpose of satisfy ing the free float requirement (assuming the Over-allotment Option is
not exercised) and assuming an Offer Price of HK$5.18, being the low-end of the indicative Offer Price
range, upon completion of the Global Offering, it is expected that 125,000,000 Shares, with an expected
market value at the time of listing of approximately HK$647,500,000, will be held by the public and not
subject to any disposal restrictions (whether under contract, the Listing Rules, applicable laws or
otherwise) at the time of the listing. Accordingly, the Company will satisfy the free float requirement
under Rule 8.08A of the Listing Rules.
NO PRE-IPO INVESTMENT
There was no pre-IPO investor to our Group before and after our Reorganization within the
meaning of the Listing Rules.
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OVERVIEW
Mission & Vision — Creating a shopping experience of ‘‘More Choices, More Fun ’’for every
customer
We are a leading Hong Kong-bas ed chain retail store of beauty, health and pharmaceutical
products under our ‘‘Lung Fung ’’(龍豐) brand. According to Frost & Sullivan, in FY2025, our Group
ranked third among beauty, health and pharmaceutical product retailers with a market share of 5.8% in
terms of retail sales value in Hong Kong; and we were the largest pharmaceutical product retailer by
retail sales value in Hong Kong, with a market share of 5.2%, and also the third largest health and
pharmaceutical product retailer by revenue in Hong Kong, with a market share of approximately 4.2%.
We focus on offering a wide variety of value-for-money products to our customers through our 31 retail
stores in operation in Hong Kong as at the Latest Practicable Date and our various online sales
platforms. Leveraging over 30 years of experience, we have cultivated a strong capability to effectively
identify and capture consumer dema nd in the local retail market and established ourselves as a one-stop
beauty, health and pharmaceutical products provider . We have developed expertise in product selection,
strategically offering a diversified product portfolio with over 49,000 SKUs of products sold over the
Track Record Period and approximately 28,800 SKUs of products sold in FY2025, covering 11 core
categories including beauty and s kincare, healthcare and suppleme nt, pharmaceutical, maternal and
infant, personal care, food an d household daily products.
As at the Latest Practicable Date, we had 31 phys ical retail stores in Hong Kong covering major
prime locations and communities, including Central, Tsim Sha Tsui, Mong Kok and Causeway Bay with
an aggregate UFA exceeding 123,000 sq.ft.. Furthermore, our online sales channels, namely ‘‘Lung Fung
Mall ’’online store and on e-commerce platforms in the PRC such as WeChat, Tmall and JD.com,
complement our physical retail store network, enabling us to accommodate the diverse shopping
preferences and habits of our customers.
We possess strong supply chain procurement cap ability and sourced from over 600 suppliers as at
30 November 2025, including international brand owners and authorised agents, ensuring a stable supply
of a wide variety of products in a timely manner. We have maintained business relationship with three
of our top five suppliers for each of FY2023, FY2024 and FY2025 for over 15 years. To enhance our
procurement efficiency and better address consumers ’ evolving demands, we have established a
procurement office in Japan to enhance our direct engagement with suppliers in Japan. Apart from
sourcing a majority of our products from different suppliers, we also offer some products under our own
private labels such as ‘‘Tse Tai Kung ’’(謝太公). As at 30 November 2025, we had established over 40
private label brands, covering proprietary Chinese medicines and health products. We engage OEM and
ODM manufacturers for the production of our private label products while we remain responsible for the
quality control over these products.
By offering a diversified product portfolio thr ough our physical retail network, we aim to provide
customers with a pleasant and one-stop shopping experience. Our objective is to provide customers with
the convenience of accessing a wide selection of daily lifestyle products in a si ngle visit, aligned with
their individual preferences and needs.
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During the Track Record Period, our revenue re corded significant gro wth, increasing from
HK$1,094.0 million for FY2023 to HK$2,460.5 million for FY2025, representing a CAGR of 50.0%
over the three financial years. Our revenue increased by 34.7% from HK$1,510.4 million for
8MFY2025, to HK$2,035.1 million for 8MFY2026. We recorded gross profit of HK$272.2 million,
HK$592.8 million and HK$777.6 million, respectively, over the past three financial years, with a CAGR
of 69.0%; with our gross profit margin increased from 24.9% for FY2023 to 31.6% for FY2025, and
remained relatively consistent at 30.9% for 8MFY2026. We achieved robust growth in net profit, turning
around from a loss of HK$27.1 million for FY2023 caused by the COVID-19 pandemic to a profit of
HK$144.5 million for FY2024 and further increased by 17.9% to HK$170.4 million for FY2025. We
recorded a growth of 95.8% in terms of the revenue generated from the beauty, health and
pharmaceutical product sector between FY2023 and FY2024, significantly outpacing the industry
average growth rate for the sector of 19.0%.
OUR STRENGTHS
1. Our brand is well trusted and accepted by the Hong Kong retail market
Throughout our operational history, we believe our brand ‘‘Lung Fung ’’has established itself as a
trusted brand, recognised for delivering value-for-m oney offerings and guaranteed authenticity. We have
established internal control verification procedure to ensure product authenticity, and we have obtained
the ‘‘Rx’’certification for licensed pharmacies from the Hong Kong Department of Health and the ‘‘No
Fakes Pledge ’’ Scheme certification from the Intellectual Property Department. These authoritative
certifications guaran tee our commitment to authentic products and integrity in business operations.
Since the opening of our first store in Sheung Shui in 1992, we have maintained a steadfast
commitment to a Hong Kong-centric business model. In our formative years, due to cost considerations
and limited market penetration, we strategically concentrated our store locations in the New Territories,
where operational costs were more manageable. As o ur customer base and brand reputation grew over
time, we took a significant step forward by establishing our first Kowloon store in 2018, marking a
transition from a community-based retail approach to a strategic pr esence in prime urban locations.
Leveraging our extensive business experience and wide range of product offering, we opened our
Central flagship store in 2022, followed by another flagship store at Gala Place, Mong Kok in 2023.
According to Frost & Sullivan, in FY2025, the overall beauty, health and pharmaceutical product
retailer market in Hong Kong was relatively competitive, with the top five retailers accounting for an
aggregate market share of 27.4% in terms of retail sales value. In terms of the year-on-year growth, we
recorded a growth of 95.8% in terms of the revenue generated from the beauty, health and
pharmaceutical product sector between FY2023 and FY2024, significantly outpacing the industry
average growth rate for the sector of 19.0%.
This performance underscores the effectivenes s of our locally focused and adaptive business
strategy, which enabled us to capture increased market share during a time of broad industry contraction.
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2. We have established a well-selected wide por tfolio of product categories complementing our
leading market position
We have established a wide supplier network whi ch facilitates us in esta blishing a well selected
portfolio of product categories, which complements our leading position in the Hong Kong beauty,
health and pharmaceutical products retail industry through our outstanding product capabilities and
category advantages. Firstly, we sold over 49,000 SKUs of products during the Track Record Period and
typically stock over 9,000 SKUs per retail store. Our vast and diverse product range not only offers
consumers the convenience of ‘‘one-stop shopping ’’experience but also forms the foundation of our
robust supply chain advantage. With such large-scale procurement volume, we are able to secure more
favorable purchase prices and more stable supply chains, while also offering consumers broader
opportunities for pri ce comparison and selection. Secondly, o ur products cover 11 main categories,
including proprietary Chinese medicines, western medicines, health supplem ents, skincare products,
cosmetics, perfume, personal care, household sundries, maternal and infant care products, food and pet
supplies. Our large product portfolio enables us to meet the diversified needs of different customer
groups thus widening our customer base.
We have also maintained amicable direct business relationship with well-known brands. We have
direct relationship with brands inc luding Fortune Pharmacal, GlaxoSm ithKline, Advance Pharmaceutical,
Ma Pak Leung, Nin Jiom Medicine, Hisamitsu Pharm aceutical, Colgate, Friso, Vitasoy and Walch. We
were the top purchaser of products under some well-known brands — for instance, based on information
provided by the respective suppliers , we were the top purchaser of Friso ’s infant formula products in
2022, 2023 and 2024 in terms of the relevant supplier ’s annual total sales value to traditional sales
channels in Hong Kong such as pharmacies and we were the top purchaser of Coltalin 36S and Coltalin-
GP Extra 36S products in 2022, 2023 a nd 2024 in terms of Fortune Pharmacal ’s annual total sales value
to pharmacies in Hong Kong. We hold a requisite license issued by the Hong Kong Department of
Health, which allows us to employ registered pharmacists to provide professional consulting services.
This signifies that we are not only qualified to offer general medicine, but also to provide dispensing
services for prescription medicines (with a doctor ’s prescription), which distinguish us from most of the
other beauty, health and pha rmaceutical products shops.
Leveraging over 30 years of extensive experi ence in the beauty, health and pharmaceutical
products retail industry, we have successfully developed our private label business and is growing
steadily. As at 30 November 2025, we had established over 40 private label brands, covering a total of
over 700 SKUs available for sale as at the Latest P racticable Date, in pr oduct categories such as
proprietary Chinese medicines, skincare products and health supplements. We analyse and monitor local
consumer trends through a variety of channels, including membership data, sales hotspots, and social
media insights. When we identify unmet consumer n eeds or market demand that are not fully fulfilled by
products sourced from our third-party suppliers, we will proactively seek to meet these demands through
the development and introduction of our own private label products. Finally, our private label embraces
localised marketing strategies to a chieve effective brand penetration. For example, our own Chinese
medicine brand, ‘‘Tse Tai Kung ( 謝太公)’’, engages local artists and key opinion leaders (KOLs) who
are well-known to the Hong Kong general public to endorse the brand, effectively enhancing its brand
image and sales.
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3. We offer one-stop shopping experience with comprehensive product offering to maximise
consumer engagement
Our retail stores in Hong Kong had an average s ize of over 4,180 sq.ft.. We are committed to
providing consumers with a comprehensive, one-stop shopping experience.With our extensive product
portfolio, we have successf ully created an immersive ‘‘one-stop shopping ’’experience for customers,
where consumers can embark on a shopping journey that s imultaneously fulfills their diverse needs for
beauty products, health products, pharmaceuticals, maternal and infant care products and even pet food
in each visit. As at the Latest Practicable Date, we h ad 15 registered pharm acists and over 38 beauty
consultants stationed across our 31 retail stores in operation in Hong Kong.
While we prioritize storage efficiency by optimizing our product racks to accommodate a broad
range of products, thereby offering our customer s an extensive selectio n of products, we are also
committed to ensuring that the overall in-store environment remains comfortable. Our store layouts are
carefully designed to avoid overcrowding, with well-organised product displays and clearly defined
aisles that allow for easy navigation. This enables customers to locate their desired products quickly and
effortlessly, enhancing both shopping satisfaction and operational flow. We continually review and fine-
tune our store configuration based on customer f eedback and shopping patt erns to ensure an optimal
balance between inventory presentation and customer experience.
We regularly update the layout of our products in response to evolving promotional and marketing
strategies. These changes may be driven by various f actors, such as the launch of new products, seasonal
campaigns, or the need to highlight specific promotional items to increase their visibility and drive sales.
By adjusting the product arrangement, we aim to crea te a dynamic and engaging in-store experience that
captures our customers ’ attention. These periodic layout revisions also help ensure that our store remains
visually appealing and feels fre sh with every visit. We believe th at a well-curated and frequently
refreshed product display not only enhances the shopping experience but also encourages product
discovery by the customers and increases their satisfaction. We believe that this three-dimensional
strategy of ‘‘brand uniqueness + product diversity + immersive experience ’’has successfully enabled us
to transcend the traditional beauty, hea lth and pharmaceutical products retail model.
4. We have established a strong and efficient supp ly chain with stable relationship with our key
suppliers and well-developed modern w arehousing and logistics systems
With over three decades of experience in retail business, we have successfully built a highly
efficient and stable supply chain, with comprehensive warehousing, logistics and quality control
systems, which is the key foundation for us to provide a comprehensive product offering with
competitive pricing. We maintain stable relationship with our existing suppliers and we have established
long-term cooperative relationships with our key suppliers, among which three of our five largest
suppliers for each of FY2023, FY202 4 and FY2025 have over 15 years of bu siness relationship with us.
We believe our stable relationship with suppliers allows us to maintain advantages in both products and
prices. To enhance procurement efficiency and better address customers ’ evolving demands, we have
established a procurement off ice in Japan to enable more dire ct engagement with suppliers.
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Moreover, our modern warehousing and logistics system supports the efficient operation of our
retail network and enables omni-channel coordinat ion. Our warehouse and logistics center in Fanling
spans over 110,000 square feet across six floors. This integrated headquarters facility combines
warehousing, operation, and distribution, and is equipped with advanced temperature control and
ventilation systems, the temperature and humidity m onitoring systems ensure optimal storage conditions
for drugs, cosmetics and other specialised pr oducts. We also utilise an integrated warehouse
management system to monitor inventory status in real time and automatically generate replenishment
requests for our physical retail stores. In terms of l ogistics network, we have established a delivery
system from our central warehouse to retail stores, enabling high-frequency replenishment for physical
retail stores at least once per day g enerally. We operate our own logistics vehicle fleet equipped with
GPS tracking and temperature control systems to ensure the safety and timeliness of product
transportation. In terms of quality control, we have established a rigorous quality management system
covering all our operation processes. For supplie r access management, we impl ement a rigorous vetting
process that requires all suppliers to provide quality management system certifications (ISO9001/GMP)
and established a professional quality inspection team to evaluate suppliers based on their experience,
production capacity, agency certification, supply chain transparency, pricing and compliance to ensure
product quality.
5. Founder and management team with extensive experience in retail beauty, health and
pharmaceutical products industry and long -term commitment to social and charitable
initiatives contributing to significant brand value for Lung Fung in local community
Our founder, Chairman, executive Director and Controlling Shareholder, Mr. Tse, is a seasoned
participant in Hong Kong ’s retail beauty, health and pharmaceutical products industry with over 35 years
of experience. Mr. Tse joined the pharmacy retail sector in the 1980s, personally witnessing the
industry ’s evolution and transformation. He possesses insight of consumer demands and local market
trends in Hong Kong. Particularly during the COVID-pandemic, when Hong Kong ’s overall retail market
was underperforming, Mr. Tse seized the opportunity and led Lung Fung to achieve counter-cyclical
expansion through flexible operational strategies. Mr. Tse has integrated entrepreneurial spirit, business
acumen and risk management capabilities into Lung Fung ’s corporate development, forming Lung Fung ’s
unique business philosophy. Mr. Tse possesses comprehensive expertise across critical areas including
procurement strategy, store operations and supply chain management, enabling him to swiftly make
strategic decisions that align closely with actual market conditions.
We have established a strong and experienced management team. The core management has deep
retail industry experience, with some members having previously worked for internationally renowned
retail groups, bringing advanced management concepts and a global perspective to Lung Fung. Among
them, Ms. Tse serves as Executive Director of Lung Fung, overseeing Lung Fung ’s own-brand products
and operations, including skincare products and pers onal care products. She has consistently driven the
expansion of our private label business while introducing innovative operational concepts to Lung Fung.
We have a stable management team, with a number o f senior management members having been with
our Group for many years, ensuring the effective c ontinuity of our corporate culture and business
philosophy.
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Moreover, we consistently uphold the principle of ‘‘Taking from society and giving back to
society, ’’actively fulfilling our corporate social responsibilities. Mr. Tse has been actively engaged in
local public service, holding multiple public offices to provide advice and assistance on local affairs and
development. We also actively participated in various charitable initiatives, which not only helped
residents navigate challenging times but also further cemented Lung Fung ’s reputation as a guardian of
community health.
OUR STRATEGIES
Our objective is to maintain our leading position in Hong Kong ’s retail beauty, health and
pharmaceutical products industry. We plan to furthe r enhance our influence and market share through
the implementation of the following strategies, thereby continuously expanding our business.
1. Continuously expanding t he local physical retail net work to increase market share
During the Track Record Period, over 90% of our total revenue was derived from our physical
retail network. As at the Latest Practicable Date, we operated a total of 31 retail stores in Hong Kong,
covering multiple prime locations across Hong Kong Island, Kowloon and the New Territories. Based on
our deep understanding of customer preferences, market trends and the retail landscape, we believe that
by leveraging the flexible offline store operation model, we can gradually expand the geographic
coverage of our local retail stores in Hong Kong and continue to optimise and consolidate our store
layout to enhance our core competitiveness among Hong Kong ’s retail beauty, health and pharmaceutical
products sector peers.
We strongly believe that the beauty, health an d pharmaceutical products retail market in Hong
Kong holds immense potential. In recent years, following the COVID-19 pandemic, the Hong Kong
retail industry has shown a steady recovery trend, with overall development prospects looking positive.
According to Frost & Sullivan, retail sales valu e of consumer goods reta il in Hong Kong reached
HK$175.7 billion in 2024 and is projected to achieve a CAGR of 5.2% over the next five years, with the
retail sales value expected to reach HK$226.6 billion by 2029. Concurrently, Hong Kong ’st o u r i s m
sector maintains robust momentum, with inbound visito rs reaching 44.5 million in 2024, representing a
CAGR of 87.5% compared to the COVID-pandemic period in 2020. The number of inbound visitors are
expected to reach 67.5 million by 2029. Among them, Mainland tourists remain the primary tourist
group, while the number of overseas tourists also continues to grow. Please refer to the section headed
‘‘Industry Overview ’’for more information about the market trend.
We plan to open up to 11 new retail stores in Hong Kong during the period from the Listing Date
to 31 March 2029 utilizing proceeds from this Listing, covering locations with various demographics
(both residential and commercial area s) including opening retail stores i n high pedestrian-traffic areas,
such as Causeway Bay, Tsim Sha Tsui, Central. With the use of Listing net proceeds, we currently target
to open approximately 4, 4 and 3 retail stores in Hong Kong Island, Kowloon and New Territories,
respectively from the Listing Date to 31 March 2029, depending on the market dynamics and subject to
the availability of suitable premises. Please refer to the paragraph headed ‘‘Use of Proceeds — Physical
sales network ’’under ‘‘Future Plans and Use of Proceeds ’’section for further information. In addition,
we also plan to open new retail stores utilizing our existing financial resources. We, therefore, intend to
open between 18 to 21 new retail stores from the Listing Date until 31 March 2029, with approximately
six to seven new retail stores each financial year. Whe n identifying suitable locations for new stores, we
carefully evaluate the target geographical coverage, ant icipated foot traffic and sales potential of the area
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and compare it with the geographic coverage of our existing stores to ensure there is no material overlap
and the healthy expansion of our offline sales network and prevent cannibalization between stores. Our
management is experienced in closely monitoring the sales performance of retail stores within the same
district to assess whether and how the sales of one reta il store may affect the sale of another retail store
in the same district or area. For example, we manag ed to achieve overall growth in total revenue in areas
such as Canton Road of Tsim Sha Tsui and Shatin where we opened an additional new store during
FY2025 and 8MFY2026 respectively. We recorded a growth of 14.6% (from June to November 2024 to
June to November 2025) and 49.8% (from August to November 2024 to August to November 2025) in
our revenue from our retail stores in these two ar eas, respectively, which d emonstrates our ability to
manage cannibalisation and over-expansion risk. We will only open a new store where we consider that
the density of customers and sufficiency of demand j ustify the opening of a new store in relatively close
proximity to a pre-existing store.
We plan to focus on expanding new, high-quality stores ranging from 4,000 to 15,000 square feet.
This will further leverage Lung Fung ’s strengths by offering more spacious and comfortable shopping
environments alongside wider and more diverse product selection. Moreover, economies of scale will
enable us to provide customers with more competitive pricing and a wider variet y of product categories.
At the same time, we will continue to conduct product promotions from time to time with and
launch themed marketing campaigns.
2. Expand product variety and optimise product mix and continue to strengthen our private
labels
Our business success and growth are attributable to the diversity of our product offering. We are
committed to capturing market trends and consumer p references through a robust product mix, thereby
securing a greater market share. Leveraging our well- established overseas procurement network over the
years, we will continue to closely monitor consumpt ion trends and changes in customer preferences,
actively introducing new product categories with st rong market potential to further expand our market
share. In addition to maintaining coverage of leading brands, we intend to increase the offering of
second- and third-tier brands in key product categor ies based on customer feedback and preferences,
ensuring that we remain a market leader in terms of pro duct comprehensiveness. With respect to product
categories, we will continue to expand beyond our existing 11 major categories, exploring emerging
categories to cover a wider range of household consumption products and meet increasingly diversified
consumer needs. Riding on our Group ’s supplier network in Japan, our Group intends to diversify its
product offerings by expanding to selling Japan-s ourced goods, primarily beef, fruits, and fresh produce
in certain store outlets, primarily including our larger retail stores, while broadening our product range,
we will continuously adjust and optimise the product mix across all Hong Kong stores based on our
understanding and analysis of customer attributes and preferences in different districts. For example, we
plan to introduce more premium and newly launched products at large stores located in high-spending
areas (such as our Central branch), and subsequently refine the product mix based on the sales
performance of these products.
We also intend to further develop our private label business. We will continue to invest to drive
the sustained growth of our private label portfolio, thereby enhancing our overall profitability. Given the
strong growth potential of the beauty, health and p harmaceutical products mar ket, we will allocate
sufficient resources to this segment. From a product development perspective, we will continue to
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pursue private label innovation driven by consumer insights, reinforcing our development foundation. By
analysing offline store data, member consumption p atterns, and community in teractions, we have an
accurate understanding of local consumer concerns an d trends, and are able to translate these insights
directly into product design and functional specifications. Furthermore, in quality control and
production, we will continue to strengthen strategic cooperation with existing OEM/ODM manufacturers
while developing new strategic relationship with suitable manufacturers based on product development
needs. We will oversee the entire production process, including packaging and quality inspection, and
ensure all products meet our stringent quality standards. Finally, we will continue to develop distinctive
localised marketing strategies to deepen brand penet ration. We plan to actively collaborate with popular
Hong Kong artists and KOLs to promote our brands or co-create contents based on product
characteristics, thereby strengthening brand affin ity and emotional connection with local consumers. In
summary, we are committed to achieving growth in both scale and reputation for our private labels
through a combined strategy of precise consumer-driven development, supply chain collaboration and
tailored marketing strategy to enhance the competitiveness and customer loyalty of our private label
products.
3. Strengthen supply chain p rocurement and warehousing an d logistics capabilities
Enhancing supply chain procurement capabilities
To support our continued business expansion, w e have established a detailed strategy to
strengthen our supply chain and procurement capabilities, aiming to build a more resilient,
efficient, and differentiated global supply network.
Firstly, we will focus on deepening strategic business relationship with existing suppliers and
brand owners. Capitalising on our long-term strategic cooperation relationship with suppliers and
sharing with them our sales forecasts and invent ory data, we aim to achieve more efficient joint
demand planning and accelerate p roduct responsiveness. At the s ame time, we will continue to
expand our cooperation with partner brands by introducing their sub-brands and other product
lines, as well as co-developing Hong Kong-exclus ive or co-branded products where appropriate.
This approach will create unique marketing eff ect and enhance product diversification while
leveraging economies of scale to reduce costs.
Accordingly, we will also further optimise and enhance our centralised procurement and
overseas direct sourcing model. Building on our successful procurement experience in Japan, we
plan to enhance local procurement office and war ehouses in the key strategic markets of South
Korea and Japan staffed with professional procurement teams. These teams will not only source
supply resources but also gain deeper insights into domestic consumption habits and identify
innovative products to ensure that procured items meet the needs of our target customers. We will
continue to formulate global procurement strategies such as by negotiating core terms and
standardising quality control across the organisation to streamline our procurement process and
achieve ‘‘central coordination + regional cultivation ’’.
We will also proactively expand direct cooperation with new suppliers, manufacturers, and
brand owners in order to introduce distinctive products and brands that are popular but have yet to
enter the Hong Kong market thereby further enhance our product differentiation and appeal to an
expanded target customer base.
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Enhancement of automated warehousing and logistics systems
We believe that an efficient logistics and distribution system is crucial to maintaining
competitiveness, optimising inventory manageme nt, and ensuring timely s tock replenishment for
our retail stores. As our retail network expands, t he importance of our warehousing and logistics
systems will continue to grow. Accordingly, we plan to allocate additional resources to further
strengthen this infrastructure.
Our logistics centre in Fanling occupies a GFA of over 110,000 sq.ft. and serves as a regional
distribution hub for local and cross-border goods distribution. To better support future business
development, we plan to expand our warehousi ng capacity and invest in the development of an
automated warehouse management system to optimise the utilisation of both existing and new
warehouse space. The system will have functiona lities including autom ated search, sorting,
collection, and transfer processes, as well as a logistics visualisation platform. These features will
enable precise inventory control and efficient or der management, effectively reducing inter-
regional transfer times and operating costs, accelerating inventory turnover, and supporting sales
network expansion and market responsiveness. In terms of logistics, we will enhance digital and
automation integration by upgrading our transportation management system to achieve intelligent
route planning and real-time tracking, thereby improving delivery efficiency and customer
satisfaction. In addition, we plan to design and implement an automatic loading and unloading
system and optimise the layout of a multi-tier warehousing network to enhance responsiveness and
service flexibility for stores and customers. These measures will help us establish an efficient,
flexible, and sustainable supply chain infrastructure.
4. Further enhance online sales capabilities a nd optimise online-offl ine omni-channel sales
network
We will systematically enhance o ur online sales capabilities to advance our strategic objective of
integrated online-offline omni-channel development. In terms of channel expansion, we plan to
strengthen our sales through the major e-commerce p latforms currently in partnership with us, such as
Tmall and JD.com, while proactively expanding in to emerging social e-commerce channels such as
Douyin, leveraging content-driven marketing to re ach a broader consumer base in Chinese Mainland. As
at the Latest Practicable Date, we had engaged a third-party service provider to enhance the operational
effectiveness and efficiency and to further develop o ur sales through the major e-commerce platforms in
the Chinese Mainland. Please refer to the paragraph headed ‘‘Online Sales Platforms ’’in this section for
further details. In parallel, we will continue to optimise our online flagship store and mobile application,
with enhanced user interface co nvenience and payment efficiency to ensure a seamless online shopping
experience.
For membership management, we will develop an intelligent membership system powered by big
data analytics to deliver precise product recomm endations and personalised marketing based on
consumer behaviour. By introducing a tiered membership programme, differentiated member benefits
and exclusive offers, as well as a member referral re ward scheme, we aim to strengthen customer loyalty
and encourage repeat purchases. Meanwhile, we wil l focus on optimising our cross-border logistics
system by collaborating with quality logistics service providers to offer multiple real-time, trackable
delivery options. We will also enhance data security through encryption technologies and regular
security audits to safeguard customer information.
Through this three-pronged approach — expansion of e-commerce channels, upgrading of
membership systems, and optimisation of supporting services, we aim to build a more integrated and
competitive digital sales ecosystem, laying a solid foundation for future business growth. These
initiatives will significantly enhance our online market penetration and further strengthen our digital
sales channels and capabilities.
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5. Implement employee recruitment and traini ng strategy to promote sustainable business
development
To support our ongoing business expansion and strategic execution, we attach great importance to
building a strong and capable talent pool. We will continue to improve our internal training and
recruitment systems, selecting and retaining outst anding employees through a structured performance
incentive and talent development mechanism. The follo wing is our specific talen t management strategic
plan:
— To support the expansion of our new retail stores, we plan to continue recruiting sales
associates, sales consultants and registered pha rmacists to provide professional sales services
and enhance the in-store customer experience;
— To support the expanding product offerings into food and ancillary categories, we will recruit
experienced personnel, including merchandisers and specialists in perishable goods, to
maintain product quality and inventory management;
— To strengthen our online sales op erations, we intend to recruit information technology talents
with expertise in digital marketing and technical development, expand our marketing and
promotion teams, and further enhance our t echnical capabilities, so as to optimise our e-
commerce platforms and online sale channels;
— We will continue to enhance and expand our warehousing and logistics to cater for our
business expansion and growth strategies.
BUSINESS MODEL
We generate our revenue principally through the sale of beauty, health and pharmaceutical
products and other consumer goods such as househ old and daily essentials and food products at our 31
retail stores under our ‘‘Lung Fung ’’(龍豐) brand in Hong Kong as at the Latest Practicable Date and
through our various online sales platforms. Our product range covers 11 categories namely proprietary
Chinese medicines, western medicines, health supplements, skincare, cosmetics, fragrances, personal
care, maternal and infant products, food, pet food and household daily nece ssities. We offer a wide
range of products as demonstrated by the number of SKUs we have sold during the Track Record Period
and being stocked at each of our retail stores on a daily basis. Our products are principally sourced from
brand owner manufacturers, authorised distributors or agents and other distributors, and a small part of
our products are manufactured by OEM and ODM manufacturers for our private labels.
During the Track Record Period, our retail store network contributed the majority of our revenue.
For FY2023, FY2024, FY2025 and 8MFY2026, we recorded revenue of HK$1,027.2 million,
HK$1,959.0 million, HK$2,391.6 million and HK$1,988.3 million, respectively, from sales through
retail stores, representing 93.9%, 96.9%, 97.2% and 97.7% of our total revenue; meanwhile, we recorded
HK$44.6 million, HK$38.2 million, HK$42.7 million and HK$30.2 million of sales through our online
sales platforms, representing 4.1%, 1.9%, 1.7% and 1.5% of our total revenue for the respective
financial years and financial period.
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The following diagram illustrates ou r key business operation processes:
Market research
Identify new suppliers Identify new products or re-order
existing products
Products passing initial quality
check will be recorded in WMS
system and POS system
Damaged/defective products will
be notified to our procurement
team and segregated
Referral to new brands by
existing suppliers
Market intelligence gathered by our
Hong Kong and overseas offices
Marketing plans will be
drawn up with regards to
promotion of new or
slow-selling products
Liaise and negotiate with local and overseas suppliers regarding supply terms via our Hong Kong and overseas offices
Conduct initial quality inspections upon receiving the products against predefined standards and the quantity and
specifications of the purchase order
Place purchase orders or entering into supply agreements with selected suppliers
All products will undergo further
quality inspection at our warehouse
before storage
Set aside for
special
promotional sale
Return to supplier
for refund or
replacement
Products procured from suppliers are delivered to our warehouse by third party logistics companies
Market intelligence,
identification of
suppliers and
products
Procurement of
Products
Delivery of products
and quality control
Warehousing
and stock
replenishment
Products will be transferred to
the designated storage
area within the same day of arrival
Products subject to
Pharmacy and Poisons Ordinance
will be stored separately
Warehousing team will monitor inventory levels and
alert procurement team for replenishment where
the stock level of a product is low
Warehousing team will prepare internal invoices for
store delivery according to automated stock
replenishment system
Products will be passed over to our delivery fleet for
delivery to our retail stores
Special promotional campaigns will be arranged
for slow-selling products (e.g. discounts and
placement at eye-catching areas
within a retail store)
Our retail store staff members will check and confirm
the products being delivered to the store
Products will be loaded onto display shelves at our retail store
Sales and marketing
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OUR RETAIL NETWORK
Our retail business is supported by our well-estab lished network of strategically located retail
stores in Hong Kong. As at the Latest Practicable Date, we operated 31 physical retail stores in Hong
Kong with an aggregate UFA exceeding 123,000 sq.ft., covering major tourism and shopping areas,
residential areas and office commercial areas. In l ine with our business strategy which focuses on our
physical retail network as the main sales channel, s ales from our retail netwo rk contributed the vast
majority of our total revenue during the Track Record Period. Please refer to section ‘‘Financial
Information — Description of Selected Items in Consolidated Statements of Profit or Loss — Revenue ’’
of this prospectus for details of the revenue contribution from this segment. According to Frost &
Sullivan, in FY2025, we were (i) the third largest b eauty, health and pharmaceu tical product retailer in
terms of retail sales value in Hong Kong, with a market share of approximately 5.8%; (ii) the largest
pharmaceutical products r etailer by revenue in Hong Kong, with a market share of 5.2%; and (iii) the
third largest health and pharmaceuticals products retailer by revenue in Hong Kong, with a market share
of approximately 4.2%.
O fo u r3 1r e t a i ls t o r e si no p e r a t i o na sa tt h eL a t e s tPracticable Date, 6 retail stores were located on
Hong Kong Island, 11 retail stores were located in Kowloon and 14 retail stores were located in the New
Territories. Among the retail stores:
. 21 of them were branded as ‘‘Lung Fung Mall ’’, which are generally larger in size with GFA
over 3,000 sq.ft. and offer a greater number of products covering beauty products, health
products, pharmaceutical products and other consumer products;
. Four were branded as ‘‘Lung Fung ’’, generally with GFA under 3,000 sq.ft.
1 and offer a wide
variety of products covering beauty products, health products, pharmaceutical products and
other consumer products;
. Two were branded as ‘‘Lung Fung Cosmetic ’’, which are smaller in sh op size and primarily
offer pharmaceutical products other than prescribed drugs items, beauty products, health
products and a selected range of other consumer products;
. Two were branded as ‘‘Lung Fung Dispensary ’’, which are attended by a registered
pharmacist and primarily offe r pharmaceutical products including prescribed drugs items,
health products as well as a selected range of other consumer products;
. Two are branded as ‘‘Lung Fung Pop Up ’’, which are temporary in nature in terms of
renovation and continuity. Both ‘‘Lung Fung Pop Up ’’stores offer a variety of products
covering pharmaceutical products other than pre scribed drugs items, b eauty products, health
products and other consumer products.
1 Except for the Lung Fung store located at Gala Place, Dundas Street, Mong Kok with a GFA of approximately 17,500 sq.ft.
and UFA of approximately 12,900 sq.ft..
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Our flagship Lung Fung Mall store in Central Our flagship and largest store by GFA in
Hong Kong located at Dundas Street, Mong Kok
Our Lung Fung store in Tsim Sha Tsui Our Lung Fung Dispensary store in Fanling
The majority of our retail stores are street-level shops which offer the benefit of high pedestrian
flow and provide convenience to customers. As we strive to stock a wide variety of products at our retail
stores and provide a spacious environment for our customers, we typically opt for physical stores with
larger floor area. Our largest retail store, located in Mong Kok, offers a spacious shopping environment
with a GFA of approximately 17,500 sq.ft. and a UFA of approximately 12,900 sq.ft.. As at the Latest
Practicable Date, the UFA of our retail stores ranges from approximately 570 sq.ft. to 12,900 sq.ft., with
an average of over 4,180 sq.ft. per store. Of our 31 retail stores in operation, one of them is situated at
premises owned by our Group, three are situated a t premises leased by our Group from entities
controlled by our Controlling Shareholders and the remaining 27 are situated at premises leased from
independent third-party landlords. As at the Latest Practicable Date, we had entered into a lease
agreement with an independent third-party landl ord for a new retail store which is expected to
commence operation in early 2027. For FY2023, FY2024, FY2025 and 8MFY2026, our average sales
per square foot was approximately HK$17,550, HK$29,270, HK$26,100 and HK$17,220
(Note) .T h e
significant increase in average sales per square foot in FY2024 was primarily driven by the reopening of
Note: Average sales per square foot for the year/period is calculated by dividing (i) our revenue from offline retail sales for the
year/period by (ii) the sum of the approximate total GFA of all our retail stores at the beginning of the year/period and that
at the end of the year/period divided by two.
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the border following COVID-19 and the subsequent recovery in local consum er confidence during the
return to normality, and the decline in the average s ales per square foot for 8MFY2026 was mainly due
to a drop in sales recorded by our retail shops locat ed in the New Territories as the visitors from the
Chinese Mainland have shifted their spending t o less pricey products. We have been strategically
expanding our network of physical retai l stores during the Track Record Period — we added 1 new
store, 3 new stores and 9 new stores for FY2023, FY2024 and FY2025, respectively, and a further 6 new
stores between 1 April 2025 and the Latest Practicab le Date. In 2025, we have established new stores at
various new locations such as Whampoa, Fortress Hill and Aberdeen to further expand our retail store
network to cover untapped areas.
For illustrative purposes only, the map below indicates the approximate locations of our retail
stores as at the Latest Practicable Date:
Lung Fung
Lung Fung Mall
Lung Fung Dispensary
Lung Fung Cosmetic
Lung Fung Pop Up
Over the years, we have strategically and gradua lly developed from a regional pharmacy chain
located in the New Territories serving primarily customers from the northern part of Hong Kong and
cross-border tourists from the PRC, to having over 30 stores across Hong Kong in major residential,
commercial and tourist areas. As at 30 November 20 25, the majority of our revenue was generated from
our retail stores located in Kowloon and New Territor ies, consistent with the fact that the majority of
our retail stores are located in Kowloon and New T erritories. As we plan to expand our presence on
Hong Kong Island through opening more new retail stores, our Directors expect that more revenue, in
terms of both value and proportion, will be generated from our retail stores located on Hong Kong
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Island. The following table sets out the number of our retail stores and proportion of revenue contributed
by our retail stores located on Hong Kong Island, Kowloon and New Territori es, respectively, for
8MFY2026:
Area
Number of
retail stores Revenue Percentage
(HK$ million)
Hong Kong Island 5 341 17.2%
Kowloon 10 899 45.2%
New Territories 14 748 37.6%
Total 29 1,988 100%
We believe that our physical retail stores are well- positioned to serve our cust omers, especially for
health and pharmaceutical products . Physical retail stores offer better customer engagement through
personalized interactions, thereby helping customers make more informed decisions and enhance their
confidence in our products. For instance, our well-tr ained frontline salespers ons can directly attend to
customers ’ enquiries in real-time and offer recommendations based on their knowledge and experience
with our products. Similarly, we offer our customer s an opportunity to try our products in person, for
example through ‘‘testers ’’ and other selected product samples, which provide them with a better
opportunity to understand the quality and functions of the products. Targeting the younger generation of
customers who may prefer learning about the product themselves, we display barcodes for our products
so that customers can conveniently obtain the relevant product information online on their mobile
devices. For FY2023, FY2024, FY2025 and 8MFY2026, revenue generated from our top three retail
stores by revenue in aggregate accounted for 46.3%, 38.0%, 28.0% and 22.1% of our total revenue
generated from retail stores for the respective finan cial year/period. During the Track Record Period, our
top three retail stores by revenue for each financia l year/period were those with UFA exceeding 3,000
square feet. For each of FY2023 and FY2024, two of the top three retail stores by revenue were located
in major tourist and shopping areas in Kowloon, namely Tsim Sha Tsui and Mong Kok, whilst one was
located in the New Territories, namely Yuen Long for FY2023 and Sheung Shui for FY2024,
respectively. As for FY2025 and 8MFY2026, all top thre e retail stores by revenue were located in major
tourist and shopping areas in Kowloon, namely Tsim Sha Tsui and Mong Kok, one of which being our
flagship store in Mong Kok. In order to mitigate the c oncentration of sales in certain stores, we have
strategically opened new stores in popular tourist and shopping areas where there is sufficient demand
and customer flow, and expanded into other reside ntial areas where there is sufficient demand and
spending power from local residents, e.g. Kai Tak , Aberdeen. The gradual decrease in the revenue
contribution from the top three retail stores as a proportion to our total revenue generated from retail
stores during the Track Record Peri od demonstrates the effectiveness of our strategy to mitigate the
sales concentration in certain stores. Please refer to the paragraph headed ‘‘Risk Factors — Risks
Relating to Our Business — Our Group faces risks relating to sales concentration at key retail stores ’’in
relation to the risk of sales concentration at certain stores.
The actual environment of our retail stores
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As at the Latest Practicable Date, we employed 15 r egistered pharmacists t o station at designated
retail stores to manage the dispensaries section supplying prescribed drug products. During the Track
Record Period and up to the Latest Practicable Date , each of our retail stores t hat offered prescribed
drug products was attended by a registered pharmacist, who is responsible for managing the dispensary
section, and we had complied with the relevant laws and regulations in Hong Kong for the sale of such
prescribed drug products in all material respects.
As compared to traditional pharmacies or chain ph armacy stores, we gener ally offer a wider range
of products and SKUs in stores of larger size to provide customers with a one-stop shop experience. To
cater for customers demand in different areas, there are some variations in the product offering available
at each retail store depending on the location, e.g. whe ther it is located in residential areas, business or
tourist districts.
We plan to consolidate some of our current smaller retail stores into larger ones upon the expiry of
the current leases in order to provide a wider range of products in a more spacious environment, which
we believe will help increase customer flow and average unit sales.
The following table sets out our average and range of spending per offline retail transaction at our
retail stores for the years/period indicated:
Year/Period FY2023 FY2024 FY2025 8MFY2026
Average spending per transaction
(HK$) 169 220 209 188
Range of spending per transaction
(HK$) 1 1 to 567,600 1 to 165,000 1 to 342,000 1 to 176,000
The average spending per offline retail transaction was relatively lower in FY2023 mainly due to
COVID-19 pandemic where travel restrictions and quarantine measures were imposed during the
majority of FY2023 which negatively affected the spending power of consumers. The average spending
per offline retail transaction in FY2024 increased mainly due to the return of customers from Chinese
Mainland and their spending on health products an d pharmaceutical products after the pandemic, and it
remained stable in FY2025. The average spending per offline retail transaction for 8MFY2026 decreased
as compared to FY2024 and FY2025 as we opened more retail stores in residential areas targeting
household customers. Household customers tend to spend less per transaction as compared to tourists,
thereby lowering the average spending per transaction.
Management of retail stores
Our operation controller (retail) is responsible for overseeing the operation of our retail network.
Our operation team comprises our operation controller (retail), three district managers, 29 shop
managers and over 500 frontline salespersons at our retail stores as at 30 November 2025.
Pursuant to the Pharmacy and Poisons Ordinance (Cap 138) ( ‘‘PPO’’), every licensed retail
pharmacy operated is required to st ore and dispense all regulated medicines in full compliance with the
mandated code of practice. To ensure adherence, we ha ve established a detailed internal procedure and
operating guidelines requiring all registered pharmacists and relevant personnel to comply with.
Regarding licensing requirements and daily operational procedures under the PPO, our senior
pharmacists oversee the management of both new licen se applications and renewals and establish daily
operational guidelines.
1 The spending spreads over a large range as it may cover single purchase of lower priced items, such as cotton swabs, wet
swipes or similar personal care items to high purchase price s such as involving bulk purchase of beauty products, wine or
branded products.
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Our district managers are responsible for the impl ementation of our sales strategy and policy in the
respective regions and manages the operation of the retail stores in that region. The frontline
salespersons at our retail store are managed by a st ore manager at each of the store who reports to the
regional manager. The store manager of each retail store is responsible for managing the salespersons at
the store, monitoring and adjusting the automatic replenishment requests, placing replenishment requests
through our system based on the daily sales of the retail store, and inspecting the stock for their physical
appearance and expiry dates. Stock replenishment generally arrives on the same day as or the next day
after the replenishment request is made.
Retail store location selection and opening of new stores
The number of our retail stores grew from 14 as at 1 April 2022 to 31 retail stores in operation as
at the Latest Practicable Date. Our management team is directly responsible for the overall planning of
our retail store network and identifying and selecting suitable locations for new stores.
We strategically locate our reta il stores across different districts and areas. A primary
consideration is market demand and purchasing power of a certain area — where there is sufficient
demand and depth, we will consider opening a store o r multiple stores in an area. We adopt a structured
methodology when evaluating and identifying suitable sites for potential new stores. We carefully select
sites which our Directors believe can bring sufficient customer flow, optimize revenue potential and
cater to our target customers in ord er to mitigate risks associated with underperforming sites. In line
with retail industry practices, we gen erally conduct compreh ensive site analysis which takes into account
demographic profiling, economic indicators, m arket dynamics, competitive landscape and our
management ’s judgment. Key factors of our site analysis include:
(i) Pedestrian flow: We prioritize locations with hi gh pedestrian traffic as it directly correlates to
visibility and impulsive purchases typical in the retail sector. Locations are evaluated based
on daily pedestrian flow metrics and the site ’s ability and attractiveness to draw visitors from
other areas in order to leverage cross-regional demand and enhance sales volume beyond
local residents;
(ii) Estimated spending power of customers: We analyze the target area ’s economic profile such
as average household income, disposable income levels and consumers ’ spending patterns on
health and wellness products; and
(iii) Nature and types of customers: We also consid er the characteristics of customers in the target
area, including factors such as age, gender, needs, lifestyle and health consciousness. For
instance, we consider commercial areas which a re populated by professionals and tourists
with higher demand for quality products and premium areas can enhance the image of our
Group, while residential areas populated by household families have a higher demand for
more economical products at accessible locati ons which in turn facilitates repeated and
regular purchases.
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An example illustrating our retail store location strategy is our presence in Mong Kok, a popular
commercial and shopping area in which we operate three separate stores where each store targets a
distinct group of customers: we have a retail stor e located near the MTR Station to attract the vast
amount of pedestrian flow on the street; we have a nother retail store located among the cluster of
sportswear shops to attract tourists shoppi ng in the area; we also have a flagship store — our largest
retail store in Hong Kong — which offered the largest range of products with approximately 13,000
SKUs as at the Latest Practicable Date.
We constantly search for and eval uate suitable premises to expand our retail store network, such as
by expanding into new areas to reach new customers and offer more convenience to repeated customers
located in different areas. When selecting the location o f a new retail store, we typically consider factors
including our existing presence in the vicinity, the pedestrian flow, the spending power of customers and
the demographic and type of customers of that ar ea. For instance, we opened new retail stores in
Fortress Hill and Whampoa in 2025 in order to establish a presence in those dense residential areas and
tap into the strong demand for pharmaceutical and household products from residents in the vicinity.
Before we decide on the location of a new store, we will conduct feasibility studies such as conducting
estimations on sales performance and possible returns. Once our management team has decided on a
location to establish a new retail store, we will then identify suitable premises to set up the retail store
with help from property agents. Our operations team will be responsible for negotiating the lease with
the landlord and managing the related documentations.
In order to avoid competition and cannibalisation among our retail stores, when identifying a
suitable location for our new retail stores, we wil l take into account the geographical coverage of the
location compared to that of our existing retail stor es in order to ensure that our sales networks do not
materially overlap or there is sufficient demand a nd purpose to justify establishing multiple retails
within a closer proximity. For example, in popular tourist and shopping areas like Tsim Sha Tsui and
Mong Kok, we generally target both tourists and local consumers and will consider opening a new store
if our Directors are of the view that the market has not yet saturated and can absorb an additional store.
By way of example, our Company ’s existing store on Carnarvon Road, Tsim Sha Tsui, had a sales
revenue of approximately HK$171.6 million in FY2023. Our Company opened a new store on Canton
Road, Tsim Sha Tsui, in June 2023 and for FY2024, the Carnarvon Road and Canton Road stores
respectively reported sales revenue of approximately HK$273.6 million and HK$134.0 million. In
addition, depending on the characteristics of a par ticular store such as its precise location and size,
different stores in a closer proximity may slightly tilt towards a specific group of customers in terms of
the product range stocked, such as overseas visitors, local family customers and office worker
customers. In other areas such as residential areas, we may open stores within a relatively close
proximity targeting residential customers if there i s sufficient demand considering the purchasing power
and consumption pattern the target customer group. Besides, our management closely monitors the sales
performance of retail stores within the same district to assess whether the sales of one retail store will
cannibalize the sales of other retail store(s) in the same district. For example, we managed to achieve
overall growth in total revenue in areas such as Canton Road of Tsim Sha Tsui and Shatin where we
opened an additional new store during FY2025 and 8MFY2026 respectively, where we recorded a
growth of 14.6% (from June to November 2024 to June to November 2025) and 49.8% (from August to
November 2024 to August to November 2025) in our revenue from our retail stores in these two areas,
respectively. The density of customers and sufficie ncy of demand justified the introduction of a new
store in relatively close proximity to a pre-existing store and demonstrated our ability to manage
cannibalisation and over-expansion risk.
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The estimated capital investment per store, excluding inventory, is between HK$5 million to
HK$10 million, which includes the costs of renovation and purchase of equipment and fixtures.
The following table sets out the details of our r etail stores opened and closed during the Track
Record Period and up to the Latest Practicable Date:
FY2023 FY2024 FY2025
From
1 April 2025
to the Latest
Practicable
Date
Number of retail stores
Number at the commencement of the
year/period 14 13 16 25
Number of retail stores opened during the
year/period 1 3 9 6
Number of retail stores closed during the
year/period 2 0 0 0
Total number at the end of the year/period 13 16 25 31
We closed two retail stores in FY2023, upon the expiry of the respective leases, in Sheung Shui,
the New Territories, as there had been four stores in that area at the relevant time and the market
demand in that area was subdued due to decreased level of spending by cross-border visitors and local
customers in the area. There was no other closure o f retail stores during the rest of the Track Record
Period.
We opened 19 stores during the Track Record Peri o da n du pt ot h eL a t e s tP r a c t i c a b l eD a t e ,o f
which six new stores commenced business after 1 April 2025. The average store breakeven period was
within three months after the opening of the store. As at the Latest Practicable Date, 5 stores had not
achieved investment payback
1, majority of which commenced business after 1 April 2025. For stores
that achieved investment payback du ring the Track Record Period, they generally achieved investment
payback between two to eight months.
In FY2023 and FY2025, there were two and one loss-making stores respectively. The loss incurred
by the two stores (which were subsequently clos ed in the same year as abovementioned) in FY2023 was
mainly attributable to the closure of borders for a substantial period during FY2023, as both stores were
located in the northern part of Hong Kong to which the tourists from the Chinese Mainland contributed a
large portion of their revenue. The store which made a loss in FY2025 was only opened in the second
half of FY2025, as such the store had not reached b reakeven yet. There was no loss-making store in
FY2024 and 8MFY2026.
1 Investment payback is estimated by referring to the number o f months at which the accumulated EBITDA of a new shop needed
to equal the total initial capital expenditure spent on that store.
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Same store sales growth
During the Track Record Period, in addition to the expansion of our retail store network, our same-
store sales had also increased significantly, with a CAGR of approximately 28.1% from the beginning of
FY2023 to the end of FY2025. Same-store sales represents the revenue from the retail stores
(‘‘Comparable Stores ’’) that were in operation throughout the enti rety of the relevant financial year (or
period) and the preceding financial year (or peri od) being compared. The table below sets out the
revenue from same-store sales of our retail s tores for the respective years and periods:
FY2023 FY2024 FY2024 FY2025 8MFY2025 8MFY2026
Number of
Comparable Stores 12 12 15
Sales of Comparable
Stores (HK$ ’000) 968,785 1,590,500 1,690,808 1,590,391 1,352,522 1,352,720
Same-store sales
growth 64.17% (5.94)% 0.01%
A significant year-on-year same-store sales growth was recorded for FY2024 as compared to the
preceding financial year, primari ly driven by the reopening of the border following COVID-19 and the
subsequent recovery in local consumer confidence during the return to normality. According to Frost &
Sullivan, the reopening of borders in 2023 spurred a tourism surge, particularly visitors from the PRC,
and boosted demand for beauty products and daily e ssentials. The modest decline in same-store sales
growth observed in FY2025 as compar ed to the preceding financial year was largely attributable to the
high baseline established in the preceding year. The revenue from our Compar able Stores for 8MFY2026
was generally stable as compared to 8MFY2025, mai nly due to a drop in sales recorded by our retail
shops located in the New Territories which was offset by growth in sales of our retail shops in major
tourists and shopping areas in Kowloon and the Hong Kong Island. Sales generated from our Group ’s
Comparable Stores located in the New Territories a ccounted for approximatel y HK$556.5 million and
HK$548.6 million for 8MFY2025 and 8MFY2026, respectively, while sales generated from our Group ’s
Comparable Stores located in major tourist and shopping areas in Kowloon and Hong Kong Island,
namely stores located in Mong Kok, Tsim Sha Tsui and Central, accounted fo r approximately HK$796.1
million and HK$804.1 million for 8MFY2025 and 8MFY2026, respectively.
We believe the decrease in sales recorded by our retail shops located in the New Territories for
8MFY2026 was mainly due to cross-border customers gradually shifting to online shopping for their
purchase of health, pharmaceutical and daily consum able products instead of p hysically visiting Hong
Kong to purchase such products, as well as the implementation of more stringent cross-border measures
for eligible items which can be brought back to Chin ese Mainland. The growth in sales attributable to
r e t a i ls h o p sl o c a t e di nK o w l o o na n dH o n gK o n gI s l a n di n8 M F Y 2 0 2 6w a sm a i n l yd u et oo u rs t r a t e g i c
expansion to central business districts and household areas targeting local customers.
Please refer to the section ‘‘Financial Information — Key Factors Affecting Our Results of
Operations — Same store sales ’’of this prospectus for details of our same-store sales performance.
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ONLINE SALES PLATFORMS
Apart from our network of physical retail stores in Hong Kong, we have established online sales
channels to facilitate our customers ’ purchases without the constraints of opening hours and location.
We operate our official Lung Fung online store at https://eshop.lungfung.hk/ ( ‘‘Official Online Store ’’)
which primarily serves local Hong Kong customers and we operate as an e-commerce trader on three
major e-commerce platforms in the PRC, namely Lung Fung Group Overseas Flagship Store ( 龍豐集團
海外旗艦店) on Tmall International ( ‘‘Tmall Store ’’), Lung Fung Mall ( 微信龍豐商城)o nW e C h a t
Mini-Program ( ‘‘WeChat Store ’’) and Lung Fung Group Overseas Store ( 龍豐集團海外賣場店)o n
JD.com ( ‘‘JD Store ’’). Please refer to section ‘‘Financial Information — Description of Selected Items
in Consolidated Statements of Profit or Loss — Revenue ’’of this prospectus for further details of the
revenue contribution from this segment.
Our Official Online Store offers a 24-hour 7-days-a-week channel for our customers to purchase
our products. We believe that our Official Online Store supplements our physical retail store network by
allowing customers to conveniently make and repeat their purchases without having to visit our retail
stores in person. Our Official Online Store targets local customers in Hong Kong and we offer delivery
services for orders within Hong Kong via third party logistics service providers. During the Track
Record Period, we sold over 6,500 SKUs on our Official Online Store. During the Track Record Period
and up to the Latest Practicable Date, all orders pl aced through our Official Online Store were centrally
processed by a designated retail store which was responsible for the packing and shipping of the items.
The layout of our Official Online Store.
To better reach out to customers in Chinese Mainland, we operate as a foreign e-commerce trader
on China ’s major e-commerce platforms, through our Tmall Store, WeChat Store and JD Store. Due to
cross-border restrictions such as licensing and c ustoms requirements, the SKU number of products
available on our e-commerce platforms in Chinese Mainland is fewer than those available at our physical
retail stores. The list prices of our products on our Chinese Mainland e-commerce platforms are
generally higher than the same items available at our physical retail stores due to the addition of import
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value-added tax (VAT) and logistics costs. For orders from customers located in Chinese Mainland
placed through our e-commerce pl atforms, we engage Independent Third Party logistics service
companies to assist the fulfilment and delivery of such orders. In practice, our Group delivers products
to the warehouse of the logistics service companies in Hong Kong, who will then sort the products
according to each order placed, prepare documents for customs clearance and arrange for the delivery of
the products to the customers in the Chinese Mainland. As advised by the PRC Legal Adviser, the
aforesaid arrangement complied with the applicable PRC laws during the Track Record Period and up to
the Latest Practicable Date. For further information about our arrangement with the logistics service
provider, please refer to the paragraph headed ‘‘Inventory Management, Warehousing and Logistics —
Warehousing and Logistics ’’in this section.
During the Track Record Period, we sold over 7,000 SKUs on our e-commerce platforms across
Tmall Store, WeChat Store and JD Store. As at the Latest Practicable Date, we had engaged an
experienced service provider, an Independent Third Party, which would be responsible for the daily
management and operations and also the development of our e-commerce platforms in the Chinese
Mainland. Under this arrangement, the service prov ider will be responsible for the sales and promotion
activities for our e-commerce platforms, such as arranging the layout of our online stores on the
platforms, the liaison with the e-commerce platfor ms, advising on the range of our product offering and
conducting marketing campaign. Through this strat egy, we intend to leverage on the service provider ’s
expertise and experience in operating e-commer ce platforms in the Chinese Mainland in order to
enhance our exposure and marketing and sales to our ta rget customers more effectively and efficiently.
In compliance with the relevant regulat ions as disclosed in the paragraph headed ‘‘Regulatory
Overview — (G) Licensing And Customs Requirements For Conducting Sales Via Online Platforms In
The PRC ’’, as advised by our PRC Legal Adviser, our Group has appointed our PRC subsidiary as the
qualified Domestic Agent for our online business in the Chinese Mainland. Pursuant to our contractual
arrangement, our PRC subsidiary is mainly responsible for, at a monthly service fee, assisting us in
satisfying regulatory obligations such as customs declaration and inspections, verifying the authenticity
of the transactions, acting as our representative for the receipt of documents and inquiries and assuming
primary responsibility for product quality and saf ety. As advised by our PRC Legal Adviser, we have
complied with the relevant PRC laws and regulatio ns for conducting sales in the Chinese Mainland
through e-commerce platforms dur i n gt h eT r a c kR e c o r dP e r i o da n du pto the Latest Practicable Date.
We believe that our physical retail store network will foster the growth of our online sales
platforms as our physical retail store network enhances both our reputation and brand image, which in
turn enhances customers ’ confidence in our Group. In November 2025, the number of our members
using the Lung Fung App surpassed 300,000. During FY2025, we recorded an average monthly active
users
(Note) of approximately 54,413 on our mobile app Lung Fung App. The number of registered users
and monthly active users on the Lung Fung App increased from year to year due to (i) an increase in
awareness of our brand following our expansion of retail shops to new areas and reaching out to new
customers and (ii) an increase in advertising efforts and related expenditure to boost the popularity of
Note: ‘‘Monthly active users ’’refers to users who have interacted with the Lung Fung App at least once in a calendar month; for
the purpose of calculating ‘‘monthly active users ’’, each user who has interacted with the Lung Fung App at least once in a
calendar month will be counted as one active user for the month regardless of the number of times the user has interacted
with the Lung Fung App. The number of monthly active users in the table below reflects the average number of monthly
active users for FY2023, FY2024, FY2025 and 8MFY2026.
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our brand and our membership programme. The following table sets out the number of registered users
and monthly active users on the Lung Fung App at the end of each year/period of the Track Record
Period:
For the year ended/
As at 31 March
For the
eight months
ended/
As at
30 November
2023 2024 2025 2025
Registered users 110,532 157,333 234,228 314,051
Monthly active users 22,236 34,392 54,413 89,369
Customers ordering from our online sales platforms are protected by our data privacy protection
policy and relevant terms and conditions. All user data collected from our online sales platforms are
encrypted.
The frontpage layout of our Tmall Store
The frontpage layout of our JD Store The frontpage layout of our WeChat Store
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OUR PRODUCTS
We offer a comprehensive range of products covering principally beauty products, health products,
pharmaceutical products and other consumer products. Our key strategy is to offer a broad and
diversified product portfolio at relatively economic and affordable prices. By leveraging the offering of
more well-known and popular products at competi tive prices, we aim to attract customer flow into our
retail stores which in turn increas es the exposure and sales opportunities for other brands and our own
private label products.
We strive to offer a wide variety of products to our customers beyond the scope of a typical
pharmacy and we constantly evaluat e market trends to satisfy customers ’ needs. Originated as a
pharmacy focusing on beauty products, health pro ducts and pharmaceutical products, we have gradually
expanded to provide other consum er products such as snacks and pet food to attract a wider range of
customers, such as the younger generation. We sold over 49,000 SKUs over the Track Record Period.
We sold approximately 28,800 SKUs in FY2025, which was consistent with approximately 30,000 SKU
and approximately 29,000 SKU which we sold in FY2023 and FY2024, respectively. Of the over 28,800
SKUs we sold during FY2025, of which over 6,800 SKUs were beauty products, over 4,200 SKUs were
health products, over 3,000 SKUs were pharmaceu tical products, and over 14,000 SKUs were other
consumer products, demonstrating the breadth and depth of our product offerings. We typically stock
over 9,000 SKUs per retail store, with some larger retail stores carrying up to around 13,000 SKUs. The
table below sets forth the number of SKUs of each of the four main categories of products we had sold
during the Track Record Period:
Number of SKUs
sold during
the Track Record
Period
Product segment Principal products
Beauty products Skincare and cosmetics products and fragrances 10,554
Health products Health supplements 6,303
Pharmaceutical
products
Proprietary Chinese medicines and
Western medicines
3,920
Other consumer
products
Personal care, maternal and infant products, food,
pet food and household daily necessities
28,683
Total 49,460
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The following table sets out the indicative range of shelf life of the principal products of each of
our four main product categories d uring the Track Record Period:
Product segment Principal products
Indicative range of
shelf life
Beauty products Skincare and cosmetics products and
fragrances
3 years
Health products Health supplements 3 –5y e a r s
Pharmaceutical products Prop rietary Chinese medicines and
Western medicines
3–5y e a r s
Other consumer products (Note) Personal care, maternal and infant
products, pet food and household
daily necessities
1–3y e a r s
Note: The shelf life of food products varies significantly and is not included
Average selling price per unit
Product segment Principal produc ts FY2023 FY2024 FY2025 8MFY2026
(HK$) (HK$) (HK$) (HK$)
Beauty products Skincare and cosmetics products and
fragrances
74.6 94.0 94.0 92.1
Health products Health supplements 37.2 77.3 79.5 81.7
Pharmaceutical
products
Proprietary Chinese medicines and
Western medicines
33.4 43.0 45.3 44.7
Other consumer
products
Personal care, maternal and infant
products, food, pet food and
household daily necessities
31.4 35.8 36.2 32.7
The average selling price per unit of all product categories increased in FY2024 because of the
return of the Chinese Mainland tourists after the travel restrictions and quarantine measures were lifted
after the COVID-19 pandemic, as the products purchased by the Chinese Mainland tourists were in
general of a higher price range. The average selling price per unit of other cons umer products decreased
in 8MFY2026 due to a general decrease in purchase cost of newly introduced items.
Together with the wide range of product offering m entioned above, our Directors believe that one
of our major competitive edges is our ability to continuously refresh our product offerings by
introducing new products and phasing out slow-selling products. In particular, our local and overseas
procurement teams are responsible for conduct marke t studies to assess consumer trends and identify
new products that they believe will appeal to our customers. Our local and overseas procurement teams
are also responsible for liaising with existing or new suppliers for such supplies. We typically procure
from brand owners, authorised dealers and tr ading companies. Please refer to the section ‘‘Procurement
and Suppliers ’’below for further details about our procurement channels and process. For FY2023,
FY2024 and FY2025 and 8MFY2026, we introduced over 6,500, 7,700, 6,000 and 4,300 SKUs of new
products to our retail stores, respectively.
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Beauty products
We offer a wide range of beauty products which can be categorized under skincare and cosmetics
products and fragrances. For 8MFY2026, we stocked over 6,000 SKUs of beauty products, with diverse
unit selling prices generally ranging from HK$2.0 to HK$6,400. Beauty products at the lower end of the
price range include double eyelid tapes, facial foam cleansers and makeup sponges, while products at the
higher end of the price range include certain types of skin revitalization cream, certain serum
concentrate and certain nourishing face care cream. Other products include face moisture masks, acne
treatment gel, cushion foundation, eye shadow palettes and fragrances. The following are examples of
the beauty products we offer.
Examples of beauty products
Health products
Health products are classified as consumer goods/cosmetics, provided they make only supportive,
maintenance, or aesthetic claims (e.g., ‘‘enhances skin hydration ’’) without implying disease treatment or
pharmacological modification. There is no pre-market registration requirement for health products, in
contrast with the mandatory pre-ma rket registration requirement for pharmaceutical products. We offer a
wide range of health products such as Chinese and Western health supplements. For 8MFY2026, we
stocked over 3,200 SKUs of health products, with diverse unit selling prices generally ranging from
HK$0.5 to HK$3,500. Health products at the lower end of the price range include vitamin tablets, eye
drops and pain-relieving patches, while products at the higher end of the price range include ganoderma
spore capsules ( 靈芝孢子膠囊), and bovine bezoar pills ( 牛黃丸). Other examples include sea dog
vitality supplements, nicotinamide mononucleotide (NMN) capsules and omega-3 fish oil. The following
are examples of health products we offer.
Examples of health products
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Pharmaceutical products
We offer a wide range of pharmaceutical products which can be categorized under proprietary
Chinese medicines and Western medicines. Pharm aceutical products include western medicines and
proprietary Chinese medicines as substances or preparations intended for the prevention, diagnosis,
treatment, or alleviation of diseases, disorders, or medical conditions, or for restoring, correcting, or
modifying physiological functions through pharmacological, immunological, or metabolic action. These
require mandatory pre-market registration with the Pharmacy and Poisons Board or Chinese Medicines
Board, demonstrating safety, efficacy, and quality. For 8MFY2026, we stocked over 2,600 SKUs of
pharmaceutical products, with diverse unit selling prices generally ranging from HK$0.5 to HK$10,500.
Pharmaceutical products at t he lower end of the price range include pills and tablets sold on a per unit
basis and dextrocilla syrup while products at the higher end of the price range include a type of
medication for patients who have had a kidney or liv er transplant to preven t rejection and a type of
injectable medicine for weight management. Some of these items are prescribed drug items and can only
be purchased at our designated retail stores which ar ea t t e n d e db yar e g i s t e r e dpharmacist. The following
are examples of pharmaceutical products we offer.
Examples of pharmaceutical products
Other consumer products
We offer a wide range of other consumer products which can be categorised under personal care,
maternal and infant products, food and drinks, pet food and household daily necessities. For 8MFY2026,
we stocked over 12,000 SKUs of other consumer products, with diverse unit selling prices generally
ranging from HK$1.0 to HK$38,000. Other consumer products at the lower price range include
confectionaries, pet food, bottled drinks and wet tissu e papers, while products at the higher end include
wild ginseng, Moutai ( 茅台酒) and edible bird ’s nest food products. Other examples include personal
care products such as sunscreen lotion, hair growth treatment solutions for men, deodorant sprays,
shampoo, and electric toothbrush; maternal and infant products such as prenatal vitamin tablets, infant
formula milk powder and supplements for infants; food products such as condiments and wine; pet food
and household daily necessities such as anti-bacteria cleanser sprays, glass cleaning solutions,
dishwashing detergents, fabric refresher. The following are examples of other consumer products we
offer.
Examples of other consumer products
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Revenue breakdown by key product categories
The following table sets forth a breakdown of our revenue by product category in absolute amount
and as a percentage of our total revenue comprising retail sales from our retail stores and our online
sales platforms, wholesale and private label businesses for the periods indicated:
FY2023 FY2024 FY2025 8MFY2026
Revenue
(HK$ ’000)
% of total
revenue
Revenue
(HK$ ’000)
%o ft o t a l
revenue
Revenue
(HK$ ’000)
%o ft o t a l
revenue
Revenue
(HK$ ’000)
%o ft o t a l
revenue
Beauty products (Note) 306,014 28.0% 668,228 33.1% 818,044 33.3% 667,216 32.8%
Health products 174,752 16.0% 357,656 17.7% 433,752 17.6% 369,039 18.1%
Pharmaceutical
products 246,529 22.5% 398,219 19.7% 473,105 19.2% 354,641 17.4%
Other consumer
products 366,716 33.5% 596,628 29.5% 735,577 29.9% 644,239 31.7%
Total 1,094,011 100.0% 2,020,731 100.0% 2,460,478 100.0% 2,035,135 100.0%
The following table sets forth a breakdown of our approximate sales volume by product category
and the percentage of our approximate total sales volume for the respective periods indicated:
FY2023 FY2024 FY2025 8MFY2026
Units % Units % Units % Units %
(in million units, except for percentage)
Beauty products 4.1 14.7 7.1 18.9 8.7 19.4 7.2 18.4
Health products 4.7 16.8 4.6 12.3 5.5 12.1 4.5 11.5
Pharmaceutical products 7.4 26.5 9.3 24.6 10.4 23.2 7.9 20.1
Other consumer products 11.7 42.0 16.7 44.2 20.3 45.3 19.7 50.0
Total 27.9 100 37.7 100 44.9 100 39.4 100.0
Private Label Products
Leveraging on our established retail store network and our in-depth experience in sales of
consumer products, we have been developing and offer ing our private label products. The private label
products are customized for us i n accordance with our s pecifications and manufactured for us by
Independent Third-Party OEM and ODM manufactur ers for sale exclusively in our retail stores.
Our private label products include health supplements, skin care products and cosmetic products.
Revenue from sales of our private label products increased gradually during the Track Record Period.
For FY2023, FY2024 and FY2025 and 8MFY2026, revenue from sales of our private label products was
HK$74.2 million, HK$216.1 million, HK$332.4 million and HK$292.6 million, respectively,
representing 6.8%, 10.7%, 13.5% and 14.4% of our total revenue, respectively. For example, our ‘‘Tse
Note: Beauty products include skincare, cosmetics, fragrances products.
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Tai Kung ’’(謝太公) label, a label which specialises in Chin ese pharmaceuticals and health products,
recorded sales revenue of HK$6.9 million, HK$31.4 million, HK$68.2 million and HK$66.3 million for
FY2023, FY2024 and FY2025 and 8MFY2026, respectively.
Revenue breakdown by product
The following table sets forth a breakdown of our revenue by product category for private label
products:
FY2023 FY2024 FY2025 8MFY2026
(HK$ ’000) (HK$ ’000) (HK$ ’000) (HK$ ’000)
Beauty products 22,456.2 48,173.0 60,725.9 51,414.3
Health products 34,895.0 132,398.9 210,791.3 188,523.0
Pharmaceutical products 11,697.4 25,187.4 32,280.5 23,627.8
Other consumer products 5,162.7 10,334.5 28,591.7 29,070.3
Total 74,211.3 216,093.8 332,389.4 292,635.4
We partner with OEM and ODM manufacturers to avoid incurring excessive development and
manufacturing costs. Our OEM and ODM manufacturer s are primarily located in South Korea, Taiwan,
the United States, Europe and in Hong Kong. We carefully assess and select our OEM and ODM
manufacturers based on whether they possess the m anufacturing qualifications such as ISO 9001. We
typically engage ODMs to manufacture products that are relatively prevalent on the market as the
f o r m u l a ea n dc o m p o s i t i o no fs u c hproducts have limited variance. We partner with OEMs to develop
products that have strong market demand based on our observations and which are subject to a higher
degree of originality and customization. We will consider customer needs and suggestions to ensure that
the end products align with our customers ’ demand.
We engage Independent Third-Party OEM/ODM m anufacturers to manufact ure our private label
products. Leveraging on the expertise of the OEM/ODM manufacturers in the production of the relevant
products, we typically customize or modify existing composition, formula, products or semi-finished
products provided by our OEM/ODM partners based on customers ’ feedback and our own experience
and market research. Our Directors believe that su ch collaborative approach serves to shorten the time
and reduce the costs in relation to product development — as compared to conducting substantial
research and development in-house — and allows us to broaden our product offering in a more timely
and cost-effective manner.
The private label products are generally custom ized for us in accordance with our specifications
and packaging requirements and manufactured for us by the OEM/ODM manufacturers for sale
exclusively in our retail stores. We generally do not acq uire the intellectual property right generated in
the development of the private label products by the OEM/ODM manufacturer, such as the product
formulae, due to (i) the prevalence and availability of similar products in the market, including the
availability and readiness of alternative product formulations and OEM/ODM manufacturers, and (ii) the
non-patented nature of most of these product formulations and (iii) in line with the industry norm, the
product formulations and ingredients of OEM/ODM products are typically provided by the OEM/ODM
manufacturers to their customers. Pl ease refer to the paragraph headed ‘‘Risk Factors — Risks Relating
to Our Business — Our Group faces risks relating to non-owner ship of intellectual property rights of our
private label products ’’for risks related to intellectual property rights.
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Pursuant to the supply agreements with our OEM/ODM manufacturers, we typically have a right to
seek compensation from the OEM/ODM manufacturers, in the form of replacement or exchange of the
items concerned, return or a corresponding refund, regarding items that were not manufactured to our
required standard or where the items are defective within the warranty period or a specific period of
time from the receipt of the items. During the Track Re cord Period and up to the Latest Practicable Date
and to the best of our knowledge and based on our reasonable enquiry, the OEM/ODM manufacturers
we partner with had generally been in compliance with Good Manufacturing Practice (GMP), Good
Laboratory Practice (GLP) and other relevant requirements regulated by the Department of Health and
other regulatory bodies in Hong Kong.
The following table summarises the typical major terms of collaboration with our OEM/ODM
manufacturers:
Pricing The price may be specified in the OEM /ODM agreement or in the purchase
orders.
Roles and
responsibilities
Typically, the OEM/ODM manufac turer will be responsible for
manufacturing and supplying the product to us in accordance with the
agreed product design, quality, composition and packaging.
Intellectual property
rights
Typically, the OEM/ODM manufacturer will be granted authorization to
apply the relevant trademark owned by us on the items to be produced by
the OEM/ODM manufacturer for us.
Warranty For more sensitive products such as cosmetics and skincare, the OEM/
ODM contracts typically specify a war r a n t yp e r i o dw i t hr e g a r d st ot h e
products supplied to us by the OEM/ODM manufacturer.
Period/Termination Typically on purchase order basis or a specified duration such as one year.
Parties may agree to terminate in writing.
We adopt a systematic approach when developing product items with OEM and ODM
manufacturers. At the initial stage, we conduct market research and an alyse feedback fr om our frontline
salespersons regarding customers ’ needs and preferences. We also visit trade shows to keep ourselves
updated about new products and trends in the market. Where we see suitable opportunities, we will work
with our OEM and ODM manufacturers to develop the product. If the prototype is successfully
developed, we will then proceed to mass producing the product. We will perform quality control checks
of the finished product and will prepare for the la unch of the product, such as preparing the package
design, determining the price and offering internal trainings to our salespersons regarding the new
product. The products under our private labels are primarily sold at our own retail stores. We typically
register the trademarks of our private labels in Hong Kong, Macao, the PRC as well as the place where
the product was manufactured. Our Directors believe that the development of products under our private
label can help diversify our business, revenue base and improve the overall gross profit margin of our
business.
As at 30 November 2025, we had established over 40 private label brands. As at the Latest
Practicable Date, we had over 700 SKUs available for sale under our private label brands, including over
130 SKUs of beauty products, over 300 SKUs of health products, over 50 SKUs of pharmaceutical
products
1 and over 260 SKUs of other consumer products.
1 Some of these pharmaceutical products require registration with the Pharmacy and Poisons Board of Hong Kong.
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Under the Pharmacy and Poisons Regulations (Cap. 138A), pharmaceutical products must be
registered with the Pharmacy and Poisons Board of Hong Kong before they can be sold, offered for sale,
distributed or possessed for the purposes of sale, distribution or other use. As at the Latest Practicable
Date, a total of seven products from our private lab els had been registered as pharmaceutical products of
which five were prescribed medicines, one was a pharmacy-only medicine and one was an over-the-
counter medicine. As at the Latest Practicable Date, we were in the process of applying for the
registration of two additional pharmaceutical products. The following table sets out a summary of our
private label products which have been registered on the list of registered pharmaceutical products
maintained by the Pharmacy and Poisons Board of Hong Kong:
Product name Registered holder Legal Classification Sale Requirement
Dosin Tablets 10mg Top Harvest Pharmaceuticals
Company Limited (Note 1)
Part 1, Schedule 1 &
Schedule 3 Poison
Prescription Only
Medicines
Flucozole Capsules
150mg
Top Harvest Pharmaceuticals
Company Limited (Note 1)
Part 1, Schedule 1 &
Schedule 3 Poison
Prescription Only
Medicines
Lochol Tab 10mg Top Harvest Pharmaceuticals
Company Limited (Note 1)
Part 1, Schedule 1 &
Schedule 3 Poison
Prescription Only
Medicines
Lochol Tab 20mg Top Harvest Pharmaceuticals
Company Limited (Note 1)
Part 1, Schedule 1 &
Schedule 3 Poison
Prescription Only
Medicines
Sinflo Tablets 200mg Top Harvest Pharmaceuticals
Company Limited (Note 1)
Part 1, Schedule 1 &
Schedule 3 Poison
Prescription Only
Medicines
Lorsedin Tablets 10mg Top Harvest Pharmaceuticals
Company Limited (Note 1)
Part 1 Poison Pharmacy Only
Medicines
Setin Tab 10mg Top Harvest Pharmaceuticals
Company Limited (Note 1)
Part 2 Poison Over-The-Counter
Medicines
Note 1: Top Harvest Pharmaceuticals Company Limited is a wholly-owned subsidiary of our Group.
We believe that our ability to develop and offer the private label products will be complementary
to our business development which, will on one hand, allow us to effectively control the price premiums
of our private label products and their qualities and thereby contribute to higher profitability of such
products to our Group and on the other hand, further uplift our brand awareness and reinforce our brand
recognition in the market. We will continuously identify suitable opportunities to develop additional
private label products as and when appropriate.
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PROCUREMENT AND SUPPLIERS
We centrally procure products from a large number of suppliers from around the world, including
(i) brand manufacturers, (ii) authorised agents and the brands ’ distributors in Hong Kong, (iii) parallel
import wholesalers in Hong Kong and overseas and (iv) OEM and ODM manufacturers. We mainly
source from local distributors in Hong Kong as well as overseas suppliers located in Japan, South Korea,
Southeast Asia, Europe and the U.S..
Procurement process
We strive to source quality products that cater to the popular demands of our target customers in a
timely manner. To grasp the latest trend and to consta ntly enrich and refresh our product range, we have
set up a procurement office in Fukuoka, Japan to source local products that we believe appeal to our
target customers. We believe our dedicated and experienced overseas procurement team gives us an edge
over our competitors due to their local intelligence and network as well as the ability to discover and
identify new products. By gain ing direct access to local distri butors and suppliers, our overseas
procurement team enables us to source seasonal or latest products directly from Japan in a timely
manner before they become generally available in Hong Kong. Our overseas procurement teams visit
trade shows in their areas to keep themselves abreast of new products and market trends.
We have adopted a thorough procedure to ensure that we have a wide range of products with
sufficient inventory for daily operations and to further ensure the quality of the products. We monitor
the inventory level of our products continuously. Through our inventory monitoring system, our
warehouse will be alerted if an item falls below the pre-determined minimum stock level at a retail store
and we will arrange for replenishment from our warehouse generally within one business day. If the item
falls below the minimum stock level at our warehouse, we will arrange to place order from our suppliers
for replenishment.
We conduct thorough quality inspections upon receiving the products against predefined standards
and the specifications of the purchase order. We will then process the storage and sorting of the products
at our warehouse.
Suppliers
We strive to foster sustainable and collaborative partnerships with our suppliers to ensure product
quality and stability of supply. We generally select our suppliers based on factors such as whether they
are the brand owners or authorised distributors, reputation, pricing and product authenticity. We monitor
and evaluate our suppliers to ensure we have stable and quality sources of supply, which helps to reduce
risks of sub-standard products.
After we approve a new supplier, we will place purchase orders for the selected products which
specify the description and quantity of the products to be ordered, price, payment terms, delivery
arrangement and our standard terms and conditions. We typically do not enter into long-term distribution
agreement, but we have established a long-term rela tionship with most of our suppliers and we prefer to
maintain flexibility in our choices of products to keeping our product portfolio fresh and up-to-date.
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To maintain flexibility, which our Directors believe is our key competitive edge, and to better
adapt to the constantly changing tr ends and demand from customers, we generally do not enter into any
fixed or long-term distributorship agreement or pro curement agreement with our suppliers. Instead, we
purchase from our suppliers mainly by way of purchase orders on an as-needed basis. Our purchase
orders set out, among other things, the products specifications and quantity to be ordered, unit price of
each product, place of delivery, credit terms (i f applicable) and may include warranties and
representations provided by the suppliers for assuring, inter alia, the legality, the quality and the
ingredients of the products supplied.
We had not experienced any significant issues or disputes with our suppliers and had not
experienced any material fluctuations in purchase price when procuring products from our suppliers
during the Track Record Period and up to the Latest Practicable Date. We had not experienced any
major supply disruptions or shortages during the Track Record Period, although there were instances
where immaterial disruptions did occur for certain items for reasons beyond our control such as
instability in international logistics, insufficient raw materials experienced by our suppliers. We respond
to such disruptions and shortages through procuring alternative products of similar type and price
adjustments.
When procuring from authorised dealers, importers and exporters, we typically place purchase
orders with them where the volume and products pur chased under each order will depend on our actual
needs at the time. This arrangement allows us to maintain flexibility and minimize the risks of over-
stocking or slow-moving stock.
As at 30 November 2025, we had over 600 suppliers. We have established strong and stable
relationship with many of our major suppliers. During the Track Record Period, three of the five largest
suppliers in each of FY2023, FY2024 and FY2025 were suppliers which we have collaborated for over
15 years. On the other hand, we have been among the top and key purchasers of some of our suppliers
of popular items. For example, based on information provided by the relevant supplier, we were among
the top purchasers of certain products from the suppliers below in terms of annual total sales value:
Brand distributed
by the supplier Relevant product(s) Year(s) Ranking
Friso Infant formula (milk powder)
products
2022, 2023, 2024
(Note 1) Top 1
Fortune Pharmacal Coltal in 36S; Coltalin-GP
Extra 36S
Extra Fast Coltalin-GP 36S
Coltalin GP Extra 24S
2022, 2023, 2024
(Note 2)
2023, 2024 (Note 2)
2022 (Note 2)
Top 1
O l dT o w nW h i t eC o f f e e 3I n1C l a s s i cW h i t eC o f f e e ;
3 In 1 Hazelnut White Coffee;
2-in-1 Sugar Free White
Coffee
September to
December 2024
(Note 2)
Top 2
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Brand distributed
by the supplier Relevant product(s) Year(s) Ranking
Ma Pak Leung Ma Pak Leung Bovine
Bezoar Pill (10 pills)
2024 (Note 3) Top 3
Ma Pak Leung Pear
Loquat Syrup
2024 (Note 3) Top 4
Ma Pak Leung Pear
Loquat Candy
2024 (Note 3) Top 4
Colgate Colgate Dental Cream;
Colgate Optic White;
Colgate Total Toothpaste
2024
(Note 3) Top 4
Notes:
1. In terms of annual total sales value to traditional sales channels in Hong Kong such as pharmacies.
2. In terms of annual total sales value to pharmacies in Hong Kong.
3. In terms of the distributor ’s general trade account.
Through our suppliers, we source products originated from different countries around the world.
The following table sets forth a breakdown of our purchase amounts and as a percentage of our
total purchases by major regions based on the supplier ’s place of incorporation for FY2023, FY2024,
FY2025 and 8MFY2026:
FY2023 FY2024 FY2025 8MFY2026
Region
Purchase
amount
Percentage
of our total
purchases
Purchase
amount
Percentage
of our total
purchases
Purchase
amount
Percentage
of our total
purchases
Purchase
amount
Percentage
of our total
purchases
(HK$
million)
(HK$
million)
(HK$
million)
(HK$
million)
Hong Kong (Note 1) 802.5 90.9% 1,332.7 91.2% 1,672.0 92.4% 1,332.8 90.4%
Japan 63.3 7.2% 97.2 6.7% 87.0 4.8% 79.5 5.4%
Korea 6.3 0.7% 12.9 0.9% 32.3 1.8% 45.3 3.1%
Rest of Asia (Note 2) 10.5 1.2% 16.6 1.1% 14.0 0.7% 15.5 1.0%
Europe (Note 3) —— 1.7 0.1% 4.5 0.3% 1.5 0.1%
Chinese Mainland 0.0 0.0% 0.1 0.0% 0.1 0.0% 0.1 0.0%
Notes:
1. This includes companies incorporated in Hong Kong which supply products made in Hong Kong, and also includes
trading companies incorporated in Hong Kong which i mport products which are sourced from or made outside of
Hong Kong, including Japan, Korea, the rest of Asia, Europe and the Chinese Mainland, and supply such products to
us in Hong Kong.
2. Mainly Singapore, Taiwan, Indonesia and Thailand.
3. Mainly Belgium and the Netherlands.
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We lease a warehouse in Korea and a procurement office and a warehouse in Japan. Warehousing
services were provided by employees of our major supplier ( ‘‘Supplier A ’’), including packing and
order fulfillment to our Group. The costs of such labour at the warehouses are borne by Supplier A and
indirectly covered by the revenue generated from our purchases. In addition, Supplier A has designated
(i) an employee to serve as the representative of our Japan subsidiary without charge, and (ii) two
employees to assist with the daily operation of our Japan procurement office, such as conducting market
research and product development, whose cost are borne by us through reimbursement to Supplier A. As
we are a key customer of Supplier A, the establishment of such procurement office supported by
Supplier A is, in the Directors ’ view, a mutually beneficial commer cial arrangement for both our Group
and Supplier A — on the one hand, we are able to strengthen our procurement ability in Japan by
utilising the local network and market intelligence offered by Supplier A in a cost-effective manner; on
the other hand, the support offered by Supplier A ensures we have a stable source of procurement, which
translates into stable source of business from a key customer for Supplier A. For details of the
warehouse leases in Japan and Korea, please refer to the paragraph headed ‘‘Inventory Management,
Warehousing and Logistics — Warehousing and logistics ’’in this section; for details of the office lease
in Japan, please refer to the paragraph headed ‘‘Properties — Leased Properties ’’in this section.
Top five suppliers
For FY2023, FY2024, FY2025 and 8MFY2026, total purchases from our five largest suppliers for
the respective year/period in aggregate accounted for 22.8%, 21.6%, 21.7% and 22.4%, respectively, of
our total purchase, and total purch ase from our largest supplier i n each year/period accounted for
approximately 5.3%, 4.9%, 5.4% and 6.0%, respectiv ely, of our total purchases for the respective year/
period. The following table sets out the details of our top five suppliers for the respective year/period:
Supplier
Principal
place of
business
Principal
business
Principal products
purchased by us
Approximate
years of
relationship
with us as at
the Latest
Practicable
Date
Typical payment
term
Typical
payment
method
Approximate
total
purchases
Approximate
percentage of
our total
purchase
(HK$ ’000)
For 8MFY2026
1. Supplier F Hong Kong Distribution and
trading
Beauty products; Other
consumer products
Over 2 Payment on Delivery Telegraphic
transfer
88,335 6.0%
2. Supplier C Hong Kong Distribution and
trading
Pharmaceutical
products; health
products; other
consumer products
Over 20 Payment on Delivery;
monthly payment
with 30 days
credit period
Telegraphic
transfer
65,009 4.4%
3. Supplier A Japan Distribution and
trading
Pharmaceutical
products; health
products; other
consumer products
Over 7 60% Deposit; 40%
Payment on
Delivery
Telegraphic
transfer
62,644 4.3%
4. Supplier E Hong Kong Distribution and
trading
Health products Over 20 Payment on Delivery;
monthly payment
with 30 days
credit period
Telegraphic
transfer
56,475 3.9%
5. Supplier B
(Note 1)
Hong Kong Distribution and
trading
Pharmaceutical
products; health
products; other
consumer products
Over 15 Payment on Delivery;
monthly payment
with 30 days
credit period
Telegraphic
transfer
55,911 3.8%
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Supplier
Principal
place of
business
Principal
business
Principal products
purchased by us
Approximate
years of
relationship
with us as at
the Latest
Practicable
Date
Typical payment
term
Typical
payment
method
Approximate
total
purchases
Approximate
percentage of
our total
purchase
(HK$ ’000)
For FY2025
1. Supplier B
(Note 1)
Hong Kong Distribution and
trading
Pharmaceutical
products; health
products; other
consumer products
Over 15 Payment on Delivery;
monthly payment
with 30 days
credit period
Telegraphic
transfer
95,379 5.4%
2. Supplier F Hong Kong Distribution and
trading
Beauty products; other
consumer products
Over 2 Payment on Delivery Telegraphic
transfer
86,603 4.9%
3. Supplier C Hong Kong Distribution and
trading
Pharmaceutical
products; health
products; other
consumer products
Over 20 Payment on Delivery;
monthly payment
with 30 days
credit period
Telegraphic
transfer
73,643 4.1%
4. Supplier E Hong Kong Distribution and
trading
Health products Over 20 Payment on Delivery;
monthly payment
with 30 days
credit period
Telegraphic
transfer
67,854 3.8%
5. Supplier A Japan Distribution and
trading
Pharmaceutical
products; health
products; other
consumer products
Over 7 60% Deposit, 40%
Payment on
Delivery
Telegraphic
transfer
63,014 3.5%
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Supplier
Principal
place of
business
Principal
business
Principal products
purchased by us
Approximate
years of
relationship
with us as at
the Latest
Practicable
Date
Typical payment
term
Typical
payment
method
Approximate
total
purchases
Approximate
percentage of
our total
purchase
(HK$ ’000)
For FY2024
1. Supplier B
(Note 1)
Hong Kong Distribution and
trading
Pharmaceutical
products; health
products; other
consumer products
Over 15 Payment on Delivery;
monthly payment
with 30 days
credit period
Telegraphic
transfer
71,797 4.9%
2. Supplier A Japan Distribution and
trading
Pharmaceutical
products; beauty
products; other
consumer products
Over 7 60% Deposit, 40%
Payment on
Delivery
Telegraphic
transfer
68,139 4.6%
3. Supplier D
(Note 2)
Hong Kong Distribution and
trading
Beauty products; other
consumer products
Over 6 Payment on Delivery;
monthly payment
with 30 days
credit period
Telegraphic
transfer
66,457 4.5%
4. Supplier E Hong Kong Distribution and
trading
Health products Over 20 Payment on Delivery;
monthly payment
with 30 days
credit period
Telegraphic
transfer
58,445 4.0%
5. Supplier C Hong Kong Distribution and
trading
Pharmaceutical
products; health
products; other
consumer products
Over 20 Payment on Delivery;
monthly payment
with 30 days
credit period
Telegraphic
transfer
53,427 3.6%
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Supplier
Principal
place of
business
Principal
business
Principal products
purchased by us
Approximate
years of
relationship
with us as at
the Latest
Practicable
Date
Typical payment
term
Typical
payment
method
Approximate
total
purchases
Approximate
percentage of
our total
purchase
(HK$ ’000)
For FY2023
1. Supplier A Japan Distribution and
trading
Pharmaceutical
products; beauty
products; other
consumer products
Over 7 60% Deposit, 40%
Payment on
Delivery
Telegraphic
transfer
46,359 5.3%
2. Supplier B
(Note 1)
Hong Kong Distribution and
trading
Pharmaceutical
products; health
products; other
consumer products
Over 15 Payment on Delivery;
monthly payment
with 30 days
credit period
Telegraphic
transfer
42,328 4.8%
3. Supplier C Hong Kong Distribution and
trading
Pharmaceutical
products; health
products; other
consumer products
Over 20 Payment on Delivery;
monthly payment
with 30 days
credit period
Telegraphic
transfer
38,382 4.3%
4. Supplier D
(Note 2)
Hong Kong Distribution and
trading
Beauty products; other
consumer products
Over 6 Payment on Delivery;
monthly payment
with 30 days
credit period
Telegraphic
transfer
37,150 4.2%
5. Supplier E Hong Kong Distribution and
trading
Health products Over 20 Payment on Delivery;
monthly payment
with 30 days
credit period
Telegraphic
transfer
36,760 4.2%
Note 1: The approximate total purchases amount represents the aggre gate purchase amount from various related parties of this
supplier.
Note 2: The approximate total purchases amount represents the aggreg ate purchase amount from related parties of this supplier.
To the best of the knowledge and belief of our Directors, all of our five largest suppliers for each
year/period during the Track Record Period are Indepe ndent Third Parties, and none of our Directors or
any Shareholders, who owns more than 5% of the share capital of our Company as at the Latest
Practicable Date, nor any of their re spective associates, had any interest, directly or indirectly, in any of
our five largest suppliers for each year/period during the Track Record Period.
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Supply Channels
Our Suppliers
Our products are sourced from brand owners, ma nufacturers or their authorised or licensed
distributors, dealers or agents or trading companies in Hong Kong or overseas suppliers from Japan,
Korea, Europe, the U.S. and Australia.
For FY2023, FY2024, FY2025 and 8MFY2026, we purchased HK$357.9 million, HK$624.1
million, HK$802.2 million and HK$685.4 million, respectively, from Official Channel Suppliers,
representing approximately 40.4%, 42.1%, 44.3% and 46.3%, respectively, of our total purchases during
the respective year and period
(Note 1) .
We also purchase from the suppliers other than Official Channel Suppliers which generally enables
us to purchase products at lower prices than purchase through the official channel and this also broadens
our products offering, such as products that do not have an official distributor or otherwise unavailable
in Hong Kong. When there is a business need, for ex ample, where certain products are popular or
around festive periods where the demand for certain products surges, we may concurrently procure the
same products from both suppliers from official channels and other channels in order to meet the
demand.
(Note 2) We purchased HK$527.7 million, HK$857.0 million, HK$1,008.6 million and HK$794.2
million, respectively, from these suppliers, representing approximately 59.6%, 57.9%, 55.7% and 53.7%
of our total purchases for FY2023, FY2024, FY2025 and 8MFY2026, respectively.
For purchase from these suppliers other than the Official Channel Suppliers, we have implemented
enhanced due diligence measures for these supplier s to minimise product infringement risks. These
measures include: (1) Pre-purchase v erification: We obtain and review r elevant documentation, including
business licences, company search records, verification of client references, procurement channel
scrutiny, and examination of import documents/agency certificates. Where goods are claimed to be
sourced directly from manufacturers, manufacturer invoices are required, and independent third-party
industry checks may be conducted; (2) Supply chain tracing: we also verify the origins of the supply by
checking relevant documents such as purchase inv oices from brand owners/ma nufacturers/authorised
dealers or reputable retailers; (3) Written undertakings: Suppliers are required to provide written
undertakings confirming products are genuine, lega lly sourced, and non-counterfeit. (4) Post-receipt
verification: Additional checks upon product arrival include spot-checks, comparison against official
retail channel products, cross-re ferencing batch numbers online, and third-party laboratory testing
(where necessary) to ensure quality/substance matches official products; (5) Supplier cessation: During
the Track Record Period, we ceased procurement from 8 suppliers other than Official Channel Suppliers
due to their failure to provide proof of supply chain or product origin. These measures ensure product
authenticity and mitigate infringement risks for non-official channel sources.
Note 1: Purchases from Official Channel Suppliers include our tota l purchases of all products procured from suppliers that we
have identified, to the best of our knowledge after reasonabl e enquiry, as official channels based on the majority of the
products we procured from them, and also include our pur chases from OEM/ODM manufacturers for our private label
products.
Note 2: Such products, although generally identical whether procure d from official channels or not, may be of different versions
which are intended for different regions and hence bear slight variations among them, for example, in terms of packing.
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Regarding goods from suppliers other than the Official Channel Suppliers (regardless of whether
an authorised supplier or dealer was appointed in Hong Kong), our Hong Kong Legal Counsel is of the
view that the risks of intellectual property rights infringement or trade description issues are ‘‘negligible
or relatively remote ’’provided strict adherence to the Group ’s precautionary measures (internal controls,
protective terms). As elaborated in point (i) below, defence bases exist for any claims, and indemnity
can be sought from the suppliers. In essence, in case of any civil claim of infringement of intellectual
property rights, the restrictive statutory definition of ‘‘infringing copies ’’in that once the goods had
been put on the market under the trade mark by or with the consent of the trade mark owner, their
subsequent resale, even without the owner ’s consent, will not constitute infringement, together with the
abovementioned precautionary measures, would prov ide a reasonable basis for defence of such claim. In
addition, the warranties provided by our suppliers in the protective terms and conditions expressly
contained in our standard purchas e orders will generally entitl eu st os e e ka ni n d e m n i t ya n d / o r
contribution from the relevant supplier should any such claim arise. Consequently, based on the
aforesaid reasons, such purchases generally would not give rise to trade description or intellectual
property issue or claim. Further, for goods purchased where there is no authorised supplier/dealers
appointed in Hong Kong, certain cross jurisdictional hurdles may also exist for the overseas authorised
suppliers or dealers to commence any intellectual property rights infringement or trade description claim
in Hong Kong.
Having considered the business model and operation of our Group and the above-mentioned
precautionary measures adopted by our Group, our Hong Kong Legal Co unsel, Ms. Queenie W.S. Ng, is
of the opinion that:
(i) the trade mark law in Hong Kong does not prohibit parallel importation. Generally, the sale
and advertisement of genuine products in Hong Kong through parallel importation are not
prohibited under the laws of Hong Kong. In particular, parallel trading activities fall within
Section 20 of the Trade Marks Ordinance (Cap. 559) which provides for the exhaustion of
trade mark rights. Under this provision, the resale of goods or products that have been placed
on the market anywhere in the world by the trade mark owner, or with his consent (whether
express, implied, conditional or unconditional) does not constitute trade mark infringement,
unless the condition of the product has been changed or impaired after they have been put on
the market and the use of the registered trade mark in relation to those products is
detrimental to the distinctive character or repute of the trade mark; The basis of the view of
our Hong Kong Legal Counsel is, among other things, the exhaustion of rights principle
under the Trade Marks Ordinance pursuant to which a trade mark proprietor ’s rights are
exhausted once genuine goods bearing the relevant trade mark have been put on the market
anywhere in the world by or with the consent of the trade mark owner. Accordingly, the
subsequent importation and resale of such genuine products in Hong Kong, including by way
of parallel importation, will not constitute trade mark infringement given that the products are
not materially altered or impaired;
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(ii) as for copyright, the packaging of parallel-imported products will generally fall within the
category of ‘‘accessory works ’’(note) for which the label affixed o r displayed thereon, the
container, the written instructions or other information incidental to the products not
predominantly attributable to the economic value of the work are usually exempted as an
infringement of copyright under Section 35(3) and Section 35(8) of the Copyright Ordinance,
and will not trigger claims for copyright infringement;
(iii) we are not exposed to significant risks of intellectual property rights infringement and such
risks (if any) are generally negligible or relatively remote provided that we strictly adhere to
the precautionary measures incl uding the internal control pol icies adopted and implemented
by us described above; As such, purchases from suppliers other than the Official Channel
Suppliers will also not give rise to any trade description issue or claim, given that the
products are genuine and are no t described, presented or mark eted in a false or misleading
manner, including as to their origin, quality or authorised distribution status;
(iv) in case of any civil claim of infringement of intellectual property rights, the restrictive
statutory definition of ‘‘infringing copies ’’ and its exceptions, together with the above-
mentioned precautionary measures, would pr ovide a reasonable basis for defence of such
claim. In addition, the warranties provided by our suppliers in the protective terms and
conditions expressly contained in our standard purchase orders will generally entitle us to
seek an indemnity and/or contribution from the relevant supplier should any such claim arise;
(v) in the event of any prosecution for copyright infringement (which is the only category of
intellectual property right en-countered by us in our business operations that may attract
criminal liability), the restrictive statutory definition of ‘‘infringing copies ’’, together with the
applicable statutory exceptio ns, and our strict adherence to the precautionary measures
described above, would likewise provide a reasonable basis for defence against any such
allegation;
(vi) in the event of any alleged non-conformity of trade description laws in relation to products
procured by us through parallel importation, we would similarly have a reasonable basis for
defence against any prosecution for supplying goods with a false trade description. In
addition, the protective terms and conditions contained in our standard purchase orders would
generally entitle us to seek indemnity and/or contribution from the relevant supplier should
any such issue arise; and
Note: As advised by our Hong Kong Legal Counsel, in layman terms, the exemption in respect of ‘‘accessory works ’’
reflects the position that the real value of the goods lies in the products themselves (such as the cosmetic, skincare,
perfume, food, health supplement etc.), rather than in the packaging, labels or instructions that accompany them.
The packaging, labels and instructions are mainly used t o identify the product, explain how it should be used and/or
comply with regulatory requirements, and are not what consumers are paying for. As such, these materials are
regarded as incidental to the products which fall within the definition of ‘‘accessory works ’’under Section 35(8) of
the Copyright Ordinance, and selling genuine parallel-imported goods together with their original packaging will not
generally, by itself, amount to copyright infringement.
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(vii) Food labelling requirements are mandatory for sale of pre-packaged food in Hong Kong
pursuant to Food and Drugs (Composition and Labelling) Regulations (Cap. 132W)
(‘‘FD(CL)R ’’. Regulation 4B of the FD(CL)R concerns the nutrition labelling of prepackaged
food and nutrition claim. Hence, the Group ’s compliance of this mandatory labelling
requirement is not to be regarded as alteration of packaging as such, whether the product is
imported from overseas or not, parallel or not pa rallel. No issue in relation to intellectual
property rights infringement or trade descri ption laws would arise because of the aforesaid
legal requirement in relation to nutrition labelling.
Since the commencement of the retail business of our Group and up to the Latest Practicable Date,
we had not been involved in any litiga tion proceedings for alleged infring ement of intellectual property
rights in respect of any parallel- imported products procured by us.
As we generally do not enter into framework or long-term purchase agreements with any suppliers,
there is no exclusivity clauses in our purchase orders with our suppliers, we are generally at liberty to
procure simultaneously from alternative sources. On the basis above, our Hong Kong Legal Counsel is
of the view that there is no legality issue in relat ion to any breach of agreement with the Official
Channel Suppliers or violation of exclusivity clauses.
During the Track Record Period and up to the Latest Practicable Date, we had not experienced any
material quality issues relating to products. All products procured, whether from suppliers of official
channels or not, are subject to our standard product quality control procedures, pursuant to which any
batch of products that fail to meet our standards upon examination will be rejected. Please refer to the
paragraph below headed ‘‘ — Internal controls and supplier due diligence ’’ and the section headed
‘‘Business — Quality Control ’’for further information about our quality control procedures.
Internal controls and supplier due diligence
To ensure product authenticity and quality, in addition to the aforesaid measures for onboarding
and ongoing monitoring of our suppliers, we have established a set of rigorous internal control policy
which covers all products sold or proposed to be sold in Hong Kong by the Group.
Tracing the chain of supply
We rely primarily on tracing of the chain of supply to verify the authenticity and quality of
products. We require, as the case may be, either the letter of authorisation or documentations
capable of verifying the chain of supply in order to trace the origins of the product, including, as
the case may be, (a) proof of authorised distributorship such as a letter of authorization issued by
the brand owner or manufacturer showing that our supplier or its upstream supplier is an
authorised distributor; (b) purchase invoices issued directly by the brand owner or manufacturer or
their authorised dealer to our supplier; and (c) purchase invoices issued by reputable suppliers to
our suppliers are authentic and legally source reta ilers such as local and ove rseas retailers or duty
free shops in order to show that the products were procured from legitimate sources. Please refer to
the paragraph headed ‘‘Supply Channels — Protective terms and conditions ’’in this section for
further details of the undertaking.
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For suppliers of official channels, we require them to provide relevant documentation
depending on the duration of their authorisation, for example, if their authorisation lasts for one
year, we would require relevant authorisation document to be provided for our review every year;
for suppliers other than those from official channels, we obtain and review the relevant
documentations and we only confi rm the purchase order upon satisf actory review of the relevant
documents.
Where we procure from new or less-established suppliers, we implement enhanced due
diligence measures to ensure authenticity of the products, including reviewing the business licences
and company search records of these suppliers, verif ication of current clients and related invoices,
scrutiny of procurement channels and examinati on of import documents and agency certificates.
Where goods are claimed to be sourced directly from manufacturers, we typically require provision
of the manufacturer ’s invoices and we may conduct independent third-party checks within the
industry through our own channels to confirm the reliability of the supply chain.
Supplier ’s undertaking
For suppliers who are not Official Channel Suppliers who are new to our Group or those with
less market experience where we were not able to obtain much reference from industry intelligence
regarding their market reputation, we will seek written undertakings from our suppliers confirming
that all products supplied to us are genuine and lawfully obtained and that no counterfeit products
will be supplied.
Ongoing monitoring of suppliers:
For ongoing monitoring, we perform annual assessments (or ad-hoc assessments if major
issues arise). Ongoing monitoring measures include (i) confirming the validity of authorisation
certificates and agreements, ensuring they have not expired or been revoked; (ii) obtaining updated
certificates or confirmations if existing ones expire, and reviewing whether the product scope
aligns with current procurement needs and (iii) conducting public domain checks are conducted to
identify any adverse developments, such as regulatory actions or disputes. Any serious concerns
identified during monitoring are escalated to le gal and compliance for considering further action,
such as suspension or termination of the supplier relationship.
For suppliers other than Official Channel Suppliers who we actively trade with, our
procurement team is required to perform an annual assessment, and any seri ous concerns identified
must be escalated to legal and compliance of con sidering further actio n, such as suspension or
termination of the supplier rel ationship. During the Track R ecord Period, our Group had ceased
procuring from 10 suppliers following ongoing assessment. Such cessation was primarily due to
their failure to provide proof of supply chain or product origin and other commercial reasons such
as a drop in demand of certain brands and products
(Note) .
Note: Our Group ceased procuring from 8 suppliers because of the suppliers ’ failure to provide proof of chain of supply.
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Other internal control measures
In addition to the due diligence and monitoring measures on the suppliers, we have
established a set of rigorous internal control policies to safeguard the quality and authenticity of
inbound stocks supplied to us.
. Product selection and internal approval: for each product proposed to be purchased, our
procurement team is required to conduct product assessment recording the product name,
brand, SKU code and description, country of origin and any known or expected differences
against the official Hong Kong version. Only products approved by our designated personnel
will be added to our list of approved products;
. Additional review for products posing higher quality, safety and regulatory risks: for
products such as pharmaceutical products, infant products, high-value cosmetics and skincare
products, we will further review (i) the registration and licensing status of regulated products
in Hong Kong, (ii) any differences in formulation, dosage or indication and whether these
create clinical or regulatory concerns, and (iii) required warnings or usage restrictions;
. Purchase control: we will only issue purchase orders to suppliers who are on our list of
approved suppliers or who are official channels and will only purchase products on our
approved product list;
. Inbound checks: upon receiving products procured, we will verify the products against the
purchase order and supplier invoice and conduct visual inspection. We will also check that
batch number and expiry dates are clearly printed. Products with notable issues will be
segregated and will be notified to our procurement team for follow up;
. Labelling: our procurement team will ensure that prior to the sale of the relevant products in
Hong Kong, the product ’s packaging and labelling comply with applicable Hong Kong
requirements and supplemental label s will be applied where necessary; and
. Marketing and promotion: we will ensure that marketing or promotional materials will
comply with the Group ’s internal guidelines and applicable Hong Kong laws. Promotional
contents with higher-risk must be submitted to designated members of our management team
and, where applicable, external legal adviser for review before release.
Additional verification work upon receipt of the products
For products procured from sources other than the official channels, we typically conduct
additional verification work upo n the receipt of the products to ens ure their authenticity, including
(i) spot-checking the products upon arrival at warehouse; (ii) comparing identical products that are
being sold via official retail channels to detect variations or discrepancies; (iii) cross-checking
product information such as batch number appearing on the package of the product against online
information and, (iv) where necessary, we may also conduct testings
(Note) to ensure that the quality
and substance of products supplied to us are identical to those available at official retail channels
of the manufacturer or brand owner. We also hav e quality control procedures to perform rigorous
examinations of the products, to ensure that the products are genuine, noting that they are
sometimes different versions of the same products across different regions.
Note: Our Company engaged third party laboratories to conduct tes tings and the testing results revealed no material exception.
Product testings were conducted whenever necessary, for example, before rolling out a new product or emergence of
negative news about similar products.
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Our internal policies and procedures as summarised above aims to safeguard the quality and
authenticity of the products systematically in all m aterial respects: (i) with regards to the source of
supply, we assess the credibility of a supplier through understanding its business background and
requiring proof of its supply chain to ensure that the products were supplied to it from reliable origins;
(ii) with regards to the products, we conduct researc h on product information and characteristics to stay
vigilant on potential defects, discrepancies and variances; and (iii) we also conduct inbound checks and
quality control procedure (pleas e refer to the paragraph headed ‘‘Quality Control — Quality Control of
Products and Product Labelling ’’below for further details) upon the arrival of product items, including
examining the appearance, physical characteristics and labelling of the item, to ensure that the products
do not raise authenticity issues and faulty produ cts will be rejected. According to the independent
internal control review report, our Group ’s internal control measures are adequate and effective in
ensuring the quality of our suppliers, including but not limited to product authenticity and quality.
Our Hong Kong Legal Counsel considered that suppliers undertakings are an effective safeguard in
reducing the Group ’s risk of civil and criminal liability relatin g to product authenticity, intellectual
property infringement and trade description issues, as they place primary responsibility on suppliers to
ensure that the products are genuine, accurately desc ribed, legally compliant and non-infringing, and
help demonstrate our Group has taken reasonable an d commercially prudent steps to verify its supply
chain. Although such undertakings may not absolve our Group from being prosecuted by the
Government authorities or sued by other claimant, in the context of potential criminal liability, they
support the Group in advancing a defence based on honest and reasonable belief of reliance of
information and/or taken all reasonable precautions and exercised all due diligence to avoid the
commission of the offence in product authenticity and trade descriptio n prosecution. If established to the
satisfaction of the court, such defence operates as a complete defence to the charge, resulting in an
acquittal. In the context of civil claims, the Gr oup may rely on such contractual protections to
commence third party proceedings against the supplier by joining the supplier to the action, with a view
to seeking contribution, apportionment of liability and/or a full indemnity pursuant to the relevant
contractual undertakings. This enables the Group, if found liable to the claimant, to shift or recover all
or part of its liability from the supplier based on the supplier ’s breach of representations.
Our Group has also implemented a comprehensive internal control policy, which establishes
structured controls over supplier due diligence, product approval, inspection, labelling, sales practices
and incident handling, supported by ongoing monitoring and training. The effectiveness of our Group ’s
policy and internal control is further supported by the absence of any criminal conviction against our
Group in relation to counterfeit products and the fact that past complaints during the Track Record
Period have not been substantiated or resulted in prosecution or civil action.
Overall, our Hong Kong Legal Counsel was of the view that the internal control policy
demonstrates that the Group has implemented reas onable steps to ensure pro duct authenticity and
compliance, and to manage risks relating to intell ectual property and trade descriptions in parallel
imports, and in light of the implementation of the parallel import policy and the absence of any criminal
and/or civil action against the Group in relation to the authenticity of its products, there is a reasonable
basis to believe that the products sold by the Gr oup are generally authen tic and genuine. This is
consistent with our Hong Kong Legal Counsel ’s view that our Group has not infringed intellectual
property rights and the sale and advertisement of products in Hong Kong by way of parallel importation
are not prohibited under the laws of Hong Kong.
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Views of our Directors and the Sole Sponsor
Based on the views of our Hong Kong Legal Counsel, our Directors are of the view, and nothing
material has come to the Sole Sponsor ’s attention that would cause it to disagree with the Directors ’
view, that there is no material risk of our Group with respect to alleged infringement of intellectual
property rights, trade description issues and product authenticity relating to the sales of products
procured from the suppliers other than Official Channel Suppliers. Based on the views of our Hong
Kong Legal Counsel, our Directors and the Sole Sponsor further concur that there is no legality issue in
relation to any breach of agreement with the Offic ial Channel Suppliers or violation of exclusivity
clauses.
Our Directors confirmed, and our Hong Kong Legal Counsel and the Sole Sponsor concurred, that
during the Track Record Period and up to the Latest Practicable Date, except for piecemeal enquiries
originated from certain customers, our Group had n ot been involved in any material formal government
investigation, prosecution or dispute with the brand owners or authorized dealers with respect to product
authenticity and we had not encountered any material issues concerning product authenticity. Our
Directors believe, and the Sole Sponsor concurs, that this demonstrates the adequacy, soundness and
effectiveness of our internal contro l system in place for safeguarding pr oduct authenticity. Our Directors
believe that even if there is a possibility, as a matter of law, that certain intellectual right proprietors
may institute legal proceedings agai nst us in respect of the sales of parallel-imported products in Hong
Kong and there is risks associated with false trade description on products, the possibility of our Group
facing material legal claims and liabilities in these regards is remote. Our Directors confirm that our
Group has not made any misrepresentation about the origins of our Group ’s products. Our Directors also
confirm that we have not made any alteration to t he packaging of products. We also have in place
internal control policy which prevents alteration of packaging of the relevant products, including
stringent checking policy where nutrition labelling needed to be made according to the Public Health
and Municipal Services Ordinance, and only designated staff are given the authority to perform such
tasks). We would ensure that the original information would not be obscured, e.g. product name, batch,
expiry and regulatory marking etc., and all labelli ng works would be carried out under strict control. We
also provide training to staff who performed the labelling, and there would be supervisory checks on the
correctness and placement.
Procurement of products t hat require registration
In particular, when procuring products that require registration in Hong Kong such as regulated
medicines, we have internal procedure and policies to ensure that such products comply with applicable
registration requirement. First, our procurement team will cross-check whether the product has already
been registered on the list of registered pharma ceutical products maintained by the Pharmacy and
Poisons Board of Hong Kong. In add ition, according to our internal cont rol policy relating to procuring
health products from suppliers other than Official Channel Suppliers, our pharmacists will (i) review the
regulatory classification, registration status and clin ical appropriateness of such products; (ii) review the
health, therapeutic or dosage related aspects of such products; and (iii) advise on labelling, warnings,
usage restrictions and customer information of such products. Further, upon the arrival of such products,
we will examine the invoices and the packing of the products to confirm that the products are the
registered products which we procured, including checking the registration identifier on the product
packing and that appropriate warnings have been affixed. To ensure compliance with applicable laws
and regulations, we only procure pharmaceutical products or proprietary Chinese medicines that require
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registration from the supplier of official channel. As we do not procure such products that require
registration from suppliers other than Official Channel Suppliers, our Directors believe, and our Hong
Kong Legal Counsel concurs, that it is unlikely to give rise to any regulatory concern in this respect.
As advised by our Hong Kong Legal Counsel, the person responsible for obtaining registration of a
pharmaceutical product is the (i) licensed manufac turer, or (ii) the Hong Kong branch, subsidiary,
representative, agent or distributor of the overseas manufacturer, or (iii) the licensed wholesale dealer
contracting with the licensed manufacturer or who imported the pharmaceutical product. We generally
do not procure unregistered pharmaceutical product that would require us to conduct registration, as this
generally does not justify the time and cost that we have to incur for the registration.
Protective terms and conditions
We request the following terms from our suppliers or obtain representations, warranties and/or
guarantees as part of the protective terms and conditions provided from our suppliers in our purchase
order/supply agreement:
(i) the authenticity and legality of the products supplied;
(ii) the accuracy and completenes s of product information including their ingredients, nutrition
information, energy values, contents, suitable users, expiry date, instructions and/or
precaution for use, import requirements and trade description;
(iii) the conformity with the description on ingredients, composition and materials provided on the
product packaging;
(iv) there is no infringement of trademark, copyright or other intellectual property rights of the
brand owner and/or manufacturer in the sale of products supplied; and
(v) where the products are procured by the supplier from the brand owner or its authorised
manufacturer(s) or other intermediaries for r esale to us, the products supplied to us have not
been repackaged and have not been changed or modified in any respect after being released
from the brand owner or its authorised manufacturer(s) up to delivery to us, which will result
in the original conditions of the original genuine products be changed or impaired in any
respect(s), and that no change whatsoever has been made which will or may lead to the
products becoming infringing products or will lead to any legal dispute on infringement.
We have occasionally received inquiry letters from Official Channel Suppliers regarding our
parallel importation during the Track Record Period. S uch letters mainly notified us that certain products
were offered for sale by us without authorisation from the Official Channel Suppliers and requested us
to cease the sales of the relevant products. Dur ing the Track Record Period and up to the Latest
Practicable Date, we had not ceased to offer any product due to any enquiry received from Official
Channel Suppliers, as we were not legally obligated to resolve the inquiry letters received during the
Track Record Period and up to the Latest Practicable Date by ceasing the sales of any relevant products,
and we had not received any further follow-up inquiry letters subsequently. As advised by our Hong
Kong Legal Counsel, such inquiry letters are merely requests for information and/or assertions of
position and do not constitute any binding court order, injunction, or enforceable notice requiring
cessation, and none of such inquiries had evolved into any legal action, dispute or litigation as at the
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Latest Practicable Date. Absent of any legal restriction prohibiting the sale of the relevant products or
any substantiated claim, the receipt of such inquiry letters does not, as a matter of law, impose an
obligation on us to cease the relevant business activities. To minimise th e risks of disputes arising from
allegation of potential claims on infringement of intellectual property rights or trade description issues,
we have adopted various precautionary measures in cluding (a) the adoption of internal control and
verification procedures and (b) the incorporation of protective terms and conditions in our standard
purchase order. Given the above, and the fact that our purchase from the suppliers other than Official
Channel Suppliers had not affected our purchases from Official Channel Suppliers and our relationship
with them in any material respect during the Track Record Period and up to the Latest Practicable Date,
our Directors are of the view, and the Sole Sponsor concurs, that our concurrent procurement of the
same or similar products from both official channels or otherwise does not give rise to any operational
risks in any material respect.
Our Directors and Hong Kong Legal Counsel confirmed that, during the Track Record Period and
up to the Latest Practicable Date, except for th ose instances disclosed in the paragraph headed ‘‘Non-
Compliances and Enquiries from Government Authorities — Inspections and Enquiries ’’,o u rG r o u ph a s
not been involved in any litigation pro ceedings for alleged infringement of intellectual property rights,
authenticity of products or trade des cription issues in respect of produ cts sourced from suppliers other
than Official Channel Suppliers.
QUALITY CONTROL
Selection of Suppliers
To ensure product quality, we generally procure from recognized brand owners and trusted
distributors and wholesalers. We prefer to procure from suppliers with which we have established a
long-term and trusted relationship. Most of our top five suppliers for each year/period during the Track
Record Period have been partnering with us for many years (please refer to the section ‘‘Procurement
and Suppliers — Suppliers — Top five suppliers ’’). Before procuring from a distributor or wholesaler,
we require the supplier to provide its proof of authorization from the brand and to provide proof of
chain of supply for the products.
Quality Control of Products and Product Labelling
We conduct thorough product quality inspection to meet our customers ’ expectation on product
quality and we pay additional attention to regul ated, delicate or high-value products such as
pharmaceuticals, cosmetic s, skincare products and wine to ensur e product safety and compliance with
relevant regulations and requirements.
In addition to procuring from trusted suppliers and establishing robust quality control procedures to
ensure the quality of our procurement, we adopt the following procedures and measures to inspect and
verify all products procured from our suppliers generally:
. Document and good s verification: for each shipment, our warehousing team will, upon
arrival of the products, check the delivery not es, packing lists and invoices to verify the
products. We will then conduct a preliminary inspection of the goods against the documents
to check their quantity, quality and appearance.
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. Acceptable Quality Limit ( ‘‘AQL’’) sampling inspection: After the goods have been
accepted by our warehousing team, we will adopt a further AQL sampling inspection, which
is a statistical sampling inspection technique. Under this approach, we randomly draw a
predetermined number of samples from the entire batch for inspection. The sample size and
the allowable number of defects for the purpose of deciding whether a particular batch is to
be accepted or rejected are determined by referen ce to established international standards
such as ISO 2859 –1. Products procured from suppliers other than the suppliers from official
channels will generally be subject to a stricter degree of inspection and defect rate as
compared to products procured from official channels.
. Products with different versions: We pay attention to variances in product versions, which
arises when certain products may have particular versions intended for Hong Kong and
overseas markets with occasional differences such as packing and labelling. Where we have
procured different versions of an item, we will generally provide them with different item
identifiers, store them separately and record thei r respective batch numbers. A quality control
manager will be required to conduct further enquiry if necessary, such as contacting the
supplier with assistance from the procurement team to obtain an explanation for any variance
between the versions and verifying the information of the different versions through the
brand ’s official website or industry database. Where necessary, we will contact the brand
owner directly to confirm the variance between the versions. Where the differences in
versions have been confirmed as normal (e.g. an official update of the version of the
product), we will notify our frontline staff accordingly and ensure that they are aware of the
differences. Where the variance cannot be satisfactorily explained, we will suspend the
delivery of the relevant batch of products to our retail stores pending confirmation from the
supplier.
. Labels verification: For goods procured from suppliers other than Official Channel
Suppliers, we will verify the product labels displayed on such products against the labels on
products from official chan nels. In particular, we will compare key areas such as the
consistency of product name in both Chinese and English, completeness and consistency of
the ingredients list, instructions for use and pr ecautionary statements, importer information
and relevant licence and registration numbers as well as format and accuracy of
manufacturing date and expiry date labelling. Where any content on the label differs from
those displayed on products imported from the Official Channel Supplier, we will further
verify whether the ingredients comply with the Hong Kong Pharmacy and Poisons Ordinance
and other applicable regulations and conduc t a compliance assessment with reference to
related statutory requirements. Where the va riance complies with applicable laws, we may
apply a supplementary or corrective label with reference to the products imported from the
Official Channel Supplier to ensure complet eness and clarity. Where any variance may
present potential compliance or safety risks, we will suspend processing the batch pending
further actions (e.g. returning to the supplier).
We had a team of six quality control team members a s at the Latest Practicable Date, responsible
for quality control of all products supplied by our suppliers. The team compri ses a quality assurance
inspector who has over seven years of quality control experience in beverage products and skin care
products, a team leader and four other supporting staff members. As at the Latest Practicable Date, we
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also had seven staff members in our warehousing team responsible for inbound quality control,
comprising a supervisor who has over ten years o f experience in pharmacy and cosmetics retail and
warehousing operation, a deputy team leader and four other supporting staff members.
Upon the arrival of the products at our warehouse, our warehousing team will initially check the
descriptions and quantities against the specifications of our purchase order. Once the products and
quantities are confirmed, the invoice will be confirmed for system entry. Any discrepancies, suspicious
packaging, damage or defective goods discovered during this stage must be immediately reported to the
procurement team. Thereafter, our quality control team will conduct further inspections on the products
received, including inspecting the packaging and la beling of the products, cro ss-checking the products
against our reference samples and online resources , as well as verifying batch numbers against online
records to verify authenticity. All accepted goods will then be transferred to designated floors for
storage or processing on the same day. When we procure from new suppliers, we will inspect all
products supplied by such new suppliers for the first six months of cooperation to ensure product quality
and consistency. In addition, we only procure products with a shelf life of at least 18 months from the
manufacturing date or has not exceeded one-third of its indicated consumption period. We also require
that all invoices from our suppliers must clearly indicate the product batch number and the product
expiry date for our record and cross-checking.
We had not experienced any product quality issue that required material product return during the
Track Record Period and up to the Latest Practicable Date.
Product Safety
To ensure safety and authenticity of our products, we adopt a rigorous supplier and product
verification process for products we procure from suppliers. We either source directly from authorised
distributors or brand owners; or, where we procure from trading companies, we would require such
suppliers to provide the full supply chain documentation to ensure the goods originate from brand owner
or manufacturers or their authorised local or internat ional agents. For electrical appliances, we require
and verify the certification by the Electrical and Mechanical Servi ces Department before any such
product is displayed for sale. Products such as food, wine and cosmetics are stored at designated 24-hour
air-conditioned warehouse facilities with control over temperature and humidity. We also utilize a
refrigerated truck for these products during the delivery process. At the store level, our frontline staff
members perform daily checks on all displayed products to ensure that the products are in suitable
condition for sale.
When engaging suppliers for our own private label products, we generally conduct a detailed
supplier review to ensure that the suppliers are in possession of legitimate business licenses and relevant
factory certifications (e.g., ISO 9001, ISO 22000, Good Manufacturing Practice (GMP), Brand
Reputation Compliance Global Sta ndards (BRCGS)). This includes on-site audits to evaluate production
processes, quality control systems and hygiene conditions of these suppliers. We also require third-party
safety testing conducted by accredited laborato ries and we implement a batch sampling system to
periodically verify that all batches meet the estab lished safety standards. We also ensure that the
products are traceable through batch or serial numbe rs from the production stage to finished products.
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MARKETING AND PROMOTION
Marketing of Products
Our marketing team organise promotion activities for new products as well as existing products.
For new products, we typically prepare product flyers to be published on our media platforms and in-
store. Our marketing team also works closely with our warehousing team to make additional promotional
efforts for products wit h shorter shelf-life.
Our marketing and sales team
Our marketing and sales team consisted of mar keting personnel and graphic designers. The
marketing personnel are responsible for social me dia content creation, negotiating promotional
campaigns with suppliers, implementing promotional p lans, analysing promotional results, managing our
online sales platforms and the mobile application for our members. The graphic designers are primarily
responsible for designing promotional posters, pr oduct packaging, product photography, social media
advertising graphics, promotional videos, product brochures and the graphics appearing on our online
sales platforms and the websites of our private labels.
Marketing strategy and process
We regularly review the effectiveness of our marketing strategy, adjust and formulate our strategy
and implement new initiatives for promotion plan and to discuss the budget allocation for the execution
of the approved marketing plans.
We actively identify new products and new suppliers through various channels including referral to
new brands by our existing suppliers and our internal ma rket research and market i ntelligence gathered
by our overseas offices.
With regards to a specific promotional campaign, our sales and promotion process begins with the
establishment of clear objectives , such as increasing sales within a specific customer segment or
enhancing overall product awareness. Following this, we determine the most suitable advertising
platforms within our allocated budget. Our creative t eam then develops tailored content such as imagery,
videos and texts specifically desi gned for the selected channels. Fin ally, to measure effectiveness, we
conduct a comprehensive analysis of key performance metrics after the campaign, including reviewing
sales data and engagement analytics such as clicks and impressions, supplemented by direct feedback
from our frontline staff.
We primarily engage in the following marketing and promotion activities to enhance the image and
awareness of our brands and products:
. Online advertising, such as placi ng advertisements on social media, video sharing platforms
and on our mobile application;
. Outdoor advertising, such as placing advertisem ents on the digital screens displayed at the
lobbies of commercial and residential buildings and on LED billboards hoisted on the
exteriors of buildings;
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. Engaging celebrities with suitable public image, visibility and demographic profile to be
ambassador for our products by appearing on our online, offline and television commercials;
and
. Promotion activities such as discounts, giveaways, and limited-time special offerings.
We utilize a diversified and multi-faceted stra tegy to acquire new customers, leveraging both
digital and physical channels. Our primary acquisition methods include targeted social media marketing
across key platforms such as Facebook, Instagram, Threads, Little Red Note, Douyin, YouTube and
WeChat to engage consumers in specific demographic groups. We further amplify our reach through
collaborations with influencers and key opinion leaders (KOLs) to build credibility and tap into their
mass follower base. Additionally, we incentivise wor d-of-mouth growth through a membership referral
program. To ensure precise targeting, we utilis e Rich Communication Services (RCS) to deliver
interactive promotional messages to specific customer segments in designated locations within
designated timeframes.
We engage in strategic partnerships with compani es in complementary sectors to achieve synergy
in promotion and broaden our reach. For example, du ring the Track Record Period, we collaborated in
‘‘cross-over ’’promotional campaigns with a sports and leisurewear retailer and a jewellery retailer to
provide special discounts and offers to our custom ers and customers of our collaborating partner. We
have also partnered with financial institutions su ch as bank card service providers and digital payment
platforms to offer special discounts to customers who elected to settle payment of eligible transactions
via designated payment methods. We also rely on our presence on prominent local and PRC e-commerce
platforms to stay visible among our customers and we constantly evaluate expanding our physical retail
store network into new areas to drive customer growth.
Membership scheme
We launched our membership scheme in 2022 administered under a customer relationship
management system and operated through our official mobile app (Lung Fung Group App) to foster
customer loyalty and drive sales. Customers can register as a member through online registration and
can, thereafter, accumulate reward points upon eac h purchase. In addition, we have implemented a
referral programme where existing members who su ccessfully refer new members will receive a one-off
cash coupon eligible for instant discount upon checkout at our retail stores. We also disseminate
marketing and promotional updates to our members via our official mobile app to keep them updated
about our latest offers. By offering exclusive ince ntives such as reward poin ts, member-only special
prices and exclusive product and cash coupons redemption, we aim to create additional value for
members and to incentivise repeated purchases. This strategy not only boosts sales but also cultivates
customer loyalty connections and prompts recurring businesses. The number of registered members has
increased from approximately 37,700 as at 1 April 2022 to approximately 314,000 as at 30 November
2025.
CUSTOMERS
The vast majority of our customers are walk-in reta il customers at our retail stores. We also sell to
retail customers through our online sales platforms a nd to some wholesale customers which are primarily
pharmacies and trading companies.
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Retail stores
We principally engage in retail business through our retail store network and the vast majority of
our customers are walk-in customers from the general public. Our target customer groups include
tourists, housewives, office workers, mothers, y oung families, middle-class consumers and high-
spending consumers, which is consistent with the choice of location of our retail stores.
We believe that our comprehensive range of beauty, health, pharmaceutical and other products
available at our retail store, which typically stock over 9,000 SKUs per store, cover a wide spectrum of
daily needs and thus generally attract a broad range of customers. According to Frost & Sullivan, there
has been a surging demand for one-stop shopping e xperience among local consumers in recent years
driven by lifestyle changes. By offering beauty, health, pharmaceutical, and household and daily
essentials under one roof, this integrated approach eliminates the need for consumers to visit multiple
specialised outlets, offer ing convenience for families, working pr ofessionals, and elderly shoppers who
can pick up vitamins and supplements, over-the-counter medicines, skincare and cosmetics, as well as
groceries, cleaning supplies, and pantry staples in a single store. Our Directors believe that our Group is
well-positioned to meet and satisfy such trend with our wide selection of products available at our retail
stores in key business, residential and tourism areas.
During the Track Record Period, customers of our retail store business were mainly local
consumers from Hong Kong and tourists from the PRC visiting Hong Kong.
Online sales platforms
To facilitate the demand for our products from visitors from the PRC and to provide additional
convenience to our local customers, we have established online sales platforms via the Official Online
Store ‘‘Lung Fung Mall ’’on our website, as well as on major Chinese e-commerce platforms such as
Tmall, WeChat Mini-Program and JD. During the Track Record Period, our online sales platforms sold
to local Hong Kong customers and customers in Chinese Mainland.
Wholesale and bulk-purchase customers
In addition to walk-in customers who purchase products at our retail stores, we also supply, on
wholesale basis, beauty products, health products, pharmaceutical products and other consumer products
to corporate customers and local pharmacies in Hong Kong ( ‘‘Wholesale Customers ’’). As at the Latest
Practicable Date, we sold to more than 110 Wholesale Customers, including over 20 corporate customers
which were primarily importers and exporters and over 90 local pharmacies in Hong Kong. As we are
able to procure a wide range of products, especially products that are popular in the market, at
competitive prices through our procurement channels, some importers and exporters procure products
from us to be on-sold to other retailers. Similarly, as we are able to supply certain products to local
pharmacies in Hong Kong below their procurement costs from other channels, some local pharmacies in
Hong Kong engage us to wholesale certain products to them. For FY2023, FY2024, FY2025 and
8MFY2026, we recorded HK$22.2 million, HK$23.6 million, HK$26.2 million and HK$16.6 million,
respectively, from wholesale sales, representing 2.0%, 1.2%, 1.1% and 0.8% of our total revenue for the
respective periods. We generally se ll to Wholesale Customers pursuant to orders they place with us from
time to time. We will suspend shipments to the pharmacies with long overdue payment or would require
upfront payment from such customers. We generall y require upfront payment from other corporate
customers before shipment of the order. The products are generally delivered by our own logistics team
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to the locations in Hong Kong specified by such customers. We do not enter into any distributorship
agreement, framework or long-te rm agreement with any Wholesale Customer. One of our Wholesale
Customers during the Track Record Period was a co mpany owned by the sister of Mr. Tse, which is a
connected person of our Company ( ‘‘Relevant Wholesale Customer ’’). Sales to this Wholesale
Customer were conducted on normal commercial ter ms and at prices comparable to other third-party
customers, and amounted to HK$1.9 million, HK$6.7 million, HK$6.4 million and nil for FY2023,
FY2024 and FY2025 and 8MFY2026, respectively.
Diverse customer base
Sales to our top five customers represented less than 5% of our revenue for FY2023, FY2024 and
FY2025 and 8MFY2026, respectively. Given that the total amount of sales generated from Wholesale
Customers and individual bulk-purchase customers represented an insignificant amount of our total
revenue, our Directors consider that there is no substantive meaning to identify and disclose details of
our five largest customers for each year/period for the Track Record Period. Given the diverse nature of
our customers and our Group did not rely on any single customer during the Track Record Period, we do
not face any customer concentration or counterparty risks. During the Track Record Period, some of our
Wholesale Customers were also our suppliers. None of such Wholesale Customers, however, was a
major customer of our Group as sales to such Wholesale Customers represented an insignificant amount
of our total revenue due to our diverse customer base and none of them were our major supplier during
the Track Record Period.
Except for the Relevant Wholesale Customer, none of our Directors or any Shareholders who owns
more than 5% of the share capital of our Company as at the Latest Practicable Date, nor any of their
respective associates, had any interest, directly or indirectly, in any of our five largest customers or any
of the Wholesale Customers for each year/period during the Track Record Period.
CUSTOMER SERVICES
We aim to provide our customers with an enjoyable and comfortable retail experience and train our
employees to provide quality customer service. We provi de training to our sales staff at our retail stores
to provide efficient and helpful service to our customers. Our customers may raise complaints or
concerns through our hotline or email.
Return policy
For products purchased at our ret ail stores, while we generally do not offer refund or exchange, we
allow for product exchange at our discretion within seven days from the date of purchase for products
with quality issue. To be eligible, the product in question must be in unused condition in its original
packing with all original parts and accessories, whe re applicable, together with a valid true copy of the
original receipt. We do not offer any product warranty for our products.
For products purchased from our Official Online Store, we generally do not provide return,
exchange or refund once an order is confirmed and pay ment is successfully processed. Cancellation of a
paid order may be considered under exceptional circumstances at our d iscretion and normally subject to
a handling fee of 20% of the total order value. We do not provide return, exchange or refund if an order
has been dispatched. However, to p rovide additional assurance to our customers, if upon receipt of an
item it is found that the remaining validity period is short — namely six months or less from the date of
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the order for healthcare, cosmetic s, and fragrances items and three months or less from the date of order
for all other product categories — our customers may contact our cust omer service team for special
arrangements.
For products purchased on Tmall Store, WeChat Store and JD Store, we provide refund or
exchange for products with quality issue. For refund or exchange of products without quality issue, we
normally offer refund after deducting a service charge of 20% of the invoiced value and the delivery fee
incurred. Customers may contact our customer service within seven days where products arrive with
defective packaging or quality issue.
Where we identify quality issues or defects in products originated from the manufacturing process
or other defaults on the part of our suppliers, we would seek reimbursements on product procurement
costs and related expenses from the relevant supplier. If the affected products have been sold to our
customers, we would initiate a recal l and seek compensation for expens es incurred in such recall actions
from the relevant supplie r. During the Track Record Period, w e did not experience any instance of
product recall or receive any liability claims due to product quality or defects.
Customer complaints
Our customers can lodge complaints with us via so cial media platforms such as WeChat, Facebook
and Instagram and WhatsApp, as well as by email and telephone.
During the Track Record Period, we received compl aints from customers, which mainly related to
products description, product quality, staff services and/or requests for refund or exchange. During the
Track Record Period, we recorded a complaint rate of 0.00012%, 0.0003% and 0.00006% during
FY2023, FY2024 and FY2025, respectively. We received 7 complaints
(note) involving approximately
HK$5,200 during FY2023, 26 complaints (note) involving approximately HK$28,000 during FY2024 and 7
complaints (note) involving approximately HK$8,500 during FY2025, which our Directors believe are not
abnormal in the industry. The complaints were typi cally resolved after an exchange of product or a
refund, and some were resolved after we provided more information or explanation to the relevant
customer. We did not pay any monetary compensation and did not suffer from any legal or other
consequences in connection with such complaints during the Track Record Period and up to the Latest
Practicable Date. None of such complaints have any material adverse impact on our Group or our
business operation. Given the vast number of customers served by our Group on multiple channels on a
daily basis, our Directors believe that it is not uncommon for us or other market players in the beauty,
health or pharmaceutical product retailer sector to rece ive feedback of different nature and complaints
from consumers from time to time, which do not necessa rily represent any critical issue with products or
service quality and product authenticity.
Our Directors are of the view that such feedb ack and complaints hei ghten our awareness in
customers ’ expectation and drive us to ensure product quality and deliver quality services. During the
Track Record Period, we did not experience any material claim for product returns or exchanges due to
product quality defects, product authenticity or damages or any related product liability claims.
Note: This refers to traceable complaints made to us in writing or referred to us by the relevant authorities with the name and
contact detail of the complainant and sufficient details on the subject matter provided.
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SETTLEMENT AND CASH MANAGEMENT
The majority of our customers settle their purcha ses at our retail stores by cash, credit card and
payment by way of Octopus Card and other contactless digital payment methods. We have engaged an
Independent Third Party smart payment solutions agent to handle and process payments for orders
placed via our online sales platform s. For payments made in Renminbi from our customers located in
Chinese Mainland, the smart payment solutions agent will convert the su m of money collected in
Renminbi into equivalent Hong Kong Dollars and deposit the equivalent Hong Kong Dollars net of the
transaction fee charged by the smart payment soluti ons agent directly into our designated bank account
located in Hong Kong.
Cash and cash management
In light of the daily handling of cash receipts, we have instituted a comprehensive internal control
framework to handle and manage cash. Each retail location is equipped with a point-of-sale (POS)
system, which records and monitors all orders, transactions, and sales through all means of payment. To
restrict unauthorised disbursements, all store personnel are generally prohibited from withdrawing cash
from the POS terminals unless prior approval from the store manager has been obtained and only for
business purposes. Upon the conclusion of a business day, designated personnel is required to perform a
physical count of all cash contained within the POS terminal and such count must be confirmed and
reconciled against the sales summary generated by the POS system. Any identified variances between
the physical cash count and the system record must be investigated. All cash r eceived is to be secured in
a cash deposit safe until its transmission by the security company which will verify the amount and
deposit into our bank account. A formal daily settlement record, detailing sales figures, cash received,
and transaction data, must be completed b y the closing cashier prior to the store ’s closure each business
day. The corporate accounting department performs a daily reconciliation for each retail outlet. This
process involves a cross-verification of the cash b alances as recorded in the POS system against the
authenticated bank deposit records for the designate d company accounts. This ensures that all daily cash
receipts are deposited in full into the authorised bank account by the next succeeding business day.
F u r t h e r m o r e ,a l lr e t a i lp r e m i s e sa r em o n i t o r e db yac losed-circuit television ( CCTV) surveillance system
operating on a continuous 24-hour basis to provide additional security and oversight.
We had not identified any incident of material discrepancy or variance between the results of our
physical cash counts and system records during the Track Record Period and up to the Latest Practicable
Date. We have established a banking and cash man agement policy. Having reviewed our relevant
policies and practices, the independent internal control review report has not identified any internal
control deficiencies in relation to our sales involving cash settlements.
Our Directors confirm that during the Track Recor d Period and up to the Latest Practicable Date,
we had not encountered any mater ial cash misappropriation.
Credit cards and other contactless digital payment methods
Our retail stores accept credit cards from all major credit card issuers for settlement of purchases.
The settlement terms with credit card companies are u sually within two business days after the billing
date which is also the service rendered date. During the Track Record Period, service charges ranging
from approximately 1.3% to approximately 1.4% on t he transaction amount wer e generally imposed by
the credit card issuers, which the Directors consider to be in line with prevailing market rate.
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Octopus Card
Octopus card is a convenient means of settlemen t which is a popular choice for customers with a
relatively low purchase amount. We accept Octopus card payment at our retail stores and on our Official
Online Store. We believe that the acceptance of Octo pus card at retail stores can enhance our operational
efficiency and save time from depositing cash into banks. For FY2023, FY2024 and FY2025 and
8MFY2026, the total service fees paid by us to the operator of the Octopus card (including payments
collected from retail stores and through our Official Online Store) amounted to approximately HK$2.4
million, HK$2.7 million, HK$3.0 million and HK$2.8 million, respectively.
Membership reward points
To boost brand loyalty and encourage repeated purchase, we have established a membership
reward points scheme in which our registered members can accrue reward points from their purchases,
where the reward points may then be applied to redeem digital cash coupons on our mobile app for the
settlement of their future purchases. According to the prevailing terms of our membership scheme, each
registered member may receive one point upon every purchase of HK$10. A cash dollar coupon with a
value of HK$5 can then be redeemed by every 100 reward points, HK$15 can then be redeemed by
every 300 reward points, HK$50 can then be redeemed by every 500 reward points ( ‘‘Cash Dollar
Redemption Rate ’’). All reward points accrued during a y ear will expire by 31 December of the same
year.
Third-party payment solutions agents and online platforms
To facilitate smooth trans actions for our customers placing orde rs via our Official Online Store, we
have engaged an Independent Third Party payment s olutions agent to collect and process payments for
us. The payment solutions agent connects our online sales platforms to its checkout page, allowing our
customers to make payments directly on the page using their preferred payment methods, without being
redirected to other pages. Through the merchant portal, we are able to access real-time electronic
payment transaction details for better managem ent and streamline accounting and reconciliation
processes. For our other online sales platforms namely Tmall Store, WeChat Store and JD Store, the
relevant platform will charge us a service fee ran ging from 1% to 8% per transaction during the Track
Record Period. Such platforms typically collect payment from the customers upon their purchase and
deposit the proceeds net of their service charges to our Group ’s designated bank account periodically.
For FY2023, FY2024 and FY2025 and 8MFY2026, the total service fees paid by us to the Independent
Third Party smart payment solutions agent and the platforms for handling and processing our online
transactions were approximately HK$1.5 million, HK$1.4 million, HK$1.6 million and HK$1.3 million,
respectively.
PRICING POLICY
One of our key business strategies is to offer our wide range of products to our customers at
competitive prices. We believe that our strategy to offer our products at competitive prices has been
instrumental to the growth of our business and our r eputation. Procuring a substantial portion of
products from reliable suppliers other than Official Channel Suppliers allows us to stay flexible and
competitive in terms of pricing. We believe that as such suppliers typically incu r less costs than Official
Channel Suppliers in the upstream, for example through incurring less promotion expenses and lower
stock commitment, they are able to supply products to us at a lower cost, thereby allowing us to offer to
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our customers products at a lower retail price. Separ ately, we aim to achieve higher profitability for
products which are not as commonly available and our private label products which allows us to
maintain gross profit margin as the price competition for such products among co m p e t i t o r si sl e s sf i e r c e .
Our pricing strategy takes into account various factors including product categories, uniqueness,
supply quantity, current market demand and the strategic goals of our Group. We also adopt special
pricing strategies for promotional items.
When determining the prices of our products, we adopt a rigorous approach that utilizes both
objective data and subjective judgment. As our products are primarily fast-consumer goods with a
number of substitutes available on the market, our customers are generally price-sensitive. We adopt a
flexible pricing strategy which aims to balance and maximize our competitiveness, customer attraction
and profitability in a highly competitive market. We generally adopt a cost-plus pricing policy for the
majority of our products. For popular items from well-recognised brands, we typically adopt a more
aggressive pricing approach with a lower expected average gross profit margin. This enables us to offer
highly competitive prices that typically align with or are below the prices of other retailers in order to
drive customer flow and sales volume, and expand our market share. We regularly monitor the prices of
these high-turnover products and adjust their prices with reference to market dynamics. For less popular
brands such as other imported brands and less well-known local brands with lower sales velocity and
price sensitivity, we typically adopt prices that targ et to achieve higher profit margins. This helps to
support our overall profitability. We believe this flexible strategy balances volume-driven
competitiveness on flagship items a nd secures stronger margins on diff erentiated or niche offering. We
regularly review our prices, taking into account prevailing market conditions, promotional needs and
customer expectations.
Consumers pattern for our products are heavily influenced by price and are highly responsive to
promotional incentives, including discounts, limited-time offers, and discounted bundle deals.
Consequently, competitive pricing and volume-based promotions are critical to attracting customers. For
instance, we regularly offer products at special prices and host weekly flash sales to drive store traffic
and incentivise purchases.
We regularly conduct market surveys to stay informed of pricing trends and competitors ’ activities
to ensure that our prices remain co mpetitive. Our experienced sale s team also regularly monitors and
analyses sales data gathered from each retail store a nd our online sales platforms to evaluate customers ’
needs and demands for different products in different areas and across platforms. Such data will then be
compared against procurement cost in order to deter mine the profit margin of each product and whether
adjustments are required at the procurement leve l. Combined with feedback and insights from our
frontline salespersons, we make informed and strategic pricing decisions for our products and will make
adjustments flexibly in response to market dynamics.
For parallel-imported products that are also avail able through official dealer channels, we adopt a
slightly lower pricing strategy as compared to thos e official dealer channels to project a high value-for-
money perception among customers.
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SEASONALITY
We observed that during the Track Record Period , we experienced peak seasons in terms of sales
revenue during the Chinese New Year holiday period, Christmas festive period and Chinese ‘‘Golden
Week ’’holiday periods in May and October. We generally experienced relative low seasons in May
(after the labour day ‘‘Golden Week ’’ holiday period) and June. Our Directors believe that this
seasonality pattern is consistent with the overall retail industry in Hong Kong.
INVENTORY MANAGEMENT, WAREHOUSING AND LOGISTICS
Inventory management
Our inventories consist primarily of finished goods procured from our suppliers. We have
established inventory policies, management procedures and provide adequate training sessions on
inventory management to our warehouse staff me mbers. Our procurement department manages our
inventory levels at our warehouses and retail stores by constantly monitoring our stock-holding level,
products flow, sales orders and observing the demand and trends regarding different products by
working closely with our frontline sales personnel at retail stores. Based on real-time stock-holding data
of our retail stores, sales orders and forecast inf ormation, our procurement department prepares
inventory plans in advance which is updated periodically, and monitors our inventory level on a daily
basis. Reflecting inventory data from both our retail stores and at warehouse, our integrated enterprise
resource planning ( ‘‘ERP’’) system will alert our procurement department about items that fall below
minimum stock-holding level which will then arrange placing orders with the relevant suppliers to
restock such items.
We procure products from our suppliers once an item falls below our pre-determined minimum
stock-holding level at our warehouse. Local suppliers typically provide a more stable source of supply
with shorter lead time, hence we generally procure inventory at a volume sufficient for four to six
weeks ’ sales per order. In contrast, due to uncertainties with international logistics and with longer lead
time, we typically procure inventory from our overseas suppliers in volume that represents four to five
months of sales of such products. We prepare sales forecast and stock ordering plan monthly with
reference to various factors including the inventory level and movement of our products, the expected
sales and production and delivery lead time, any seas onal effects which will cau se supply interruption
(e.g. during Chinese New Year period) or demand surge for particular products, promotion plans,
consumers ’ feedback and market observations. We strive to maintain a level of inventory capable of
supporting our business operations while minimizing obsolete or expired inventory through constantly
monitoring our inventory level against historical an d recent sales pattern and turnover days of different
items. Our warehousing management system provides information such as stock description, quantities
and expiration dates of products to our warehousing team, who, in particular, will be alerted to items
with a closer expiry date so that they can prioritiz e sending such items to retail stores and assess
whether the marketing team shall be engaged to launch special promotion events for such particular
products. In addition, our area managers and area supervisors will also report the stock description and
quantities in their retail stores with expiry dates before the end of a calendar month. To ensure diligent
stock-taking and identification of items approaching expiry dates, the presence of any unreported
obsolete products at retail stores will affect the eva luation of performances at re tail store level pursuant
to our internal assessment policy.
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At the retail store level, our integrated ERP system allows us to track the sales, inventories level
and movement of each SKU in each of our retail stores on a real time basis. We pre-set inventory
maintenance level for each SKU in our retail store wit h reference to the differe nt sizes of our individual
retail store, the historical and recent store turnover days of a particular SKU and the delivery circle for
replenishment. Based on the pre-set inventory mai ntenance level for each SKU in each retail stores, the
automatic stock replenishment function of our integrated ERP system alerts our warehouse team for each
SKU falling below the minimum stock-holding level. Our store managers are responsible for reviewing
and confirming the stock-holding information to ensure timely replenishment of products and manually
adjust replenishment req uests where necessary.
We do not have a standard inventory retention period for our inventories due to the wide range of
products we offer. For reference, we generally maintain an average inventory level of approximately 1.1
months at a retail store level and approximately 2.0 months at our Company level as a whole. The average
inventory level is measured by taking the current inventory valued at cost and divide it by the average cost
of sales for the preceding three months. Our products are sold on a first-in-first-out basis. To minimize the
risk of inventory backlogs, we conduct monthly, quarterly and annual reviews of our inventory levels. We
also carry out physical stock counts and stock inspections regularly to identify damaged products or
expired products, which are disposed of or for which provisions are made. We make provisions for our
inventory based on an assessment of net realisable value taking into account historical sales record, aging
analysis, marketing and promotion plans and subsequent selling prices of the inventories.
With respect to food safety and import control, our procurement team has designated specialists
responsible for documenting relevant regulatory restrictions. During the importation process, our
procurement staff and suppliers conduct thorough inspections of all imported components to prevent any
compliance violations.
As at 31 March 2023, 2024 and 2025 and 30 November 2025, the balance of inventories amounted
to approximately HK$176.0 million, HK$225.4 million, HK$336.0 million and HK$402.4 million,
respectively, representing approximately 61.1%, 57.3%, 77.0% and 60.6%, respectively, of our total
current assets for the corresponding year or period end date. The average turnover days of inventory
(Note)
of our Group for FY2023, FY2024, FY2025 and 8MFY2026 were approximately 63 days, 51 days, 61
days and 63 days, respectively.
For FY2023, FY2024 and FY2025 and 8MFY2026, we wrote off inventories of approximately
HK$0.9 million, HK$0.4 million, HK$1.2 million and HK$0.4 million, respectively, as a result of
disposal of damaged or unsold or expired products a nd stock loss, representing approximately 0.11%,
0.03%, 0.07% and 0.03% of our total cost of sales for the respective periods.
Warehousing and logistics
We store the majority of our inventories at our warehouse located in Fanling, Hong Kong which is
leased to us by a company wholly-owned by Mr. Tse, and therefore a connected person of our Group.
This warehouse in Fanling offers storage space amounting to a total floor area of approximately 113,510
sq.ft. We strictly follow regulator y requirements to store prescribed pharmaceuticals separately. We also
Note: Average turnover days of inventories for FY2023, FY2024 and FY2025 and 8MFY2026 is derived by dividing the
arithmetic mean of the opening and closing balances of inventories for the relevant period by cost of sale and multiplying
by 365/240 days.
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lease warehouses in Fukuoka, Japan and Gyeonggi-do, South Korea from Independent Third Parties in
line with the businesses of our offices in Japan and Korea. The table below sets out the details of our
warehouses as at the Latest Practicable Date:
Premise Location Lease Period GFA
Designated
storage
capacity
(sq.ft.) (cubic meters)
(Note 2)
Lung Fung Group Centre Room G1 and G2, G/F, 23 Yip Cheong St,
Fanling, Hong Kong (Note 1)
Room G1:
From 10 February 2025
to 9 February 2027
4,252 693.6
Room G2:
From 1 April 2025 to
31 March 2027
1,600 N/A (Note 3)
Lung Fung Group Centre Room 101 and 102, 1/F, 23 Yip Cheong St,
Fanling, Hong Kong (Note 1)
From 1 April 2026 to
31 March 2028
28,226 2,061.6
Lung Fung Group Centre Room 201, 2/F, 23 Yip Cheong St, Fanling,
Hong Kong (Note 1)
From 1 April 2026 to
31 March 2028
12,832 2,181.6
Lung Fung Group Centre Room 301 and 302, 3/F, 23 Yip Cheong St,
Fanling, Hong Kong (Note 1)
From 1 April 2026 to
31 March 2028
28,226 3,253.2
Lung Fung Group Centre Room 401 and 402, 4/F, 23 Yip Cheong St,
Fanling, Hong Kong (Note 1)
From 1 April 2026 to
31 March 2028
28,226 1,710.0
(Note 4)
Lung Fung Group Centre Room 501 and 502, 5/F, 23 Yip Cheong St,
Fanling, Hong Kong (Note 1)
From 1 April 2026 to
31 March 2028
16,000 1,232.4
MJ Logipark Fukuoka 1 Room 3/F, 369-8 Inagi, Oaza Ino, Umi-cho,
Kasuya-gun, Fukuoka, Japan
From 1 July 2025 to
30 June 2028
1,165 84.0
General Logistics
Warehouse
770-112-2-3, Gobong-ro, Ilsandong-gu, Goyang-
si, Gyeonggi-do, Republic of Korea
From 1 July 2024 to
30 June 2027
342 24.9
Note:
1 Our Group leased the premises from Huge Max (Hong Kong) Limited, a company wholly-owned by Mr. Tse, our
executive Director, chairman of our Board, chief executive officer and one of our Controlling Shareholders.
2. Designated storage capacity is the total volume of the relevant warehouse available for storage purpose, and is
derived from (i) the actual floor area that had been or has been generally used for storage purpose ( ‘‘Actual Storage
Floor Area ’’) in each of the warehousing premises during the relevant leased period or licensed periods; (ii) the
proportional Actual Storage Floor Area designated for the zone for storage and the zone for storage handling
inventories in different warehousing premises; (iii) the d ifferent height of pallets of inventories adjusted with
reference to the height of ceilings of the respective warehousing premises; and (iv) the different stacking up
arrangements within different warehousing premises designed in accordance with the height of the ceilings of the
respective warehousing premises and the products ’ tolerance level to stacking up.
3. Room G2 was designated for quality control of in-bound products such as product inspection and thus excluded for
the purpose of estimating designated storage capacity.
4. A portion of Room 401 and Room 402 was designated for packaging purpose and thus excluded for the purposes of
estimating designated storage capacity.
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As at the Latest Practicable Date, we had a fleet of eight trucks to carry out delivery duties. Our
delivery fleet delivers stock from our warehouse to all our retail stores located in different districts on a
daily basis.
During the Track Record Period and up to the Latest Practicable Date, we engaged Independent
Third Party logistics service companies to provide logistics services to our Group, primarily for the
provision of order fulfillment and delivery service s to the end-customers located in the PRC for orders
placed through our e-commerce platforms in the PRC. Set out below are the key terms of the service
agreement entered into between us and ou r main logistics service provider (the ‘‘Logistics Service
Provider ’’):
Scope of services: Services provided by the Logistics Servi ce Provider to us include receiving and
picking up parcels, warehousing, sorting and packing within Hong Kong and handling cross-border
delivery of parcels into Chinese Mainland. In practice, we typically transport parcels to a warehouse
operated by the Logistics Service Provider in Hong Kong, who will then be responsible for forwarding
the parcels to designated bonded w arehouse for entry into Chinese M ainland, order processing and
sorting within the bonded warehouse, managing cus toms clearance and delivering the parcels to our
customers in Chinese Mainland.
Duration: 1 year (renewable automatically unless either party objects)
Fees: The Logistics Service Provider charges serv ice fees including custom s declaration fees per
order, warehouse tally and handlin g fees per item, per box or per consignment, order processing fees,
postal and delivery fees based on w eight, packaging material costs an d fees relating to picking up,
loading and unloading of goods. Pursuant to the servic e agreement, we are required to prepay the service
fees to the Logistics Service Provider before they w ill render the services and process the parcels.
Termination: The service agreement can be terminat ed if both parties agree in writing. The
Logistics Service Provider may unilate rally terminate the service agreement.
Our Directors confirmed that we had not experi enced any material disputes with the Logistics
Service Provider during the Track Record Period and up to the Latest Practicable Date.
Our warehousing and logistics team
Our warehousing and logistics team is responsible for the operations of our warehouse and delivery
fleet, including (i) coordinating the reception and s torage of new stock arriving at our warehouse, (ii)
performing quality control checks of new stock arriving at our warehouse for defects or damage, (iii)
sorting the stock by category and allocating stora ge area, (iv) checking product labels and affixing
supplemental labels for specific products (e.g. food and pharmacists products), (v) monitoring the stock
level and expiry dates of inventories through our warehouse management system, (vi) scheduling and
loading stock onto the delivery trucks for delivery to our retail stores and to our third party logistics
service providers and (vii) delivering stock from our warehouse to our retail stores.
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INFORMATION TECHNOLOGY
We have adopted an integrated information technology systems to support the various aspects of
our business operations, including procurement, sales, inventory management of both our warehouse and
retail stores, warehousing and logistics facilities , stock replenishments, m embership management and
other administrative functions.
Our integrated system is deployed to centralize and manage key operational functions, including
procurement, sales, inventory, supply chain, and membership management. It provides management with
real-time access to critical sales data and key performance indicators — such as stock descriptions,
variety, inventory levels and overall store performance — which are essential for evaluating product
marketability, cust omer purchasing preferences, and market tr ends. This capability enables management
to efficiently adjust product assortments, initiate targeted promotional offers, and update retail and
promotional pricing promptly. The system features an automated stock replenishment function for
individual retail stores which is linked to our warehouse. This function alerts our warehousing team for
stock replenishment needs based on pre-set invent ory parameters, while allowing both head office
management and retail staff to simultaneously monitor replenishment status which enhances operational
efficiency. The system f acilitates the packing and delivery of re plenishment items requested by our
individual retail stores so that low-stock items can be replenished as soon as the same day or the next
business day.
The system also serves to govern and manage all warehousing and logistics operations in relation
to our inventory. Its core functions include recording detailed inventory information such as stock
descriptions and storage locations, as well as identifying inventory shortages, slow-moving stock and the
expiration dates of the relevant SKU. This functiona lity facilitates the priority packing and delivery of
products that are close to their expiration dates, adhering to the first-expiry-first-out (FEFO) principle.
We have a separate financial syst em to record and track key financial data relating to our business
operations for accounting purposes which supports our Group ’s financial management. Sales invoices
from our wholesale business and procurement orders are recorded daily on the system, while sales
receipts from our retail stores an d online sales platforms are updat ed monthly on the system by our
finance department after they have processed and co nsolidated the relevant d ata. Our financial system
allows our management team to keep track of the perfo rmance of each sales channel and each individual
store periodically.
DATA SECURITY
We generally do not collect personal information of walk-in customers upon their purchase in-
store. We collect personal informa tion such as name, contact number, email address, delivery address,
credit card information and IP location of custome rs who purchase through our Official Online Store.
Official Online Store
For the operation of our Official Online Store, w e collect such information primarily for the
purposes of processing and fulfilling online orders, issuing invoices and providing delivery slips,
updating our internal records, conducting market research, conducting customer data analysis and
handling customers ’ complaints and account inquiries.
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From the beginning of the Track Record Period and up to November 2025, all such personal
information data collected through our Official Online Store was encrypted and maintained under strict
confidence by the service provider responsible for maintaining our Official Online Store, which was an
Independent Third Party located in Hong Kong. Since November 2025 and up to the Latest Practicable
Date, all such personal information data collected through our Official Online Store was encrypted and
maintained under strict confidence with the service provider with whom we have subscribed for data
storage services, which is an Independent Third Pa rty located overseas. U pon enquiry with the data
storage service provider, due to the security and operational reasons and as a standard practice, the
service provider is not able to disclose service locations and granular physical details such as the
specific data centre facility, rack or physical hardware. We also collect personal information from
registered members, including name, gender, contact number and email address, for the purpose of
creating membership accounts wit hin our mobile app. During the T rack Record Period and up to the
Latest Practicable Date, all such personal information data coll ected through our mobile app was
encrypted and maintained under strict confidentiality by the service provider responsible for maintaining
our mobile app, which is an Independent Third Party located in Hong Kong. Access to all such personal
information data is restricted to designated staff members in our marketing and information technology
teams, with access rights which are tiered and grante d strictly on a need-to-kn ow basis commensurate
with an individual ’s job responsibilities, and the service providers. As advised by our Hong Kong Legal
Counsel, the above arrangements are in compliance with applicable Hong Kong laws. As advised by our
Hong Kong Legal Counsel, from the Hong Kong law perspective, cross-border transfer of personal data
is not, in itself, prohibited, and compliance is primarily assessed by reference to the Data Protection
Principles under the PDPO, including requirements relating to purpose, use, security and retention of
data. Hence, the ultimate destination of data is not determinative under the personal data and privacy
protection laws and regulations in Hong Kong.
E-commerce platforms in the PRC
With regards to our operations on e-commerce platforms in the PRC, we conducted it via the e-
commerce platforms collect personal information suc h as name, contact number, email address, delivery
address, payment information and IP location of customers when customers from the PRC purchase
through such e-commerce platforms in order to fulfill the transaction. Certain transaction and personal
data obtained by the PRC e-commerce platforms are retained by the e-commerce platforms in the PRC
and our PRC subsidiary. Such transaction and pers onal data are accessible by our Logistics Service
Provider and our Group to the extent required to fulfill customers ’ orders which, according to our PRC
Legal Advisor, is permissible and in compliance with applicable PRC laws relating to cross-border data
transfer. Pursuant to our data privacy policy published on our website and Tmall Store, WeChat Store
and JD Store, all users of our services are deemed to have given us their consent to pass over certain
personal data to our third-party service providers where such disclosure is incidental to providing the
required service to the user.
Pursuant to the data privacy policy of ou r Official Online Store, we retain visitors ’ data for not
more than 12 months and retain online customers ’ data for not more than 85 months. We will destroy a
user ’s data upon the user ’s request. For our online stores on Tmall Store, WeChat Store and JD Store, we
are bound by the service terms of the relevant pla tforms. The platforms g enerally retain users ’ personal
information only for the period necessary in the PRC to render the relevant service and will destroy or
anonymize users ’ personal information as required by applicable law after the retention period. The
platforms generally allow users to request for destru ction of personal data stored on such platforms. Our
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Directors are of the view that the Group ’s internal control measures on data privacy and security are
adequate. According to our PRC Legal Advisor, our Group has complied with the relevant laws and
regulations on data security and dat a export in all material respects a nd implemented necessary measures
such as internal encryption to e nsure data storage security.
Based on the above, our Directors confirm that our Group have not breached any applicable data
privacy or data security laws or regulations in Hong Kong and the PRC, or recorded any material
information security incidents, data l eakages or unauthorised use of customers ’ personal information
during the Track Record Period and up to the Latest Practicable Date. As advised by our Hong Kong
Legal Counsel and the PRC Legal Advisor, we had c omplied with relevant d ata privacy and security
laws and regulations, including those on cross-border data transfer, in Hong Kong and Chinese Mainland
respectively, namely the jurisdictions that we conduct retail business operations, during the Track
Record Period up to the Latest Practicable Date.
Our commitment to data security is formalized in our internal dir ectives for all staff members,
which outlines the policies and guidelines for the protection of customers ’ personal data. The directives
specify the proper procedures for data collection and confidentiality obligations, in particular we require
our staff members to only collect personal data for specific purposes and must be conducted in a lawful
manner, access to and use of data must be based on legi timate business reasons and must not be used for
private purposes, and employees must immediately report to their direct supervisor in the event of a
privacy data incident. We also require that only the minimum amount of data necessary for achieving the
specified purposes shall b e collected and the reproduction or transmission of personal privacy data
externally is strictly prohibited.
During the Track Record Period, we have complie d with all applicable personal data and privacy
protection laws and regulations in all relevant juris dictions and have not expe rienced any incidents of
material data leakage.
COMPETITION
We compete with other individual and chain pharmacist stores, individual and chain cosmetic
stores and imported cosmetics chain stores. These com petitors share similar business characteristics with
us making it easy for consumers to make comparisons in terms of product range and service quality.
Although the pharmaceutical retail market is mature and well-developed in Hong Kong, our Directors
believe that there remains significant potential for our Group to further expand by gaining market share
from our competitors.
Our Directors believe that our Group possesses competitive advantage in terms of product offering,
pricing strategy and shopping experience which will help increase our market share among our
competitors. In terms of product offering, we strive to offer a diverse product range which is frequently
updated to meet customers ’ needs. For instance, we sold over 49,000 SKUs of products over the Track
Record Period and we typically stock over 9,000 SKUs per store; supported by our procurement office
in Japan, we strive to identify new and latest products overseas and introduce them to our customers —
in this regard we have introduced over 6,500, 7,700, and 6,000 new SKUs for FY2023, FY2024 and
FY2025 and over 4,300 new SKUs for 8MFY2026. According to Frost & Sullivan, there has been a
surging demand for one-stop shopping experience am ong local consumers in recent years as busy urban
lifestyles and limited spare time drive demand for a single retail destination that combines beauty
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products, health products, pharm aceutical products, and household and daily essentials and foods in one
store. We actively broaden our product categories and refresh our product offering to meet this one-stop
demand and, over the years, we have evolved from a tr aditional pharmacy into a comprehensive lifestyle
hub by offering an extensive range of nutritional supplements, prescription and over-the-counter
medications, premium beauty products and everyday household items.
In terms of pricing strategy, we strive to offer our products at competitive prices, which is
supported by managing our procurement cost through our established and trusted network of suppliers.
Leveraging economies of scale, our retail network and our strong customer base, we have maintained a
solid relationship with suppliers such as brand owners and other distributors to ensure we have timely
and reliable sources of supp lies at a competitive cost.
In terms of shopping experience, we strive to offer a spacious environment for customers who can
take their time to explore and compare different items and select the right items for their need. The UFA
of our retail stores ranges from approximately 570 sq.ft. to 12,900 sq.ft. per store as at the Latest
Practicable Date.
Please refer to the section ‘‘Industry Overview ’’ for more information about the competitive
landscape of our business.
EMPLOYEES
As at 30 November 2025, we had 922 employees in total. The following table sets forth the
number of our employees categorized by function as at 30 November 2025:
Function Number
Operations 628
Logistics and Warehousing 167
Purchasing 30
Personnel employed by our Guangzhou office 21
Security 17
Sales and Marketing 19
Finance 12
Human Resources and Administration 10
Information and Technology 8
General Office 4
Business Development 3
Management 3
Total 922
Except for personnel employed by our subsidiary in Guangzhou, China, all of our employees are
located in Hong Kong. During the Track Record Period and up to the Latest Practicable Date, we
employed a small number of foreign labour to support our warehouse and frontline operations under the
Sector-specific Labour Importation Schemes initiated by the Hong Kong government. In compliance
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with the applicable labor laws, we enter into individual employment contracts with our employees
covering matters such as wages, bonuses, emplo yee benefits, confidentiality obligations, non-
competition and grounds for termination.
During the Track Record Period and up to the La test Practicable Date, we did not employ any
employees in Japan and Korea. The personnel who serve the procurement office in Japan and the
warehouse in Korea provide their services under a contractor agreement we entered into with Supplier A
and the relevant personnel are contractually under direct supervision and direction of Supplier A while
providing services to our Group through managing the respective operations of the procurement office
and warehouses.
Recruitment
We regularly evaluates our manpower needs amid the business environment and the continuous
expansion of our business. We are active in talen t recruitment to match the needs of our business
operations. For our main business operations in Hong Kong, we recruit via both online and offline
channels — we regularly participate in large-scale job fa irs organized by the Labour Department and
other organizations, hold recruitment days at desig nated stores, publish rec ruitment advertisements
online and recruit interns from colleges and universities. To bridge labour shortage, we have also
participated in the Hong Kong Government ’s Sector-specific Labour Importation Schemes and imported
foreign labour to assist our business operations, mainly in the logistics department.
Retention
In line with market practice, we provide incentives, benefits and promotion opportunities to our
employees. The remuneration package of both full-time and part-time employees generally includes
basic salary and discretionary bonus. The basic salary is generally based on the particular employee ’s
work experience, academic and professi onal qualifications (where appl icable) and the prevailing market
salary levels. The discretionary bonus is generally based on, among other things, the operational
performance of the relevant retail store which the e mployee serves (or the financial performance at
group-level if he/she assumes a gr oup-level position) and the employee ’s work performance and
assessment results.
The Directors believe that the salaries of our sta ff members and senior executives are comparable
to those offered by our competitors in the market. To enhance our appeal and to retain our staff
members, we offer a competitive remuneration package for our staff members comparable to our
competitors. We also provide competitive salari es and stock incentive plans to our key employees to
foster the growth of our Group.
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Training
We invest in continuous education and training programs for all staff members to enhance their
skills and knowledge as well as keep them vigilant to issues and regulatory requirements. Our Group has
implemented a structured system that provides regular trainings and guidance for staff members at
different roles. We provide general trainings such as store safety awareness trainings, work safety
trainings and anti-theft and anti-fraud trainings to employees and provide in-store trainings for new
employees as part of their induction. We also provide sp ecialized training session s to specific categories
of employees depending on their needs and job nature, including:
. all customer-facing personnel undergo mand atory training on the in tricacies of the Trade
Descriptions Ordinance. This includes imme rsive workshops on accurate product
representation, avoiding misleading statements, and the correct handling of supplier
information, empowering them to uphold the highest standards of consumer transparency;
. we host dedicated training sessions for our procurement and logistics teams led which focus
on compliance with the Import and Export Ordinance and Food Safety Ordinance, covering
various aspects including license acquisition, regional import restrictions and supplier
verification techniques to mitigate regulatory risk;
. we host training sessions for designated staff on the requirements for nutritional labelling in
compliance with the Public Health and Municipal Services Ordinance.
We require all our employees, especially those who are involved in sales and marketing and
business development activities, to abide by our anti-bribery, anti-corruption and anti-monopoly
compliance requirements and applicable laws and regulations. We closely monitor our employee ’s
compliance with these policies and we have an internal whistle-blowing policy to facilitate the reporting
of suspected misconduct.
During the Track Record Period and up to the Latest Practicable Date, there had not been any
strikes, labour disputes or industrial action which had a material effect on our business. As at the Latest
Practicable Date, save as disclosed in ‘‘ — Business — Legal Proceedings ’’we had complied with all
statutory labour insurance requir ements applicable to us under applic able laws in all material respects.
Our Directors confirm that during the Track Recor d Period and up to the Latest Practicable Date,
(i) we had not experienced any material disputes with our employees or any disruption to our operations
due to labour disputes; (ii) we had not experienced an y difficulties in the recruitment and retention of
staff; and (iii) there was no labour union established by our employees. In the future, we plan to recruit
more high-end information technology talents to further improve the digitalization of some of our
workstreams to improve operational efficiency.
INSURANCE
Our Group maintains insurance coverage for (i) statutory employees ’ compensation for all full time
and part time employees; (ii) contractors ’ public liability for all interior and exterior decoration,
renovation, repairs, maintenance works and reinstatement work for our retail stores; (iii) shop package
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insurance to cover contents and stocks and third party public liability in the retail stores; (iv) stock
coverage for the stocks in our office and warehouses; (v) business interruption coverage, (vi) medical
insurance for our full-time employees; and (vii) cargo and logistics coverage.
For FY2023, FY2024 and FY2025 and 8MFY2026, we incurred insurance expenses of
approximately HK$1.0 million, HK$1.5 million, HK$2.1 million and HK$1.9 million, respectively.
During the Track Record Period, we received a total of HK$0.28 million as full and final
settlement from an insurance company as compensation for our loss of stock due to a fire which broke
out at the warehouse of our service provider.
We review our insurance policies from time to time for adequacy in the breadth of coverage. Our
Directors consider that our insurance coverage is in line with the normal coverage in the industry and is
adequate for our operations.
HEALTH AND WORK SAFETY
In accordance with the local regulatory requi rements in Hong Kong, our Group is dedicated to
providing and maintaining a safe working environment for all employees. To ensure our operations are
conducted safely and that our staff are equipped with essential safety knowledge, we have implemented
comprehensive workplace safety guidelines across all retail stores. These guidelines articulate our work
safety policies and are designed to promote a culture of safety at all work sites. Additionally, we
conduct internal training sessions to educate emplo yees on the importance of health and safety, as well
as the correct practices to adhere to in the workplace. Our Directors are confident that these initiatives
will effectively reduce both the likelihood and s everity of workplace inju ries. Our Human Resources
Department is responsible for reporting and handling w orkplace incidents and ensures that all injuries
are properly documented. In the event of unfortunate accidents, we will arrange necessary medical
treatments to any injured employ ees and follow up with insurance c laims according to the relevant
policies. We aim to safeguard the well-being of our employees and protecting the interests of our Group.
During the Track Record Period, there were 15 employees ’ compensation claims and third-party
public liability claims against our Group. Having considered (i) the nature of the relevant claims; and
(ii) the fact that all such employees ’ compensation claims and third part y liability claims are expected to
be fully covered by the insurance policy taken out by our Group, our Directors confirmed that we did
not have any material accidents in the course of our o peration nor any material accidents related to the
health or safety of our employees or customers and we had not received any material claims for personal
or property damage by our employees or customers. The 15 claims generally involved workplace
accidents at our retail stores and w arehouse, including sl ips and falls, cuts from tools and injuries
resulted from handling goods or machinery. Of these 15 claims, 14 cases had been fully resolved or
settled. The employee involved in the outstanding case remained on sick leave as at the Latest
Practicable Date and our Directors expect to settle the case with the relevant employee pending an
assessment on the injury to determine the appropriate amount of compensation. The amounts being
claimed ranged from approximately HK$1,280 to approximately HK$154,000, reflecting variations in
injury severity and sick leave duration. All of the above claims (including the outstanding claim) are
fully covered by insurance purchased by our Group. In an attempt to reduce the likelihood of such
incidents, we have adopted enhan ced measures to heighten employees ’ work safety awareness such as
providing on-the-job trainings, putting up reminder notices at work areas and installing additional tools
and equipment to assist our employees. During the Track Record Period, we settled one case of third-
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party public liability claim in relation to an allege d injury suffered by a customer at one of our retails
stores. We received a legal letter representing the customer in the form of an intended claim and we
subsequently fully settled the case for a compensation of HK$75,000. In response to the alleged injury
by the customer, we have updated our retail store policy to ensure storage of goods is in line with our
goods storage guidelines, we also carry out regular r outine briefing to our frontline staff to ensure the
updated policy is effectively implemented.
The Directors consider that all of the above empl oyee compensation claims and the third-party
public liability claim occurred in the ordinary course of business. Having considered the nature and
monetary compensation amount inv olved in each claim, the Directors are of the view that none of such
claims was material or would cause any materia l adverse impact to our operation or business.
PROPERTIES
Owned Property
As at the Latest Practicable Date, we owned two properties in Hong Kong. The following table sets
out a summary of certain informatio n regarding our owned property as at the Latest Practicable Date:
Address
Entity owning
the property
Approximate
salable area Usage
(sq.ft.)
G/F and cockloft, 1/F with
flat roof and 2/F with roof,
Nos. 41A –41B Fu Hing Street
and Nos. 15 –19 San Fat Street,
Sheung Shui, New Territories,
Hong Kong
Kidbrooke Group
Limited
6,075.8 Partially for retail and
partially for
residential; certain
portions were
vacant
(Note 2)
G/F and cockloft,
No. 49 Fu Hing Street and
No. 87 San Fung Avenue,
Sheung Shui, New Territories,
Hong Kong
(Note 1)
Harvest Smart
Holdings
Limited
1,373.3 Partially for retail and
partially vacant
Note:
1. A portion of this property, namely G/F, No. 49 Fu Hing Street, Sheung Shui, New Territories, Hong Kong with a
total saleable area of approximately 755 sq.ft., was used as a Lung Fung Pop Up store. The remaining portion of this
property was held for investment purpose, of which three re tail units were leased to three tenants for retail use while
the remaining portions of the premises wer e vacant as at the Latest Practicable Date.
2. As at the Latest Practicable Date, portions of this premis es, namely six retail units and two residential units, were
leased to and occupied by six tenants who were independent th ird parties for retail or residential use; the remaining
portions of the property were vacant.
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Except for the property interests described in the property valuation report, our Group has no other
owned property interest that forms part of our non-property activities with a carrying amount of 15% or
more of total assets, or property activities with a carrying amount of 1% or more of total assets, that
requires a valuation report pursuant to Rules 5.01A and 5.01B of the Listing Rules.
Leased Properties
As at the Latest Practicable Date, our Group had le ased or obtained licences for 30 retail stores in
operation and one office site in Hong Kong, one office site in the PRC, one office site and one
warehouse in Japan and one warehouse in South Korea. Except for three sites, details of which are set
out in the section headed ‘‘Connected Transactions ’’in this prospectus, all pr operties were either leased
or licenced by our Group from Independent Third Parties.
The following table sets out a summary of the properties leased or licenced by our Group in Hong
Kong for the use as retail stores in opera tion as at the Latest Practicable Date:
Retail store Location
Approximate
UFA Term of lease/licence Rental/Licence Fee Basis
(sq. ft.)
Hong Kong Island
Lung Fung Mall
(Central store)
G/F & Mezzanine Floor,
Yu To Sang Building,
37 Queen ’sR o a dC e n t r a l&
3–5 Chiu Lung Street,
Hong Kong
5,184 Three years commencing
from October 2025 and
expiring in
October 2028
Fixed monthly rental or a
percentage of the gross monthly
sale turnover generated from the
retail store, whichever is higher
Lung Fung Mall
(Causeway
Bay store)
Shop No. G01, Ground Floor,
Excelsior Plaza,
Chee On Building,
24 East Point Road,
Hong Kong
4,330 Three years commencing
from August 2024 and
expiring in August 2027
Fixed monthly rental plus additional
rent of a certain percentage of
the monthly gross turnover of
the retail store exceeding the
fixed monthly basic rent
Lung Fung Mall
(Kornhill
store)
Portion A of Mezzanine Floor,
Kornhill Plaza,
1 Kornhill Road,
Hong Kong
9,300 Three years commencing
from July 2025 and
expiring in June 2028
Fixed monthly basic rent plus
additional rent of a certain
percentage of the monthly gross
turnover of the retail store
exceeding the fixed monthly
basic rent
Lung Fung Mall
(Aberdeen
store)
Shop 1, G/F of Site 4 of
Aberdeen Centre, 2 –4&1 4 –
16 Nam Ling Street, Hong
Kong
3,943 Three years commencing
from April 2025 and
expiring in March 2028
Fixed monthly rental plus additional
rent of a certain percentage of
the monthly gross sales turnover
of the retail store exceeding the
fixed monthly basic rent
Lung Fung Mall
(Fortress Hill
store)
Shop 1 & 2, Ground Floor,
United Building,
135 –145 King ’sR o a d&
3 Oil Street, Hong Kong
2,635 Three years commencing
from March 2025 and
expiring in February
2028
Fixed monthly rental
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Retail store Location
Approximate
UFA Term of lease/licence Rental/Licence Fee Basis
(sq. ft.)
Lung Fung Mall
(Admiralty
store)
Shop No. B04, First Floor,
Queensway Plaza,
93 Queensway,
Hong Kong
3,700 Commencing from February
2026 and expiring in
January 2028
Fixed monthly rental plus additional
rent of a certain percentage of
the monthly gross turnover of
the retail store exceeding the
fixed monthly basic rent
Kowloon
Lung Fung Mall
(Carnarvon
Road Store)
G01, 02, 03, 05 & 08, Ground
Floor, Carnarvon Plaza,
No. 20 Carnarvon Road,
Tsim Sha Tsui, Kowloon
6,300 Three years commencing
from September 2025
and expiring in August
2028
Fixed monthly rental
Lung Fung
(Dundas Street
Store)
(Note)
Shop No. A G/F., Gala Place,
56 Dundas Street,
Mong Kok, Kowloon
12,938 Three years commencing
from October 2023 and
expiring in October 2026
Fixed monthly rental plus additional
rent of a certain percentage of
the monthly gross sales turnover
of the retail store exceeding the
fixed monthly basic rent
Lung Fung Mall
(Sai Yeung
Choi Street
Store)
Shop B on Ground Floor,
No. 614 Nathan Road,
Good Hope Building,
Nos. 612 –618 Nathan Road,
Nos. 7, 13 –19 Sai Yeung
Choi Street South and Nos
40G –40H Shantung Street,
Kowloon, Hong Kong
7,086 Three years commencing
from November 2025
and expiring in October
2028
Fixed monthly rental
Lung Fung Mall
(Tung Choi
Street Store)
G/F, Nos. 6F & 6G Nelson
Street & Nos. 40, 42, 44,
46, 48 & 50 Tung Choi
Street, Mong Kok, Kowloon
and Portion of the First
Floor of No. 46, the First
Floor of No. 46A, Portion
of the First Floor of
No. 48, the First Floor of
Nos. 48A, 50 and 50A
Tung Choi Street, Kowloon
6,764 Three years commencing
from April 2024 and
expiring in March 2027
Fixed monthly rental
Lung Fung Mall
(Canton Road
Store)
Shop 1,2,3 on G/F of
Manley House,
No. 86 –98 Canton Road,
Kowloon
2,800 Three years commencing
from May 2026 and
expiring in May 2029
Fixed monthly rental
Note: As at the Latest Practicable Date, our Gr oup has finalised the renewal terms with the landlord and pending execution of the
binding agreement with the landlord.
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Retail store Location
Approximate
UFA Term of lease/licence Rental/Licence Fee Basis
(sq. ft.)
Lung Fung
(Peking Road
Store)
Front Portion on G/F Mary
Building, No.73 Peking
Road and Rear Portion of
G/F Mary Building,
N o .7 1 ,7 3 ,7 5 ,7 7
Peking Road, Kowloon
2,080 Three years commencing
from January 2025 and
expiring in January 2028
Fixed monthly rental
Lung Fung Mall
(Jordan store)
Portion of Ground Floor
(Shop A and Shop B),
Foremost Building,
Nos.19 –21 Jordan Road,
Jordan, Kowloon
2,600 For Shop A, three years
commencing from
January 2026 and
expiring in January 2029
For Shop B,
commencing from April
2026 and expiring in
January 2029
Fixed monthly rental
Lung Fung Mall
(Kai Tak
Sports Park
Store)
Shop Nos. M2-206 and M2-
207, Level 2, Kai Tai Mall
2, Kai Tai Sports Park,
Kowloon City, Kowloon
5,088 Three years commencing
from October 2024 and
expiring in September
2027
Fixed monthly rental or a
percentage of the gross monthly
turnover generated from the
retail store, whichever is higher
Shop No. M2-208, Level 2,
Kai Tai Mall 2, Kai Tai
Sports Park, Kowloon City,
Kowloon
Three years commencing
from October 2024 and
expiring in September
2027
Fixed monthly rental or a
percentage of the gross monthly
turnover generated from the
retail store, whichever is higher
Lung Fung Mall
(Star House
Store)
Shop 9 & 9A of G/F and Shop
A of 1/F, Star House,
No.3 Salisbury Road,
Kowloon
3,573 Three years commencing
from May 2024 and
expiring in May 2027
Fixed monthly rental or a
percentage of the gross monthly
turnover generated from the
retail store, whichever is higher
Lung Fung Mall
(Whampoa
Store)
Shop 6A on the Ground Floor
of the Commercial Podium
of Site 1, Whampoa Garden,
Hunghom, Kowloon, H.K.
3,044 Three years commencing
from December 2024 and
expiring in December
2027
Fixed monthly rental plus additional
rent of a certain percentage of
the monthly gross turnover of
the retail store exceeding the
fixed monthly basic rent
Lung Fung Pop
Up (Kwun
Tong store)
Unit 3 of Workshop on
Ground Floor and
Store on the Cockloft,
Camelpaint Building
Block III,
No. 60 Hoi Yuen Road,
Kowloon
2,300 Two years commencing
from January 2025 and
expiring in January 2027
Fixed monthly rental
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Retail store Location
Approximate
UFA Term of lease/licence Rental/Licence Fee Basis
(sq. ft.)
Unit 2 of Workshop on
Ground Floor and Store
on the Cockloft,
Camelpaint Building
Block III,
No. 60 Hoi Yuen Road,
Kowloon
Two years commencing
from March 2025 and
expiring in March 2027
Fixed monthly rental
New Territories
Lung Fung Mall
(San Fung
Avenue store)
G/F., 107 –109 San Fung
Avenue,
New Territories
8,480 Two years and six months
commencing from
February 2026 and
expiring in August 2028
Fixed monthly rental
G/F and Cockloft of
111 San Fung Avenue,
New Territories
Two years and six months
commencing from
February 2026 and
expiring in August 2028
Fixed monthly rental
Shop A, G/F & Cockloft,
113 –119 San Fung Avenue,
New Territories
Three years commencing
from April 2026 and
expiring in March 2029
Fixed monthly rental
Shop B, G/F & Cockloft,
113 –119 San Fung Avenue,
New Territories
Three years commencing
from April 2026 and
expiring in March 2029
Fixed monthly rental
Shop E3 G/F,
113 –119 San Fung Avenue,
New Territories
Three years commencing
from April 2026 and
expiring in March 2029
Fixed monthly rental
Flat C, G/F and Cockloft,
117 San Fung Avenue,
New Territories
(Note)
Three years commencing
from June 2023 and
expiring in May 2026
Fixed monthly rental
Lung Fung Mall
(San Hong
Street store)
Shop 1, 2, 8, 9 & Shopping
Arcade Area of G/F & 1/F,
No.67 San Hong Street,
Sheung Shui,
New Territories
9,761 Three years commencing
from November 2025
and expiring in October
2028
Fixed monthly rental
Lung Fung Mall
(Taipo store)
P o r t i o nA 1o n1 / Fo fC i n e m a
II, Tai Po Plaza, No.1 On
Tai Road, Tai Po, New
Territories
4,523 Three years commencing
from July 2024 and
expiring in July 2027
Fixed monthly rental
Note: The lease would not be renewed upon its expiry.
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Retail store Location
Approximate
UFA Term of lease/licence Rental/Licence Fee Basis
(sq. ft.)
Lung Fung Mall
(Tuen Mun
store)
Shop Nos. 17 & 18 and Shop
Nos. 49 –51, Level 3,
S o u t hW i n g ,T r e n dP l a z a ,
No. 2 Tuen Lung Street,
Tuen Mun, New Territories
3,372 Three years commencing
from February 2025 and
expiring in February
2028
Fixed monthly rental plus additional
rent of a certain percentage of
the monthly gross turnover of
the retail store exceeding the
fixed monthly basic rent
Shop Nos. 43 –46, Level 3,
S o u t hW i n g ,T r e n dP l a z a ,
No. 2 Tuen Lung Street,
Tuen Mun, New Territories
Two years and seven
months and 21 days
commencing from June
2025 and expiring in
February 2028
Fixed monthly rental plus additional
rent of a certain percentage of
the monthly gross turnover of
the retail store exceeding the
fixed monthly basic rent
Lung Fung Mall
(Yuen Long
store)
Nos. 2 –3 on the Ground Floor
of Tung Yik Building, No.8
Yu King Square,
Yuen Long, New Territories
3,260 Five years commencing
from March 2024 and
expiring in February
2029
Fixed monthly rental
Lung Fung Mall
(Shatin Centre
store)
Shop Nos. 6 –8, 15, 16A and
16B, Level 3, Shatin Centre,
Nos. 2 –16 Wang Pok Street,
Shatin, New Territories
2,895 Three years commencing
from December 2023 and
expiring in December
2026
Fixed monthly rental plus additional
rent of a certain percentage of
the monthly gross turnover of
the retail store exceeding the
fixed monthly basic rent
Shop Nos. 17B and 17C on
Level 3, Shatin Centre, Nos.
2–16 Wang Pok Street,
Shatin, New Territories,
Hong Kong
Two years and six months
and 26 days commencing
from June 2024 and
expiring in December
2026
Fixed monthly rental plus additional
rent of a certain percentage of
the monthly gross turnover of
the retail store exceeding the
fixed monthly basic rent
Lung Fung Mall
(Shatin Plaza
store)
Shop 45A and 47,
3rd Floor, Shatin Plaza,
21–27 Shatin Centre Street,
New Territories
2,400 Three years commencing
from August 2025 and
expiring in July 2028
Fixed monthly rental plus additional
rent of a certain percentage of
the monthly gross turnover of
the retail store exceeding the
fixed monthly basic rent
Lung Fung G/F & Cockloft,
No. 19 Sau Fu Street,
Yuen Long, New Territories
2,350 Three years commencing
from August 2023 and
expiring in August 2026
Fixed monthly rental
G/F, No. 21 Sau Fu Street,
Yuen Long, New Territories
Four years and five months
and 10 days commencing
from March 2025 and
expiring in August 2029
Fixed monthly rental
Lung Fung
Cosmetic
Shop A, B, C & D, G/F.,
& Cockloft,
No. 66, San Hong Street,
Sheung Shui,
New Territories
2,244 Three years commencing
from April 2026 and
expiring in March 2029
Fixed monthly rental
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Retail store Location
Approximate
UFA Term of lease/licence Rental/Licence Fee Basis
(sq. ft.)
Lung Fung
Dispensary
G/F., 22 Luen Shing Street,
Fanling, New Territories
1,924 12 years commencing from
December 2022 and
expiring in December
2034
Fixed monthly rental
Lung Fung
(Fanling Town
Centre store)
Shop Nos. 13, 15, 16, 17,
Level 2, Fanling Town
Centre, No.18 Fanling
Station Road, Fanling
1,780 Three years commencing
from August 2024 and
expiring in July 2027
Fixed monthly rental plus additional
rent of a certain percentage of
the monthly gross turnover of
the retail store exceeding the
fixed monthly basic rent
Lung Fung
Cosmetic
(Yuen Long
Centre store)
Shop Nos. 1A, 1B & 2A, G/F,
Yuen Long Centre,
51–59 Sau Fu Street,
Yuen Long, New Territories
1,683 Three years commencing
from March 2024 and
expiring in March 2027
Fixed monthly rental
Lung Fung
Dispensary
Shop 3 Level 1 Lung Fung
Garden, 33 Lung Sum
Avenue, Sheung Shui,
New Territories
572 Three years commencing
from November 2025
and expiring in October
2028
Fixed monthly rental
Office Location
Approximate
GFA Term of lease/licence Rental/Licence Fee Basis
(sq.ft.)
HK Office 5/F, 23 Yip Cheong St,
Fanling, Hong Kong
12,226 From April 2026 to
March 2028
Fixed monthly rental
PRC Office Room 208, No. 233
Hanxi Avenue West, Shibi
Street, Panyu District,
Guangzhou City, PRC
567 From February 2026 to
July 2026
(note)
Fixed monthly rental
Japan Office 4F Crescent Bldg, 13 –26
Tsushima-Koji, Hakata-ku,
Fukuoka-Shi, Fukuoka-ken
715 From July 2019, with
automatic renewal for
each year unless either
party otherwise notifies
the other party before
expiration
Fixed monthly rental
Please see the particulars of the licences of ou r warehousing premises in the paragraph headed
‘‘Warehousing and logistics ’’in this section.
Note: As at the Latest Practicable Date, our Group was in the p rocess of discussing renewal of the lease with the lessor.
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Building order and warning notices against our leased properties for our retail stores
During the Track Record Period, our Group was charged and pleaded guilty to three counts of
unauthorised building structures involving the construction of signboards on the external wall of the
shopfront of two of our retail stores. Our Group was fined a total of HK$26,941. All fines have been
settled and rectification works with respect to the r espective unauthorised bu ilding structures has been
completed. Our Directors are of the view that the irregularities and the fines did not have any material
adverse effect on our Group.
In addition, there were unreleased building orders and warning notices pertaining to the premises
for our four retail stores:
1. Lung Fung Pop Up (Kwun Tong store)
Location
Unit 3 of Workshop on Ground Floor and Store on the Cockloft, Camelpaint Building Block III, No. 60
Hoi Yuen Road, Kowloon, and
Unit 2 of Workshop on Ground Floor and Store on the Cockloft, Camelpaint Building Block III, No. 60
Hoi Yuen Road, Kowloon
Subject matter
The landlord (being a controlled entity of our Controlling Shareholder, Mr. Tse) of our Lung Fung
Pop Up (Kwun Tong store) retail store received two warning letters ( ‘‘Warning Letters ’’)d a t e d8A p r i l
2025 and 9 June 2025, respectively, from the District Lands Office of Hong Kong. As set out in the
Warning Letters, the current usage of the premises is not for industrial or godown purposes, which is in
contravention of the relevant government lease. As at the Latest Practicable Date, the landlord had
submitted application documents to the District Lands Office of Hong Kong for a waiver ( ‘‘Waiver ’’)o f
the relevant conditions set out in the government lease. In the event that the application of the Waiver
failed, we may be evicted from the premises. As advised by our Hong Kong Legal Counsel, the legal
risk for lease enforcement actions on non-conforming uses of industrial buildings is re-entry of the land
by the Lands Department and there are no other foreseeable legal consequence. Based on our past
experiences, our Directors are of the view that we will be able to relocate our store in around two
months with a relocation cost of approximately HK$500,000, and the relocation will not have material
adverse effect on our Group. Our Hong Kong Legal Counsel is of the view that given the absence of
adverse enforcement history and the ongoing waiver application, the regulatory risk arising from this
matter to be immaterial.
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2. Lung Fung Cosmetic
Location
Shop A, B, C & D, G/F., & Cockloft, No. 66, San Hong Street, Sheung Shui, New Territories
Subject matter
The landlord (being our Controlling Shareholder, Mr. Tse) of our Lung Fung Cosmetic retail store
received a building order from the B uilding Authority on 6 April 2017 in relation to an unauthorised
building work erected on and over the yard at G/F at t he location of our store. In the past, we used the
unauthorised building work are a for passage purpose but such us e had already been ceased as at the
Latest Practicable Date. As at the Latest Practicable Date, we had engaged an authorized person to
inspect the relevant premises and advise on the appropriate rectif ication steps in respect of the
unauthorised building work identified. As at the Lates t Practicable Date, the rect ification works for Lung
Fung Cosmetic were being carried out by our contractor. Our Hong Kong Legal Counsel is of the view
that, having considered the nature and scope of the building orders registered against the premises, the
associated regulatory risk to our Group is low and not material.
3. Lung Fung Mall (San Fung Avenue store)
Location
Shop A, G/F & Cockloft, 113 –119 San Fung Avenue, New Territories
Subject matter
As at the Latest Practicable Date, part of our store premises, namely, Shop A, G/F, Nos. 113 –119
San Fung Avenue, New Territories was subject to two buildings orders in respect of (i) a canopy
attached to the external wall of the building, an d an air-conditioning support frame attached to the
external wall of the building; and (ii) a structure over the rear yard of the building, respectively. The
structure served as the cover over the rear yard used as passage in the past which we have ceased to use.
As at the Latest Practicable Date, the authorised person engaged by the landlord (being a controlled
entity of our Controlling Shareholder, Mr. Tse) had completed the rectification steps in respect of the
relevant unauthorised building works. The authorised person had, accordingly, submitted the Notice and
Certificate of Completion of Class III Minor Works (the ‘‘Notice ’’) with the Buildings Department and
the Buildings Department had ack nowledged the receipt of such Notice. As at the Latest Practicable
Date, we were waiting for the confirmation of the Buildings Department regarding the completion of the
rectification works. Our Hong Kong Legal Counsel is of the view that, having considered the nature and
scope of the building orders registered against the premises, the associated regulatory risk to our Group
is low and not material.
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4. Lung Fung Mall (San Fung Avenue store)
Location
Shop A, G/F & Cockloft, 113 –119 San Fung Avenue, New Territories
Shop B, G/F & Cockloft, 113 –119 San Fung Avenue, New Territories
Flat C, G/F and Cockloft, 117 San Fung Avenue, New Territories
Shop E3 G/F, 113 –119 San Fung Avenue, New Territories
Subject matter
The premises are leased from an entity controll ed by Mr. Tse, our Controlling Shareholder. The
premises are subject to a fire safety compliance order ( ‘‘Order ’’) which requires the landlord of the
premises (being a controlled entity of our Controlling Shareholder, Mr. Tse) to provide or improve the
requested fire service installations and equipme nt. The Fire Service Department has accepted an
extension of the deadline for the compliance to 21 April 2026. Based on an enquiry with the relevant
officer from the Fire Service, it is understood that the Order was issued pursuant to the Fire Safety
(Buildings) Ordinance (Chapter 572 of the Laws of Hong Kong), which focuses on pre-1987 composite
and domestic buildings, highlighting the need to update fire safety standards in older buildings across
Hong Kong. The improvement and update in fire system is for the betterment of the general public and
does not indicate any specific fire safety issue or c oncern over the subject premises. Since 21 April
2026, the contractor has been in communication with the Fire Service Department and plans to submit a
drainage plan to the Fire Service Department for review. Our Hong Kong Legal Counsel is of the view
that, given the contractor was in communication wit h the Fire Service Department in relation to the
rectification work and the department ’s awareness thereof, the associated risk to our Group is low and
not material.
5. Lung Fung Mall (Carnarvon Road Store)
Location
G01, 02, 03, 05 & 08, Ground Floor, Carnarvon Plaza, No. 20 Carnarvon Road, Tsim Sha Tsui,
Kowloon
Subject matter
Our store premises is subject to a fire safety direction to comply with the fire safety construction
requirement to remove the roller shutters installed across five exits at the premises. As at the Latest
Practicable Date, the required installation of n ew escape doors has been completed pursuant to the
compliance plan we had agreed with the Buildings Department and we have received a confirmation
from the Buildings Department in December 2025 that the Fire Safety Direction registered against the
premises has been withdrawn.
Enhanced internal control measures
In order to avoid leasing or licensing premises with material unauthorised st ructures in the future,
we have adopted enhanced internal control measures with regards to selecting, approving, managing and
monitoring rental properties occupied or intended to be occupied by our Group:
. Before proceeding to formal ne gotiations, we will perform a p reliminary risk assessment
which includes, where practicable, (i) checking the permitted use of the premises under
relevant planning and building regulations and lease conditions, (ii) checking visible
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structural issues, fire exits, ventilation and basic safety features, and (iii) attempt to request
from the landlord or agent the relevant documentation on building compliance such as
building orders, warning notices, or unauthorised structures affecting the property.
. Prior to signing or renewing a lease, we will conduct further due diligence on the property to
the extent practicable, including (i) conducting land search in respect of ownership and title
of the landlord, encumbrances and registere d building orders or warning notices; (ii)
requesting written confirmations in the lease from the landlord that the property may lawfully
be used for the Group ’s intended business and the landlord is not aware of outstanding
building orders or illegal structures materially affecting safe use of the property by the
Group; and (iii) obtaining the floor plan and building plan of the property for on-site
inspection to identify any potential unauthorized building structures.
. Where material building orders, warning notices or any potential unauthorized building
structures are identified, we will seek advice s from professional advisors such as surveyor or
authorized person to ascertain if the concerned s tructures are of unauthorized nature and will
not enter into a lease or license to use premises for a premise affected by any unauthorized
building structures unless such concerned structures are to be rectified by the owner of the
target premises before commencement of the lease.
. If we proceed to enter into a formal lease, we will consider requesting for termination clauses
to be stipulated in the lease which would be tri ggered by events such as major structural
issues.
. After we have occupied the property, we will continue to monitor the building conditions and
third party notices and all material issues wi ll be reported to our management and external
legal adviser.
In terms of fire safety, fire extinguishers are placed in visible and easily accessible locations to
facilitate safe evacuation. Fire pr otection equipment is regularly inspected to ensure proper functioning,
and strict adherence to safety operating procedures is enforced. Regular inspections of store outlets for
any abnormal conditions, and flammable and explosive hazardous mate rials are conducted. Fire training
and fire drills are also conducted periodically.
Insurance and indemnities from our Controlling Shareholders
We have maintained insurance coverage that is customary for a retail business of our size and type,
providing protection against reasonable losses related to our operations, including but not limited to
public liability insurance. For more details on our insurance policies, please refer to the ‘‘Insurance ’’
section.
However, while we have restricted access for our employees and customers to the areas affected by
the unauthorised structure in the relevant stores, w e cannot guarantee that the insurance we hold will
adequately cover injuries, loss es, or damages incurred by our em ployees or customers due to any
unauthorised access to these areas. The adequacy of c overage depends on various factors, including the
reasons behind and the extent of any such injuries, losses, or damages.
Additionally, our Controlling Shareholders have jointly and severally agreed to indemnify our
Group against losses and costs incurred in relation to the outstanding building order and the warning
notice. This includes any loss of business resulting from rectification work required by the Buildings
Department. Further details regarding the Deed of Indemnity can be found in the section titled
‘‘Appendix V — Statutory and General Information — D. Other Information — 12. Estate Duty, Tax,
and Other Indemnities ’’in this prospectus.
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RISK MANAGEMENT AND INTERNAL CONTROL
Our Directors and senior management are responsible for the formulation of and overseeing the
implementation and effectiveness of our internal control and risk management systems, which are
designed to ensure our ongoing compliance with the applicable laws, regulations and rules relevant to
our business operations and corporate governance, and to prevent any recurrence of any incidents of
non-compliance. We have adopted a consolidated se t of risk management policies which set out a risk
management framework to identify, assess, evaluate and monitor key risks associated with our strategic
objectives on an on-going basis. Risks identified by our management will be analysed on the basis of
likelihood and impact, and will be properly followed up and mitigated and rectified by our Group and
reported to our Directors.
We believe that our internal control systems and c urrent procedures are sufficient in terms of
comprehensiveness, practicability and effectiveness. We have adopted or will adopt the following
internal control measures:
(i) we have established an audi t committee which comprises all our independent non-executive
Directors with written terms of reference in accordance with Appendix 14 of the Listing
Rules. The primary duties of the audit committee include, among other things, overseeing our
financial reporting, internal control and risk management systems, and ensuring the
compliance of our financial reporting with the Listing Rules and relevant legal requirements;
(ii) we have appointed DBS Asia Capital Limited as our compliance adviser with effect from the
Listing Date to advise us on ongoing compliance with the Listing Rules and other applicable
securities laws and regulations in Hong Kong;
(iii) our Audit Committee which will review our internal control system and procedures for
compliance with the requirements prescribed by the applicable laws, rules and regulations;
(iv) the provision of trainings to our relevant employees in order to enhance their industry
knowledges and to encourage encompassing culture of risk management ensuring that our
relevant employees are aware of and res ponsible for risk management; and
(v) the establishment of an in-house complian ce team which consists o f our chief financial
officer and our compliance officer to organise, review and maintain our internal control
system and to provide assistance to our Direc tors, senior management and employees with
respect to our internal control policies.
In addition, we have established r isk management policies which se t forth procedures to identify,
analyse, mitigate and monitor various risks as well as the reporting mechanism of risks identified in our
operations. Each of our business teams is responsible for identifying and evaluating the risks relating to
its scope of operations and implementing our risk management and internal control systems. Our chief
financial officer is responsible for overseeing our internal control and risk management.
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In preparation for the Listing, we have engaged an independent internal control consultant to assist
our Group to review our internal control system. The independent internal control consultant provided us
with a number of findings and recommendations, to which we have subsequently taken remedial actions
in response. The major recommendations that we have adopted include, among others, the following:
. establishing clear line of approval and allocation of responsibilities in the context of
reviewing and approving external contracts;
. establishing risk management policies and action flowchart for the identification and
assessment of risks;
. establishing internal anonymous whistle-blowing policies to encourage reporting of any
malpractice, non-compliance and misconduct;
. clarifying daily inventory discrepancy threshold that would trigger investigation and the
ensuing record-keeping procedure after reconciliation;
. establishing policies to monitor and track covenants and financial obligations stipulated in
bank agreements; and
. establishing software licensing management policy, copyright management records and
software inventory report to monitor software licences and authorisation.
Taking into account the recommendations from the independent internal control review report, our
Directors are of the view that we have enhanced our internal control system accordingly as at the Latest
Practicable Date.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE MATTERS
We regard environmental, social and governance ( ‘‘ESG’’) considerations as fundamental to our
long-term and sustainable development. As a responsible company to our shareholders, employees,
customers and the wider community, we are committed to strengthening our ESG governance
framework, enhancing our practi ces and performance, and c ontributing to societal well-being through
the implementation of ESG initiatives.
Governance Structure
Our Board assumes overall responsibility for the formulation and oversight of our ESG strategy,
policies and disclosures. Our Board is responsible fo r establishing ESG-relat ed objectives, monitoring
the effectiveness of risk managem ent mechanisms, and reviewing our performance against ESG targets
on a regular basis.
To assist the Board in fulfilling its ESG responsibilities, we have established an ESG Working
Group led by the Chief Financial Officer. The ESG Working Group comprises representatives from key
departments such as finance, human resources and com pliance, bringing relevant expertise across ESG
areas. It is responsible for:
. executing ESG strategies, policies and frameworks approved by the Board;
. identifying and assessing ESG risks and opportunities relevant to our operations;
. monitoring ESG performance indicators and reporting progress to the Board; and
. coordinating the preparation of our ESG disclosure in compliance with applicable reporting
requirements.
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The ESG Working Group reports to the Board at least annually, and more frequently if any
material ESG issues arise.
ESG policies
We have established a set of ESG policies that serve as internal guidelines for our operations.
These policies are developed to address key ESG topics relevant to our retail business. We understand
the importance of keeping these policies current. These policies are regularly reviewed and updated to
reflect new regulations and stakeholder feedback, helping us maintain trust and operational integrity.
Process to identify, assess and manage ESG-related Risks
We actively engage with our stakeholders th rough a combination of meetings and ongoing
interactive dialogue to understand t heir expectations and shape our sust ainable development strategy. To
identify material ESG risks and opportunities, we c onducted benchmarking against industry peers and
reviewed established industry standards. The id entified risks and opportunities were prioritized by
assessing ‘‘impact to stakeholders ’’and ‘‘impact to our business ’’through an internal evaluation. The
findings from the materiality assessment were reviewed and approved by the Board. The table below
outlines these material ESG issues:
Material ESG issue Potential risks, opportunities and impacts
Energy management Inefficient energy managem ent or excessive emissi ons can potentially lead
to higher operating costs and increased exposure to stricter environmental
policies. To mitigate the environmental impact, we implement various
energy-efficient measures in our busi ness operations to reduce energy
consumption and GHG emissions and regularly review our environmental
performance.
Employment and
labour standards
Employment practices and labour standards are critical to maintaining a
stable workforce and ensuring compl iance with labour laws. Risks such as
unfair treatment, unsafe working conditions or violations of labour rights
can result in legal disputes, reputational harm, and employee turnover. We
maintain a fair and safe workplace in compliance with applicable labour
laws and regulations. We have developed policies and implemented
measures covering compensation, equal opportunity, diversity, anti-
discrimination, grievance channels, workplace safety and staff benefits.
Product quality
and service
management
Product quality and service management directly affect consumer safety,
satisfaction, and brand credibility. I ssues relating to product safety or
service delivery can result in recalls , regulatory sanctions, and loss of
customer trust. Regulatory compliance and consumer safety remain our
priorities in product sourcing and service delivery. We implement a
rigorous process to monitor and maintain product quality. Our suppliers are
carefully selected, and any product concerns are addressed promptly to
maintain customer safety and trust.
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Material ESG issue Potential risks, opportunities and impacts
Business ethics and
anti-corruption
Ethical conduct and anti-corruption measures are fundamental to protecting
our integrity and reputation. Risks such as bribery, fraud or conflicts of
interest can lead to financial penalti es, reputational damage and loss of
investor confidence. We have set out policies on ethical conduct and anti-
corruption. Our employees are provided guidance on these policies and we
offer clear channels for reporting a ny suspected business misconduct.
Environment
Environmental Compliance
During the Track Record Period, we strictly adhered to applicable environmental laws and
regulations, including but not limited to the Waste Disposal Ordinance and the Product Eco-
responsibility Ordinance.
Environmental Management
Energy Management
We recognise that for a business operating a chai n of retail stores, effi cient energy is a critical
priority. Our primary energy sources are electricity , petrol, and diesel across our offices, warehouse and
retail stores.
To manage our energy use, we have implemented a series of measures including replacing the
fluorescent lights with energy-efficient LED lights, and setting temperature controls for air-conditioning.
We also promote energy-saving habits among employees, such as switching off lights, air-conditioning,
computers, and other electronic devices when not in use.
The following table details our energy consumption over the Track Record Period:
Unit Year ended 31 March
Eight months
ended
30 November
2023 2024 2025 2025
Total Direct Energy
Consumption
MWh 701.63 530.57 693.45 849.65
Diesel MWh 630.25 487.79 656.49 826.76
Petrol MWh 71.38 42.78 36.96 22.89
Total Indirect Energy
Consumption
MWh 2,434.77 2,986.10 3,534.98 3,978.22
Purchased Electricity MWh 2,434.77 2,986.10 3,534.98 3,978.22
Total Energy Consumption MWh 3,136.40 3,516.67 4,228.42 4,827.87
Energy Consumption
Intensity
MWh/million
HKD revenue
2.87 1.74 1.72 2.37
Note:
The increase in energy consumption in the eight months ended 30 November 2025 was primarily attributable to business
expansion, including the opening of additional stores and the expansion of our warehouse.
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GHG Emissions
Our GHG emissions primarily arise from Scope 2 indirect emissions generated through the
consumption of purchased electric ity at our offices, warehouse and r etail stores. We target to reduce
Scope 1 and 2 emission intensity by 5% by 2030 compared with a 2025 baseline. We will step up our
efforts to improve energy efficiency by raising awareness of our employees and adopting energy-
efficient appliances. The following table sets forth our GHG emissions data during the Track Record
Period:
Unit Year ended 31 March
Eight months
ended
30 November
2023 2024 2025 2025
Total Scope 1 GHG
emissions
tCO2e 184.17 138.93 181.00 221.09
Total Scope 2 GHG
emissions
tCO2e 1,083.34 1,228.53 1,415.00 1,634.11
Total Scope 3 GHG
emissions
tCO2e 100.16 163.91 266.74 240.55
Total GHG emissions tCO2e 1,367.67 1,531.37 1,862.74 2,095.75
Total GHG emissions
intensity
tCO2e/million
HKD revenue
1.25 0.76 0.76 1.03
Note:
1. Scope 1 GHG emissions are primarily generated from direct energy consumption (diesel and petrol). Scope 2 GHG
emissions are primarily generated from indirect energ y consumption (purchased electricity) in our operational
processes. Scope 3 GHG emissions include energy consump tion related to business travel and employee commuting.
Furthermore, we plan to further expand our Sc ope 3 disclosure categories in the future.
2. The significant increase in GHG emissions in the eight months ended 30 November 2025 was due to higher energy
consumption from business expansion, including the opening of additional stores and the expansion of our
warehouse.
Climate-related Risks and Opportunities
We recognise climate-related risks and opportunities could affect our business operations and
financial performance. We have i dentified and evaluated the impact of climate-related risks and
opportunities. Transition risks, such as the potentia l increases in operational costs arising from future
carbon pricing or stricter energy e fficiency regulations, could aff ect our retail stores and logistics.
Physical risks — including acute events like extreme weather (e.g., floods that may disrupt supply
chains or damage stores) and chronic shifts in climate patterns (e.g., prolonged heatwaves increasing
cooling needs) — could also directly affect our physical assets, supply chain reliability, and business
continuity. At the same time, transitioning to a low-carbon economy presents potential opportunities
such as innovation and optimisation of resource use, enabling us to operate more efficiently and support
sustainable growth.
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To manage these risks and opportunities, we are dedicated to integrating climate considerations
into our strategic planning and operations. We will stay informed with the latest climate-related
requirements and strive to enhance our energy efficiency and reduce our carbon emissions.
Waste and Packaging Management
Effectively managing the waste generated by our operational activities is paramount to our
environmental responsibility and commitment to sustain able practices. Our operations primarily generate
non-hazardous waste, which includes general office refuse, paper, and various packaging materials for
our product handling and logistics.
We emphasize reduction, reuse, and recycl ing to optimize waste management across our
operations. In terms of reuse and recycling, waste in our warehouses and stores, including packaging
materials such as cardboard, paper, and stretch w rap, is carefully sorted and sent to recyclers to
minimize environmental impact. Specifically, stretch wrap, a common by product of our logistics and
operational processes, is collected separately by our waste collectors for recycling, with approximately
80% being recycled. To reduce plastic waste, we encourage customers to bring their own shopping bags.
Plastic shopping bags are provided only upon request and are subject to the statutory charge in
accordance with government regula tions. Looking ahead, we will roll ou t handheld inventory scanners
across operations to drive digital transformation and further reduce paper consumption.
We will explore setting targets for waste reductio n and recycling rates, particularly for high-
volume waste streams. Furthermore, we will strengthen employee awareness and training programs to
foster a culture of waste minimization and responsible consumption throughout the company, aiming for
a more sustainable and resource-efficient operational model.
The following table sets forth the information on our consumption of paper and packaging
materials for the indicated periods during the Track Record Period:
Unit Year ended 31 March
Eight months
ended
30 November
2023 2024 2025 2025
Paper tonnes 3.36 4.87 5.96 4.64
Paper box tonnes 809 1,122 1,441 1,057
Stretch Wrap tonnes 16.7 23.4 33.4 27.8
Water Management
We are committed to promoting water conservation across our operations. Our water usage
primarily involves municipal water fo r offices, warehouse and retail stores. To improve water efficiency,
we have implemented various water conservation measures, including promoting employee awareness
through water-saving reminder labels in restrooms, regularly inspecting our plumbing systems for leaks,
and promptly addressing any identified issues.
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The following table shows our water consumption for the indicated periods during the Track
Record Period:
Unit Year ended 31 March
Eight months
ended
30 November
2023 2024 2025 2025
Total water consumption m3 1,163.06 3,533.84 4,868.69 3,557.27
Water consumption
intensity
m3/million HKD
revenue
1.06 1.75 1.98 1.75
Employee Caring
Employment and labour standards
We firmly believe that talent is an important resource for our development. We comply with
applicable employment-related laws and regulations, including but not limited to the Employment
Ordinance, Sex Discrimination Ordinance, Disability Discrimination Ordinance, Race Discrimination
Ordinance, Family Status Discrimination Ordinance. We have formulated internal policies and
procedures to provide clear guidance across the employee lifecycle, from recruitment and onboarding to
ongoing management and separation.
We commit to fostering a fair and equal working environment. Our recruitment and promotion
policy ensures equal opportunities for all employees in areas such as recruitment, advancement, welfare
protection, and career development, without discrimi nation based on race, nationality, gender, marital
status or religion. We also support equal employment opportunities for migrant workers, people with
disabilities and retired servicemen.
We strive to provide a comfortable, respectful, and harassment-free wo rking environment. A
formal grievance procedure is in place, allowing em ployees to report any unfair treatment, misconduct,
or harassment, ensuring thorough investigation and appropriate action.
To support employees ’ career development, we regularly assess employee needs and regulatory
requirements to provide relevant internal and external enhancement courses. Our performance appraisal
system is in place to ensure performance of all empl oyees is assessed, serving as a basis for decisions on
promotions, salary adjustments, bonuses, and pro bation outcomes. We identify and nurture high-
performing employees for career progression, and fo ster talent acquisition through an employee referral
bonus scheme, encouraging our employees to bring in valuable new team members.
In addition, employees are entitled to a range o f leave benefits, includ ing paid annual leave,
birthday leave, maternity leave and paternity leave.
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As at 30 November 2025, the Group had 922 employees, and the specific breakdowns are as
follows:
Year ended 31 March
Eight months
ended
30 November
2023 2024 2025 2025
Total number of employees 268 429 694 922
By gender
Male 125 197 308 422
Female 143 232 386 500
By age
30 Below 25 63 128 202
30–50 156 250 415 547
Over 50 87 116 151 173
By geographical location
Hong Kong 250 408 670 901
Chinese Mainland 18 21 24 21
By categories
Senior Management 8 8 12 13
Management 43 59 64 75
General Staff 217 362 618 834
Occupational Health and Safety
We are committed to protecting the health and saf ety of our employees and maintaining a safe and
healthy working environment at all our facilities. During the Track Record Period and up to the Latest
Practicable Date, we complied with all applicable health and safety laws and regulations, including the
Occupational Safety and Health Ordinance.
To protect employee health and safety, we have impl emented comprehensive preventive measures,
including providing necessary personal protective equipment, conducting regular facility inspections,
maintaining emergency preparedness, performing fire safety management, and providing guidance on
safe work practices. In the event of any critical incident involving injury or fatality among our
personnel, we have a process in place to effectively manage such situations. We also provide health and
safety training to key personnel to ensure they possess the knowledge and skills necessary to maintain
workplace safety standards.
Product Quality and Safety
Product quality and safety are the top priorities for our business. We are committed to providing
quality products and have established rigorous qual ity assurance processes and a dedicated quality
control team to perform regular inspections on branded products from around the world.
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To ensure product quality, we have established policies for all aspects of product management,
including procurement, storage , recall, and sale. We maintain a centralized procurement system to
safeguard product quality at source. Before products are made available for sale, standardized receiving
and inspection checks are conducte d to verify packaging integrity, pro duct condition, and expiration date
requirements. Temperature and humidity controls are maintained for sensitive products, with daily
monitoring to preserve product quality. Furthermore, regarding the storage and handling of
pharmaceuticals, we strictly contro l the hygiene conditions of our dispe nsing rooms to ensure the safety
and efficacy of the pharmaceuticals. In addition, we ha ve a dedicated team of professional pharmacists
who provide ongoing training on pharmaceutical prod uct knowledge to our frontline staff.
In the event of product safety concerns, we have recall procedures in place to enable rapid
response to any potential issues . We have also established mechanis m for handling customer feedback
and complaints. All reported quality issues are promptly reviewed and handled by our customer service
team in accordance with our policie s. During the Track Record Period, we did not encounter any product
recalls due to safety or health issues, or receive any s ignificant customer com plaints that would have a
material impact on our business operation.
Supply Chain Management
We work with suppliers from around the world to source a diverse range of products for our
customers. Recognising the important role that suppliers play in our business, we are committed to
building a sustainable and responsible supply chain.
When selecting and engaging suppliers, we carefully consider several factors, including product
quality, business reliability, and compliance with applicable laws and regulations. We require suppliers
to submit business registration certificates, relev ant qualification and safety permits, and management
system certifications as appropriate. We maintain a regular relationship with our suppliers through
ongoing performance reviews and periodic assessments in areas such as product quality, delivery, and
regulatory compliance with relevant social and environmental laws and regulations.
Business Ethics and Anti-corruption
We place high importance on business ethics and integrity and strictly comply with all applicable
anti-corruption laws and regulations. We have establi shed policies on anti-cor ruption which apply to all
employees. We set clear guidance for responsible behaviour when employees are offering or receiving
benefits, gifts, or hospitality in the course of their work. Suspected misconduct behaviour such as fraud,
bribery, or corruption can be reported thr ough established reporting channels.
Community
As a retail group deeply rooted in the community , we recognise our important role in promoting
sustainable social development. We consistently uphold the principle of balancing enterprise growth
with social responsibility, committed to building mutually beneficial relationships with the communities
where we operate, to jointly create and share value.
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Our community engagement strategy is strategically designed to foster positive impact across
various segments of society. This commitment i s realized through a compr ehensive approach that
includes:
. Youth Development and Education: Actively supporting children ’s well-being through child
sponsorship programs and the donation of educational resources to primary schools.
. Elderly Welfare and Companionship: Providing companionship an d practical assistance to
seniors by volunteering at local nursing homes.
. Community Support: Distributing provisions like rice and canned goods to vulnerable
households.
We encourage our employees to actively engage in public welfare, giving back to society through
practical actions like volunteer services, and provide necessary support and platforms for this.
LEGAL PROCEEDINGS
From time to time we have been, and may in the future be occasionally, involved in legal
proceedings or disputes in the ordinary course of business that are common for our industry, including
minor employment disputes, customer complaints regarding product quality, enquiries or complaint
letters from brand owners or authorised distributors and contract disputes with our suppliers or service
providers. During the Track Record Period and up to the Latest Practicable Date, none of our Company
or any other members of our Group were engaged in any claims or litigation or a rbitration proceedings
of material importance and no liti gation, claim or arbitration proceeding of material importance is
known to our Directors to be pending or threatened against any member of our Group, and our Directors
are of the view that none of the litigation claims or disputes involving our Group is material to our
Group.
Each of our Directors has also confirmed that he/she was not personally involved, whether
collectively or individually, in any of the above claims.
No provision for litigation claims
In relation to the employees ’ compensation claims and third-par ty public liability claims received
by our Group, having considered (i) the nature and the degree of injuries of the incidents; and (ii) the
coverage of our insurance policies, our Directors consider that no provision for contingent liabilities in
respect of current, pending and pot ential litigations is necessary.
Indemnity given by our Con trolling Shareholders
Our Controlling Shareholders have entered into the Deed of Indemnity whereby our Controlling
Shareholders have agreed to indemnify our Group, subject to the terms of the Deed of Indemnity, in
respect of all liabilities and penalties which may a rise as a result of any outstanding and potential
litigations and claims of our Group on or before the date on which the Global Offering becomes
unconditional. Please r efer to the paragraph ‘‘Other Information — 12. Estate duty, tax and other
indemnities ’’in Appendix V to this prospectus for details.
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NON-COMPLIANCES AND ENQUIRIES FROM GOVERNMENT AUTHORITIES
Our Directors confirm that, and advised by our Hong Kong Legal Counsel, during the Track
Record Period and up to the Latest Practicable Da te, we had not been and were not involved in any
material non-compliance incidents that had led to fi nes, enforcement actions or other penalties that
could, individually or in the aggregate, have a material adverse effect on our business, financial
condition and results of operations. Given the comprehensive internal control system which we have
implemented to ensure our compliance with relevant l aws and regulations in all material respects of our
business, our Directors confirm, and our Hong Kong Legal Counsel concurs, that none of the non-
compliance incidents are systemic in nature.
Undesirable Medical Advertisements Ordinance
During the Track Record Period and up to the Late st Practicable Date, we received a total of five
warning letters issued by the Department of Health ( ‘‘DoH’’) against four of our subsidiaries for
potential non-compliance with the Undesirable Medical Advertisements Ordinance (Cap. 231)
(‘‘UMAO ’’).
The warning letters did not specify or obligate any action or rectification steps required to be taken
by us, but the relevant subsidiaries of our Group were warned that prosecution proceedings might be
instituted against them if wordings which might potentially contravene applicable labelling and
advertising restrictions under the UMAO continued to be displayed on the packing of the relevant
products of which, none of them is our private label products. As at the Latest Practicable Date, four of
the five warning letters, namely the warning le tters issued on 22 March 2023, 12 December 2024, 17
December 2024 and 19 June 2025, respectively, were already time-barred for prosecution pursuant to
Section 26 of the Magistrates Ordinance (Cap. 227). Nevertheless the products in question mentioned in
the aforesaid time-barred warning letters were already removed from all store outlets. As advised by our
Hong Kong Legal Counsel, the rem aining warning letter issued on 11 December 2025 would be time-
barred for prosecution against the relevant subsi diary in respect of the matters relating to UMAO
contravention as specified therein on 10 June 202 6, being six months after the issuance of the said
w a r n i n gl e t t e rp u r s u a n tt oS e c t i o n2 6o ft h eM a g i s t r a t e sO r d i n a n c e .R e g a r d i n gt h ew a r n i n gl e t t e ri s s u e d
on 11 December 2025, the relevant advertisement featured a blood circulation medication product with a
caption appearing on the product packing which the DoH considered such wording may have
contravened Section 3(1) and/or Section 3B(1) of the UMAO. Our Directors confirmed that the product
in question was removed from all store outlets. No prosecution or follow-up enforcement action by the
Department of Health had taken place during the Tr ack Record Period and up to the Latest Practicable
Date.
Our Directors believe that these incidents were due to the inadvertent oversight in the course of
our product labelling checks by our marketing staff . No charge had been laid against and no penalty has
been imposed on us in respect of the above suspected contraventions during the Track Record Period
and up to the Latest Practicable Date. In light of th e fact that four of such cases had been time-barred
for prosecution and no charge had been laid by the relevant authorities against our Group in respect of
the case which was not yet time-barred, our Hong Kong Legal Counsel advised that the risk that our
Group will be subject to any penalty (a maximum fine is HK$100,000) under the UMAO is remote.
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We have adopted the following internal control measures in order to prevent the recurrence of
similar non-compliance incidents, including:
(i) the adoption of compliance guidelines to provide specific guidance to staff members on
product labelling and advertisements to ensure co mpliance with relevant laws and regulations,
including the UMAO;
(ii) our marketing team review all marketing mat erials against internal guidelines to ensure
compliance with the relevant requirements under the laws of Hong Kong before publication.
Our marketing manager is responsible for reviewing and approving all marketing and
advertising materials befo re their launch publication;
(iii) we have distributed relevant training materials to our management and marketing teams
where they were given an overview on the applicable laws and regulations of Hong Kong
relating to product advertising within the context of UMAO. We will arrange trainings to be
provided by appropriate accr edited institutio n to reinforce our management team ’sa n d
marketing team ’s awareness on applicable Hong Kong laws and regulations, especially in
respect of the UMAO;
(iv) implement regular training sessions to educate employees about compliance requirements
relating to advertising regulations and laws, especially the UMAO; and
(v) we will consult relevant governing authorities and our external legal advisers for guidance
and advice in case of any uncertainties or queries regarding compliance matters related to
product labelling and advertising.
Consumer Goods Safety Ordinance
During the Track Record Period and up to the La test Practicable Date, we received one warning
letter issued by the Customs and Excise Department ( ‘‘C&ED ’’) for non-compliance with the Consumer
Goods Safety Ordinance (Cap. 456) ( ‘‘CGSO ’’) in relation to supplying goods that did not comply with
the bilingual safety labelling requirement as specified in Section 2(1) of the Consumer Goods Safety
Regulations made under the CGSO. Due to our inadvertent oversight, we had omitted to affix a warning
or caution label with respect to the safe keeping, use, consumption or disposal in both the English and
the Chinese language on the packing of certain products. As advised by our Hong Kong Legal Counsel,
C&ED stated in the warning letter that they had d ecided not to take prosecution action but to serve a
written warning for the relevant non-compliance. This incident of non-compliance was rectified
immediately with no material adverse effect on our b usiness or operations. Our Directors believe that
this incident was caused by inadvertent oversight. Any prosecution of this incident has been time-barred
as at the Latest Practicable Date.
We have adopted the following internal control measures in order to prevent the recurrence of
similar non-compliance incidents, including:
(i) the adoption compliance guidelines to provide specific guidance to staff members on product
labelling and advertisements to ensure comp liance with relevant laws and regulations;
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(ii) our senior management responsible for procurement supervise and monitor our product
labelling work performed at our warehouse to ensure compliance with the relevant
requirements under the laws of Hong Kong, especially the CGSO, before such products are
available for purchase at our retail stores or on our online e-commerce platforms;
(iii) our procurement team has strengthened the in spection process of all products upon delivery at
our warehouse, with particular attention to product labels appearing on the packing of the
products, and will apply additional tailored labels onto products in compliance with CGSO
where necessary;
(iv) we have distributed relevan t training materials to our management and procurement teams in
which they were given an overview on the applicable laws and regulations on laws of Hong
Kong relating to product labelling. We will arrange trainings to be provided by appropriate
accredited institution to rei nforce our management team ’s and procurement team ’s awareness
on applicable Hong Kong laws and regulations, especially in respect of the CGSO; and
(v) we will consult relevant governing authorities and our external legal advisers for guidance
and advice in case of any uncertainties or queries regarding compliance matters related to
product labelling.
Having considered (i) the nature of the relevant cla ims, (ii) the potential liability exposure with
regards to the disputes, and (iii) the fact that all such employees ’ compensation claims and third-party
liability claims have been/are e xpected to be fully covered by the insurance policy taken out by our
Group, our Directors considered the impact of such claims would be immaterial.
Food and Drugs (Composition and Labelling) Regulations
During the Track Record Period and up to the Latest Practicable Date, we had contravened the
Food and Drugs (Composition and Labelling) Regula tions (Cap. 132W) in relat ion to pre-packaged food
not properly labelled on three occasions and had been fined between HK$2,700 to HK$3,500 for these
contraventions. As at the Latest Practicable Date, we had one outstanding case in relation to pre-
packaged food not properly labelled under the Food and Drugs (Composition and Labelling) Regulations
(Cap. 132W). As confirmed by our Directors and accor ding to records retrieved from the Centre of Food
Safety, we had ceased the sales of the products in que stion in the four cases aforementioned. We have
adopted internal control measures in relation to the packaging and labeling of the products in order to
avoid similar incidents, pleas e refer to the paragraph headed ‘‘Quality Control — Quality Control of
Products and Product Labelling ’’for further details.
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Inspections and Enquiries
Our retail stores are subject to regular inspections by various government departments including
the Department of Health ( ‘‘DoH’’), Food and Environmental Hygiene Department, Customs and Excise
Department ( ‘‘C&ED ’’)a n dC e n t r ef o rF o o dS a f e t yi nr e l a t i o nt op r o d u c t ss o l db yu s .D u r i n gt h eT r a c k
Record Period and up to the Latest Practicable Date, we had received certain enquiries from the relevant
authorities:
. In June 2025, one of our retail stores was contacted by C&ED concerning a complaint by a
consumer to the C&ED for inconsistency of price on invoice and price tag. The C&ED
interviewed one of our staff members subsequently. As at the Latest Practicable Date, the
matter remained at the enquiry stage with no ch arge, penalty or enforcement action taken to
date. As advised by our Hong Kong Legal Counsel, based on the current status and nature of
the enquiry, there is no indication of material regulatory risk arising from this incident.
. In December 2023, there were two instances wh ere C&ED officers seized certain skincare
products from one of our retail stores, alleging that the parallel-imported product labels
differed from the official Hong Kong version as the Chinese version of the caution label was
omitted from the packing due to the Group ’s inadvertent oversight. After investigation, both
cases were closed in December 2024 and March 2025, respectively, and the seized goods
were released and returned to us without further action.
. In November 2023, one of our retail stores was contacted by the C&ED concerning
discrepancies found on the product label of certain fish oil products and the official
information held by the DoH. The matter relat ed to a private label product where our OEM
supplier applied a label with a misspelling error on the packing. The case resulted in a verbal
warning issued by the C&ED against the Group, after which the C&ED took no further
action.
. In July 2023, officers of the C&ED seized certa in medicated oil from bearing suspected
forged trademark from us and arrested certain employees of our Group. Following the
investigation, all arrested employees were re leased and their bail monies were returned. No
further action has been taken against the employees or our Group. As advised by our Hong
Kong Legal Counsel, the matter appears to hav e concluded as at the Latest Practicable Date
without any prosecution or ongoing regulatory concern.
The Directors confirmed that none of the above enquiries from the relevant authorities concluded
that any of the products were unauthentic or required the cessation of sales of any product.
During the Track Record Period, we received vari ous complaints referred to us from the Consumer
Council regarding auth enticity of our products:
. In June 2025, we received a comp laint lodged by a customer alleging that certain skincare
product purchased from us caused skin allergy. Upon investigation, we verified that the
product in question was an authentic product pr ocured from a supplier other than an Official
Channel Supplier. We conducted a further inspection on the batch of products in question and
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found no quality issues. We duly responded by denying the allegation and confirming that the
relevant products were of normal quality and genuine. No further action was taken by the
Consumer Council.
. In March 2025, we received a complaint lodged b y a customer alleging that a certain health
supplement product purchased from us were not t h es a m ea st h eg e n u i n ep r o d u c t s .B a s e do n
photos of the alleged products provided with the complaint, we noted that the product in
question was a product by another brand and did not raise authenticity concerns. Despite our
request for further information, no response was received from the Consumer Council or the
said customer. No further action was taken by the Consumer Council.
. In March 2025, we received a complaint lodged by a customer alleging that a certain skin
care product purchased from us carried an odor . Based on the batch number provided by the
customer, we verified that the product in question was procured from a supplier other than an
Official Channel Supplier and of the same version as those available at authorized dealers ’
retail outlets in Hong Kong. We conducted a further inspection on the batch of products in
question and found no quality issues. We duly responded by explaining our refusal to offer
return or refund as there was no quality issue a ssociated with the product. No further action
was taken by the Consumer Council.
. In August 2024, we received a complaint lodged by a customer alleging that certain skincare
product purchased from us were not genuine and had expired. We provided proof of
authorized distributorship and verified our procurement record that the batch of product in
question was supplied to us adequately before the expiry date. We duly responded by denying
the allegations and confirming that the relevant products were compliant with Hong Kong
laws and had not expired by the time of purchase. No follow-up action was taken by the
Consumer Council thereafter.
As advised by our Hong Kong Legal Counsel, as of the Latest Practicable Date, the above matters
appeared to have been concluded without any prosecution, regulatory enquiry, or ongoing concern.
LICENCES AND PERMITS
Our Directors confirm that we had obtained all necessary material licences for our business
operation in Hong Kong, thus being in compliance with relevant laws and regulations as at the Latest
Practicable Date. Our Directors confirm that our Group did not experience any material difficulties in
obtaining and/or renewing such licences. Further, our Directors are not aware of any circumstances that
would significantly hinder or delay the renewal of such licences upon their expiration. Therefore, our
Directors do not foresee any major difficulties in compliance with such licencing requirements that
would cause material impacts on our Group ’s operations and business.
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The table below sets forth the details of the licen ces obtained by our Group that are material to our
operation and business as at th e Latest Practicable Date:
Number of licences and their remaining
period of validity from the Latest
Practicable Date
Type of licence Within one year More than one year
Listed Sellers of Poisons 8 (Note 1) —
Authorised Seller of Poisons Licence 15 (Note 2) —
Pesticides Licence 30 —
Permit to sell frozen confections
(other than soft ice cream)
1 —
Wholesaler Licence in Proprietary Chinese
Medicines
— 1
Wholesale Dealer ’s Licence to Supply Dangerous
Drugs (Part II)
1 —
Wholesale Dealer Licence 1 —
Antibiotics Permit (To Deal in Substances and
Preparations to Which the Antibiotics Ordinance
applies)
1 —
Certificate of Drug/Product Registration 7 —
Import/Supply of Part I Registered Pesticides
Licence
1 —
Food Importer/Distributor Registration — 2
Import & Export Licence for Liquor issued by the
C&ED pursuant to the Dutiable Commodities
Ordinance
1 —
Certificate of Registrat ion (Ordinary Registered
Supplier) issued by the Environmental Protection
Department in accordance with the Product Eco-
responsibility (Regulated Articles) Regulation
(Cap. 603C) concerning co ntainer recycling levy
1 —
Note 1: As at the Latest Practicable Date, six subsidiaries were in the process of a pplying for Listed Sellers of Poisons
(‘‘LSP’’) Licence. According to our Hong Kong Legal Counsel, there appears to be no legal impediment or known
compliance issue that would adversely affect the grant of these LSP Licences to the subsidiaries and the LSP
Licences are expected to be issued in the second quarter of 2026.
Note 2: As at the Latest Practicable Date, t wo subsidiaries were in the process of applying for Authorised Seller of
Poisons ( ‘‘ASP’’) Licence. According to our Hong Kong Legal Counsel, there appears to be no legal impediment
or known compliance issue that would adversely affect the grant of these ASP Licences to the subsidiaries and
the ASP Licenses are expected to be issued in the second quarter of 2026.
Note 3: For the licences which bear validity within one year, the relevant governing authorities notify our Group to start
renewal around 3 months prior to expiry. Our Group would t hen complete the relevant renewal documentations.
During the Track Record Period till the Latest Practic able Date, our Group has not encountered any legal or
practical impediments in the renewal.
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Note 4: According to our Hong Kong Legal Counsel, Certificate of Registration of Premises under Section 13 of the PPO
for registration of the premises to conduct retail sale o f controlled medicines as an Authorized Seller of Poisons
(‘‘ASP’’) (referred to by the Group as ‘‘Part I & II Licence ’’) and Listed Sellers of Poisons ( ‘‘LSP’’) (referred to
by the Group as ‘‘Part II Licence ’’) are the two common certificates for sale of regulated pharmaceutical
products in Hong Kong. Both licenses are issued by the Drug Office of the Department of Health ( ‘‘DoH’’).
For pharmaceutical products containing Part 1 poisons, they can only be sold in ASP in the presence and under
the supervision of registered pharmacist. For pharmaceutical products that contain Part 2 poisons are referred as
Over-The-Counter medicines ( ‘‘OTC’’) which can be sold in ASP and LSP. For pharmaceutical products that do
not contain any poisons can be sold in any retail shops.
Only an ASP can sell prescription medicines under the authority of a prescription with the supervision of a
pharmacist. At these premises, a pharmacist will be on du ty at specified hours and it is allowed to use or display
the ‘‘Rx’’logo . For LSP, there is no requirement for pharmacists to be on duty. They cannot sell pharmaceutical
products containing Part 1 poisons, including prescription medicines and are prohibited from using or displaying
the ‘‘Rx’’logo. Nevertheless, they are authorised to sell medi cines that are non-poisons or Part 2 poisons, such as
general cold and flu medications.
We will apply to renew the relevant licenses when they are due to expire, and our Directors, as
advised by our Hong Kong Legal Counsel, are not aware of and do not foresee any legal impediment to
renew such licenses when they expire.
Compliance with regulations regarding prescribed drugs
Some of our prescribed drug products are subject to sp ecific governmental regulatory requirements
in Hong Kong, such as recording and registration. Our Group has in place a strict set of pharmacy
supervision procedures regarding such specific dru g products. In any event, the sales of these specific
drug products only accounts for a small portion of our Group ’s business volume with limited impact on
our overall operations and profitability. During the Track Record Period and up to the Latest Practicable
Date, based on the best knowledge of our Directors and as advised by our Hong Kong Legal Counsel
after due enquiry, all pharmaceutical products we sol d that required registration with the Pharmacy and
Poisons Board of Hong Kong had been registered as required.
INTELLECTUAL PROPERTY
We operate our business and our retail stores under our brands ‘‘Lung Fung ( 龍豐)’’(
),
‘‘Lung Fung Mall ( 龍豐Mall) (
 )’’and ‘‘Lung Fung Cosmetic ’’(‘‘龍豐藥粧’’)(
 )i n
Hong Kong. As at the Latest Practicable Date, we had registered trademarks in Hong Kong, the PRC,
Macao, India, Switzerland, Japan, Australia, New Zealand, Canada, the United States, South Korea,
Taiwan, the United Kingdom, Vietnam, Cambodia, the European Union, Singapore, Malaysia, Thailand,
Indonesia. We have registered trademarks in the P RC for the purpose of protecting our goodwill and
reputation among potential PRC customers who may visit our retail stores in Hong Kong. We typically
register trademarks in the countries where our priv ate label products were manufactured. As at the Latest
Practicable Date, our Group had re gistered various domain names.
For details of the intellectual property rights which are material to our Group ’s business, please
refer to the paragraph headed ‘‘Appendix V — Statutory and General Information — B. Further
Information About Our Business — 2. Our material intellectual property rights ’’in this prospectus.
Our Directors confirm that, during the Track Record Period and up to the Latest Practicable Date,
we were not aware of any material infringement (i) by us of any intellectual property rights owned by
third parties; or (ii) by any third parties of any int ellectual property rights owned by us, and there were
BUSINESS
– 197 –


--- page 207 ---
no disputes or infringements in connection with our intellectual property rights pending or threatened
against our Group which could have a material adverse effect on our operations or financial
performance, and we had not been involved in any mater ial proceedings, disputes or claims in relation to
infringement of any intellectual property rights.
AWARDS AND RECOGNITION
We have earned numerous awards and recognitions throughout our operating history, which we
attribute to the reputation of our Group and the quality and range of our products. For example, we were
recognized as a ‘‘Popular Cosmeceutical Store ’’ (‘‘人氣藥妝’’)i nt h e ‘‘01 Quality Life Brand and
Service Awards 2023 ’’and were awarded ‘‘Favourite Parent-Child Cosmeceutical Store ’’(‘‘最愛親子藥
妝’’)i nt h e ‘‘01 Parent-Child Favourite Life Brand Awards 2023 ’’by online media HK01 in 2023. These
awards serve to validate our customers ’ trust and recognition of our brand and demonstrate our
commitment to quality service.
CHARITY AND CORPORATE SOCIAL RESPONSIBILITY
We attach great importance to corporate social res ponsibility and participates in many charitable
initiatives. Throughout the years, we have sponsored or participated in the following charitable or ESG
activities:
. We sponsored the 2025 Youth Inclusion 3x3 Basketball Open Championship organized by
WeCharity;
. We were a partner of Plan International Hong Kong in 2023 and 2024;
. We donated mooncakes to Hong Kong Family Welfare Society in 2024;
. We organized ‘‘Rice Distribution for Charity ’’(派發平安米) in Hong Kong in 2024 where we
gave away 1000 sets of rice packs and lunche on meat to elderlies in Sheung Shui area;
. We participated in voluntary work at an elderly home managed by Hong Kong Buddhist
Association in 2024;
. We donated thermal bottles to an elderly home managed by Tung Wah Group of Hospitals in
2023; and
. We supported Cheerful Masks Act campaign organized by H.K. Rehabilitation Power in
2020.
BUSINESS
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--- page 208 ---
OUR CONTROLLING SHAREHOLDERS
Immediately following completion of the Global Offering and Capitalisation Issue (assuming the
Over-allotment Option is not exercised), TTK Holding will hold 75% of the Company. TTK Holding is
an investment holding company owned by Mr. Tse, Mrs. Tse and Ms. Tse as to 97.29%, 2.70% and
0.01%, respectively. As such, TTK Holding, Mr. Tse, Mrs. Tse and Ms. Tse will be the controlling
shareholders of the Company and will continue to hold a controlling interest in our Company upon
completion of the Global Offering and the Capitalisation Issue. Details of the background of our Mr. Tse
and Ms. Tse are set out in the section headed ‘‘Directors and Senior Management ’’in this prospectus.
During the Track Record Period, save as disclosed in this prospectus, we did not have any business
dealings with the other companies associated with or controlled by our Controlling Shareholders and
there was no overlapping business between our Group and our Controlling Shareholders.
As at the Latest Practicable Date, our Controlli ng Shareholders confirmed that, apart from the
business operated by us, they and their respective clo se associates and/or companies controlled by them
do not hold or conduct any business which compet es, or is likely to compete, either directly or
indirectly, with our business, and would require dis closure pursuant to Rule 8.10 of the Listing Rules.
INDEPENDENCE FROM OUR CONTROLLING SHAREHOLDERS
Our Directors do not expect that there will be any significant transactions between our Group and
our Controlling Shareholders upon or shortly after the Listing, other than those set out in the subsection
headed ‘‘ — Operational Independence ’’ b e l o wi nt h i ss e c t i o n .W ea r ec a p a b l eo fc a r r y i n go no u r
business independently from and does not place undue reliance on our Controlling Shareholders, taking
into consideration the following factors:
Management independence
Our Board comprises two executive Directors and three independent non-executive Directors. Mr.
Tse and Ms. Tse are our executive Directors and each of them is a Controlling Shareholder. Having
considered the following factors, our Directors cons ider that our management is capable of operating
independently free from the Controlling Shareholders after the Listing:
(a) each of our Directors is aware of his/her fiduciary duties as a Director which require, among
other things, that he/she acts for the benefit and in the best interests of our Company and
does not allow any conflict between his/her duties as a Director and his/her personal interest;
(b) in the event that there is a potential conflict of interest arising out of any transaction to be
entered into between us and our Directors or the ir respective close asso ciates, the interested
Director(s) shall abstain from voting at t he relevant board meetings of our Company in
respect of such transactions and shall not be counted in the quorum unless otherwise
permitted by the Articles;
(c) we have established internal control procedures independent from our Controlling
Shareholders to facilitate the effective operation of our business activities;
(d) all our licences which are material to the operation of our Group are held by our subsidiaries
instead of our Controlling Shareholders;
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
– 199 –


--- page 209 ---
(e) save as disclosed in the section ‘‘Directors and Senior management ’’in this prospectus, our
senior management members are independent from our Controlling Shareholders and are
responsible for our daily operations in relation to finance, sales and marketing, procurement
and operations; and
(f) our independent non-executive Directors h ave sufficient knowledge, experience and
competence, and will bring independent judgment to the decision making process of our
Board, taking into account the advi ce of our senior management.
During the Track Record Period, certain entities controlled by our Controlling Shareholders entered
into related party transactions with our Group in the ordinary course of our business. Such related party
transactions are disclosed in Note 35 to the Accountants ’ Report set out as Appendix I to this
prospectus.
Our Directors confirm that, there will not be any oth er continuing connected transactions with our
Controlling Shareholders immediately after the Listing other than fully exempted de minimis
transactions under Rule 14A.76 of the Listing Rules.
Financial independence
During the Track Record Period, Mr. Tse provided guarantees and granted mortgages over his
properties as security (the ‘‘Founder ’s Guarantees ’’) for certain loans lent to our Group (the
‘‘Founder ’s Guaranteed Loans ’’) with maturity dates up to July 2040. The Founder ’s Guaranteed Loans
were utilised in our ordinary course of business. As at 31 March 2026, the amount of the Founder ’s
Guaranteed Loans was approximately HK$532.7 million. The Founder ’s Guarantees are on normal
commercial terms and are not secured by any assets of our Group, therefore they are fully exempted
connected transactions in accordance with rule 14A. 90 of the Listing Rules.
We intend to release the personal guarantee in the Founder ’s Guaranteed Loans upon Listing and
replace with corporate guarantee of Lung Fung Group Holdings Limited upon listing, and we are in the
process of discussing with the relevant lending banks in relation thereto. As at the Latest Practicable
Date, we have obtained consent from all the relevant lending banks and were in the process of finalising
the documents for execution, which would be completed upon the Listing. With the replacement of the
personal guarantee by the corporate guarantee, our Directors are of the view that our Group will be able
to secure loans at comparable terms and secure alte rnative credit line facilities without the assistance,
guarantee or security from the Controlling Shareholders.
Notwithstanding the existence of the Founder ’s Guaranteed Loans, our Directors are of the view
that we are financially independent of our Controlling Shareholders and/or their close associates for the
following reasons:
(1) we have sufficient capital to operate our business independently. As at 31 March 2026, our
cash and cash equivalents amounted to approximately HK$74.0 million. We are capable of
obtaining, if necessary, financing from Independent Third Parties banks without relying on
any guarantee or security provided by our Controlling Shareholders and/or their close
associates. In particular, as at the Latest Pract icable Date, several i ndependent third-party
commercial banks confirmed they were willin g to provide our Group in aggregate HK$714.9
million credit line facilities, without any a ssistance, guarantee or security from our
Controlling Shareholders, subject to regulatory requirements, negotiation of the detailed
terms and the customary credit policies of suc h banks. As at the Latest Practicable Date, we
have obtained indication and agreed the terms with the banks in relation to the provision of
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
– 200 –


--- page 210 ---
credit line facilities. We were in the process of finalising the loan documents, which would
be completed before the Listing. Having cons idered the financial status and business
development of our Group, our Company considers that it can obtain the credit line facilities
on comparable terms as the existing loans obtained by our Group. Such loans from
independent third-party commercial bank s can be used as our working capital, and are
sufficient to cover the Founders ’ Guarantees; and
(2) we have an independent financial syste m and make financial decisions according to our
Group ’s own business needs independently. We hav e internal control an d accounting systems
and a finance department which can make financial decisions independently. None of our
Controlling Shareholders and/or their close associates interferes with our use of funds. We
have also established an audit committee comprising three independent non-executive
Directors in compliance with Rule 3.21 of the Listing Rules.
Operational independence
We are capable of making business decisions independently. On the basis of the following factors,
our Directors believe that we will continue to operate independently from our Controlling Shareholders
and companies controlled by our Controlling Shareholders:
(a) we have established a set of internal control measures to facilitate the effective operations of
our business;
(b) we have our own administrative and corporate governance infrastructure across each of our
core functions;
(c) our customers are primarily retail customers from the general public and our suppliers are all
independent from our Controlling Shareholders and we do not rely on our Controlling
Shareholders or their respective close associ ates for any access to suppliers and customers;
(d) we have an independent management team to handle our day-to-day operations; and
(e) we are in possession of all relevant licences and workforce necessary to carry on and operate
our business independent from the Controlling Shareholders and their associates.
As at the Latest Practicable Date, (i) our headquar ters and warehouse in Fanling, three retail stores
and two staff quarters were leased from various ent ities controlled by Mr. Tse , our executive Director,
chairman of our Board, chief executive officer and one of our Controlling Shareholders; and (ii) one
staff quarter was leased from Mrs. Tse, one of our Controlling Shareholders. For further details, please
see ‘‘Connection Transactions ’’in this prospectus.
G i v e nt h a t( i )t h eP r o p e r t yL e a s i n gA g r e e m e n t sa re on normal commercial terms or better after
arm’s-length negotiations, and (ii) even if Mr. Tse a nd/or Mrs. Tse terminates such agreements, the
interruption to our operations would be mitigated by our ability to secure alternative leases in the market
and our Directors believe that there should be no mat erial obstacles for our Group to find alternative
leases in the market at comparable terms and prices based on the present market conditions, and the
lease of properties from Mr. Tse and/or Mrs. Tse does not affect our operational independence.
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
– 201 –


--- page 211 ---
Based on the above, our Directors are of the view that our Group can operate independently of our
Controlling Shareholders and their close associates upon Listing.
CORPORATE GOVERNANCE MEASURES
Our Company will comply with the provisions of the Corporate Governance Code set out in
Appendix C1 to the Listing Rules, which sets out principles of good corporate governance. We recognise
the importance of good corporate governance in the protection of our Shareholders ’ interests. We have
adopted the following measures to safeguard good corporate governance standards and to avoid potential
conflict of interests between our Gro up and our Controlling Shareholders:
(a) in preparation for the Listing, our Company has conditionally adopted our Articles of
A s s o c i a t i o nt oc o m p l yw i t ht h eL i s t i n gR u l e s. In particular, our Arti cles of Association
provide that, except for certain exceptions permitted under the Articles, a Director shall not
vote (nor be counted in the quorum) on any resolution of the Board approving any contract or
arrangement or any other proposal in which such Director or any of his/her close associates is
materially interested;
(b) we are committed that our Board should include a balanced composition of executive and
independent non-executive Directors. We have appointed three independent non-executive
Directors and we believe our independent non-executive Directors possess sufficient
experience and they are free of any business and/or other relationship which could interfere
in any material manner with the exercise of th eir independent judgment and will be able to
provide an impartial and external opinion to protect the interests of our public Shareholders.
For details of our independent non-executive Directors, please see ‘‘Directors and Senior
Management — Board of Directors ’’in this prospectus;
(c) we have appointed DBS Asia Capital Limited as our compliance adviser, which will provide
advice and guidance to us with respect to compliance with the applicable laws and the Listing
Rules, including but not limited to various requirements relating to Directors ’ duties and
internal controls;
(d) the management structure of our Group includes an audit committee, a remuneration
committee and a nomination committee, the terms of reference of each of which will require
them to be alert to prospective conflict of i nterest and to formulate their proposals
accordingly; and
(e) our Directors, including our independent non-executive Directors, will be able to seek
independent professional advice from external parties in appropriate circumstances at our
Company ’sc o s t s .
Save as disclosed in this prospectus, our Company is expected to comply with the provisions of the
Corporate Governance Code set out in Appendix C1 to the Listing Rules which sets out principles of
good corporate governance in relation to, among oth ers, Directors, chief ex ecutive, Board c omposition,
the appointment, re-election and removal of Directors, their responsibilities and remuneration and
communication with our Shareholders. Our Company will state in our interim and annual reports
whether we have compiled with such code, and will provide details of, and reasons for, any deviation
from it in the corporate governance reports attached to our annual reports.
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
– 202 –


--- page 212 ---
CONNECTED PERSONS
The following parties, with which our Group has entered into the Property Leasing Agreements (as
defined below) in the ordinary and usual course of business, will become our connected persons:
Mr. Tse our executive Director, chairman of our Board, chief executive
officer and one of our Controlling Shareholders
Mrs. Tse the spouse of Mr. Tse, our executive Director, chairman of our
Board, chief executive officer and one of our Controlling
Shareholders
Huge Max (Hong Kong)
Limited
a company wholly owned by Mr. Tse and therefore, is an associate
of Mr. Tse and our connected person.
Huge Max Development
Limited
a company wholly owned by Mr. Tse and therefore, is an associate
of Mr. Tse and our connected person.
Max Profit Investment
(Holdings) Limited
a company wholly owned by Mr. Tse and therefore, is an associate
of Mr. Tse and our connected person.
Lung Fung International
Trading Limited
a company owned by Mr. Tse and Ms. Tse as to 90% and 10%,
respectively, and therefore, i s an associate of Mr. Tse and our
connected person.
Full Group Corporation
Limited
a company wholly owned by Mr. Tse and therefore, is an associate
of Mr. Tse and our connected person.
ONE-OFF CONNECTED TRANSACTIONS
Property leasing agreements
As at the Latest Practicable Date, (i) our headquar ters and warehouse in Fanling, three retail stores
and two staff quarters were leased from various ent ities controlled by Mr. Tse , our executive Director,
chairman of our Board, chief executive officer and one of our Controlling Shareholders; and (ii) one
staff quarter was leased from Mrs. Tse, one of our Controlling Shareholders (collectively, the ‘‘Premises
leased from Connected Persons ’’).
CONNECTED TRANSACTIONS
– 203 –


--- page 213 ---
Details of the property leasing agreements in r elation to Premises leased from Connected Persons
(the ‘‘Property Leasing Agreements ’’)s u b s i s t i n ga sa tt h eL a t e s tP r a c ticable Date are set out below:
Headquarters and warehouse
Property
Date of
agreement Lessor Lessee Term of the lease Location of the Premises Use
Approximate
GFA
Monthly
rent
(sq. ft.) (HK$)
1. Our
headquarters
and
warehouse
21 February
2025
Huge Max (Hong
Kong) Limited
LFP 10 February 2025
to 9 February
2027
Room G01, Lung Fung Group
Centre, No. 23 Yip Cheong
Street, Fanling, New
Territories
Warehouse 4,252.0 82,000
9 April 2025 Huge Max (Hong
Kong) Limited
LFP 1 April 2025 to
31 March 2027
Room G02, Lung Fung Group
Centre, No. 23 Yip Cheong
Street, Fanling, New
Territories
Warehouse 1,600.0 5,000
27 March 2026 Huge Max (Hong
Kong) Limited
LFP 1 April 2026 to
31 March 2028
1/F, Lung Fung Group Centre,
No. 23 Yip Cheong Street,
Fanling, New Territories
Warehouse 28,226.0 316,100
27 March 2026 Huge Max (Hong
Kong) Limited
LFP 1 April 2026 to
31 March 2028
Room 201, Lung Fung Group
Centre, No. 23 Yip Cheong
Street, Fanling, New
Territories
Warehouse 12,832.0 135,000
27 March 2026 Huge Max (Hong
Kong) Limited
LFP 1 April 2026 to
31 March 2028
3/F, Lung Fung Group Centre,
No. 23 Yip Cheong Street,
Fanling, New Territories
Warehouse 28,226.0 296,373
27 March 2026 Huge Max (Hong
Kong) Limited
LFP and Top Harvest
Pharmaceuticals
Company Limited
1 April 2026 to
31 March 2028
4/F, Lung Fung Group Centre,
No. 23 Yip Cheong Street,
Fanling, New Territories
Warehouse 28,226.0 282,370
27 March 2026 Huge Max (Hong
Kong) Limited
LFP 1 April 2026 to
31 March 2028
5/F, Lung Fung Group Centre,
No. 23 Yip Cheong Street,
Fanling, New Territories
Office and
Warehouse
28,226.0 248,400
Total: 131,588 1,365,243
CONNECTED TRANSACTIONS
– 204 –


--- page 214 ---
Retail stores
Retail store
Date of
agreement Lessor Lessee Term of the lease Location of the Premises Use
Approximate
UFA
Monthly
rent
(sq. ft.) (HK$)
1. Lung Fung Pop
Up (Kwun
Tong)
20 March 2025 Huge Max
Development
Limited
LFP 20 March 2025 to
19 March 2027
Unit 2 of Workshop on
Ground Floor, Camelpaint
Buildings Block III, No.60 Hoi
Yuen Road, Kowloon
Retail 1,000.0 200,000
21 January 2025 Huge Max
Development
Limited
LFP 20 January 2025
to 20 January
2027
Unit 3 of Workshop on
Ground Floor and Store on the
Cockloft, Camelpaint Buildings
Block III, No.60 Hoi Yuen
Road, Kowloon
1,300.0 220,000
Total: 2,300.0 420,000
2. Lung Fung
Cosmetic
23 March 2026 Max Profit
Investment
(Holdings)
Limited
Well Harvest (China)
Limited
1 April 2026 to
31 March 2029
Shop A, B, C & D,
G / F . ,N o .6 6 ,S a nH o n gS t r e e t ,
Sheung Shui, New Territories
Retail 2,244.0 300,000
3. Lung Fung Mall
(San Fung
Avenue
store)
23 March 2026 Lung Fung
International
Trading Limited
Lung Fung Dispensary
(3rd store)
Limited
1 April 2026 to
31 March 2029
G/F. and cockloft,
Shop A, 113 –119
San Fung Avenue,
Sheung Shui, New Territories
Retail 880.0 168,000
23 March 2026 Max Profit
Investment
(Holdings)
Limited
Lung Fung Dispensary
(3rd store)
Limited
1 April 2026 to
31 March 2029
G/F. and cockloft,
Shop B, 113 –119
San Fung Avenue, Sheung
Shui, New Territories
905.0 168,000
23 March 2026 Lung Fung
International
Trading Limited
Lung Fung Dispensary
(3rd store)
Limited
1 April 2026 to
31 March 2029
G/F., Shop E3, 113 –119
San Fung Avenue, Sheung
Shui, New Territories
280.0 30,000
Total: 2,065.0 366,000
Staff quarters
Property
Date of
agreement Lessor Lessee Term of the lease Location of the Premises Use
Approximate
GFA
Monthly
rent
(sq. ft.) (HK$)
1. Staff quarter 27 September
2024
Full Group
Corporation
Limited
LFP 1 October 2024 to
30 September
2026
No.68 San Uk Tsuen, Lung
Yeuk Tau, Fanling, New
Territories
Residential 1,975.0 40,000
2. Staff quarter 1 August 2025 Mrs. Tse LFP 1 August 2025 to
31 July 2026
Flat A, 2/F., San Fung House,
No.113 –119 San Fung Avenue,
Sheung Shui, New Territories
Residential 415.0 10,000
3. Staff quarter 16 October
2024
Max Profit
Investment
(Holdings)
Limited
LFP 16 October 2024
to 15 October
2026
1/F., No.66 San Hong Street,
Sheung Shui, New Territories
Residential 1,029.0 20,000
CONNECTED TRANSACTIONS
– 205 –


--- page 215 ---
The terms under the Property Leasing A greements were determined after arm ’s length between the
parties to the Property Leasing Agreements, following their arm ’s length negotiations with reference to
market prices of comparable properties of similar conditions in the vicinity. Our Directors are of the
view that the Property Leasing Agreements have been entered into on normal commercial terms or
better.
Reasons and benefits of the transaction
Historically, our Group leased the premises from (i) the entities controlled by Mr. Tse as retail
shop, office and warehouse and staff quarters (as the case may be); and (ii) Mrs. Tse as staff quarters,
respectively. To avoid unnecessary costs associated with searching for new premises and engaging in
prolonged negotiations with third-party property owners for lease agreements, our Group intends to
continue with the leasing arrangements after the Listing.
In light of the foregoing, our Directors are of the view that the leasing arrangements are fair and
reasonable and in the interests of our Shareholders as a whole. Notwithstanding the above, the Property
Leasing Agreements do not affect our operational independence. For further details, please see
‘‘Relationship with Our Controlling Shareholders — Independence from Our Controlling Shareholders
— Operational Independence ’’in this prospectus.
Accounting treatment and the Listing Rules implications
In accordance with HKFRS 16 ‘‘Leases ’’applicable to our Group and pursuant to the guidance
issued by the Stock Exchange, when an issuer enters into a lease transaction as a lessee and where the
lease is subject to an agreement with fixed terms, i t is treated as a one-off transaction (i.e., an
acquisition of capital assets). As such, the transactions under the Property Leasing Agreements will be
recognised as acquisitions of right-of-use assets and constitute one-off transactions of our Company
before the Listing and will not be classified as continuing connected transactions under Chapter 14A of
the Listing Rules. Accordingly, the reporting, annual review, announcement, circular and independent
shareholders ’ approval requirements with regard to continuing connected transactions in Chapter 14A of
the Listing Rules will not be applicable to the Property Leasing Agreements.
The balance of the lease liabilities in relation t o the Premises leased from the Connected Persons
according to HKFRS 16 as at 30 November 2025 am ounted to approximat ely HK$14.0 million.
CONNECTED TRANSACTIONS
– 206 –


--- page 216 ---
BOARD OF DIRECTORS
Our Board currently consists of five Directors, comprising two executive Directors and three
independent non-executive Directors. The duties and powers conferred on our Board include, among
other matters, performing corporate governance duties, convening Shareholders ’ meetings and reporting
to Shareholders, implementing Shareholders ’ resolutions, formulating our Company ’s business plans and
investment plans, formulating our Company ’s annual budget and final accounts, formulating our
Company ’s proposals for profit distributions and recovery of losses, formulating our Company ’s
proposals for the increase or reduction of registered capital; and exercising other duties and powers as
conferred by the Articles of Association.
Our Board is responsible for and has general powers for the management and conduct of our
business.
The following table sets forth certain information regarding the members of our Board:
Name Age Position(s)
Date of
Joining
our Group
Date of
Appointment
as our Director
Roles and
Responsibilities
Relationship with
Other Directors
or Senior
Management
Members
Executive Directors
Mr. Tse Siu Hoi
(謝少海)
58 Executive Director,
chairman of the
Board and chief
executive
officer
October
1992
October 2025 Responsible for overall
management and
operations, strategic
planning and business
development of our
Group
Father of Ms. Tse;
Brother-in-law of
Mr. Chan Wai
Kong
Ms. Tse Chui Ying
(謝翠瑩)
31 Executive Director July 2019 October 2025 Responsible for business
and supply chain
operations, and
product development
of our Group
Daughter of Mr. Tse
and niece of Mr.
Chan Wai Kong
Independent non-executive Directors
Mr. Chu Woon Ming
(朱煥明)
80 Independent non-
executive
Director
November
2025
November 2025 Responsible for
overseeing the
management of our
Group independently
None
Mr. Yau Sheung Yu
(尤向宇)
61 Independent non-
executive
Director
November
2025
November 2025 Responsible for
overseeing the
management of our
Group independently
None
Ms. Woo Pui Yan
Joyce ( 胡珮茵)
49 Independent non-
executive
Director
November
2025
November 2025 Responsible for
overseeing the
management of our
Group independently
None
DIRECTORS AND SENIOR MANAGEMENT
– 207 –


--- page 217 ---
Executive Directors
Mr. Tse Siu Hoi ( 謝少海), aged 58, is the chairman of the Board and our chief executive officer
and he was appointed as a Director in October 2025 and re-designated as an executive Director in
November 2025. He is primarily responsible for our Group ’s overall corporate strategies, management
and business development. He is also a member of Re muneration Committee. He has been the Managing
Director of LFP since January 2008.
Mr. Tse founded our Group in 1992. Since then, Mr. Tse has been instrumental in our business
expansion and has developed our Group from a small-scale operation of one local pharmacy in Sheung
Shui, New Territories, into one of Hong Kong ’s largest pharmacy and cosmetics retail chains.
Mr. Tse has over 30 years of experience in the pharmacy industry. He also serves as a director of
the following members of our Group:
. Top Harvest Pharmaceuticals Company Limited . Lucky Talent Corporation Limited
. Tai Fung Medicine Company Limited . Huge Harvest Trading Limited
. San Fung Health Limited . Grand Harvest Worldwide Limited
. Pearl Lake Global Limited . Gain Ocean International Limited
. Lung Fung Pharmaceutical (Group) Limited . Forever Rising Worldwide Limited
. Lung Fung Investment (Japan) Limited . Fancy Mind Corporation Limited
. Lung Fung Investment (China) Ltd . Dragon Mind Creation Limited
. Lung Fung Dispensary (Main Store) Limited . Kidbrooke Group Limited
. Lung Fung Dispensary (3rd Store) Limited . Harvest Smart Holdings Limited
Apart from his position in our Group, Mr. Tse has also been serving as the Consultant of the
Sheung Shui District Rural Committee since 2011. He is also the honorary president of the New
Territories Chiu Chow Federation from 2017 until present. Before establishing his own pharmacy
business and founding the Company, Mr. Tse received secondary school level of education and worked
at a dispensary shop owned by his brother-in-law. Prior to that, Mr. Tse worked in the garment industry
in the 1980s.
Mr. Tse is the father of Ms. Tse and the brother-in-law of Mr. Chan Wai Kong.
Ms. Tse Chui Ying ( 謝翠瑩), aged 31, was appointed as a Director in October 2025 and re-
designated as an executive Director in November 2025. She is primarily responsible for business and
supply chain operations, and product development of our Group. She is a member of our Nomination
Committee.
Ms. Tse serves as a director of the following members of our Group:
. Well Harvest (China) Limited . Great Harvest Enterprise Limited
. Pearl Lake Global Limited . Great Harvest Asia Investment Limited
. Master Grand Investment Limited . Grand Harvest Worldwide Limited
Ms. Tse obtained her bachelor ’s degree in Business and Management from Cardiff Metropolitan
University in June 2019.
DIRECTORS AND SENIOR MANAGEMENT
– 208 –


--- page 218 ---
After obtaining her bachelor ’s degree from the University of Cardiff Metropolitan University, she
returned to Hong Kong in 2019 to participate in the family retail business, serving as Assistant to the
Managing Director of LFP. When she first joined the Group, she was involved in the development of
OEM products, primarily focusing on skincare and personal care products. As she gained experience,
Ms. Tse also assisted her father, Mr. Tse, in managing and coordinating daily departmental operations of
our Group.
Ms. Tse is the daughter of Mr. Tse and the niece of Mr. Chan Wai Kong.
Independent non-executive Directors
Mr. Chu Woon Ming ( 朱煥明)( ‘‘Mr. Chu ’’), aged 80, was appointed as our independent non-
executive Director in November 2025. He is responsible for overseeing the management of our Group
independently. He is also the chairman of the Nomination Committee and a member of our Audit
Committee and Remuneration Committee.
He dedicated a total of 40 years to the Hong Kong Judiciary, with his career beginning in January
1965, where he performed general clerical duties. He then served as Clerk to High Court Judges from
February 1973 to July 1974, followed by his role as First Clerk at the Fanling Magistracy until June
1980. From June 1980 to September 1983, he was a Tribunal Officer at the Small Claims Tribunal, after
which he worked as First Clerk at the San Po Kong Magistracy until July 1987. Mr. Chu also acted as a
temporary special magistrate from time to time from July 1985 to September 1985. He then served as
Deputy Clerk of Court at the Supreme Court from July 1987 to March 1991, followed by his role as
Clerk of Court at the Supreme Court until September 1994. He was appointed Registrar of the District
Court from September 1994 to July 1998 and then becam e the Principal Judiciary Clerk (Administration)
to the Supreme Court from July 1998 to June 2001. He served as Acting Assistant Judicial Administrator
(Quality) until his retirement i n December 2004. Mr. Chu received h is secondary school education in
Hong Kong and matriculated in London through remote examination.
While Mr. Chu does not have industry-specific e xperience in beauty, health and pharmaceutical
retail operations, we believe that Mr. Chu ’s vast experience in the legal field strengthens the Board ’s
a b i l i t yt oa s s e s sa n dm i t i gate legal and regulatory risks, such as those arising from product liability,
consumer complaints or regulatory enfo rcement actions and enhances the Board ’s awareness and
gatekeeping ability to ensure compliance with legal and regulatory requirements governing the sale,
labelling, storage and promotion of the Group ’s products.
Mr. Yau Sheung Yu ( 尤向宇)( ‘‘Mr. Yau ’’), aged 61, was appointed as our independent non-
executive Director in November 2025. He is responsible for overseeing the management of our Group
independently. He is also the chairman of our Remuneration Committee and a member of our Audit
Committee and Nomination Committee.
Mr. Yau has more than 20 years of experience in commercial banking and financial services. Prior
to joining our Group, Mr. Yau worked at Bank of China (Hong Kong) Limited from June 1998 to
November 2024, and his last position held was deputy general manager in commercial banking. In his
senior leadership capacity as th e deputy general manager at Bank of China (Hong Kong) Limited, Mr.
Yau was mainly responsible for overseeing and guiding the bank ’s business developmen t and operations,
with a focus on business growth, risk governance, and regulatory compliance. In particular, Mr. Yau was
responsible for assisting the general manager in formulating business strategies, consolidating and
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expanding the bank ’s corporate and commercial client base, ove rseeing human resources arrangements,
ensuring robust asset quality and comprehensive risk control across the portfolio and ensuring that
frontline business activities adhered to applicable local laws, regulations and codes of conduct set by the
relevant regulatory agencies.
Mr. Yau obtained his Bachelor of Arts degree from t he University of Lethbridge, Alberta, Canada
in October 1992.
While Mr. Yau does not have industry-specific e xperience in beauty, health and pharmaceutical
retail operations, we believe that Mr. Yau ’s vast experience in the banking industry offers practical
insight into business strategy formulation, customer-base expansion and operational scaling for our
Group. Mr. Yau ’s experience in a senior management role at a major bank in Hong Kong also provides
the Board with robust risk-governance and regulatory-compliance experience, enabling the Board to
strengthen financial risk management, business operations monitoring and adherence to regulatory
requirements as a listed company.
Ms. Woo Pui Yan Joyce ( 胡珮茵)( ‘‘Ms. Woo ’’), aged 49, was appointed as our independent non-
executive Director in November 2025. She is respons ible for overseeing the management of our Group
independently. She is also the chairlady of our Audit Committee and a member of our Remuneration
Committee and Nomination Committee.
Ms. Woo is currently a partner of Foremost Accounting Advisers Limited, a company that is
principally engaged in providing technical accountin g and auditing consultation , monitoring reviews and
evaluation of quality management of certified p ublic accountants, techni cal review of financial
statements services, regulatory investigation and inspection support, and litigation support.
Prior to joining Foremost Accounting Advisers Limited in March 2024, she worked as a director in
the investigation and compliance department of the Accounting and Financial Reporting Council (the
‘‘AFRC ’’) from January 2008 till February 2024. Over her 16 years ’ tenure with AFRC, Ms. Woo ’s
responsibilities included reviewing financial statements to make recommendation as to whether an
investigation or an enquiry should be initiated; conducting enquiries to inquire into possible non-
compliance; and drafting invest igation and enquiry reports.
Ms. Woo worked at PricewaterhouseCoopers Hong Kong from September 1998 till December
2007, and her last position held was senior manager. Over these nine years, Joyce performed audits and
assurance services for Hong Kong companies.
Ms. Woo graduated from the University of British Columbia with a Bachelor ’sd e g r e ei n
Commerce in May 1998. She also obtained a Bachelor of Laws degree from the University of London
(External Programme) through distance learning in August 2004.
Ms. Woo became a member of American Institute of Certified Public Accountants in June 2000, a
member of Hong Kong Institute of Certified Public Accountants in January 2002 and a Certified Fraud
Examiner in December 2023.
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While Ms. Woo does not have industry-specific exp erience in beauty, health and pharmaceutical
retail operations, we believe that Ms. Woo ’s experience in accounting consultancy, regulatory and
auditing provides the Board with technical expertise in the financial review and management and assists
Board in her role as the chairlady of our Audit Committee.
We consider that, collect ively, our three independent non-ex ecutive Directors deliver a balanced
and independent perspective based on their respective experience to strengthen our regulatory
compliance, financial integrity, risk management a nd strategic decision-making ability, which will
contribute to our operations.
SENIOR MANAGEMENT
Our senior management consists of six member s, namely, Mr. Tse, Ms. Tse, Mr. Chan Wai Kong,
Ms. Wong Yin Kwan, Mr. Yee Chong Chiu and Mr. Chung Wai Wing. Details of their biographies are
set out below:
Mr. Tse Siu Hoi ( 謝少海), for whose biography please refer to the sub-section above headed ‘‘ —
Board of Directors — Executive Directors ’’.
Ms. Tse Chui Ying ( 謝翠瑩), for whose biography please refer to the sub-section above headed
‘‘ — Board of Directors — Executive Directors ’’.
Mr. Chung Wai Wing ( 鍾偉榮)( ‘‘Mr. Chung ’’), aged 57, joined our Group in December 2011
and is our Chief Financial Officer. H e is responsible for the overall financial management of our Group.
Mr. Chung has over 25 years in financial management. He worked at GP Industries Group from
June 1996 to May 2011, and his last position held was finance manager, which he was responsible for
overseeing the operation of the finance department.
Mr. Chung obtained his bachelor of Science (Economics) from the Queen Mary & Westfield
College, University of London in August 1992. He is a member of the Hong Kong Institute of Certified
Public Accountants.
Mr. Yee Chong Chiu ( 余創超)( ‘‘Mr. Yee ’’), aged 55, joined our Group in September 2021 and
has been our operation controller — retail since February 2024. He is responsible for our Group ’s
overall branch operations and supply chain management.
He served as our assistant operation controller — retail from September 2021 to February 2024.
Mr. Yee has over 20 years of experience in the management and operations of the pharmacy
industry. Prior to joining the Group, he worked at Park ’n Shop Ltd from October 1988 to September
1993, and his last position held was store manager. He then worked at Mannings from October 1993
until July 2013, and his last position held was senior area manager. Following this, he worked at
CRCare from July 2013 to January 2015, and his la st position held was senior area manager —
operations department. Mr. Yee re-joined Mannings in January 2015, where he worked there until July
2018, and his last position held was assistant regional operations manager. He then returned to CRCare
in August 2018 and worked there until September 2021, and his last position held was controller in
operations department.
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Mr. Yee received a Professional Diploma in Retai l Management from The Chinese University of
Hong Kong — Tung Wah Group of Hospitals Community College in May 2013.
Ms. Wong Yin Kwan ( 王燕君)( ‘‘Ms. Wong ’’), aged 53, joined the Group in January 2019 as a
sales and brand manager and has been our operation controller — cosmetics since June 2024. Ms. Wong
is primarily responsible for formulating and implem enting marketing strategies for cosmetic products
and managing all aspects of daily store operations.
Prior to joining our Group, Ms. Wong previously worked as a Store Manager of Bonjour Holdings
Limited from May 1998 to May 2008. She later served as the General Manager of Goldroyal Palace
Limited ( 城隍有限公司) from July 2008 to October 2018, during which she was responsible for
overseeing the company ’s cosmetics and skincare business in Hong Kong, Taiwan and Macau.
Ms. Wong received secondary school education in Hong Kong.
Mr. Chan Wai Kong ( 陳偉剛)( ‘‘Mr. Chan ’’), aged 44, joined our Group in October 2009 and
has been our purchasing director since March 2023. He is also a director of one of the members of the
Group, namely, Tai Fung Medicine Company Limited. Mr. Chan is primarily responsible for formulating
our Group ’s procurement strategies, managing daily procurement operations and handling daily
negotiations with suppliers and order processing.
Mr. Chan served as the Assistant to the Managing Director of LFP from October 2009 to
September 2015. He then worked as a purchasing manager of LFP from September 2015 to March 2023.
He has over 15 years of experience in procurement management. Prior to joining the Group, Mr.
Chan previously served as a Business Analyst in AGA Information Ltd. from September 2006 to July
2007, during which he had extensive experience in business & credit information gathering and related
analysis. He subsequently joined the Hong Kong Customs and Excise Department in July 2007 and left
in October 2009, and he was primarily responsible for tax collection and enforcement of intellectual
property rights and consumer interest.
Mr. Chan has also been serving as the supervisor ( 監事) of the Hong Kong General Chamber of
Pharmacy Limited ( 港九藥房總商會) since 2023. He has been actively involved in promoting
development in the pharmacy industry and fostering communication between the government and the
public.
Mr. Chan obtained his Bachelor degree in Busine ss Administration from the Hong Kong Shue Yan
University in October 2009. Mr. Chan is the brother-in-law of Mr. Tse and the uncle of Ms. Tse.
OTHER INFORMATION
Each of our Directors confirms that he or she (i) has obtained the legal advice referred to under
Rule 3.09D of the Listing Rules on 21 November 2025, and (ii) understands his or her obligations as a
director of a listed issuer under the Listing Rules.
Except as disclosed above, each of our Directors a nd members of senior management has not been
a director of any public company whose securities of which are listed on any securities market in Hong
Kong or overseas in the three years immediatel y preceding the date of this prospectus.
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Except as disclosed in the paragraph headed ‘‘C. Further Information about Our Directors and
Substantial Shareholders — 1. Particulars of Directors ’ Service Contracts and Appointment Letters ’’in
Appendix VI in this prospectus, he/she does not have any existing or proposed service contract with our
Company other than contracts expiring or determi nable by the relevant member of our Company within
one year without payment of compensation (other than statutory compensation).
Except as disclosed in the paragraph headed ‘‘C. Further Information about Our Directors and
Substantial Shareholders — 3. Disclosure of interests ’’in Appendix VI in this prospectus and above, he/
she has no interest in the Shares within the meaning of Part XV of the SFO.
None of our Directors has any interests in any business, which competes or is likely to compete,
either directly or indirectly, with our business which would require disclosure under Rule 8.10 of the
Listing Rules. Save as disclosed in this section, other than being a Director and member of the senior
management, none of our Directors and members of the senior management is related to other Directors
and members of the senior management.
Except as disclosed above, to the best knowledge, information and belief of our Directors having
made all reasonable inquiries, there was no other matter with respect to the appointment of our Directors
that needs to be brought to the atten tion of the Shareholders, and there was no information relating to
our Directors that is required to be disclosed pursuant to Rule 13.51(2) of the Listing Rules and no other
matters are required to be brought to the attention of Shareholders as at the Latest Practicable Date.
Each of the independent non-executive Directors has confirmed (i) his/her independence as regards
each of the factors referred to in Rules 3.13(1) to (8) of the Listing Rules, (ii) he/she has no past or
present financial or other interest in the business of the Company or its subsidiaries or any connection
with any core connected person of the Company under the Listing Rules as at the Latest Practicable
Date, and (iii) that there are no other factors that m ay affect his/her independence at the time of his/her
appointments.
KINSHIP
Save as disclosed in this section, there is no family or blood relationship among any of our
Directors and the senior management of our Company.
COMPANY SECRETARY
Ms. Lam Yin Ling ( 林燕玲)( ‘‘Ms. Lam ’’), was appointed as a company secretary of our
Company on 21 November 2025.
Ms. Lam was nominated by Boardroom Corporate Services (HK) Limited ( ‘‘Boardroom ’’) under
an engagement letter made between the Company and Boardroom, pursuant to which Boardroom has
agreed to provide certain corporate secretarial services to the Comp any. Ms. Lam joined Boardroom as
an assistant manager of the corporate secretarial unit in December 2022. She was promoted to manager
of the corporate secretarial unit of Boardroom since July 2025 and has over 12 years of experience in
the corporate secretarial field and has been providing professional corporate services to Hong Kong
listed companies. Prior to joining Boardroom, Ms. Lam joined the corporate services division of Tricor
Services Limited as an associate in July 2013. She was promoted to supervisor of the corporate services
division in January 2017 and resigned in June 2018. She worked as a company secretarial officer in
Allied Group Limited (stock code: 373), a company listed on Main Board of the Stock Exchange. Ms.
Lam worked in the tax practice of PwC Hong Kong as a senior associate from May 2021 to December
2022.
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Ms. Lam is an associate member of both The Char tered Governance Institute and The Hong Kong
Chartered Governance Institute, and awarded with the dual designations of Chartered Secretary and
Chartered Governance Professional.
Ms. Lam is currently the company secretary o r joint company secretary of Lvji Technology
Holdings Inc. (stock code: 1745) and AM Group Holdings Limited (stock code: 1849), both companies
listed on Main Board of the Stock Exchange and a company secretary of Asia Pioneer Entertainment
Holdings Limited (stock code: 8400), a company listed on GEM of the Stock Exchange.
Ms. Lam obtained a Master degree in Corporate Governance from the Hong Kong Polytechnic
University in September 2020 and a Bachelor ’s degree in Business Administration from Lingnan
University in November 2013.
BOARD COMMITTEES
Our Company has formed three Board commi ttees, namely, the Audit Committee, the
Remuneration Committee and the Nomination Committee.
Audit committee
We have established the Audit Committee on 18 May 2026 with written terms of reference in
compliance with Rule 3.21 of the Listing Rules and the Corporate Governance Code set out in Appendix
C1 to the Listing Rules. The primary duties of the Audit Committee are to review and approve our
Group ’s financial reporting process and intern al control and risk management system.
The Audit Committee consists of three members, namely Mr. Chu, Mr. Yau and Ms. Woo, all of
whom are independent non-executive Directors. The chairlady of the Audit Committee is Ms. Woo.
Remuneration committee
We have established the Remuneration Committee on 18 May 2026 with written terms of reference
in compliance with Rule 3.25 of the Listing Rules and the Corporate Governance Code set out in
Appendix C1 to the Listing Rules. The primary duties of the Remuneration Committee are to review and
determine the terms of remuneration packages, bonuses and other compensation payable to Directors and
senior management of our Group.
The Remuneration Committee consists of four members, namely Mr. Tse, Mr. Chu, Mr. Yau and
Ms. Woo, three of whom are independent non-executive Directors. The chairman of the Remuneration
Committee is Mr. Yau.
Nomination committee
We have established the Nomination Committee on 18 May 2026 with written terms of reference in
compliance with Rule 3.27A of the Listing Rules an d the Corporate Governance Code in Appendix C1
to the Listing Rules. The primary duties of the Nom ination Committee are to make recommendations to
our Board on the appointment of Directors and management of Board succession.
The Nomination Committee consists of four members, namely Ms. Tse, Mr. Chu, Mr. Yau and Ms.
Woo, three of whom are independent non-executive Directors. The chairman of the Nomination
Committee is Mr. Chu.
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CORPORATE GOVERNANCE CODE
Our Directors recognize the importance of incorporating elements of good corporate governance in
the management structures and internal control p rocedures of our Group so as to achieve effective
accountability.
Pursuant to Code Provision C.2.1 of the Corporate Governance Code set out in Appendix C1 to the
Listing Rules, the responsibilities between the chairperson and the chief executive officer should be
segregated and should not be performed by the same individual. We do not have a separate chairperson
of the Board and chief executive officer and Mr. Tse c urrently performs these two roles. In view of Mr.
Tse’s substantial contribution to and stewardship of our Group since our establishment, his market
acumen and over 30 years of experience in the retail of pharmaceutical and consumer products in Hong
Kong, our Board believes that vesting the roles of both chairperson and chief executive officer in Mr.
Tse has the benefit of ensuring strong, stable and co nsistent leadership within our Group and enables
prompt and effective overall strategic planning and decision-making, as well as facilitates the execution
of our Group ’s business operations. We consider it is appropriate and beneficial to our business
development and prospects that Mr. Tse continues to act as both the chairperson and the chief executive
officer of the Company after the Listing, and therefore do not currently propose to separate the functions
of Chairman and the chief executive officer.
To ensure sound corporate governance and maintain appropriate balance of power given the
overlapping roles of Mr. Tse, we will (i) ensure there are sufficient checks and balances in the Board, as
a decision to be made by our Board requires approval by at least a majority of our Directors, and our
Board comprises three independent non-executive D irectors with diverse expertise in areas such as
finance, legal compliance, and industry operations, which offers independent input and judgment from
their respective field of expertise and is in compliance with the requirement under the Hong Kong
Listing Rules; (ii) maintain oversight through our Board committees, including the Audit Committee,
Remuneration Committee, and Nomination Committe e, which are chaired by independent non-executive
Directors; (iii) continue to ensure that the overall strategic and other key business, financial, and
operational policies of our Group are made collectively after thorough discussion at both Board and
senior management levels, and (iv) permit our independent non-executive Directors, where they consider
necessary, to convene meetings without the presen ce of executive Directors, to discuss any concerns
regarding the management and governance of our Group. Our Board considers that the balance of power
and authority for the present arra ngement will not be impaired and this structure will enable our
Company to make and implement decisions promptly an d effectively given that (i) Mr. Tse and the other
Directors are aware of and undertake to fulfil their fiduciary duties as Directors, which require, among
other things, that he/she acts for the benefit and in the best interests of our Company and will make
decisions of our Group accordingl y; and (ii) the balance of power and authority is ensured by the
operations of our Board which comprises experienced and high calibre individuals who meet regularly to
discuss issues affecting the operations of our Group. Our Board will continue to review and consider
splitting the roles of chairperson of our Board and chief executive officer of our Company at a time
when it is appropriate and suitable by taking int o account the circumstances of our Group as a whole.
Save as disclosed above, our Company expects to comply with the Corporate Governance Code as
set out in Appendix C1 to the Listing Rules. Our Directors will review our corporate governance
policies and compliance with the C orporate Governance Code each fi nancial year and comply with the
‘‘comply or explain ’’principle in our corporate governance report which will be included in our annual
reports upon the Listing.
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BOARD DIVERSITY
Our Company has adopted a board diversity policy which sets out the approach to achieve
diversity of the Board. Our Company recognises an d embraces the benefits of having a diverse Board
and sees increasing diversity at the Board level, including gender diversity, as an essential element in
maintaining our Company ’s competitive advantage and enhancing its ability to attract, retain and
motivate employees from the widest possible pool of available talent. Pursuant to the board diversity
policy, in reviewing and assessing suitable candida tes to serve as a Director, the Nomination Committee
will consider a number of factors, including but no t limited to gender, age, cultural and educational
background, professional qualifications, skills, knowledge, and industry experience. The Nomination
Committee will discuss periodically and when necessary, agree on the measurable objectives for
achieving diversity, including gender diversity, on the Board and recommend them to the Board for
formal adoption.
We recognise the particular importance of gender diversity. Our Board currently comprises five
Directors, including two female Directors. We have taken and will continue to take steps to promote and
enhance gender diversity at all levels of our Compan y, including but without limitation at our Board and
senior management levels. Our board diversity policy provides that our Board shall take opportunities
when selecting and making recommendations on suitable candidates for Board appointments with the
aim to maintain the proportion of fem ale members after Listing. We will also ensure that there is gender
diversity when recruiting staff at mid to senior level, as well as engage more resources in training more
female staff with the aim of providing a pipeline of f emale senior management and potential successors
to our Board going forward. It is our objective to maintain an appropriate balance of gender diversity
with reference to the shareholders ’ expectation and international and local recommended best practices.
REMUNERATION AND COMPENSATION OF DIRECTORS AND SENIOR MANAGEMENT
Our Directors and senior management receive comp ensation in the form of salaries, allowances,
bonuses and other benefits-in-kind, including our contribution to the pension scheme. Our Remuneration
Committee determines the salaries of our Directors based on each Director ’s qualification, position and
seniority.
The aggregate amount of remuneration (including salaries, contributions to pension schemes, other
allowances and benefits in kind and discretionary bonuses) paid by our Group to our Directors for
FY2023, FY2024, FY2025 and 8MFY2026 was approximately HK$1.1 million, HK$1.3 million, HK$1.4
million and HK$1.0 million, respectively.
Of the five individuals with the highest emoluments of our Group for FY2023, FY2024, FY2025
and 8MFY2026, one of them are our Directors respectively. The aggregate amount of remuneration
(including salaries, contributions to pension schemes, other allowances and benefits in kind and
discretionary bonuses) paid by our Group to the remaining four individuals for FY2023, FY2024,
FY2025 and 8MFY2026 was approximately HK$3.2 million, HK$4.0 million, HK$4.1 million and
HK$2.3 million, respectively.
No remuneration was paid by our Group to the Directors or the five highest paid individuals as an
inducement to join or upon joining our Group or as a compensation for loss of office during the Track
Record Period. No Director has waived or has agreed to waive any emoluments during the same period.
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Under the arrangements currently in force, the aggregate remuneration (excluding discretionary
bonuses) payable to and the benefits in kind receiva ble by our Directors for FY2026 is estimated to be
approximately HK$2.0 million.
No remuneration was paid to our Directors or the five highest paid individuals as an inducement to
join, or upon joining, our Group. No compensation was paid to, or receivable by, our Directors or past
Directors during the Track Record Period for the loss of office as director of any member of our Group
or of any other office in connection with the management of the affairs of any member of our Group.
None of our Directors waived any emoluments during the same period.
Our policy concerning the remuneration of our Directors is that the amount of remuneration is
determined on the basis of the relevant Director ’s experience, responsibilit y, performance and the time
devoted to our business.
Except as disclosed in this prospectus, no Direct o rh a sb e e np a i di nc a s ho rs h a r e so ro t h e r w i s eb y
any person either to induce him to become, or to qualify him as a Director, or otherwise for service
rendered by him in connection with the promotion or formation of us.
COMPLIANCE ADVISOR
We have appointed DBS Asia Capital Lim ited as our compliance advisor (the ‘‘Compliance
Advisor ’’) upon the Listing in compliance with Rule 3A.19 of the Listing Rules. Pursuant to Rule 3A.23
of the Listing Rules, the Compliance Advisor will provide advice to us when consulted by us in the
following circumstances:
. the publication of any regulatory announcement, circular or financial report;
. where a transaction, which might be a notifiable o r connected transacti on, is contemplated,
including share issues and share repurchases;
. where we propose to use the pro ceeds of the Global Offering in a manner different from that
detailed in this prospectus or where our busines s activities, developments or results deviate
from any forecast, estimate, or other information in this prospectus; and
. where the Stock Exchange makes an inquiry of our Company regarding unusual movements
in the price or trading volume of the Shares of our Company or any other matters in
accordance with Rule 13.10 of the Listing Rules.
The term of the appointment shall commence on the Listing Date and end on the date on which our
Company distributes its annual report in respect of its financial results for the first full financial year
commencing after the Listing Date, and this ap pointment may be subject to extension by mutual
agreement.
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So far as our Directors are aware, immediately following the completion of the Capitalization Issue
and the Global Offering and without taking into acco unt any Shares which may be issued pursuant to the
exercise of the Over-allotment Option, the following persons will have an interest or a short position in
Shares or underlying Shares which will be required to be disclosed to our Company and the Stock
Exchange pursuant to the provisions of Division 2 and 3 of Part XV of the SFO, or will be, directly or
indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to
vote in all circumstances at general meetings of our Group:
Shares held as at the
date of this prospectus
Immediately after the
Capitalization Issue and the
Global Offering (assuming the
Over-allotment Option is not
exercised)
Name of
shareholder Nature of interest
Number of
Shares (1)
Approximate
percentage of
interest in our
Company
Number of
Shares (1)
Approximate
percentage of
interest in our
Company
TTK Holding (2) Beneficial owner 1,000,000 (L) 100% 375,000,000 (L) 75.0%
Mr. Tse (3) Interest in controlled corporation
and interest jointly held with
other persons
1,000,000 (L) 100% 375,000,000 (L) 75.0%
Mrs. Tse
(3) Interest in controlled corporation
and interest jointly held with
other persons
1,000,000 (L) 100% 375,000,000 (L) 75.0%
Ms. Tse
(3) Interest in controlled corporation
and interest jointly held with
other persons
1,000,000 (L) 100% 375,000,000 (L) 75.0%
Notes:
(1) The letter ‘‘L’’denotes a person ’s long position in our Shares.
(2) The issued shares of TTK Holding is owned as to 97.29%, 2.70% and 0.01% by Mr. Tse, Mrs. Tse and Ms. Tse,
respectively.
(3) Mr. Tse, Mrs. Tse and Ms. Tse are family member of one another. Therefore, pursuant to the SFO, they are deemed
to be interested in any Shares in which one another is interested through their controlled corporation, TTK Holding.
For further details of the relationship among our substantial shareholders, please see ‘‘History,
Reorganization and Corporate Structure ’’and ‘‘Relationship with our Controlling Shareholders ’’.
Save as disclosed above and in ‘‘Appendix V — Statutory and General Information — C. Further
Information about Our Directors and Substantial Shareholders ’’, our Directors are not aware of any
person who will, immediately following the completion of the Global Offering and assuming that the
Over-allotment Option is not exercised, have an interest or a short position in the Shares or underlying
Shares which will be required to be disclosed to our Company and the Stock Exchange under the
provisions of Division 2 and 3 of Part XV of the SFO or will be, directly or indirectly, interested in 10%
or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at
general meetings of any other member of our Group.
SUBSTANTIAL SHAREHOLDERS
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SHARE CAPITAL
The following is a description of the authorized and issued share capital of our Company in issue
and to be issued as fully paid or credited as fully paid upon the completion of the Capitalization Issue
and the Global Offering:
Authorized share cap ital: Nominal value
(HK$)
3,900,000,000 Shares of HK$0.0001 each 390,000
Assuming the Over-allotment Option is not ex ercised at all, the issued share capital of our
Company immediately following the completion of the Capitalization Issue and the Global Offering will
be as follows:
Issued and to be issued share capital: Nominal value
(HK$)
1,000,000 Shares in issue as at the date of this prospectus 100
374,000,000 Shares to be issued under the Capitalization Issue 37,400
125,000,000 Shares to be issued under the Global Offering 12,500
500,000,000 Shares in total 50,000
Assuming the Over-allotment Option is exercised in full, the issued share capital of our Company
immediately following the completion of the Capitalization Issue and the Global Offering will be as
follows:
Issued share capital: Nominal value
(HK$)
1,000,000 Shares in issue as at the date of this prospectus 100
374,000,000 Shares to be issued under the Capitalization Issue 37,400
143,750,000 Shares to be issued under the Global Offering 14,375
518,750,000 Shares in total 51,875
SHARE CAPITAL
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ASSUMPTIONS
The above tables assume that the Global Offering becomes unconditional.
The above tables take no account of any Shares which may be allotted and issued or repurchased
by our Company pursuant to the General Mandate and the Repurchase Mandate as described below.
RANKING
The Offer Shares and our Shares that may be issu ed pursuant to exercise of the Over-allotment
Option will rank pari passu in all respects with all other existing Shares in issue as mentioned in this
prospectus, and, in particular, will be entitled to all di vidends and other distributions hereafter declared,
paid or made on our Shares after the date of this prospectus save for entitlements under the
Capitalization Issue.
GENERAL MANDATE
Our Directors have been granted a general unconditional mandate (the ‘‘General Mandate ’’)t o
allot, issue and deal with, otherwise than by way of rights issue, scrip dividend schemes or similar
arrangements providing for allotment of Shares in lieu of the whole or in part of any dividend in
accordance with the Articles, or under the Capita lization Issue or the Global Offering or upon the
exercise of the Over-Allotment O ption, an aggregate number of Shares not exceeding the sum of (a)
20% of the aggregate number of issued Shares i mmediately following the completion of the
Capitalization Issue and the Global Offering (but excluding any Shares which may be issued upon
exercise of the Over-Allotment Option); and (b) the aggregate number of Shares which may be
repurchased by our Company under the Repurchase Mandate.
This General Mandate will expire:
(i) at the conclusion of our Company ’s next annual general meeting; or
(ii) upon the expiry of the period within which our Company is required by any applicable law or
the Memorandum and Articles of Association to hold its next annual general meeting; or
(iii) when varied, revoked or renewed by an ordinary resolution of our Shareholders in general
meeting;
whichever occurs first.
For further details of the General Mandate, ‘‘Appendix V — Statutory and General Information —
A. Further Information about our Group — 3. Resolutions in writing of our sole Shareholder passed on
18 May 2026 ’’.
REPURCHASE MANDATE
Our Directors have been granted a general unconditional mandate (the ‘‘Repurchase Mandate ’’)t o
exercise all of the powers of our Company to repurchase Shares with an aggregate nominal value of not
more than 10% of the aggregate nominal amount of the share capital of our Company in issue, as
enlarged by the Capitalization Issue and the Globa l Offering (but excluding any Shares which may be
allotted, issued or sold upon exercise of the Over-allotment Option).
SHARE CAPITAL
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This Repurchase Mandate relates only to repurchases made on the Stock Exchange or on any other
stock exchange on which our Shares are listed (and which is recognized by the SFC and the Stock
Exchange for this purpose), and which are made in accordance with all applicable laws and the
requirements of the Listing Rules. Further information required by the Stock Exchange to be included in
this prospectus regarding the repurchase of Shares is set out in ‘‘Appendix V — Statutory and General
Information — A. Further Information about our Group — 6. Repurchases of our own securities ’’.
This Repurchase Mandate will expire:
(i) at the conclusion of our Company ’s next annual general meeting; or
(ii) upon the expiry of the period within which our Company is required by any applicable law or
the Memorandum and Articles of Association to hold its next annual general meeting; or
(iii) when varied, revoked or renewed by an ordinary resolution of our Shareholders in general
meeting;
whichever occurs first.
For further information about this Repurchase Mandate, please see ‘‘Appendix IV — Statutory and
General Information — A. Further Information about our Group — 6. Repurchases of our own
securities ’’.
CIRCUMSTANCES UNDER WHICH GENE RAL MEETINGS AND CLASS MEETINGS ARE
REQUIRED
Our Company currently only has one class of sha res in issue, namely ordinary shares, each of
which ranks pari passu with the other shares.
Pursuant to the Cayman Islands Companies A ct and the terms of the Memorandum and the
Articles, our Company may from time to time by ordinary resolution of Shareholders: (i) increase its
capital; (ii) consolidate and divide its capital into Shares of larger amount; (iii) divide its Shares into
several classes; (iv) sub-divide its Shares into Shares of smaller amount; and (v) cancel any Shares
which have not been taken. In addition, our Company may, subject to the provisions of the Cayman
Islands Companies Act, reduce its share capital or any capital redemption reserve or other
undistributable reserve in any way by specia l resolution. For furth er details, please see ‘‘Appendix IV
— Summary of the Constitution of our Company and Cayman Islands Company Law — 2. Articles of
Association — (a) Shares — (iii) Alteration of capital ’’.
Pursuant to the Cayman Islands Companies A ct and the terms of the Memorandum and the
Articles, all or any of the special rights attached to our Shares or any class of our Shares may (unless
otherwise provided for by the terms of issue of that class) be varied, modified or abrogated either with
the consent in writing of the holders of not less than three-fourths in nominal value of the issued Shares
of that class or with the sanction of a special resolution passed at a separate general meeting of the
holders of our Shares of that class. For further details, please see ‘‘Appendix IV — Summary of the
Constitution of our Company and Cayman Islands Company Law — 2. Articles of Association — (a)
Shares — (ii) Variation of rights of existing shares or classes of shares ’’.
SHARE CAPITAL
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You should read this section in conjunction with our consolidated financial information,
including the notes thereto, as set out in ‘‘Appendix I — Accountants ’ Report ’’to this prospectus. The
consolidated financial information has been prepared in accordance with HKFRSs.
The following discussion and analysis contains forward-looking statements that involve risks
and uncertainties. These statements are based on assumptions and analysis made by us in light of our
experience and perception of historical trends, current conditions and expected future developments,
as well as other factors we believe are appropriate under the circumstances. However, our actual
results may differ significantly from those projected in the forward-looking statements. Factors that
might cause future results to differ significantly from those projected in the forward-looking
statements include those discussed in ‘‘Risk Factors ’’.
OVERVIEW
We are a leading Hong Kong-bas ed chain retail store of beauty, health and pharmaceutical
products under our ‘‘Lung Fung ’’(龍豐)b r a n d .
For each of FY2023, FY2024 and FY2025, our total revenue was HK$1,094.0 million, HK$2,020.7
million and HK$2,460.5 million, respectively, representing a CAGR of 50.0% over the three years. We
recorded loss of HK$27.1 million for FY2023, and turnaround to net profit for the years of HK$144.5
million and HK$170.4 million for FY2024 and FY2025 respectively, representing an increase of 17.9%
over the two years.
For 8MFY2025 and 8MFY2026, our revenue increased by 34.7% from HK$1,510.4 million to
HK$2,035.1 million, while our profit for the period increased by 85.8% from HK$79.9 million to
HK$148.4 million.
BASIS OF PRESENTATION
The financial information has been prepared by our Directors based on accounting policies which
conform with HKFRS Accounting Standards as issued by the Hong Kong Institute of Certified Public
Accountants, on the basis of preparation and presentation as set out in note 2 to the historical financial
information in the Accountants ’ Report contained in Appendix I to this prospectus, and no adjustments
have been made in preparing the financial information.
As at 30 November 2025, our Group had net current liabilities of HK$397.1 million. Our Directors
have prepared a cash flow forecast covering a perio d of not less than twelve months from the date of
this prospectus. Based on this for ecast, which takes into account the exp ected operating cash inflows and
available banking facilities, our Directors are of the opinion that our Group will have sufficient working
capital to meet its financial obligations as and when t hey fall due and to sustain our operations for the
next 12 months from the date of this prospectus. Accordingly, our Directors consider it appropriate to
prepare the financial information on a going concern basis.
FINANCIAL INFORMATION
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KEY FACTORS AFFECTING OUR RESULTS OF OPERATIONS
Our results of operations have been and will c ontinue to be affected by a number of factors,
including those set out below:
Economy of Hong Kong and Chinese Mainland
We are principally engaged in the operation of r etail stores selling a great variety of beauty
products, health products, pharmaceutical products and household and daily essentials and foods mainly
located in Hong Kong. During the Track Record Period, majority of our total revenue was derived from
Hong Kong, which accounted for over 95% of our total revenue for FY2 023, FY2024, FY2025,
8MFY2025 and 8MFY2026. Our customers are mainly retail customers from the general public in Hong
Kong and tourist mainly from the Chinese Mainland. Therefore, changes in the economies of these
places would directly impact the disposable income of the local household, and thus, the consumer
sentiment of our customers and our financial p erformance. We believe that our customers ’ spending in
our retail stores are inter-related to the overall GDP growth in their respective places. We cannot assure
stable results of operation if the economies of these places fluctuate over time in the future. See
‘‘Industry Overview — Overview of Macro Economy in Hong Kong ’’for details.
Opening and closing of stores
During the Track Record Period, over 90% of our revenue was generated from sales at our retail
stores. Retail sales are mainly affected by the numbe r of our stores in operation and average revenue per
store. Thus, our revenue in each financial year or period is greatly affected by the store opening and
closing. The following table sets out the details of our retail stores opened and closed during the Track
Record Period:
FY2023 FY2024 FY2025
From
1 April 2025
to the Latest
Practicable
Date
Number of retail stores
Number at the commencement of
the year/period 14 13 16 25
Number of retail stores opened
d u r i n g t h e y e a r / p e r i o d 1396
Number of retail stores closed
d u r i n g t h e y e a r / p e r i o d 2000
Total number at the end of the
year/period 13 16 25 31
We incur various costs and cash outflows, such as l easehold improvement and rental deposits prior
to opening new stores and during the operations. In addition, new stores generally require a period of
time after opening to achieve target income.
Product mix and average customer spending per transaction
During the Track Record Period, we generated revenue from selling a great variety of beauty
products, health products, pharmaceutical products and other consumer products in our retail stores. Our
overall gross profit margin were 24.9%, 29.3%, 31.6%, 31.7% and 30.9% for FY2023, FY2024, FY2025
FINANCIAL INFORMATION
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and 8MFY2025 and 8MFY2026, respectively. The fluctuation was mainly due to the different revenue
mix as different types of sale generated differ ent gross profit margin with different trend.
Our profitability is dependent in part upon our success in adjusting our product mix to respond to
customer preferences and demands, which may change or evolve over time. Accordingly, we adjust the
mix of merchandise that we offer in our retail stores to maximise our revenues and profitability while
continuing to provide a wide variety of products to our customers.
Our retail operations are signifi cantly affected by changes in the average customer spending per
transaction. The average customer spending per tra nsaction at our retail stores serves as an indicator of
the amounts our customers spend at our stores and may be affected by, among other things, our product
mix and pricing, customer spending power, customer preferences and seasonal factor.
Our average spending per transaction in retail stores increased by a CAGR of 11.2% from FY2023
to FY2025. Our average spending per transaction slightly decreased to HK$188 in 8MFY2026 resulting
from more retail stores opened in residential area.
Going forward, we will continue to evaluate and adjust our portfolio of our services and product
offerings from time to time to focus on products with higher profit margins, greater market demand and
potential to maintain or increase our profitability.
Same store sales
Our profitability is affected in part by our ability to successfully increase the revenue from our
existing stores, primarily by launching new products and conducting various marketing and promotional
events such as advertising through different media and joint promotion campaigns. Same store sales
growth rates provide a period-to-period compari son of our store performance because they exclude
increases and decreases that are due to the opening an d closing of new retail stores. Same-store sales
represents the revenue from the retail stores that were in operation during the entirety of the relevant
financial years or periods compared. For example, same stores for FY2023 and FY2024 are stores that
were open throughout both FY2023 and FY2024. There are variations in the way in which other retailers
calculate these metrics. During the Track Record Period, in addition to the expansion of our retail store
network, our same store sales had also increased significantly, with a CAGR of approximately 28.1%
from the beginning of FY2023 to the end of FY2025. Same-store sales represents the revenue from the
retail stores ( ‘‘Comparable Stores ’’) that were in operation throughout the entirety of the relevant
financial year or period and the preceding financial year or period being compared. Accordingly, these
metrics may not be fully comparable with those of our competitors. The table below sets forth our same
store sales for the years a nd the periods indicated:
FY2023 FY2024 FY2024 FY2025 8MFY2025 8MFY2026
Number of
Comparable Stores 12 12 15
Sales of Comparable
Stores (HK$ ’000) 968,785 1,590,500 1,690,808 1,590,391 1,352,522 1,352,720
Same-store sales
growth 64.17% (5.94)% 0.01%
FINANCIAL INFORMATION
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A significant year-on-year same-store sales growth was recorded for FY2024 as compared to the
preceding financial year, primari ly driven by the reopening of the border following COVID-19 and the
subsequent recovery in local consumer confidence during the return to normality. With the reopening of
the border, there was relatively stronger revenue growth in stores in districts which were popular with
tourists, including our stores in Northern New Territories districts such as Sheung Shui and Fanling
(with the same-store sales growth rate of these stores being approximately 65.1%) and our stores in the
commercial and shopping areas in Kowloon districts such as Mongkok and Tsim Sha Tsui (with the
same-store sales growth rate of these stores being a pproximately 63.2%). During FY2023, our average
revenue per month from all our stores were general ly lower than other year, especially two shops in
Sheung Shui which was loss-making, primarily resulting from the impact of COVID-19 pandemic. See
‘‘Business — Our Retail Network ’’for details of loss-making stores during the Track Record Period.
According to Frost & Sullivan, the reopening of borders in 2023 spurred a tourism surge, particularly
visitors from the PRC, and boosted demand for beauty products and daily essentials. The modest decline
in same-store sales growth observed in FY2025 as c ompared to the preceding financial year was largely
attributable to the high baseline established in t he preceding year. The revenue from our Comparable
Stores during 8MFY2026 was generally stable as comp ared to the same period of the preceding financial
year, mainly due to a drop in sales recorded by our r etail shops located in th e New Territories which
was offset by growth in sales by our retail shops located in major tourists and shopping areas in
Kowloon and the Hong Kong Island.
We believe the decrease in sales recorded by our retail shops located in the New Territories was
mainly due to cross-border customers gradually shifting to online shopping for their purchase of health,
pharmaceutical and daily co nsumable products instead of physi cally visiting Hong Kong to purchase
such products, as well as the implementation of more stringent cross-border measures for eligible items
which can be brought back to Chinese Mainland. The gro wth in sales attributable to retail shops located
in Kowloon and Hong Kong Island was mainly due to our strategic expansion to central business
districts and household areas targeting local customers.
Cost of inventories sold
For FY2023, FY2024, FY2025, 8MFY2025 and 8MFY2026, our cost of inventories sold accounted
for 75.1%, 70.7%, 68.4%, 68.3% and 69.1% of our total revenue. With the increase in number of
physical and online stores, the total cost of inventories sold increased during the Track Record Period.
The price of our product may vary from period to per iod due to factors such as categories, quality,
customer ’s preference and market conditions. We determine the selling price on a cost-plus basis, taking
into account of, among others, the cost of inventories s ourced from our suppliers and any fluctuation in
foreign currencies. In any event which we are unable to shift the increase in price to our customers, we
may generate gross loss. Our ability to effectively price our products and quickly respond to cost
pressures could have a material impact on our business, financial condition or results of operations.
FINANCIAL INFORMATION
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MATERIAL ACCOUNTING POLICIES AND CRITICAL ESTIMATES AND JUDGEMENT
We have identified certain accounting policies that are material to the preparation of our Group ’s
financial statements. Some of our accounting policies involve subjective assumptions and estimates, as
well as complex judgments relating to accounting ite ms. In each case, the determination of these items
requires management judgments based on informat ion and financial data that may change in future
periods. When reviewing our financial statements, you should consider (i) our selection of critical
accounting policies; (ii) the j udgments and other uncertainties affect ing the application of such policies;
and (iii) the sensitivity of reported results to changes in conditions and assumptions. Our material
accounting policies, estimat es and judgements, are set out in the notes 4 and 5 in ‘‘Appendix I —
Accountants ’ Report ’’for details.
RESULTS OF OPERATIONS
The following table summarises the consolidated statements of profit or loss and other
comprehensive income from the financial stateme nts during the Track Record Period, details of which
are set out in the Accountants ’ Report in Appendix I to this prospectus.
FY2023 FY2024 FY2025 8MFY2025 8MFY2026
HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 %
(Unaudited)
Revenue 1,094,011 100.0 2,020,731 100.0 2,460,478 100.0 1,510,369 100.0 2,035,135 100.0
Cost of sales (821,802) (75.1) (1,427,915) (70.7) (1,682,861) (68.4) (1,031,402) (68.3) (1,406,405) (69.1)
Gross profit 272,209 24.9 592,816 29.3 777,617 31.6 478,967 31.7 628,730 30.9
Other income 26,345 2.4 26,629 1.3 30,326 1.2 20,317 1.3 22,822 1.1
Other gains and losses 7 0.0 (471) (0.0) (700) (0.0) (671) (0.0) (578) (0.0)
Decrease in fair value of
investment properties (17,690) (1.6) (16,596) (0.8) (53,482) (2.2) (47,162) (3.1) (11,140) (0.5)
Selling and distribution
expenses (232,462) (21.2) (321,738) (15.9) (431,606) (17.5) (272,806) (18.1) (380,946) (18.7)
Administrative expenses (41,110) (3.8) (47,067) (2.3) (52,584) (2.1) (36,165) (2.4) (41,111) (2.0)
Finance costs (32,506) (3.0) (52,716) (2.6) (51,550) (2.1) (35,329) (2.3) (27,881) (1.4)
Listing expenses —— —— —— —— (11,132) (0.6)
(Loss) profit before tax (25,207) (2.3) 180,857 9.0 218,021 8.9 107,151 7.1 178,764 8.8
Income tax expense (1,933) (0.2) (36,321) (1.8) (47,589) (1.9) (27,277) (1.8) (30,381) (1.5)
(Loss) profit for the year/
period (27,140) (2.5) 144,536 7.2 170,432 7.0 79,874 5.3 148,383 7.3
FINANCIAL INFORMATION
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DESCRIPTION OF SELECTED ITEMS IN CONSOLIDATED STATEMENTS OF PROFIT OR LOSS
Revenue
By products
During the Track Record Period, we generated re venue from selling various products, namely (i)
beauty products; (ii) health products; (iii) pharm aceutical products; and (iv) other consumer products.
The following table sets forth the breakdown of our re venue by products for the year/period indicated:
FY2023 FY2024 FY2025 8MFY2025 8MFY2026
HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 %
(Unaudited)
Beauty products 306,014 28.0 668,228 33.1 818,044 33.3 499,932 33.1 667,216 32.8
Health products 174,752 16.0 357,656 17.7 433,752 17.6 276,827 18.3 369,039 18.1
Pharmaceutical products 246,529 22.5 398,219 19.7 473,105 19.2 277,446 18.4 354,641 17.4
Other consumer products 366,716 33.5 596,628 29.5 735,577 29.9 456,164 30.2 644,239 31.7
Total 1,094,011 100.0 2,020,731 100.0 2,460,478 100.0 1,510,369 100.0 2,035,135 100.0
FY2023, FY2024, FY2025, 8MFY2025 and 8MFY2026, revenue contributed from different types
of products remained relatively stable. We experi enced an increase of revenue during the Track Record
Period, primarily due to the expansion of our retail network as well as the progressive return of
Mainland Chinese tourists following the opening of the border after the pandemic gradually subsided
coupled with the lifting of stringent travel restri ctions and mandatory quar antine measures during the
COVID-19 pandemic and resurgence of local consumer sentiment. We believe that the purchase of over-
the-counter medicine by the returning Mainland Chinese tourists in FY2023 contributed to the higher
revenue contribution by pharm aceutical products in FY2023. In addi tion, we believe that as the
quarantine measures were lifted and daily life resu med after the COVID-19 pandemic, local Hong Kong
customers increased their purchas es of cosmetics and skin care products, which contributed to the higher
revenue contribution of the beauty products segment for FY2024, FY2025 and 8MFY2026. Before the
re-opening of border, we took initiate to restructure and enhance our retail networks by opening stores in
strategic locations such as Central, while our retail competitors were closing their stores which reduced
the competition in such prime location. With the continuous expansion during the Track Record Period,
our retail stores increased from 13 stores as at 31 December 2023 to 31 stores as at the Latest
Practicable Date.
FINANCIAL INFORMATION
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By sales channel
During the Track Record Period, we generated revenu e from (i) retail sales at our retail stores; (ii)
retail sales on our online sales platforms; and (iii) wholesales. The following table sets forth the revenue
by sales channel during the Track Record Period:
FY2023 FY2024 FY2025 8MFY2025 8MFY2026
HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 %
(Unaudited)
Retail sales through retail
stores 1,027,169 93.9 1,958,982 96.9 2,391,643 97.2 1,464,799 97.0 1,988,312 97.7
Retail sales through
online platforms 44,637 4.1 38,160 1.9 42,682 1.7 27,330 1.8 30,203 1.5
Wholesale sales 22,205 2.0 23,589 1.2 26,153 1.1 18,240 1.2 16,620 0.8
Total 1,094,011 100.0 2,020,731 100.0 2,460,478 100.0 1,510,369 100.0 2,035,135 100.0
During the Track Record Period, over 90% of our revenue was generated from sales at our retail
stores.
Our retail sales through online platforms was relatively lower at HK$38.2 million in FY2024,
primarily due to the decrease in onlin e purchases after the opening of border because many customers
from Chinese Mainland could physically shop and purchase in our retail stores. Our retail sales through
online platforms remained relatively stable at HK$44.6 million and HK$42.7 million in FY2023 and
FY2025, respectively.
Our retail sales through online platforms increased from HK$27.3 million in 8MFY2025 to
HK$30.2 million in 8MFY2026, primarily due to our effort in promoting our online platforms with more
spending on advertising to draw online traffic.
By geographical location
During the Track Record Period, we mainly gener ated revenue from retail stores located in Hong
Kong, and insignificant amount generated from onlin e sales platforms, such as TMall, WeChat Mini-
Program and JD, in Chinese Mainland. The following table sets forth the revenue by geographical
location during the Track Record Period:
FY2023 FY2024 FY2025 8MFY2025 8MFY2026
HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 %
(Unaudited)
Hong Kong 1,042,634 95.3 1,978,086 97.9 2,412,855 98.1 1,481,230 98.1 2,007,398 98.6
Chinese Mainland 51,377 4.7 42,645 2.1 47,623 1.9 29,139 1.9 27,737 1.4
Total 1,094,011 100.0 2,020,731 100.0 2,460,478 100.0 1,510,369 100.0 2,035,135 100.0
FINANCIAL INFORMATION
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During the Track Record Period, over 90% of our revenue was generated from sales in Hong Kong.
Our sales in Chinese Mainland, which are primarily sales through online platforms, decreased from
HK$51.4 million in FY2023 to HK$42.6 million in FY2024, primarily due to the decrease in purchases
from Chinese Mainland after the opening of border because many customers from Chinese Mainland
could physically shop and purchase in our retail stores in Hong Kong. Our sales in Chinese Mainland
then relatively stable at HK$47.6 million in FY2025. Our sales in Chinese Mainland remained relatively
stable at HK$29.1 million in 8MFY2025 and HK$27.7 million in 8MFY2026.
By settlement method
The following table sets forth a breakdown of our revenue by settlement method during the Track
Record Period:
FY2023 FY2024 FY2025 8MFY2024 8MFY2025
HK$
(million) %
HK$
(million) %
HK$
(million) %
HK$
(million) %
HK$
(million) %
(Unaudited)
Cash 368 33.6 626 31.0 687 27.9 436 28.9 507 24.9
Octopus 176 16.1 201 9.9 219 8.9 132 8.7 213 10.5
Credit card 267 24.4 442 21.9 671 27.3 399 26.4 595 29.2
Other electronic
payments (Note) 283 25.9 752 37.2 883 35.9 543 36.0 720 35.4
Total 1,094 100.0 2,021 100.0 2,460 100.0 1,510 100.0 2,035 100.0
Note: Other electronic payments include mobile payment methods, which are mostly AliPay and WeChat Pay, and also
BOCPay and PayMe.
Cost of sales
During the Track Record Period, our cost of sales represented the entire amount of cost of
inventories sold. Our cost of sales is affected by a number of factors including the prevailing market
conditions as well as the volume and the type of products sold.
Our cost of sales amounted to HK$821.8 million, HK$1,427.9 million, HK$1,682.9 million;
HK$1,031.4 million and HK$1,406.4 million for FY2023, FY2024, FY2025, 8MFY2025 and
8MFY2026, respectively.
Gross profit and gross profit margin
Our gross profit represented revenue less cost of sales. Our gross profit amounted to HK$272.2
million, HK$592.8 million, HK$777.6 million, HK$479.0 million and HK$628.7 million for FY2023,
FY2024, FY2025, 8MFY2025 and 8MFY2026, respectively, while the gross profit margin was 24.9%,
29.3%, 31.6%, 31.7% and 30.9% in the respective year/period.
FINANCIAL INFORMATION
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--- page 239 ---
Our gross profit margin is greatly affected by the trend of costs and selling price of the products
sold. The price of products that we offer to our customers depends primarily on, among other things,
procurement costs, market trend and demand and retail price for similar products to ensure our price is
competitive in the market. From time to time, we also offer promotion activities such as discounts,
giveaways and limited-time special offerings, which also impose certain effect on our gross profit
margins.
Our gross profit margin was rel atively lower for FY2023 then in creased modestly from FY2024 to
FY2025. The increase in gross profit margin from FY2023 to FY2024 was primarily due to (i) increase
in profit margin attained by our heal th products because the new health products sourced and sold during
the year entailed relatively higher gross profit margin following our strategy to enhance our margin; (ii)
increase in revenue contribution from the health products which has relatively higher gross profit margin
amongst our products following our effort to continue optimising our product offerings; (iii) price
adjustments with a general increase in the selling price of our products during the relevant period; and
(iv) the decrease in cost per unit purchased because we obtained more discounts from our suppliers as a
result of bulk purchase which was benefited from the economies of scale with our continuous expansion
of retail network and hence the scale of purchases. Our gross profit margin further increased from
FY2024 to FY2025, primarily due to the increase in profit margin attained by our health products
resulting from (i) new health products sourced and sol d during the year which entailed relatively higher
gross profit margin following our strategy to enhance our margin; and (ii) increase in selling price for
our existing products following our price adjustment during the years.
By products
The following table sets forth the breakdown of our gross profit and gross profit margins by
products for the year/period indicated:
FY2023 FY2024 FY2025 8MFY2025 8MFY2026
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
HK$’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 %
(Unaudited)
Beauty products 89,398 29.2 206,259 30.9 272,992 33.4 165,072 33.0 219,517 32.9
Health products 67,596 38.7 174,955 48.9 238,170 54.9 148,284 53.6 201,479 54.6
Pharmaceutical products 36,728 14.9 73,310 18.4 86,215 18.2 54,548 19.7 64,168 18.1
Other consumer products 78,487 21.4 138,292 23.2 180,240 24.5 111,063 24.3 143,566 22.3
Total/Overall 272,209 24.9 592,816 29.3 777,617 31.6 478,967 31.7 628,730 30.9
Our gross profit margin of different type of products generally recorded an upward trend from
FY2023 to FY2025. The gross profit margin of different type of products remained relatively stable in
8MFY2025 and 8MFY2026. The gross profit margin of our health products are generally higher than
other product categories primarily due to our strategy to have more competitive pricing for other
products and less competitive pric ing for health products because we believed customers are less price-
sensitive to health products compared to other product categories. The gross profit margin of our health
products increased from 38.7% in FY2023 to 48.9% in FY2024, primarily due to the new health
products sourced and sold during the year which entailed relatively higher gross profit margin following
our strategy to enhance our margin. The gross profi t margin of our health produ cts further increased to
54.9% in FY2025, primarily due to (i) new health products sourced and sold during the year which
entailed relatively higher gross profit margin following our strategy to enhance our margin; and (ii)
increase in selling price for our existing health products following our price adjustment during the year.
FINANCIAL INFORMATION
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By sales channels
The following table sets forth the breakdown of our gross profit and gross profit margins by sales
channels for the year/period indicated:
FY2023 FY2024 FY2025 8MFY2025 8MFY2026
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
HK$’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 %
(Unaudited)
Retail sales through retails
stores 255,897 24.9 578,409 29.5 755,060 31.6 465,439 31.8 611,293 30.7
Retail sales through online
platforms 13,272 29.7 13,036 34.2 20,553 48.2 12,335 45.1 15,177 50.2
Wholesale sales 3,040 13.7 1,371 5.8 2,004 7.7 1,193 6.5 2,260 13.6
Total/Overall 272,209 24.9 592,816 29.3 777,617 31.6 478,967 31.7 628,730 30.9
Our gross profit margin of retail sales through online platforms was generally higher than retail
sales through retail stores during the Track Record Period, while our gross profit margin of wholesales
was relatively lower compared to retails sales. The g ross profit margin for retail sales through online
platforms was highest among all sales channels as online retail prices are often set at a higher range to
reflect the convenience in online shopping platforms, such as delivery of the products and the
convenience of having shopping experience from any location and any time. Retail sales through retail
stores yield a higher gross profit margin than wholesale sales as a lower price was charged for wholesale
customers who bought in bulk quantity.
By geographical location
The following table sets forth the breakdown of our gross profit and gross profit margins by
geographical location for the year/period indicated:
FY2023 FY2024 FY2025 8MFY2025 8MFY2026
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
HK$’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 %
(Unaudited)
Hong Kong 257,832 24.7 578,786 29.3 756,281 31.3 466,174 31.5 615,599 30.7
Chinese Mainland 14,377 28.0 14,030 32.9 21,336 44.8 12,793 43.9 13,131 47.3
Total/Overall 272,209 24.9 592,816 29.3 777,617 31.6 478,967 31.7 628,730 30.9
FINANCIAL INFORMATION
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Other income
Other income mainly represented (i) interest inc ome from bank balances, a mounts due from related
parties and rental deposits; (ii) management fee inco me from related parties; (iii) fixed operating lease
income; (iv) government grants; and (v) others which mainly represented advertising and promotion
income received for advertising spaces in our retail stores. The following sets forth the breakdown of
o u ro t h e ri n c o m ef o rt h eyear/period indicated:
FY2023 FY2024 FY2025 8MFY2025 8MFY2026
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
Interest income:
— B a n k b a l a n c e s 12 76 53 7 4
— Amounts due from
related parties 13,287 13,441 14,707 8,959 10,828
— Rental deposits 1,127 1,062 1,385 1,339 1,383
Management fee income from related
parties 1,974 1,974 1,974 1,316 1,316
Fixed operating lease income 5,984 6,781 6,380 4,280 3,851
Government grants (Note) 2,463 384 ———
Others 1,509 2,960 5,815 4,386 5,440
26,345 26,629 30,326 20,317 22,822
Note: During FY2023, we recognised government grants of HK$2.4 million in respect of the Employment Support Scheme
launched by the Hong Kong government.
Our other income amounted to HK$26.3 million, HK$26.6 million, HK$30.3 million HK$20.3
million and HK$22.8 million for FY2023, FY2024, FY2025, 8MFY2025 and 8MFY2026, respectively.
Other gains and losses
Other gains and losses mainly represented (i) net gains or loss on disposal or write-off of property,
plant and equipment; and (ii) net exchange gains or losses arising from fluctuation of JPY and KRW.
We had other gains of HK$7,000, other losses of HK$0.5 million, HK$0.7 million, HK$0.7 million and
HK$0.6 million for FY2023, FY2024, FY2025, 8MFY2025 and 8MFY2026, respectively. The following
sets forth the breakdown of our other gains and losses for the year/period indicated:
FY2023 FY2024 FY2025 8MFY2025 8MFY2026
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
Net loss on disposal write-off of
property, plant and equipment (68) (149) (79) (67) (91)
Net foreign exchange gains
(losses) 75 (322) (1,001) (604) (487)
Others —— 380 ——
7 (471) (700) (671) (578)
FINANCIAL INFORMATION
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Decrease in fair value of investment properties
Our property interests held for generating rental income under operating lease arrangement were
measured using fair value model and were accounted for as investment properties during the Track
Record Period. The fair value of our investment properties as at 31 March 2023, 2024 and 2025 and 30
November 2025 had been valued by the Property Valuer, primarily determined based on the (i) income
capitalization approach, where the market rentals of al l lettable units of the properties are assessed and
discounted at the market yield expected by investors for the same types of properties; and (ii) direct
comparison approach, which reflects recent trans action prices for similar properties adjusted for
differences in the nature, locatio n and condition of the properties under review. We had decrease in fair
value of investment properties of HK$17.7 million, HK$16.6 million, HK$53.5 million, HK$47.2
million and HK$11.1 million in FY2023, FY2024, FY2025, 8MFY2025 and 8MFY2026, respectively.
See ‘‘Description of Certain Items of Consolidated Statements of Financial Position — Investment
properties ’’for details.
Selling and distribution expenses
Our selling and distribution expenses mainly com prised (i) employee benef it expenses for staff in
relation to retail shops and warehouse; (ii) depreciation of property, plant and equipment and right-of-
use assets in relation to our retail shops; (iii) bank charges for electronic payments; (iv) advertising and
recruitment expenses; (v) building management fee; and (vi) government rent and rates. The following
sets forth the breakdown of our selling and distribution expenses for the year/period indicated:
FY2023 FY2024 FY2025 8MFY2025 8MFY2026
HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 %
(Unaudited)
Employee benefit expenses 81,958 35.3 144,1 28 44.8 190,231 44.1 120,326 44.1 169,579 44.5
Depreciation of right-of-use
assets 108,134 46.5 117,302 36.5 152,878 35.4 98,801 36.2 128,395 33.7
Bank charges 11,557 5.0 18,323 5.7 23,790 5.5 14,756 5.4 20,863 5.5
Depreciation of property, plant
and equipment 11,020 4.7 11,532 3.6 15,565 3.6 9,921 3.6 14,632 3.8
Advertising and recruitment 975 0.4 2,937 0.9 6,290 1.5 3,633 1.3 10,391 2.7
Building management fee 3,597 1.5 5,131 1.6 10,281 2.4 6,204 2.3 11,177 2.9
Government rent and rates 6,112 2.6 7,664 2.4 9,725 2.3 6,142 2.3 8,463 2.2
Others 9,109 4.0 14,721 4.5 22,846 5.2 13,023 4.8 17,446 4.7
232,462 100.0 321,738 100.0 431,606 100.0 272,806 100.0 380,946 100.0
Our selling and distribution expenses amounted to HK$232.5 million, HK$321.7 million,
HK$431.6 million, HK$272.8 million and HK$380.9 million for FY2023, FY2024 and FY2025 and
8MFY2025 and 8MFY2026, respectively, representing 21.2%, 15.9%, 17.5%, 18.1% and 18.7% of our
total revenue during the r espective year/period.
Administrati ve expenses
Our administrative expenses primarily comprised (i) employee benefit expenses for administrative
personnel; (ii) depreciation of right-of-use assets and property, plant and equipment for our offices,
telecommunication and sundry expenses; (iii) co mputer and security system expenses; (iv) office
expenses, which included insurance, printing and stationery expenses, motor vehicles expenses and
utilities expenses; and (v) l egal and professional fee.
FINANCIAL INFORMATION
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The following table sets forth a breakdown of our administrative expenses for the year/periods
indicated:
FY2023 FY2024 FY2025 8MFY2025 8MFY2026
HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 % HK$ ’000 %
(Unaudited)
Employee benefit expenses 23,215 56.5 29, 886 63.5 33,187 63.1 21,268 58.8 24,875 60.5
Depreciation of right-of-use
assets 7,530 18.3 4,301 9.1 4,542 8.6 4,214 11.7 3,181 7.7
Computer and security system
expenses 2,319 5.6 2,599 5.5 3,782 7.2 2,561 7.1 2,361 5.7
Office expenses 2,010 4.9 3,137 6.7 3,271 6.2 2,703 7.5 3,368 8.2
Depreciation of property, plant
and equipment 1,413 3.4 1,065 2.3 1,357 2.6 874 2.4 1,713 4.2
Legal and professional fee 2,375 5.8 2,314 4.9 2,330 4.4 1,579 4.4 2,582 6.3
Others 2,248 5.5 3,765 8.0 4,115 7.9 2,966 8.1 3,031 7.4
Total 41,110 100.0 47,067 100.0 52,584 100.0 36,165 100.0 41,111 100.0
Our administrative expenses amounted to HK$41.1 million, HK$47.1 million, HK$52.6 million,
HK$36.2 million and HK$41.1 million for FY2023, FY2024 and FY2025 and 8MFY2025 and
8MFY2026, respectively, representing 3.8%, 2.3%, 2.1%, 2.4% and 2.0% of our total revenue for the
respective year/period.
Finance costs
Our finance costs represented interest on (i) lease liabilities; (ii) bank overdrafts; (iii) bank
borrowings; and (iv) retirement benefit obligations. The following sets forth the breakdown of our
finance costs for the year/period indicated:
FY2023 FY2024 FY2025 8MFY2025 8MFY2026
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
Interests on:
— Lease liabilities 6,778 11,922 18,068 11,948 12,772
— Bank overdrafts 5,002 6,376 4,326 3,196 1,527
— Bank borrowings 20,686 34,359 29,073 20,130 13,509
— Retirement benefit
obligations 40 59 83 55 73
Total 32,506 52,716 51,550 35,329 27,881
Our finance costs amounted to HK$32.5 million, HK$52.7 million, HK$51.6 million, HK$35.3
million and HK$27.9 million for FY2023, FY2024 and FY2025 and 8MFY2025 and 8MFY2026,
respectively.
FINANCIAL INFORMATION
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Income tax expense
Our Company was incorporated in the Cayman Islands and is exempted from income tax. Under
the two-tiered profits tax rates regime of Hong Kong Profits Tax, the first HK$2 million of profits of the
qualifying group entity will be taxed at 8.25%, and profits above HK$2 million will be taxed at 16.5%.
Accordingly, the Hong Kong Profits Tax of the qualifying group entity now comprising the Group is
calculated at 8.25% on the first HK$2 million of the estimated assessable profits and at 16.5% on the
estimated assessable profits above HK$2 million for the Track Record Period. Under the Law of the
PRC on Enterprise Income Tax (the ‘‘EIT Law ’’) and Implementation Regulation of the EIT Law, the
tax rate of the relevant PRC subsidiary is 25% for the Track Record Period. No PRC Enterprise Income
Tax has been made during the Track Record Period as the relevant PRC subsidiary has no assessable
profits or has sufficient tax losses brought forward to offset assessable profits during the Track Record
Period.
Our income tax expenses amounted to HK$1.9 million, HK$36.3 million, HK$47.6 million,
HK$27.3 million and HK$30.4 million for FY2023, FY2024, FY2025, 8MFY2025 and 8MFY2026,
respectively; while our effective tax rate was 20.1%, 21.8%, 25.5% and 17.0% for FY2024, FY2025,
8MFY2025 and 8MFY2026, respectively.
During the Track Record Period and up to the Late st Practicable Date, we had fulfilled all our
income tax obligations and have not had any unresolved income tax issues or disputes with the relevant
tax authorities.
REVIEW OF HISTORICAL RESULTS OF OPERATION
F Y 2 0 2 4c o m p a r e dt oF Y 2 0 2 3
Revenue
Our revenue increased by HK$926.7 million or 84.7% from HK$1,094.0 million in FY2023 to
HK$2,020.7 million in FY2024, primarily due to the (i) increase in same store sales by 64.2%; and (ii)
revenue contributed from our new stores of HK$209.0 million in FY2024.
We recorded significant year-on-year same-store sales growth of 64.2% from HK$968.8 million in
FY2023 to HK$1,590.5 million in FY2024, primarily due to increase in revenue due to the progressive
return of Chinese Mainland tourists following the border relief after the pandemic gradually subsided
coupled with the relief of stringent travel restrictions and mandatory quarantine measures during the
COVID-19 pandemic and resurgence of local consumer sentiment.
Further, we took initiative to re-organise the location of our stores during the pandemic and opened
three new stores in key shopping districts for touris ts during FY2024, reaching 16 stores in total as at 31
March 2024. The revenue contribution of the three new stores amounted to HK$209.0 million in
FY2024.
Cost of sales
Our cost of sales increased by HK$606.1 million or 73.8% from HK$821.8 million for FY2023 to
HK$1,427.9 million for FY2024, primarily due to the increase in cost of inventories sold mainly
attributable to the increase in quantity sold resul ting from the increase in demand from customers and
number of retail stores.
FINANCIAL INFORMATION
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Gross profit and gross profit margin
Our gross profit increased by HK$320.6 million or 117.8% from HK$272.2 million for FY2023 to
HK$592.8 million for FY2024. Such increase in gross profit was mainly contributed by the increase in
revenue. Our gross profit margin increased from 24.9% for FY2023 to 29.3% for FY2024, primarily due
to (i) increase in profit margin attained by our health products as well as the increase in revenue
contribution from the health products which has relatively higher gross profit margin amongst our
products following our effort to continue optimisin g our product offerings; (ii) price adjustments in
certain stores and (iii) the decrease in cost per unit purchased because we obtained more discounts from
our suppliers as a result of bulk purchase which wa s benefited from the economies of scale with our
continuous expansion of retail netwo rk and hence the scale of purchases.
Other income
Our other income remained relatively stable at HK$26.3 million and HK$26.6 million for FY2023
and FY2024, respectively.
Other gains and losses
Our other losses of HK$7,000 for FY2023 turned to other gains of HK$0.5 million for FY2024
primarily due to the net exchange loss of HK$0.3 millio n for FY2024 resulting from fluctuation of JPY
and KRW against HKD.
Selling and distribution expenses
Our selling and distribution expenses increased by HK$89.3 million or 38.4% from HK$232.5
million for FY2023 to HK$321.7 million for FY2024. The increase in selling and distribution expenses
was attributable to increase in (i) employee benefit expenses of HK$62.2 million, primarily due to the
increase in number of selling staff resulting from the increase in number of our retail stores for the year;
(ii) depreciation of right-of-use assets of HK$9.2 million resulting from the increase in number of stores;
and (iii) bank charges of HK$6.8 million for more electronic payments resulting from increase in
revenue.
Administrati ve expenses
Our administrative expenses increased by HK$6.0 million and 14.5% from HK$41.1 million for
FY2023 to HK$47.1 million for FY2024. The increase in administrative expenses was primarily
attributable to the increase in employee benefit e xpenses of HK$6.7 million resulting from the increase
in number of administrative personnel.
Finance costs
Our finance costs increased by HK$20.2 million and 62.2% from HK$32.5 million for FY2023 to
HK$52.7 million for FY2024. The increase in finance co sts was primarily attributable to the increase in
interest on (i) bank borrowings of HK$13.7 million resulting from increase in average balances of bank
borrowings for FY2024; and (ii) lease liabilities of HK$5.1 million resulting from addition of three retail
stores for FY2024.
FINANCIAL INFORMATION
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Income tax expenses
Our income tax expense increased by HK$34.4 million or 1,779.0% from HK$1.9 million for
FY2023 to HK$36.3 million for FY2024 as a result of our increase in profit before tax generated for
FY2024.
Profit for the year
As a result of the foregoing, we had profit for the year of HK$144.5 million for FY2024 compared
to loss for the year of HK$27.1 million for FY2023. Our net profit margin was 7.2% for FY2024. Our
net loss in FY2023 was primarily attributable to the significant decrease in demand of our products from
retail stores resulting from the outbreak of COVID-19 where the border was closed and most Chinese
Mainlanders were not able to travel to Hong Kong. Following the opening of the border after the
pandemic gradually subsided coupled with the lifting of stringent travel restrictions and mandatory
quarantine measures in FY2023, our revenue began to normalise and we were able to turn around to a
net profit, coupled with the effect of new stores opening during FY2024.
F Y 2 0 2 5c o m p a r e dt oF Y 2 0 2 4
Revenue
Our revenue increased by HK$439.7 million or 21.8% from HK$2,020.7 million in FY2024 to
HK$2,460.5 million in FY2025, primarily due to the revenue contributed from our new stores of
HK$285.0 million in FY2025, partially offset by the slight decrease in same-store sales.
Further, following our strategy to expand our retail network, nine new stores were opened in
FY2025, reaching 25 stores in total as at 31 March 20 25. Our year-on-year sales was relatively stable
with a modest decrease of 5.9% from FY2024 to FY2025. The remaining increase in revenue was
contributed by the stores which were opened during FY2024, mainly due to the full year of revenue
generated in FY2025.
Cost of sales
Our cost of sales increased by HK$254.9 million or 17.9% from HK$1,427.9 million for FY2024
to HK$1,682.9 million for FY2025, primarily due to the increase in cost of inventories sold mainly
attributable to the increase in quantity sold resul ting from the increase in demand from customers and
number of retail stores.
Gross profit and gross profit margin
Our gross profit increased by HK$184.8 million or 31.2% from HK$592.8 million for FY2024 to
HK$777.6 million for FY2025. Such increase in gross profit was mainly contributed by the increase in
revenue. Our gross profit margin increased from 29 .3% in FY2024 to 31.6% in FY2025, primarily due to
(i) increase in profit margin attained by our health products; and (ii) the decrease in cost per unit
purchased because we obtained more discounts from our suppliers as a result of bulk purchase which
was benefited from the economies of scale with our continuous expansion of retail network and hence
the scale of purchases. The gross profit margin of our health products increased from 48.9% in FY2024
FINANCIAL INFORMATION
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to 54.9% in FY2025, primarily due to (i) new health products sourced and sold during the year which
entailed relatively higher gross profit margin following our strategy to enhance our margin; and (ii)
increase in selling price for our existing product s following our price adjustment during the year.
Other income
Our other income increased by HK$3.7 million or 13.9% from HK$26.6 million for FY2024 to
HK$30.3 million for FY2025. The increase was primarily due to increase in (i) others of HK$2.9 million
mainly resulting from the increase in advertising income in FY2025 for the advertising spaces in our
retail stores; and (ii) interest income on amounts due from related parties of HK$1.3 million resulting
from the increase in average balances of amounts due from related parties.
Other gains and losses
Our other losses increased from HK$0.5 million in FY2024 to HK$0.7 million in FY2025. The
increase was mainly attributable to the increase in net foreign exchange losses of HK$0.7 million mainly
resulting from the fluctuation of JPY and KRW against HKD.
Selling and distribution expenses
Our selling and distribution expenses increased by HK$109.9 million or 34.1% from HK$321.7
million for FY2024 to HK$431.6 million for FY2025. The increase in selling and distribution expenses
was attributable to increase in (i) employee benefit expenses of HK$46.1 million, primarily due to the
increase in number of selling staff resulting from the increase in number of our retail stores for the year;
(ii) depreciation of right-of-use assets of HK$35.6 million resulting from the addition of retail stores
during the year; and (iii) bank charges of HK$5.5 million for electronic payments.
Administrati ve expenses
Our administrative expenses increased by HK$5.5 million and 11.7% from HK$47.1 million for
FY2024 to HK$52.6 million for FY2025. The increase in administrative expenses was primarily
attributable to the increase in the (i) employee benefit expenses of HK$3.3 million resulting from the
increase in administrative personnel; and (ii) computer and security system expenses of HK$1.2 million.
Finance costs
Our finance costs remained relatively stable at HK$52.7 million and HK$51.6 million for FY2024
and FY2025, respectively.
Income tax expenses
Our income tax expenses increased by HK$11.3 million or 31.0% from HK$36.3 million for
FY2024 to HK$47.6 million for FY2025. The increase in income tax expense was primarily attributable
to the increase in profit before tax. Our effectiv e tax rate remained relatively stable at 20.1% for
FY2024 and 21.8% for FY2025.
FINANCIAL INFORMATION
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Profit for the year
As a result of the foregoing, our profit for the year increased by HK$25.9 million or 17.9% from
HK$144.5 million for FY2024 to HK$170.4 million for FY2025. The net profit margin remained
relatively stable at 7.2% for FY2024 and 6.9% for FY2025.
8MFY2026 compared to 8MFY2025
Revenue
Our revenue increased by HK$524.8 million or 34.7% from HK$1,510.4 million for 8MFY2025 to
HK$2,035.1 million for 8MFY2026, primarily due to the revenue contributed from our new stores of
HK$299.9 million for 8MFY2026.
Our year-on-year same-store sales remained stable from HK$1,352.5 million for 8MFY2025 to
HK$1,352.7 million in for 8MFY2026, primarily resulting from the stable sales from the Comparable
Stores.
Further, following our strategy to expand our retail network, nine new stores were opened after
8MFY2025, reaching 29 stores in total as at 30 November 2025. The revenue contribution of the new
stores amounted to HK$299.9 million for 8MFY2026. The remaining increase in revenue is contributed
by the stores which were opened during 8MFY2025, mainly due to the full period of revenue generated
in 8MFY2026.
Cost of sales
Our cost of sales increased by HK$375.0 million or 36.4% from HK$1,031.4 million for
8MFY2025 to HK$1,406.4 million for 8MFY2026, prim arily due to the increase in cost of inventories
sold mainly attributable to the increase in quantity sold resulting from the increase in demand from our
customers and the number of retail stores.
Gross profit and gross profit margin
Our gross profit increased by HK$149.8 million or 31.3% from HK$479.0 million for 8MFY2025
to HK$628.7 million for 8MFY2026. Such increase in gross profit was mainly contributed by the
increase in revenue. Our gross profit margin remained relatively stable at 31.7% for 8MFY2025 and
30.9% for 8MFY2026.
Other income
Our other income increased by HK$2.5 million or 12.3% from HK$20.3 million for 8MFY2025 to
HK$22.8 million for 8MFY2026. The increase was primarily due to increase in interest income on
amounts due from related parties of HK$1.9 million resulting from the increase in average balance of
the interest-bearing portion of amounts due from related parties.
FINANCIAL INFORMATION
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Other gains and losses
Our other losses decreased from HK$0.7 million for 8MFY2025 to HK$0.6 million for 8MFY2026.
The increase was primarily due to decrease in net foreign exchange losses of HK$0.1 million resulting
from the fluctuation of JPY and KRW against HKD.
Selling and distribution expenses
Our selling and distribution expenses increased by HK$108.1 million or 39.6% from HK$272.8
million for 8MFY2025 to HK$380.9 million for 8MFY2026. The increase was attributable to the
increase in (i) employee benefit expenses of HK$49.3 million, primarily due to the increase in number
of selling staff resulting from the increase in number of our retail stores for the period; (ii) depreciation
of right-of-use assets of HK$29.6 million resulting from the addition of retail stores during the period.
Administrati ve expenses
Our administrative expenses increased by HK$4.9 million or 13.7% from HK$36.2 million for
8MFY2025 to HK$41.1 million for 8MFY2026. The incr ease in administrative expenses was primarily
attributable to the increase in employee benefit e xpenses of HK$3.6 million resulting from the increase
in administrative personnel.
Finance costs
Our finance costs decreased by HK$7.4 million or 21.1% from HK$35.3 million for 8MFY2025 to
HK$27.9 million for 8MFY2026. The decrease in finance costs was primarily attributable to the
decrease in interest on bank borrowings of HK$6.6 million resulting from the decrease in average bank
borrowings balances.
Income tax expenses
Our income tax expenses increased by HK$3.1 million or 11.4% from HK$27.3 million for
8MFY2025 to HK$30.4 million for 8MFY2026. The increase in income tax expense was primarily
attributable to the increase in profit before tax . Our effective tax rate decreased from 25.5% for
8MFY2025 to 17.0% for 8MFY2026 primarily due to the decrease in expenses not deductible for tax
purpose in 8MFY2026 mainly arising from the decrease in fair value of investment properties.
Profit for the period
As a result of the foregoing, our profit for the period increased by HK$68.5 million or 85.8% from
HK$79.9 million for 8MFY2025 to HK$148.4 million for 8MFY2026. The net profit margin increased
from 5.3% for 8MFY2025 to 7.3% for 8MFY2026 primarily due to the increase in gross profit margin
and decrease in fair value of investment properties.
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NET CURRENT LIABILITIES
We recorded net current liabilities of HK$793.9 million, HK$673.6 million, HK$643.7 million,
HK$397.1 million and HK$413.2 million as at 31 March 2023, 2024 and 2025, 30 November 2025 and
31 March 2026, respectively. The table below sets out selected information for our current assets and
current liabilities as at the dates indicated, respectively:
As at 31 March
As at
30
November
As at
31
March
2023 2024 2025 2025 2026
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
Current Assets
Inventories 176,016 225,394 336,038 402,353 421,907
Trade and other
receivables 16,170 31,092 23,996 48,242 31,598
Amounts due from
related parties 52,880 75,131 15,381 163,918 37,487
Cash and cash
equivalents 43,137 61,408 61,182 49,896 73,641
288,203 393,025 436,597 664,409 564,633
Current Liabilities
Trade and other payables 101,522 114,482 154,992 185,333 184,150
Amounts due to related
parties 50,223 48,141 12,836 25,199 15,789
Tax payable 1,345 3,861 20,699 49,471 36,664
Bank borrowings 680,428 669,279 651,523 540,506 543,444
Lease liabilities 102,126 106,378 135,034 168,069 183,734
Contract liabilities 2,725 781 126 187 1,280
Bank overdrafts 143,685 123,699 105,049 92,755 12,793
1,082,054 1,066,621 1,080,259 1,061,520 977,854
Net Current Liabilities (793,851) (673,596) (643,662) (397,111) (413,221)
Our net current liabilities decreased from HK$793.9 million as at 31 March 2023 to HK$673.6
million as at 31 March 2024. The decrease in net current liabilities was primarily due to the (i) increase
in inventories of HK$49.4 million mainly for replenishment of inventories in our retail stores; (ii)
increase in amounts due from related parties of HK$22.3 million; and (iii) decrease in bank overdrafts of
HK$20.0 million.
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Our net current liabilities then decreased to HK$643.7 million as at 31 March 2025. The decrease
in net current liabilities was primarily due to the (i) increase in inventories of HK$110.6 million mainly
for replenishment of inventories in our retail stores; and (ii) decrease in amounts due to related parties
of HK$35.3 million resulting from repayment. The decr ease in net current liabilities was partially offset
by the (i) decrease in amounts due from related parties of HK$59.8 million; and (ii) increase in trade
and other payables of HK$40.5 million.
Our net current liabilities then decreased to HK$397.1 million as at 30 November 2025. The
decrease in net current liabilities was primarily due to the increase in (i) current portion of amounts due
from related parties of HK$148.5 million following the expected repayment tim eline; (ii) decrease in
bank and other borrowings of HK$111.0 million due to our repayment; and (iii) increase in inventories
of HK$66.3 million mainly for replenishment of inventories in our retail stores.
Our net current liabilities then increased to HK$413.2 million as at 31 March 2026. The increase in
net current liabilities was primarily due to the (i) decrease in current portion of amounts due from
related parties of HK$126.5 million; (ii) decrease in bank overdraft of HK$80.0 million; (iii) increase in
inventories of HK$20.0 million mainly from replenishment of inventories in our retail stores; and (iv)
decrease in tax payable of HK$12.8 million.
Our net current liabilities during the Track Record Period was primarily due to the current portion
of bank borrowings, which was mainly for our cost of operations as well as the additions of property,
plant and equipment for our expansion of retail networks which are non-current. Going forward, we will
consider the following measures and inten d to reduce the net current liabilities by:
. enhancing our revenue scale by expanding our retail networks. We believe with the increase
in revenue in total scale, we are able to enjoy economies of scales as we expect our revenue
growth after the payback period, which was re flected by the increase in cash inflows from
operating activities from FY2023 to FY2025; and
. monitoring and controlling our bank borrowing level. Given the appropriate terms and
conditions offered by the banks and our financing policies, we may consider to explore our
bank borrowings options with longer repayment terms, and hence, reduce the short-term
portion of our bank borrowings in the future. Further, we intend to repay our outstanding
loans of HK$134.4 million by our net proceeds from the Global Offering. See ‘‘Future Plans
and Use of Proceeds — Use of Proceeds ’’for details.
Working Capital Sufficiency
After taking into consideration of the financial resources presently available to us, including our
cash and bank balances, the available facilities to our Group, the expected operating cash flow and the
estimated net proceeds from the Global Offering, our Directors are of the opinion that we have sufficient
working capital to meet our financial obligations for at least 12 months from the date of this prospectus.
Save as disclosed in this prospectus, our Directors are not aware of any other factors that would
h a v eam a t e r i a li m p a c to no u rl i q u i d i t y .
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DESCRIPTION OF CERTAIN ITEMS OF CON SOLIDATED STATEMENTS OF FINANCIAL
POSITION
Property, plant and equipment
During the Track Record Period, our property, plant and equipment mainly consisted of leasehold
improvements, furniture and fixtures, computer equipment and motor vehicles. Our property, plant and
equipment amounted to HK$22.0 million, HK$35.2 million, HK$73.1 million and HK$112.8 million,
respectively, as at 31 March 2023, 2024 and 2025 and 30 November 2025.
The following table sets forth our breakdown on property, plant and equipment as at the date
indicated:
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Owned properties ——— 26,858
Leasehold improvements 15,142 16,545 29,196 33,211
Furniture and fixtures 3,096 9,769 25,917 33,545
Computer equipment 3,573 6,102 13,538 14,729
Motor vehicles 156 2,801 4,433 4,505
Total 21,967 35,217 73,084 112,848
Our property, plant and equipment increased from HK$22.0 million as at 31 March 2023 to
HK$35.2 million as at 31 March 2024 mainly resulting from opening of three new stores during the
financial year ended 31 March 2024. The property, plant and equipment further increased to HK$73.1
million as at 31 March 2025 mainly due to the opening of nine new stores during the financial year
ended 31 March 2024. Our property, plant and equipment increased to HK$112.8 million as at 30
November 2025 primarily due to the transfer of owned properties of HK$27.5 million from investment
properties because we utilised such property for our own pop-up store since June 2025.
Investment properties
During the Track Record Period, we leased out retail shop units and residential units under
operating leases with rentals payable monthly. Our investment properties amounted to HK$257.3
million, HK$242.1 million, HK$189.5 million and HK$150.9 million as at 31 March 2023, 2024 and
2025 and 30 November 2025, respect ively. The decrease in fair value of our investment properties as at
31 March 2023 to 31 March 2025 was primarily due to the decrease in fair value. The decrease for 31
March 2025 to 30 November 2025 was primarily due to the transfer to property, plant and equipment
because we utilised such property for our own pop-up store since June 2025. The leases typically run for
an initial period of 3 years, 3 years, 2 years to 3 y ears and 1 year to 3 years during FY2023, FY2024,
FY2025 and 8MFY2026.
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The fair values have been arrived at based on a valuation carried out by AVISTA Valuation
Advisory Limited, independent valuers not connected with the Group. See ‘‘Appendix III — Property
Valuation ’’for details for selected property interests tha t forms part of our property activities with a
c a r r y i n ga m o u n to f1 %o rm o r eo ft o t a la s s e t s .
Retail shop units and residential units locat ed in Hong Kong with aggr egate fair values of
HK$232.0 million, HK$222.3 million, HK$173.2 million and HK$134.4 million as at 31 March 2023,
2024 and 2025 and 30 November 2025, respectively, are determined based on the income capitalization
approach, where the market rentals of all lettable units of the properties are assessed and discounted at
the market yield expected by investor s for the same types of properties.
Residential units located in Hong Kong with aggregate fair values of HK$25.3 million, HK$19.8
million, HK$16.3 million and HK$16.4 million as at 31 March 2023, 2024 and 2025 and 30 November
2025, respectively, are determine d based on the direct comparison approach, which reflects recent
transaction prices for similar properties adjusted for differences in the nature, location and condition of
the properties under review.
Right-of-use assets
During the Track Record Period, our right-of-use assets mainly consisted of lease arrangement of
retail stores, warehouses and office premises and staff quarters. Our right-of-use assets amounted to
HK$185.0 million, HK$216.2 million, HK$261.4 million and HK$339.4 million, respectively, as at 31
March 2023, 2024 and 2025 and 30 November 2025.
The following table sets forth our breakdown on right-of-use assets as at the date indicated:
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Office premises and staff
quarters 6,469 965 1,939 3,611
Warehouses 4,821 1,154 4,084 8,483
Retail stores 173,686 214,064 255,343 327,263
184,976 216,183 261,366 339,357
Our right-of-use assets increased from HK$185.0 million as at 31 March 2023 to HK$216.2 million
as at 31 March 2024 primarily attributable to the three new leases for our retail stores. Our right-of-use
asset further increased to HK$26 1.4 million as at 31 March 2025 primarily due to the nine new leases
for our retail stores. Our right-of-use assets then increased to HK$339.4 million as at 30 November
2025, primarily due to the new leases for our retail stores during the period.
No indicator of impairment for non-financial assets
Notwithstanding the loss for the FY2023, our Directors have carefully assessed whether there were
any indicators of impairment for our Group ’s property, plant and equipment and right-of-use assets as at
31 March 2023. Having considered, among other factors, the significant easing of COVID-19 restrictions
in Hong Kong starting from December 2022, the positive outlook of the retail industry based on relevant
government data, and the strong rebound in our Group ’s sales performance since January 2023, our
FINANCIAL INFORMATION
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Directors concluded that the loss did not constitute an indicator of impairment an d are therefore satisfied
that no impairment is required in respect of our Group ’s property, plant and equipment and right-of-use
assets as at 31 March 2023.
Inventories
Our inventories consisted of products sold in our retail stores, online platforms and to our
wholesale customers, which included various items o f (i) beauty products; (ii) health products; (iii)
pharmaceutical produc ts; and (iv) other consumer products.
Our inventories amounted to HK$176.0 million, HK$225.4 million, HK$336.0 million and
HK$402.4 million as at 31 March 2023, 2024 and 2025 and 30 November 2025, primarily attributable to
the increase in purchase of a greater variety of products in preparation for the opening of additional
retail stores and for replenishment of stock in our existing retail stores. The following table sets forth
the ageing analysis of our inventories as at the dates indicated:
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
1–3 months 156,469 188,168 292,080 316,867
3–6 months 9,795 22,855 24,500 55,617
6–12 months 2,656 8,769 11,466 21,827
Over 1 year 7,096 5,602 7,992 8,042
176,016 225,394 336,038 402,353
As at 31 March 2023, 2024 and 2025 and 30 November 2025, 96.0%, 97.5%, 97.6% and 98.0% of
our inventories were aged within 1 year. We monitor our inventory levels, turnover days and sales
performance of individual SKU in order to identify slow-moving items. Specific inventory allowances
are made at the SKU level based on an assessment of net realisable value taking into account historical
sales records, ageing analysis, marketing and promotion plans and subsequent selling prices of the
inventories.
The following table sets forth the turnover days of our inventories for the years/period indicated.
FY2023 FY2024 FY2025 8MFY2026
Average turnover days of
inventories
(Note) 63 51 61 63
Note: Average turnover days of inventories for FY2023, FY2024 and FY2025 and 8MFY2026 is derived by dividing the
arithmetic mean of the opening and closing balances of inventories for the relevant period by cost of sale and
multiplying by 365/240 days.
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Our average turnover days of inventories decreased from 63 days for FY2023 to 51 days for
FY2024 despite the increase in inventory balance as at 31 March 2024, primarily due to the increase in
sales resulting from our increased number of shops. The increase in inventory turnover days from 51
days in FY2024 to 61 days in FY2025 primarily reflects our increased purchases in FY2025, due to (1)
increased sales upon the opening of borders after covid, causing a dip in the average turnover days of
inventories in FY2024 as the increase in sales outpaced the replenishment of stock upon opening of
borders during the year, there was a need to increas e the purchase to accommodate the expected increase
in sales; and (2) 9 new stores were opened in FY2025 leading to increased purchases of goods. The
average turnover days of inventories remained relatively stable at 61 days for FY2025 and 63 days for
8MFY2026, primarily due to the increase in sales re sulting from our increased number of shops despite
the increase in inventory balance as at 30 November 2025.
As at 31 March 2026, HK$343.0 million or 85.3% of our inventories as at 30 November 2025 had
been sold or utilised. In view of subsequent usage, we are of the view that there is no impairment issue
for inventories.
Trade and other receivables
The following table sets forth the breakdown of our trade and other receivables as at the dates
indicated:
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Trade receivables from
contracts with customers 3,948 17,332 8,193 22,600
Rental, utilities and other
deposits 29,167 45,679 52,960 62,504
Other receivables 928 585 954 84
Prepayments to suppliers 4,354 3,436 3,498 8,140
Prepaid expenses 6,940 9,739 11,351 13,825
Prepaid Listing expenses ——— 229
Prepaid issue costs
(1) ——— 13
Deferred issue costs (2) ——— 3,351
Sub-total for deposits,
prepayments and other
receivables 41,389 59,439 68,763 88,146
Total 45,337 76,771 76,956 110,746
Notes:
(1) Prepaid issue costs represented the prepayments of t he portion of Listing expenses attributable to the proposed
issuance of new Shares upon the Global Offering which have not yet been incurred as at the period end date.
(2) Deferred issue costs represented the portion of Listing e xpenses incurred attributable to the proposed issuance of new
Shares upon the Global Offering, which will be debited to equity upon the Listing.
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Trade receivables
Our trade receivables primarily ar ise from (i) amounts receivable fro m electronic payment service
providers and online platf orm providers; and (ii) our wholesale sales. Our trade receivables increased
from HK$3.9 million as at 31 March 2023 to HK$17.3 million as at 31 March 2024 and was relatively
higher primarily due to the accumula tion of the receivables from elect ronic payment service providers
resulting from public holidays shortly before 31 March 2024. Our trade receivable then decreased to
HK$8.2 million as at 31 March 2025. Our trade receivables increased to HK$22.6 million as at 30
November 2025, primarily due to the accumulation of the receivabl es from electronic payment service
providers resulting from public holidays shortly before 30 November 2025.
Retail sales made through retail stores are settled by cash or electronic payments. Retail sales made
through online platforms are settled by electronic pay ments. Trade receivables arising from retail sales
represent amounts receivable from electronic payment service providers and online platform providers
who generally settle the amounts with our Group within 2 days and 1 month, respectively, after the
sales; while our sales with our wholesale customers are generally on credit, with general trading terms
of 60 days after the month of the relevant sale.
The following table sets forth the ageing analy sis of the trade receivabl es based on the invoice
d a t e sa sa tt h ed a t e si n d i c a t e d :
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Within 30 days 3,029 16,709 7,379 22,344
31–60 days 99 108 552 —
61–90 days 640 90 82 120
Over 90 days 180 425 180 136
3,948 17,332 8,193 22,600
We perform impairment assessment under expected credit losses ( ‘‘ECL’’) model on trade
receivables and has applied the si mplified approach to measure the loss allowance at lifetime ECL.
Trade receivables arising from ret ail sales have been assessed for ECL individually based on external
credit rating. Trade receivables from wholesale cus tomers are assessed for ECL collectively based on
internal credit rating. No significant lifetime ECL is recognized on the Group ’s trade receivables
considering their external credit rating (if available ), repayment history and historical default experience
of the counterparties. As at 31 March 2023, 2024 and 2025 and 30 November 2025, no allowance on
trade receivables was made.
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The table below sets forth a summary of average t urnover days of trade receivables for the years/
period indicated:
FY2023 FY2024 FY2025 8MFY2026
Average turnover days of
trade receivables (Note) 1.3 1.9 1.9 1.8
(1) Average turnover days of trade receivables for FY2023, FY2024 and FY2025 and 8MFY2026 is derived by dividing
the arithmetic mean of the opening and closing balances of trade receivables for the relevant period by revenue and
multiplying by 365/240 days.
Due to the focus of retail business, our relatively low balance of trade receivables was relatively
low as at each year/period end. Accordingly, our ave rage turnover days of trade receivables remained
relatively low of below 2 days throughout the Track Record Period.
As at 31 March 2026, HK$22.5 million or 99.6% of our trade receivables outstanding as at 30
November 2025 were settled.
Rental, utilities and other deposits
Our rental, utilities and other deposits mainly represented rental deposits for our retail stores and
utilities deposits for our retail stores and offices.
Our rental, utilities and other deposits increased from HK$29.2 million as at 31 March 2023 to
HK$45.7 million as at 31 March 2024, primarily due to the increase in number of stores from 13 stores
as at 31 March 2023 to 16 stores as at 31 March 2024. Our rental, utilities and other deposits then
increased to HK$53.0 million as at 31 March 2025 due to the increase of stores to 25 stores as at 31
March 2025. Our rental, utilities and other deposits further increased to HK$62.5 million as at 30
November 2025 resulting from the increase in number of retail stores.
Prepayments to suppliers
Our prepayments to suppliers mainly consisted prepayment for procurement of inventories.
Our prepayments to suppliers remained relatively stable at HK$4.4 million, HK$3.4 million and
HK$3.5 million as at 31 March 2023, 2024 and 2025, respectively. Our prepayments to suppliers
increased to HK$8.1 million as at 30 November 2025, primarily due to the increase in procurement for a
greater variety of products in preparation for the opening of additional retail stores and for
replenishment of stock in our existing retail stores.
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Amounts due from related parties
The following table sets forth a breakdown of our amounts due from related parties as at the dates
indicated:
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Amount due from a Director 42,113 55,459 12,252 9,180
Amounts due from related
parties 366,235 412,310 276,825 154,738
408,348 467,769 289,077 163,918
Non-current 355,468 392,638 273,696 —
Current 52,880 75,131 15,381 163,918
408,348 467,769 289,077 163,918
We had amount due from Mr. Tse of HK$42.1 million, HK$55.5 million, HK$12.3 million and
HK$9.2 million as at 31 March 2023, 2024 and 2025 and 30 November 2025, respectively. The amount
due from a Director and related parties funds for Mr. Tse ’s personal investments and funds for the
related parties ’ operations. The principal activities of Huge Max (Hong Kong) Limited, Great Dragon
International Development Limited and Full Group Corporation Limited, which accounted for over 90%
of the total amount due from related parties as at 30 November 2025, were property investment.
Considering various factors, including the costs of the relevant properties, the business nature of the
aforesaid related parties, the l ocations and demographics of the properties and the price trend and
prevailing market price of these properties, our Directors are of the view that amount of the Group ’s
advances to the related parties are commensurate w ith the cost of the investment properties and scale of
operations of the relevant related pa rties. The amounts were non-trade in nature, unsecured, interest-free
and repayable on demand.
We had amounts due from related parties which represented the entities controlled by Mr. Tse of
HK$366.2 million, HK$412.3 million, HK$276.8 million and HK$154.7 million as at 31 March 2023,
2024 and 2025 and 30 November 2025, respectively. The amounts were non-trade in nature, unsecured
and repayable on demand. Other than aggregate amounts of HK$355.5 million, HK$392.6 million,
HK$273.7 million and HK$151.7 million as at 31 March 2023, 2024 and 2025 and 30 November 2025,
respectively, which carry interest at 3.5% per annum, other amounts are interest-free.
On 10 February 2026 and 21 May 2026, the Company declared dividends of HK$130 per share
totaling HK$130,000,000 and HK$23 per share totaling HK$23,000,000, respectively, which were
settled by way of an offsetting with the Group ’s amounts due from related parties. Accordingly, all the
amounts due from related parties had been settled in full.
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Trade and other payables
The following table sets forth our breakdown on trade and other payables as at the date indicated:
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Trade payables 81,389 86,480 108,598 123,334
Other payables 6,166 6,557 16,895 6,373
Accrued expenses 3,276 4,462 5,767 10,868
Accrued staff costs 10,691 16,983 23,732 38,289
Accrued Listing expenses ——— 4,959
Accrued issue costs
(Note) ——— 1,510
Subtotal for other payables,
accruals and accrued staff
costs 20,133 28,002 46,394 61,999
Total 101,522 114,482 154,992 185,333
Note: Accrued issue costs represented the portion of Listing exp enses attributable to the proposed issuance of new Shares
upon the Global Offering which have been incurred but not yet paid as at the period end date.
Trade payables
Our trade payables are primarily derived from payables relating to payment to our suppliers in
relation to procurement of inventories. The normal credit period for trade payables generally ranges
f r o m0t o3 0d a y s .
Trade payables remained relatively stable a t HK$81.4 million as at 31 March 2023 and HK$86.5
million as at 31 March 2024. The trade payables increased to HK$108.6 million as at 31 March 2025
and HK$123.3 million as at 30 November 2025 mainly due to increase in number of stores which led to
the increase in procurement of inventories resul ting in higher level of trade payables as at 31 March
2025.
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The table below sets forth the ageing analysis of our trade payables as at the date indicated:
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Within 30 days 54,749 55,054 79,740 93,714
31–60 days 12,580 12,514 11,731 13,287
61–90 days 5,210 8,113 6,426 4,600
Over 90 days 8,850 10,799 10,701 11,733
81,389 86,480 108,598 123,334
The following table sets out the average trade payables turnover days for the years/period
indicated:
FY2023 FY2024 FY2025 8MFY2026
Average turnover days of
trade payables (Note) 23 21 21 20
(1) Average turnover days of trade payables for FY2023, FY2024 and FY2025 and 8MFY2026 is derived by dividing
the arithmetic mean of the opening and closing balances of trade payables for the relevant period by cost of sales and
multiplying by 365/240 days.
Our average turnover days of trade payables increased remained relatively stable at 23 days, 21
days, 21 days and 20 days for FY2023, FY2024 and FY2025 and 8MFY2026, respectively, which was in
line with the increase in our trade payables balances and within the credit period granted by our
suppliers.
As at 31 March 2026, HK$113.5 million or 92.0% of our trade payables outstanding as at 30
November 2025 were settled.
Other payables, accrued expen ses and accrued staff costs
Our other payables, accrued expenses and accrued st aff costs mainly consis ted (i) other payables;
(ii) accrued expenses for u tilities of our stores and office prem ises; and (iii) accrued staff costs.
Our other payables, accrued expenses and accrued s taff costs increased from HK$20.1 million as at
31 March 2023 to HK$28.0 million as at 31 March 2024 primarily due to the increase in accrued staff
costs of HK$6.3 million resulting from the increase in staff mainly for our addition of retail stores,
which was in line with our strategy to expand our ret ail network. The other pay ables, accrued expenses
and accrued staff costs then increased to HK$46.4 m illion as at 31 March 2025 mainly due to the (i)
increase in other payables of HK$10.3 million mainly attributable to the increase in payables for
acquisition of property, plant and equipment for our opening of stores; and (ii) the increase in accrued
staff costs of HK$6.7 million resulting from the increase in staff mainly for our addition of retail stores,
which was in line with our strategy to expand our ret ail network. Our other payables, accrued expenses
and accrued staff costs then increased to HK$62.0 million as at 30 November 2025 primarily due to the
(i) increase in accrued staff costs of HK$14.6 millio n resulting from the increase in number of staff for
on addition of retail stores; (ii) increase in accrued e xpenses of HK$5.1 million f or our retail stores; and
(iii) accrued Listing expenses and accrued iss ue costs of HK$5.0 milli on and HK$1.5 million,
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respectively, for our Listing. Th e increase was partially offset by the decrease in other payables of
HK$10.5 million mainly attributable to the repayment of payables for acquisition of property, plant and
equipment.
Contract liabilities
Our contract liabilities general ly represented the deposits received from our wholesale customers in
advance of delivery. The fluctuation of our contract liabilities was generally affected by the timing of
deposits received from our customers and the timing of deliver of inventories. Our contract liabilities
decreased from HK$2.7 million as at 31 March 2023 to HK$0.8 million as at 31 March 2024 and further
to HK$0.1 million as at 31 March 2025, mainly due to the delivery of inventories in the beginning of the
next financial year. Our contract liabilities remained relatively stable at HK$0.2 million as at 30
November 2025.
Provisions
During the Track Record Period, we had provision made in relation to the restoration costs for our
retail stores which amounted to HK$18.9 million, HK$22.0 million, HK$31.0 million and HK$36.8
million as at 31 March 2023, 2024 and 2025 and 30 November 2025, respectively. Our provision for
restoration costs experienced an increasing trend pr imarily due to the increase in number of retails stores
throughout the Track Record Period, being 13, 16, 25 and 29 stores in operations as at 31 March 2023,
2024 and 2025 and 30 November 2025, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Our primary uses of cash have been, and are expected to continue to be, procurement of raw
materials, funding our operating costs and other general corporate needs. Historically, we financed our
operation and other capital requirements primarily using cash generated from our operations, bank
borrowings and amounts due to related parties.
Upon completion of the Global Offering, we curre ntly expect that there will not be any material
change in the sources and uses of cash of our Group in the future, except that we would have additional
funds from proceeds of the Global offering for implementing our future plans as detailed under the
section headed ‘‘Future Plans and Use of Proceeds ’’in this prospectus. Any significant decrease in
demand for, or pricing of, our products, or a significant decrease in the availability of bank loans or
other financing may adversely impact our liquidity.
As at 31 March 2023, 2024 and 2025 and 30 November 2025, we had cash and cash equivalents of
HK$43.1 million, HK$61.4 million, HK$61.2 million and HK$49.9 million, respectively, and bank
overdraft of HK$143.7 million, HK$123.7 million, HK$105.0 million and HK$92.8 million respectively.
Going forward, we will consider the following measures and intend to manage our liquidity by:
— enhancing our revenue scale by expanding our retail networks. We believe with the increase
in revenue in total scale, we are able to enjoy economies of scales as we expect our revenue
growth after the payback period, which was re flected by the increase in cash inflows from
operating activities from FY2023 to FY2025; and
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— monitoring and controlling our bank borrowing level. Given the appropriate terms and
conditions offered by the banks and our financing policies, we may consider to explore our
bank borrowings options with longer repayment terms, and hence, reduce the short-term
portion of our bank borrowings in the future. Further, we intend to repay our outstanding
loans of HK$134.4 million by our net proceeds from the Global Offering. See ‘‘Future Plans
and Use of Proceeds — Use of Proceeds ’’for details.
We currently expect that there will not be any material change in the sources and uses of cash of
our Group, except that we would have additional cash outflow for payment of Listing expenses, and
additional funds from proceeds of the Global Offering for implementing our future plans as detailed in
‘‘Use of Proceeds ’’in this prospectus.
Cash Flow
The following table summarises, for the periods indicated, our consolidated statements of cash
flows:
FY2023 FY2024 FY2025 8MFY2025 8MFY2026
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
Net cash from operating activities 716,180 1,233,920 1,462,415 896,345 1,081,612
N e tc a s hu s e di ni n v e s t i n g
activities (17,854) (89,785) (93,548) (51,442) (42,127)
N e tc a s hu s e di nf i n a n c i n g
activities (631,732) (1,105,870) (1,350,431) (848,231) (1,038,512)
Net increase (decrease) in cash
and cash equivalents 66,594 38,265 18,436 (3,328) 973
Cash and cash equivalents at
beginning of year/period (167,062) (100,548) (62,291) (62,291) (43,867)
Effect of foreign exchange rate
changes (80) (8) (12) 5 35
Total cash and cash equivalents
at end of year/period (100,548) (62,291) (43,867) (65,614) (42,859)
REPRESENTED BY:
Cash and cash equivalents 43,137 61,408 61,182 31,671 49,896
Bank overdrafts (143,685) (123,699) (105,049) (97,285) (92,755)
(100,548) (62,291) (43,867) (65,614) (42,859)
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Operating activities
During our Track Record Period, our cash inflow fro m operating activities was principally from the
receipt of proceeds from our sales of products. Ou r cash outflow used in operating activities was
principally for purchase of inventories, employe e benefit expenses and other operating expenses.
For FY2023, we had net cash from operating activities of HK$716.2 million, as adjusted for non-
cash and non-operating items, which primarily incl ude (i) depreciation of right-of-use assets of
HK$115.7 million; and (ii) finance costs of HK$32.5 million. The amount was further adjusted by
movements in working capital, interest paid on bank overdrafts of HK$5.0 million and net income tax
paid of HK$0.2 million. The movements in working capital primarily included the (i) increase in trade
and other payables of HK$637.4 million; (ii) increase in inventories of HK$67.8 million; and (iii)
decrease in trade and other receivables of HK$11.3 million.
For FY2024, we had net cash from operating activities of HK$1,233.9 million, as adjusted for non-
cash and non-operating items, which primarily incl ude (i) depreciation of right-of-use assets of
HK$121.6 million; and (ii) finance costs of HK$52.7 million. The amount was further adjusted by
movements in working capital, interest paid on bank overdraft of HK$6.4 million and net income tax
paid of HK$1.3 million. The movements in working capital primarily included the (i) increase in trade
and other payables of HK$937.7 million; and (ii) increase in inventories of HK$49.4 million.
For FY2025, we had net cash from operating activities of HK$1,462.4 million, as adjusted for non-
cash and non-operating items, which primarily incl ude (i) depreciation of right-of-use assets of
HK$157.4 million; and (ii) finance costs of HK$51.6 million. The amount was further adjusted by
movements in working capital, interest paid on bank overdraft of HK$4.3 million and net income tax
paid of HK$22.5 million. The movements in working capital primarily included the (i) increase in trade
and other payables of HK$1,110.2 million; and (ii) increase in inventories of HK$110.6 million.
For 8MFY2026, we had net cash from operating activities of HK$1,081.6 million, as adjusted for
non-cash and non-operating items, which primarily i nclude (i) depreciation of right-of-use assets of
HK$131.6 million; and (ii) finance costs of HK$27.9 million. The amount was further adjusted by
movements in working capital and net income tax paid of HK$6.8 million. The movements in working
capital primarily included the (i) increase in trade and other payables of HK$825.1 million; and (ii)
increase in inventories of HK$66.3 million.
The business experienced serious setback in the p a n d e m i cp e r i o dw i t hd r o pi nb u s i n e s s .P r o l o n g e d
period of border closing and lack of consumer confidence resulted in huge losses during the pandemic
period. Thus, we raise significant amount of borrowing around the pandemic period. After the re-
opening of border as the pandemic gradually subsided, our business resurged and significant operating
cash inflows was recorded from our operations. Given the continuous increase of operating cash inflows
throughout the Track Record Period, we were able to reduce the level of bank borrowings steadily
throughout the Track Record Period.
Investing activities
During the Track Record Period, our cash inflo w from investing activities was principally
repayments from related parties. Our cash outflow us ed in investing activities was principally for
advances to related parties and purchase of property, plant and equipment.
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For FY2023, we had net cash used in investing activities of HK$17.9 million primarily attributable
to (i) payments for rental deposits of HK$10.8 million; and (ii) purchase of property, plant and
equipment of HK$10.8 million.
For FY2024, we had net cash used in investing activities of HK$89.8 million primarily attributable
to (i) net advances to related parties of HK$46.0 million; (ii) purchase of property, plant and equipment
of HK$26.0 million.
For FY2025, we had net cash used in investing activities of HK$93.5 million primarily attributable
to (i) purchase of property, plant and equipment of HK$54.9 million; and (ii) net advances to related
parties of HK$28.6 million.
For 8MFY2026, we had net cash used in investing activities of HK$41.1 million primarily
attributable to purchase of property, plant and equipment of HK$28.7 million.
Financing activities
During the Track Record Period, our cash inflow fro m financing activities w as principally proceeds
from bank borrowings and advances from related parties. Our cash outflow used in financing activities
was principally for repayment of lease liabilities, repayments of bank borrowings and to related parties
and payment of interest.
For FY2023, we had net cash used in financing activities of HK$631.7 million primarily
attributable to the (i) net repayment of bank borrowings of HK$519.5 million; (ii) repayment of lease
liabilities of HK$86.9 million; and (iii) interest paid on bank borrowings of HK$20.7 million. The cash
outflow was partially offset by the net advance from related parties of HK$2.1 million.
For FY2024, we had net cash used in financing activities of HK$1,105.9 million primarily
attributable to the (i) net repayment of bank borrowings of HK$937.9 million; (ii) repayment of lease
liabilities of HK$119.7 million; and (iii) interest paid on bank borrowings of HK$34.4 million.
For FY2025, we had net cash used in financing activities of HK$1,350.4 million primarily
attributable to the (i) net repayment of bank borrowings of HK$1,088.4 million; (ii) repayment of lease
liabilities of HK$146.6 million; and (iii) net repayment to related parties of HK$68.3 million.
For 8MFY2026, we had net cash used in financing activities of HK$1,038.5 million primarily
attributable to the (i) net repayment of bank borrowings of HK$903.9 million; and (ii) repayment of
lease liabilities of HK$118.9 million.
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INDEBTEDNESS
The following table sets forth the breakdown of our total indebtedness as at the dates indicated:
As at 31 March
As at
30 November
As at
31 March
2023 2024 2025 2025 2026
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
Bank borrowings 680,428 669,279 651,523 540,506 543,444
— secured and guaranteed 556,411 557,704 556,564 536,830 532,681
— secured and unguaranteed — 2,689 3,900 3,676 10,763
— unsecured and guaranteed 124,017 108,886 91,059 ——
Bank overdrafts — secured and
guaranteed 143,685 123,699 105,049 92,755 12,793
Lease liabilities 194,299 221,259 265,267 347,399 372,747
— secured and unguaranteed 177,896 214,762 253,712 331,817 315,619
— unsecured and unguaranteed 16,403 6,497 11,555 15,582 57,128
Amounts due to related parties
— unsecured and
unguaranteed 50,223 48,141 12,836 25,199 15,789
Total 1,068,635 1,062,378 1,034,675 1,005,859 944,773
Bank borrowings
The following table sets forth a breakdown of our bank borrowings as at the dates indicated:
As at 31 March
As at
30
November
As at
31 March
2023 2024 2025 2025 2026
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
Mortgage loans 143,343 134,253 110,556 103,572 99,997
Bank loans under supplier
finance arrangement 200,911 237,009 287,111 299,182 313,545
Term loans under the Small and
Medium Enterprises ( ‘‘SME’’)
Financing Guarantee Scheme 124,017 108,886 91,059 ——
Other loans 212,157 189,131 162,797 137,752 129,902
680,428 669,279 651,523 540,506 543,444
Secured 556,411 560,393 560,464 540,506 543,444
Unsecured 124,017 108,886 91,059 ——
680,428 669,279 651,523 540,506 543,444
Guaranteed 680,428 666,590 647,623 536,830 532,681
Unguaranteed — 2,689 3,900 3,676 10,763
680,428 669,279 651,523 540,506 543,444
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The carrying amounts of the above borrowings are analyzed based on contractual repayment date
as follows:
As at 31 March
As at
30 November
As at
31 March
2023 2024 2025 2025 2026
HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
The carrying amounts of borrowings
that contain a repayment on demand
clause (shown under current
liabilities) but repayable:
Within one year 423,288 443,382 461,539 443,039 453,109
Within a period of more than one
year but not exceeding two years 42,436 48,330 41,461 14,911 11,973
Within a period of more than two
years but not exceeding five
years 94,357 81,615 71,247 33,262 32,772
Within a period of more than five
years 120,347 95,952 77,276 49,294 45,590
680,428 669,279 651,523 540,506 543,444
The exposure of the Group ’sb o r r o w i n g si sa sf o l l o w s :
As at 31 March
As at
30 November
As at
31 March
2023 2024 2025 2025 2026
HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
Fixed-rate borrowings 200,911 239,698 291,011 302,858 315,848
Variable-rate borrowings 479,517 429,581 360,512 237,648 227,596
680,428 669,279 651,523 540,506 543,444
The ranges of effective interest rates on our borrowings are as follows:
As at 31 March
As at
30 November
As at
31 March
2023 2024 2025 2025 2026
(Unaudited)
Effective interest rates:
— Fixed-rate borrowings 2.99% to
5.77%
2.75% to
6.34%
2.75% to
6.74%
1.38% to
5.83%
2.75% to
5.68%
— Variable-rate borrowings 2.01% to
4.97%
2.68% to
6.85%
2.05% to
6.32%
1.91% to
3.70%
1.80% to
4.41%
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Our bank borrowings remained relatively stable at HK$680.4 million, HK$669.3 million,
HK$651.5 million and as at 31 March 2023, 2024 and 2025, respectively. Our bank borrowings then
decreased to HK$540.5 million as at 30 November 2025 mainly due to our repayment. Our bank
borrowings then remained relatively stable at HK$543.4 million as at 31 March 2026.
Our bank borrowings comprise the following:
(i) Mortgage loans are secured by our Group ’s investment properties and/or pledge of properties
held by related parties which are entities controlled by Mr. Tse, interest-bearing ranging from
2.43% to 3.08%, 2.68% to 3.33%, 2.05% to 2.71%, 2.01% to 2.71% and 1.80% to 2.50% per
annum as at 31 March 2023, 2024 and 2025, 30 November 2025 and 31 March 2026,
respectively, guaranteed by Mr. Tse, Mrs. T se and related parties which are entities
controlled by Mr. Tse, including Lung Fung International Trading Limited, Full Group
Corporation Limited, Max Profit Investment (Holdings) Limited and/or Huge Max (Hong
Kong) Limited, and repayable on demand.
(ii) The Group enters into certain supplier finance arrangements with banks. Under these
arrangements, the banks pay suppliers the amounts owed by the Group before original due
dates. The Group ’s obligations to suppliers are legally extinguished on settlement by the
relevant banks. The Group then settles with the banks between 90 and 120 days after
settlement by the banks with interest ranging from 2.99% to 5.77%, 4.23% to 6.34%, 3.60%
to 6.74%, 1.38% to 5.83% and 2.87% to 5.68% per annum as at 31 March 2023, 2024 and
2025, 30 November 2025 and 31 March 2026, respectively. Such bank loans are secured by
our Group ’s investment properties and/or pledge of properties held by related parties which
a r ee n t i t i e sc o n t r o l l e db yM r .T s e .O t h e rt h a na na m o u n to fH K $ 8 . 5m i l l i o na sa t3 1M a r c h
2026 that is unguaranteed, the remaining amounts are guaranteed by Mr. Tse, Mrs. Tse, and
related parties which are entities controlled by Mr. Tse, including Lung Fung International
Trading Limited, Full Group Corporation Limited, Max Profit Investment (Holdings) Limited,
Dragon Grace Corporation Limited and/or Huge Max (Hong Kong) Limited, and repayable on
demand. These arrangements have extended the payment terms, which may be extended
beyond the original due dates of respective invoices. The interest rates are consistent with the
Group ’s short-term borrowing rates.
(iii) Term loans under the SME Financing Guar antee Scheme are unsecured, interest-bearing
ranging from 3.05% to 3.38%, 3.24% to 3.74% and 2.63% to 3.00% as at 31 March 2023,
2024 and 2025, respectively, guaranteed by Mr. Tse, Mrs. Tse, Mr. Tam Shu Wing and Mr.
Wong Sze Chun (who were shareholders of certain entities now comprising the Group
holding shares on trust for the benefit of Mr. Tse before the Reorganization), and/or HKMC
Insurance Limited, and repayable on demand.
(iv) Other loans represent revolving loans, term loans and other borrowings. The loans are
s e c u r e db yo u rG r o u p’s motor vehicles and investment properties and/or pledge of properties
held by related parties which are entities controlled by Mr. Tse, interest-bearing ranging from
2.75% to 5.87%, 2.75% to 6.70%, 2.75% to 5.92%, 1.91% to 3.70% and 2.75% to 4.41% per
annum as at 31 March 2023, 2024 and 2025, 30 November 2025 and 31 March 2026,
respectively and repayable on demand. Other than other borrowings of HK$2.7 million,
HK$3.9 million, HK$3.7 million and HK$2.3 million as at 31 March 2024 and 2025, 30
November 2025 and 31 March 2026 respectively which are unguaranteed, the remaining
amounts are guaranteed by Mr. Tse, Mrs. Tse, and related parties which are entities
controlled by Mr. Tse, including Lung Fung International Trading Limited, Full Group
Corporation Limited, Max Profit Investment (Ho ldings) Limited, Dragon Grace Corporation
Limited and/or Huge Max (Hong Kong) Limited.
In respect of bank loans and bank overdrafts from a bank with carrying amounts of HK$284.9
million, HK$337.4 million, HK$303.9 million and HK$302.4 million as at 31 March 2023, 2024 and
2025 and 30 November 2025, we breached a financial cove nant of the relevant ban k facility stipulating a
FINANCIAL INFORMATION
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maximum net value of the related party balances of LF P. The relevant bank has agreed to waive its right
to demand immediate repayment of the outstanding bank loans and bank overdrafts as at 31 March 2023,
2024 and 2025. Such waivers were only related to the respective reporting dates and did not stipulate a
specific waiver period. As the carrying amounts of such bank loans and bank overdraft have already
been classified under current liabilities as at 31 M arch 2023, 2024 and 2025 as a result of the repayable
on demand clause of the relevant bank facilitie s, the breach has not resulted in a change in the
classification of the bank loans and bank overdrafts. The facility agreements for our bank loans contain
customary banking covenants, but there is no individual financial covenant for our bank loans and bank
overdrafts that are considered to be material in resp ect of the Group, and there is no specific restriction
in such agreements against dividend distribution.
As at 31 March 2026, being the latest practicable date for the purpose of indebtedness statement,
we had aggregate banking facilities of HK$894.9 million, of which HK$338.7 million was unutilised.
The unutilised amount was committed by the banks but we are not committed to draw down the
unutilised amount. There is no material change in indebtedness since 31 March 2026 up to Latest
Practicable Date.
During the Track Record Period, Mr. Tse provided guarantees and granted mortgages over his
properties as security (the ‘‘Founder ’s Guarantees ’’) for certain loans lent to our Group (the
‘‘Founder ’s Guaranteed Loans ’’) with maturity dates up to July 2040. The Founder ’s Guaranteed Loans
were utilised in our ordinary course of business. As at 31 March 2026, the amount of the Founder ’s
Guaranteed Loans was approximately HK$532.7 million. The Founder ’s Guarantees are on normal
commercial terms and are not secured by any assets of our Group, therefore they are fully exempted
connected transactions in accordance with rule 14A.90 of the Listing Rules. For details of these
Founder ’s Guarantees, see ‘‘Relationship with Our Controlling Shareholder — Financial independence ’’.
All the Founder ’s Guarantees will be released upon the Listing.
During the Track Record Period, our Directors c onfirmed that we did not experience any delay or
default in repayment of bank borrowings nor experience any difficulty in obtaining banking facilities
with terms that are commercially acceptable to us. As at the date of this prospectus, we did not have any
plan for material external debt financing.
Bank overdrafts
We had bank overdrafts of HK$143.7 million, HK$123.7 million, HK$105.0 million, HK$92.8
million and HK$12.8 million as at 31 March 2023, 2024 and 2025, 30 November 2025 and 31 March
2026, respectively, primarily for our short-term needs of funding for operations. Bank overdrafts are
secured by pledge of properties held by related part ies which are entities controlled by Mr. Tse, carry
interest at market rates which range from 3.48% to 5.88%, 3.73% to 6.60%, 3.10% to 5.81%, 2.02% to
5.50% and 2.85% to 5.25% per annum as at 31 March 2023, 2024 and 2025, 30 November 2025 and 31
March 2026, respectively. We tend to utilise all types of available facilities in an effective and efficient
manner. While we were given the overdraft credit limits with interest rates that are not more unfavorable
to us than drawing a loan which entailed a more effi cient approval process in a timely manner from the
FINANCIAL INFORMATION
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banks, we incurred overdrafts to satisfy part of our funding needs from time to time. During the Track
Record Period, we did not experience any unexpected expenditures, deficiencies in cash management, or
large, one-off payments.
Lease liabilities
Our lease liabilities increased from HK$194.3 million as at 31 March 2023 to HK$221.3 million as
at 31 March 2024 and further to HK$265.3 million as at 31 March 2025, due to the increase in number
of stores leased resulting from the further expansion of our business. Our lease liabilities decreased to
HK$347.4 million as at 30 November 2025, primarily due to the increase in number of retail stores
during the period. Our lease liabilities then increased to HK$372.7 million as at 31 March 2026,
primarily due to the renewal of leases during the period.
Lease liabilities amounting to HK$177.9 million, HK$214.8 million, HK$253.7 million, HK$331.8
million and HK$315.6 million as at 31 March 2023, 2024 and 2025, 30 November 2025 and 31 March
2026 respectively are secured by rental deposits paid by the Group.
Amounts due to related parties
The following table sets forth a breakdown of our amounts due to related parties as at the dates
indicated:
As at 31 March
As at
30
November
As at
31 March
2023 2024 2025 2025 2026
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
Amount due to Mr. Tse 14,496 16,894 10,928 10,928 —
Amounts due to related
parties 35,727 31,247 1,908 14,271 15,789
50,223 48,141 12,836 25,199 15,789
We had amount due to Mr. Tse of HK$14.5 million, HK$16.9 million, HK$10.9 million, HK$10.9
million and nil as at 31 March 2023, 2024 and 2025, 30 November 2025 and 31 March 2026,
respectively. The amounts were non- trade in nature, unsecured, interest-free and repayable on demand.
We had amount due to related parties, which represented entities controlled by Mr. Tse, of
HK$35.7 million, HK$31.2 million, HK$1.9 million, HK$14.3 million and HK$15.8 million as at 31
March 2023, 2024 and 2025, 30 November 2025 and 31 March 2026, respectively. The amounts were
non-trade in nature, unsecured, inte rest-free and repayable on demand.
All the amounts due to related parties had been se ttled in full as at the date of this prospectus.
FINANCIAL INFORMATION
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Contingent liabilities or guarantees
During the Track Record Period, our Group provided a corporate guarantee to an unlimited extent
to a bank for banking facilities granted to a related party. As at 31 March 2023, 2024 and 2025, 30
November 2025 and 31 March 2026, bank facilities utilized by the related party amount to HK$128.6
million, HK$106.2 million, HK$92.4 million, HK$82.8 million and HK$75.1 million respectively. We
would release the aforesaid corporate guarantee upon the Listing.
Save as aforesaid or as otherwise disclosed herein, and apart from intra-group liabilities, our Group
did not have outstanding as at Latest Practicable Date any debt securities issued and outstanding or
agreed to be issued, or other similar indebtedness , term loans, bank overdrafts, liabilities under
acceptances (other than norm al trade bills) or acceptance credits , debentures, mortgages, charges,
finance leases or hire purchases commitments, guarantees, or other material contingent liabilities.
TRANSACTIONS WITH RELATED PARTIES
With respect to the related party transactions set forth in the Accountants ’ Report in Appendix I to
this prospectus, our Directors confirm that these transactions were conducted on normal commercial
terms or such terms that were no less favourable to our Group than those available to Independent Third
Parties and were fair and reasonable and in the interest of our Shareholders as a whole.
CAPITAL EXPENDITURES
Our capital expenditures have principally consisted of expenditures on additions of property, plant
and equipment and investment properties. For FY2023, FY2024, FY2025 and 8MFY2026, our Group
incurred capital expenditures of HK$10.8 million, HK$27.4 million, HK$54.9 million and HK$28.7
million, respectively.
We expect that our capital expenditures in the remainder of the financial year of 2026 will
primarily consist of purchase of property and eq uipment. We intend to fund our future capital
expenditures with our existing cash balance, cash ge nerated from operating activities, proceeds from
borrowings and net proceeds received from the Gl obal offering. We may reallocate the fund to be
utilized on capital expenditure and long-term investments based on our ongoing business needs. We
believe that these sources of funding will be sufficient to finance our contractual commitments and
capital expenditure needs for the next 12 months.
Our projected capital expenditures are subject t o revision based upon any future changes in our
business plan, market conditions, and economic and r egulatory environment. Please refer to the section
headed ‘‘Future plans and use of proceeds ’’in this prospectus for further information.
CAPITAL COMMITMENTS
As at each of the year/period end, we did not have material capital commitments.
FINANCIAL INFORMATION
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PROPERTY VALUATION
Avista Valuation Advisory Limited, an independent property valuer, has valued certain of our
properties as at 31 March 2026 and is of the opinion that the total market value in existing state as at
such date was in aggregate HK$170.3 million. The full text of the letter, summary of valuation and
valuation certificates with regard to such property interests are set out in Appendix III to this prospectus.
A reconciliation of the carrying value of our properties under property valuation as at 31 March 2026 to
their fair value as at 31 March 2026 as stated in the property valuation report set out in ‘‘Valuation
Report ’’in Appendix III to this prospectus is set out below:
HK$’000
Properties as at 30 November 2025 with reference to notes 15 and 16 of
Accountants ’ Report contained in Appendix I to this prospectus 177,708
Properties not qualified under property valuation (1,090)
Properties under property valuation as at 30 November 2025 176,618
Decrease in fair value of investment properties
for the four months ended 31 March 2026 (5,350)
Depreciation of owned properties for the four months ended 31 March 2026 (415)
170,853
Valuation deficit (Note) (553)
Valuation of properties owned by our Group as at 31 March 2026 as set out in
the property valuation report in Appendix III to this prospectus 170,300
Note: The valuation deficit of HK$0.6 million represents the deficit in the market value of our Group ’s owned properties
classified under property, plant and equipment below its carrying amount as at 31 March 2026. We consider that
there is no impairment indicator on our Group ’s owned properties as at 31 March 2026 as the relevant property is
used as our Group ’s retail store and is profit generating for the year ended 31 March 2026.
KEY FINANCIAL RATIOS
The following table sets forth our key financ ial ratios as at each of the dates indicated:
For the financial year ended/
as at 31 March
For the eight
months ended/
as at
30 November
2023 2024 2025 2025
Gross Profit Margin (%) (1) 24.9 29.3 31.6 30.9
Net (Loss)/Profit Margin (%) (2) (2.5) 7.2 6.9 7.3
Return on equity (%) (3) N/A 111.6 384.0 N/A
Return on total assets (%) (4) N/A 10.8 13.2 N/A
Interest coverage (times) (5) N/A 4.4 5.2 7.4
Current ratio (times) (6) 0.3 0.4 0.4 0.6
Quick ratio (times) (7) 0.1 0.2 0.1 0.2
Gearing ratio (%) (8) N/A 612.2 1,704.7 1,142.4
FINANCIAL INFORMATION
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Notes:
(1) Gross profit margin for FY2023, FY2024, FY2025 and 8MFY2026 was calculated on gross profit divided by revenue
for the respective year/period. See the paragraph headed ‘‘Review of Historical Results of Operation ’’in this section
for more details on our gross profit margins.
(2) Net profit margin for FY2023, FY2024, FY2025 and 8MFY2026 was calculated on profit for the year divided by
revenue for the respective year/period. See the paragraph headed ‘‘Review of Historical Results of Operation ’’in this
section for more details on our net profit margins.
(3) Return on equity for FY2023, FY2024, FY2025 was calculated based on the profit for the year for the respective
year divided by the total equity as at the respective year and multiplied by 100%. The return on equity for
8MFY2026 is not included for the purpose of comparison as we believe it is not meaningful to compare the ratio for
8MFY2026 with the ratio for FY2025.
(4) Return on total assets for FY2023, FY2024, FY2025 was calculated based on the net profit for the respective years
divided by the total assets of the respective years and multiplied by 100%. The return on total assets for 8MFY2026
is not included for the purpose of comparison as we believe it is not meaningful to compare the ratio for 8MFY2026
with the ratio for FY2025.
(5) Interest coverage is calculated based on the profit befor e interest and tax for the year/period and period divided by
interest expenses for the year and period.
(6) Current ratios as at 31 March 2023, 2024 and 2025 and 30 November 2025 were calculated based on the total current
assets as at the respective dates divided by the to tal current liabilities as at the respective dates.
(7) Quick ratio was calculated by dividing total curre nt assets minus inventory 31 March 2023, 2024 and 2025 and 30
November 2025 by total current liabilities as at the respective date.
(8) Gearing ratios was calculated by total interest-bearing borrowings, including bank borrowings and bank overdraft,
divided by total equity as at the end of the year/period multiplied by 100%.
Return on equity
We had loss for FY2023. Our return on equity increased from 111.6% for FY2024 to 384.0% for
FY2025, primarily due to the increase in profit for FY2025.
Return on total assets
We had loss for FY2023. Our return on total assets increased from 10.8% for FY2024 to 13.2% for
FY2025, primarily due to the increase in profit for FY2025.
Interest coverage
We had loss for FY2023. Our interest coverage increased from 4.4 times for FY2024 to 5.2 times
for FY2025, primarily due to the increase in profit for FY2025. Our interest coverage further increased
to 7.4 times for 8MFY2026, primarily due to the decr ease in finance costs incurred for 8MFY2026 as a
result of the decrease in average interest-bearing borrowings.
Current ratio
Our current ratio remained relatively stable at 0.3 times, 0.4 times and 0.4 times as at 31 March
2023, 2024 and 2025, respectively. Our current ratio then increased to 0.6 times as at 30 November 2025
primarily due to the increase in current port ion of amounts due from related parties.
FINANCIAL INFORMATION
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Quick ratio
Our quick ratio remained relatively stable at 0.1 times, 0.2 times and 0.1 times as at 31 March
2023, 2024 and 2025 respectively. Our quick ratio then increased to 0.2 times as at 30 November 2025
primarily due to the increase in current port ion of amounts due from related parties.
Gearing ratio
Our gearing ratio increased from 612.2% as at the f inancial year ended 31 March 2024 to 1,704.7%
as at 31 March 2025, primarily due to the decrease in total equity mainly resulting from dividends
recognised as distributions of HK$255.0 million for FY2025 partially offset by the increase in profit for
the year. Our gearing ratio decreased to 1,142.4% as at 30 November 2025, primarily due to the increase
in profit for the period and increase in total equity resulting from the accumulation of profit.
PLEDGE OF ASSETS
The Group ’s borrowings had been secured by the pledge of the Group ’s assets and the carrying
amounts of the respectiv e assets are as follows:
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Investment properties 256,500 239,730 187,920 149,760
Property, plant and
equipment — 2,789 4,432 31,354
256,500 242,519 192,352 181,114
CONTINGENT LIABILITIES
As at the Latest Practicable Date, except for the c orporate guarantee provided by our Group to an
unlimited extent to a bank for banking facilities granted to a related party, we did not have any material
contingent liabilities, guarantees or any litigation or claims of material importance, pending or
threatened against us. Our Directors have confirmed that there has not been any material change in our
contingent liabilities since the Latest Practicable Date and up to the date of this prospectus. For details
of the aforesaid corporate guarantee provided by our Group, please refer to the ‘‘Financial Information
— Contingent liabilities or guarantees ’’of this section.
OFF-BALANCE SHEET ARRANGEMENT
As at the Latest Practicable Date, we had not en tered into any off-balance sheet transaction.
QUANTITATIVE AND QUALITATIVE D ISCLOSURES ABOUT MARKET RISKS
We are exposed to a variety of financial risk, such as market risk, including currency risk, interest
rate risk, credit risk and liquidity risk.
Details of the risk to which we are exposed are set out in note 32 to the Accountants ’ Report, the
text of which is set out in Appendix I to this document.
FINANCIAL INFORMATION
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DISCLOSURE REQUIRED UNDER THE LISTING RULES
Our Directors confirm that as at the Latest Pract icable Date, there were no circumstances that
would give rise to the disclosure requirements under Rules 13.13 to 13.19 of the Hong Kong Listing
Rules.
LISTING EXPENSES
Listing expenses represent professional fees, underwriting commissions and other fees incurred in
connection with the Global Offering. We estimate that our listing expenses will be approximately
HK$50.4 million (assuming an Offer Price of HK$5.78 per Offer Share (being the mid-point of the
indicative Offer Price range) and no exercise of th e Over-allotment Option), of which approximately
HK$30.6 million is directly attributable to the issue of our Offer Shares and will be deducted from
equity, HK$11.1 million has been expensed in ou r consolidated statements of profit or loss in
8MFY2026 and approximately HK$8.7 million is expected to be expensed after the Track Record
Period. Our estimated listing expenses include: under writing-related expenses, representing underwriting
commission and fees of approximately HK$24.4 million; non-underwriting-related professional fees of
approximately HK$23.0 million for their services rendered in relation to the Global Offering and the
Listing, and other fees and expenses of approximately HK$3.0 million. The listing expenses above are
the best estimate as of the Latest Practicable Date and for reference only and the actual amount may
differ from this estimate.
DIVIDENDS AND DIVIDEND POLICY
During the Track Record Period, no dividend has been paid or declared by the Company since its
date of incorporation. During the year ended 31 M arch 2023, Dragon Mind Creation Limited declared
dividends of HK$13.0 million to its shareholder. For the year ended 31 March 2025, LFP, Top Harvest
Pharmaceuticals Company Limited and Pearl Lak e Global Limited declared dividends of HK$200.0
million, HK$33.0 million and HK$22.0 million, respectively, to their respective shareholders. The
dividend of LFP, Top Harvest Pharmaceuticals Com pany Limited and Pearl Lake Global Limited were
all settled by offsetting with the amount due from companies controlled by Mr. Tse and charged to
amounts due to the relevant related parties of the re spective companies on 31 March 2025 respectively.
Please see Note 34 in the Accountant ’s Report in Appendix I for details. When deciding on the dividend
payment, we have taken into account various factors other than cash flow of the relevant financial
period. These factors include operations and earning s, capital requirements and surplus, general financial
condition, contractual restrictions, capital expenditure and future development requirements,
shareholders ’ interests. After balancing various factors, it is considered appropriate to distribute
dividends to the shareholders because it is considered appropriate to offset the amounts due from
shareholders or related parties of the relevant companies by way of dividend. As advised by our Hong
Kong Legal Counsel, the aforesaid dividends were declared and settled out of profits available for
distribution of Dragon Mind Creation Limited, LFP and Top Harvest Pharmaceuticals Company Limited
at the material time, in compliance with the Companie s Ordinance (Cap. 622) and the respective articles
of association of the relevant subsidiaries
(Note) .O n1 0F e b r u a r y2 0 2 6a n d2 1M a y2 0 2 6 ,o u rC o m p a n y
declared dividends of HK$130 per share totalling HK$130,000,000 and HK$23 per share totaling
HK$23,000,000, respectively, which were settled by way of an offsetting with our Group ’s amounts due
from related parties.
Note: Under the laws of the British Virgin Islands, the place of incorporation of Pearl Lake Global Limited ( ‘‘PLG’’), and the
memorandum and articles of association of PLG, the direct ors of PLG may by resolution authorise a distribution by the
company as they think fit if they are satisfied on reasonable grounds that, immediately after the distribution, (i) the value
of the company ’s assets exceeds its liabilities, and (ii) the company is ab le to pay its debts as they fall due. Our Directors
confirmed that at the material time when PLG declared the relevant dividends, the directors of PLG were satisfied on
reasonable grounds that the value of PLG ’s assets exceeded its liabilities and PLG was able to pay its debts as they fell
due.
FINANCIAL INFORMATION
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Our Company does not have any formal dividend policy or predetermined dividend payout ratio.
However, subject to the relevant laws and our constitutional documents, the Board intends to, following
the Listing, recommend an annual dividend of no less than 50% of our profit for the year available for
distribution to the Shareholders, subject to consideration of various factors, including our operations and
earnings, capital requirements and sur plus, general financial condition, contractual restrictions, capital
expenditure and future development requirements, shareholders ’ interests and other factors which they
may deem relevant at such time. Notwithstanding the aforesaid, our Company may not be able to
distribute any dividend or may reduc e or cease any dividend di stribution in certain circumstances where
our Company has net cash outflow from operating activities in the year of the consolidated statement of
accounts, or the amount of p roposed investments or acquisiti ons of our Company during the year
exceeds its operating cash inflow in the same year. A ny declaration and payment as well as the amount
of dividends will be subject to our constitutional documents and the Cayman Islands Companies Act.
Under the Articles of Association of the Company , the Company in general meeting may declare
dividends in any currency to be paid to the members but no dividend shall be declared in excess of the
amount recommended by the board. Any future declarations of dividends may or may not reflect our
historical declarations of dividends and will be at the absolute discretion of our Directors.
Any dividends declared will be in Hong Kong dollars with respect to our Shares on a per share
basis, and our Company will pay such dividends in Hong Kong dollars.
Any distributable profits that are not distributed in any given year will be retained and available
for distribution in subsequent years. To the extent profits are distributed as dividends, such portion of
profits will not be available to be reinvested in our operations.
DISTRIBUTABLE RESERVES
Our Company was incorporated on 3 October 2025, and had reserves of HK$47.5 million as at 30
November 2025.
UNAUDITED PRO FORMA ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS
Please see the section ‘‘Unaudited Pro Forma Financial Information ’’in Appendix IIA for our
unaudited pro forma adjusted net tangible assets and unaudited pro forma estimated earnings per share.
PROFIT ESTIMATE
Please see the section ‘‘Profit Estimate ’’in Appendix IIB for our profit estimate.
RECENT DEVELOPMENT AND NO MATERIAL ADVERSE CHANGE
Please see the section headed ‘‘Summary — Recent Development and No Material Adverse
Change ’’of this prospectus for details.
FINANCIAL INFORMATION
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FUTURE PLANS
Please refer to ‘‘Business — Our Strategies ’’in this prospectus for a detailed discussion of our
future plans.
USE OF PROCEEDS
We estimate that we will receive net proceeds f rom the Global Offering of approximately
HK$672.1 million, after deducting underwriting commissions, fees and estimated expenses payable by us
in connection with the Global Offering, assuming an Offer Price of HK$5.78 per Share, being the mid-
point of the Offer Price. We currently intend to apply these net proceeds for the following intended
purposes in the amounts set forth below:
. Approximately HK$245.9 million, representing 36.6% of the net proceeds, is expected to be
used for expanding, enhancing and optimising our physical and online sales network of which
we intend to use approximately 25.8%, 36.7% and 37.5% for the period from the Listing Date
to March 2027, FY2028 and FY2029, respectively, among which:
Physical sales network
(i) approximately HK$81.7 million, representing 12.2% of the net proceeds, is expected to
be used for expanding our physical retail store network by opening up to 11 new retail
stores in Hong Kong during the period from the Listing Date to 31 March 2029 with
three to four new shops intended to be opened for each financial year. The target areas
of the new shops will cover different districts in Hong Kong Island, Kowloon and the
New Territories (covering locations with va rious demographics (both residential and
commercial areas)), depending on the market dynamics and subject to the availability of
suitable premises. Please also see the section headed ‘‘Business — Our Strategies — 1.
Continuously expanding the local physical retail network to increase market share ’’.T h e
further diversification of the locations of our stores would widen our outreach of
different types of customers, including the residents in the neighbourhood and the
workers around the commercial areas. The i ncreased number of stores and locations
would also enable the Group to be more flexible in relocating different products across
various stores, which would minimize the ris k of cannibalization. These net proceeds
will be used for initial capital expenditures, which include rental deposit and design and
renovation costs;
(ii) approximately HK$127.0 million, representing 18.9% of the net proceeds, is expected to
be used for inventory procurement for the opening of additional retail stores;
(iii) approximately HK$23.8 m illion, representing 3.5% of t he net proceeds, is expected to
be used for recruitment and training of stor e staff, beauty consultants and registered
pharmacists to be stationed at the new retail stores;
FUTURE PLANS AND USE OF PROCEEDS
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Online sales network
(iv) approximately HK$13.4 m illion, representing 2.0% of t he net proceeds, is expected to
be used for expanding our online sales channels, which will primarily include (a)
further developing and optimising our Lung Fung Mall e-commerce platform in Hong
Kong, with an aim to improve user experience, visual appeal and convenience relating
to web browsing and the online shopping process on our Official Online Store; we also
plan to enhance the functionalities of our Official Online Store to intensify our
promotion initiatives via multiple means in order to increase our online sales volume
and revenue; (b) broadening our online sal es channels and increasing our outreach to
customers through online platform such as Douyin; and (c) enhancing our presence by
opening additional self-operated e-commerce stores on e-commerce platforms such as
Tmall and JD.com for sales in the PRC in order to further strategically promote specific
products such as our private label products through enhanced exposure to target
customers.
. Approximately HK$23.5 million, representin g 3.5% of the net proceeds, is expected to be
used for brand management and marketing to increase mass awareness of our Group and the
effectiveness of our marketing activities of which we intend to use approximately 15.0%,
35.0% and 50.0% during the period from the Listing Date to March 2027, FY2028 and
FY2029, respectively, which will primarily include:
(i) approximately HK$13.4 mi llion, representing 2.0% of the net proceeds, is expected to
be used for engaging entertainers and KOLs as ambassadors for our Group and placing
commercial advertisement on major televi sion channels. These net proceeds will be
used for the annual endorsement fees for the ambassadors and the design costs relating
to our Group ’s ambassadors and production and design costs and media-buying costs;
and
(ii) approximately HK$10.1 m illion, representing 1.5% of t he net proceeds, is expected to
be used for implementing our online marketing and promotion activities, which will
primarily include the placement of onlin e advertisements to promote our Group on
social media platforms. We will create original media contents and/or sponsored videos
to promote our brands on various social media p latforms tailoring to the preferences of
audiences on different platforms.
. Approximately HK$23.5 million, representin g 3.5% of the net proceeds, is expected to be
used for strengthening our supply chain capability through expanding and upgrading our
existing procurement office and warehouse in Japan and warehouse in Korea of which we
intend to use approximately 33.3%, 33.3% and 33.4% during the period from the Listing Date
to March 2027, FY2028 and FY2029, respectively. At present, our Group utilises one
warehouse in Fukuoka, Japan, for sourcing and goods-transit. We plan to set up another
location in Japan, which is a key area of our procurement, to further enhance our sourcing
capability. We also plan to strengthen manpower in Japan and Korea to support our
operations in those locations, with an aim to enhance our order handling capacity and
improve our logistical capabilities and efficiency. We expect to increase the manpower in
Japan/Korea by engaging contractors or recrui ting employees, takin g in account such as the
FUTURE PLANS AND USE OF PROCEEDS
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costs involved, availability of suitable candidates and the then business needs. This
investment aims to enhance our operational capabilities, improve supplier relationships, and
strengthen our competitive position in these key markets. The net proceeds will be used to
lease additional office space and warehouse to accommodate a growing team dedicated to
sourcing high-quality products from suppliers in Japan and Korea; and
. Approximately HK$76.8 million, representing 11.4% of the net proceeds, is expected to be
used for upgrading and enhancing our informat ion technology systems of which we intend to
use approximately 29.4%, 38.3% and 32.3% during the period from the Listing Date to
March 2027, FY2028 and FY2029, respectively, in particular,
(i) approximately HK$53.8 mi llion, representing 8.0% of the net proceeds, is expected to
be used for upgrading our warehouse by implementing a new warehouse management
system. In particular, we plan to modernize our warehouse management, streamline
existing personnel management processes and implement modern digital management.
We plan to redesign and automate warehouse l ogistics management, and provide a data
integration platform to facilitate data ex change with suppliers, thereby improving
efficiency and receipt accuracy. The upgrade aims to enhance our operational
efficiency, support better i nventory management, and improve our overall logistics
capabilities; and
(ii) approximately HK$23.0 m illion, representing 3.4% of t he net proceeds, is expected to
be used for upgrading our point-of-sales system. This strategic investment aims to
enhance our transaction capabilities, improve customer experience, and streamline
operational processes across our retail locations. These net proceeds will be used for
acquiring new POS hardware and software, including terminals, mobile devices, and
receipt printers. This equipment will support faster transaction processing and better
integration with our inventory management systems.
. Approximately HK$134.4 million, representing 20.0% of the net proceeds, is expected to be
used to repay our outstanding loans, primarily certain supplier finance arrangements (please
refer to note 23 of Appendix I to this prospectus for further information and revolving loan of
interest rate of 3.5% to 4.5% and maturity of 3 to 6 months, of which we intend to use
approximately 50.0% and 50.0% during the period from the Listing Date to March 2027 and
FY2028, respectively.
. Approximately HK$100.8 million, representing 15.0% of the net proceeds, of which we
intend to use approximately 50.0% and 50.0% during FY2028 and FY2029, respectively, is
expected to be used for pursue selective strategic investment and acquisition opportunities
and further develop strategic partnerships to expand our business scale and our geographic
coverage. We plan to acquire companies that either operate in a similar business to ours or
can provide synergies that complement our current operations or enable us to expand our
business. For instance, we would consider vertical acquisitions such as acquiring upstream
suppliers, for instance OEM manufacturers, of products similar to what our Group is
currently offering. This would further enhance the stability of supply for certain private label
products and potentially increase our profit margin. We would also consider horizontal
acquisitions, such as acquiring other retailers in Hong Kong and overseas, in order to
FUTURE PLANS AND USE OF PROCEEDS
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increase our market share in the beauty, health and pharmaceutical products retail sector and
enhance our market penetration in different geographic areas. In assessing future acquisition
targets, we would consider (i) if it is an upstream supplier, whether such acquisition target is
an established and reliable supplier of our product portfolio; (ii) if it is a horizontal
acquisition, the location of its sales network; (iii) reputation of such company in the industry;
(iv) scale of operation of such company; and (v) historical financial performance of such
company. Our potential acquisition targets include small-cap retailers with market
capitalization below HK$500 million and an estimated annual revenue of less than HK$200
million in Hong Kong. According to Frost & Sullivan, the estimated number of potential
targets available in the beauty, health and pharm aceutical products retail sector that meet our
selection criteria in Hong Kong is more than 20. As at the Latest Practicable Date, we were
not in the process of negotiating with any potential seller, whether in Hong Kong or overseas,
for acquisition and we had not identified any appropriate target. We are open as to the
destinations of our potential acquisitions an d would assess the potential targets based on
various factors including the aforesaid.
. Approximately HK$67.2 million, representing 10.0% of the net proceeds, is expected to be
used as general working capital of our Group.
In the event that the Offer Price is set at the maximum Offer Price or the minimum Offer Price of
the indicative Offer Price range and the Over-allotm ent Option is not exercised, the net proceeds of the
Global Offering will increase or decrease by approximately HK$72.5 million, respectively. To the extent
that the net proceeds from the Global Offering are e ither more or less than expected, we will adjust our
allocation of the net proceeds for the above purposes on a pro rata basis.
The net proceeds that we would r eceive if the Over-allotment Opt ion were exercised in full would
be (i) HK$860.1 million (assuming an Offer Price of HK$6.38 per Share, being the maximum Offer
Price), (ii) HK$776.8 million (assuming an Offer Price of HK$5.78 per Share, being the mid-point of the
Offer Price range) and (iii) HK$693.5 million (assuming an Offer Price of HK$5.18 per Share, being the
minimum Offer Price).
In the event that the Over-allotment Option is exercised in full, we intend to apply the additional
proceeds to the above purposes on a pro rata basis. In the event that the actual amount of net proceeds is
insufficient to cover our expenses for the above plans, we intend to fund the shortfall through various
means, including cash generated from operations, bank loans, and other borrowings.
If any part of our plan does not proceed as planned for reasons such as changes in government
policies that would render the development of any of our plans not viable, or the occurrence of force
majeure events, we will carefully evaluate the situation and may reallocate the net proceeds from the
Global Offering. In the event of any material change in our use of net proceeds of the Global Offering
from the purposes described above, we will timely issue a formal announcement.
To the extent that the net proceeds of the Global Offering are not immediately used for the
purposes described above and to the extent permitted by the relevant laws and regulations, we will only
deposit the net proceeds into short-term interest-b earing accounts with licensed c ommercial banks and/or
authorized financial institutions (as defined under the Securities and Futures Ordinance or applicable
laws and regulations in other jurisdictions). In such event, we will comply with the appropriate
disclosure requirements under the Listing Rules.
FUTURE PLANS AND USE OF PROCEEDS
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HONG KONG UNDERWRITERS
DBS Asia Capital Limited
CMB International Capital Limited
Phillip Securities (Hong Kong) Limited
SPDB International Capital Limited
uSmart Securities Limited
UNDERWRITING
This prospectus is published solely in connection with the Hong Kong Public Offering. The Hong
Kong Public Offering is fully underwritten by the Hong Kong Underwriters on a conditional basis on the
terms and conditions set out in this prospectus and the Hong Kong Underwriting Agreement. The
International Offering is expected to be fully underwritten by the International Underwriters subject to
the terms and conditions of the International Underwriting Agreement. If, for any reason, the Offer Price
is not agreed between the Overall Coordinator (for itself and on behalf of the Underwriters) and our
Company, the Global Offering will not proceed and will lapse.
The Global Offering comprises the Hong Kong Public Offering of initially 12,500,000 Hong Kong
Offer Shares and the International Offering of initially 112,500,000 International Offer Shares, subject
to, in each case, reallocation on the basis as described in the section headed ‘‘Structure of the Global
Offering ’’in this prospectus as well as to the Over-allotment Option in the case of the International
Offering.
UNDERWRITING ARRANGEMENTS AND EXPENSES
Hong Kong Public Offering
Hong Kong Underwriting Agreement
Pursuant to the Hong Kong Underwriting Agreement, our Company is offering initially 12,500,000
Hong Kong Offer Shares (subject to reallocation) for subscription by way of a Hong Kong Public
Offering at the Offer Price on and subject to the terms and conditions in this prospectus.
Subject to (i) the Listing Committee granting approval for the listing of, and permission to deal in,
the Shares (including additional Shares which m ay be issued pursuant to the exercise of the Over-
allotment Option) as mentioned herein, and such approval and permission not having been subsequently
revoked prior to the commencement of trading of our Shares on the Main Board of the Stock Exchange
and (ii) certain other conditions set out in the Hong Kong Underwriting Agreement, the Hong Kong
Underwriters have agreed severally, but not jointly, to subscribe or procure subscribers for their
respective applicable proportions of the Hong Kong O ffer Shares being offered which are not taken up
under the Hong Kong Public Offering on the terms and conditions in this prospectus and the Hong Kong
Underwriting Agreement.
The Hong Kong Underwriting Agreement is conditional upon and subject to, amongst other things,
the International Underwriting Agreement havin g been signed and becoming unconditional and not
having been terminated in accordance with its terms.
UNDERWRITING
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Grounds for termination
The obligations of the Hong Kong Underwriters to subscribe or procure subscribers for the Hong
Kong Offer Shares under the Hong Kong Underwriting Agreement are subject to termination, if at any
t i m ep r i o rt o8 : 0 0a . m .o nt h eL i s t i n gD a t e :
(a) there has come to the notice of the Sole Sponsor and/or the Overall Coordinator:
(i) any statement contained in any offer do cuments and/or any notices, announcements,
advertisements, communications or other documents in connection with the Global
Offering (including any supplement or amendments thereto) (collectively, the
‘‘Relevant Documents ’’) was, when it was issued, or has become, untrue, incorrect,
inaccurate, incomplete, misleading or deceptive in any material respect or that any
forecast, expression of opinion, intention or expectation expressed in any of the
Relevant Documents is not, in any material r espect, in the reasonable opinion of the
Overall Coordinator (for itself and on behalf of the Hong Kong Underwriters), fair and
honest and based on reasonable assumptions, when taken as a whole; or
(ii) any material matter has arisen or ha s been discovered which would or might, had it
arisen or been discovered immediately before the respective dates of the publication of
the Relevant Documents, constitute an omission therefrom; or
(iii) any material breach of any of the obligat ions imposed or to be imposed upon any party
to the Hong Kong Underwriting Agreemen t or the International Underwriting
Agreement (including any supplemental or ame ndment thereto, as applicable) (in each
case, other than on the part of any of the Sponsor, the Overall Coordinator and the
Underwriters); or
(iv) any material event, act or omission which gives or is likely to give rise to any liability
of any of the warrantors pursuant to the Hong Kong Underwriting Agreement or under
the International Underwriting Agreement; or
(v) any material adverse change or development involving a prospective material adverse
change in the assets, liabilities, general affairs, management, business prospects,
shareholders ’ equity, profits, losses, results of operations, position or conditions
(financial, trading or otherwise) or performance of any Group company; or
(vi) any material breach of, or any event or ci rcumstance rendering untrue or incorrect in
any respect, any of the warranties in the Hong Kong Underwriting Agreement; or
(vii) the approval by the Listing Committee of the listing of, and permission to deal in, the
Shares (including any additional Shares that may be issued upon the exercise of the
Over-allotment Option) is refused or not granted, or is qualified (other than subject to
customary conditions), on or before the Listing Date, or if granted, the approval is
subsequently withdrawn, qualified (other than by customary conditions) or withheld; or
(viii) the Company withdraws any of the Relevant Documents or the Global Offering; or
UNDERWRITING
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(ix) any person named as expert in this prospe ctus (other than the Hon gK o n gU n d e r w r i t e r s )
has withdrawn or sought to withdraw its consent to being named in any of the Relevant
Documents or to the issue of any of the Relevant Documents; or
(x) that a petition or an order is presented for the winding-up or liquidation of any Group
company or any Group company makes any composition or arrangement with its
creditors or enters into a scheme of arrangement or any resolution is passed for the
winding-up of any Group company or a provisional liquidator, receiver or manager is
appointed to take over all or part of the assets or undertaking of any Group company or
anything analogous thereto occurs in respect of any Group company; or
(xi) an authority or a political body or organization in any relevant jurisdiction has
commenced any investigation or other action, or announced an intention to investigate
or take other action, against any of the Dir ectors and senior management members of
the Group as set out in the section headed ‘‘Directors and Senior Management ’’of this
prospectus; or
(xii) a portion of the orders in the bookbuilding process, which is considered by the Overall
Coordinator (for itself and on behalf of the Hong Kong Underwriters) at its sole and
absolute opinion to be material, at the time the International Underwriting Agreement is
entered into; or
(xiii) any material loss or damage has been sust ained by any Group company (howsoever
caused and whether or not the subject of any insurance or claim against any person)
which is considered by the Overall Coordinator (for itself and on behalf of the Hong
Kong Underwriters) at its reasonable opinion to be material; or
(xiv) any Director or member of senior manageme nt of the Company is vacating his or her
office, is being charged with an indictable offence or is prohibited by operation of law
or otherwise disqualified from taking part in the management or taking directorship of a
company or there is the commencement by any governmental authority of any
investigation or other action against any Director or member of senior management of
the Company in his or her capacity as such or any member of the Group or an
announcement by any governmental authority that it intends to commence any such
investigation or take any such action; or
(b) there shall develop, occur, exist or come into effect:
(i) any local, national, regional, internation al event or circumstance, or series of events or
circumstances, beyond the reasonable control of the Underwriters (including, without
limitation, any acts of government or orders of any courts, strikes, calamity, crisis,
lock-outs, fire, explosion, flooding, earthquake, tsunami, volcanic eruption, civil
commotion, acts of war, outbreak or escala tion of hostilities (whether or not war is
declared), acts of God, acts of terrorism, decl aration of a local, regional, national or
international emergency, riot, public disorder, economic sanctions, outbreaks of
diseases, pandemics or epidemics (incl uding, without limitation, Severe Acute
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Respiratory Syndrome, avian influenza A (H5N1), Swine Flu (H1N1), H7N9, Middle
East Respiratory Syndrome, coronavirus or such related or mutated forms) or
interruption or delay in transportation) in or affecting Hong Kong, the PRC, the United
States, the Cayman Islands, the BVI, or any other jurisdictions relevant to any Group
company or the Global Offering (the ‘‘Specific Jurisdictions ’’); or
(ii) any material adverse change or development involving a prospective material adverse
change, or any event or circumstance or ser ies of events or circumstances likely to
result in any material adverse change or dev elopment involving a prospective material
adverse change, in any local, regional, national, international, financial, economic,
political, military, industrial, fiscal, legal regulatory, currency, credit or market
conditions, equity securities or exchange control or any monetary or trading settlement
system or other financial markets (including, without limitation, conditions in the stock
and bond markets, money and foreign exchange markets, the interbank markets and
credit markets) in any of the Specific Jurisdictions; or
(iii) any moratorium, suspension or restriction on trading in securities generally (including,
without limitation, any imposition of or requirement for any minimum or maximum
price limit or price range) for over three consecutive trading days on any of the Stock
Exchange, the New York Stock Exchange, the London Stock Exchange, the NASDAQ
Global Market, the Shanghai Stock Exchange and the Shenzhen Stock Exchange; or
(iv) any new laws, or any change or development involving a prospective change in existing
laws, or any event or circumstance or series of events or circumstances likely to result
in any change or development involving a prospective change in the interpretation or
application of existing laws by any court o r other competent authority, in each case, in
or affecting any of the Specific Jurisdictions; or
(v) any general moratorium on commercial banking activities, or any disruption in
commercial banking activities , foreign exchange trading o r securities settlement or
clearance services or procedures or matt ers, in or affecting any of the Specific
Jurisdictions; or
(vi) the imposition of economic sanctions, in whatever form, directly or indirectly, by or for
any of the Specific Jurisdictions; or
(vii) a material change or development involving a prospective material change in or
affecting taxation or exchange control (or th e implementation of any exchange control),
currency exchange rates or foreign investment laws (including, without limitation, any
change in the system under which the value of the Hong Kong currency is linked to that
of the currency of the United States or a material fluctuation in the exchange rate of the
Hong Kong dollar or the Renminbi against any foreign currency) in or affecting any of
the Specific Jurisdicti ons or affecting an investment in the Shares; or
(viii) any material change or development involving a prospective material change in, or a
materialisation of, any of the risks set out in the section headed ‘‘Risk Factors ’’in this
prospectus; or
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(ix) any material litigation or claim of any thir d party being threatened or instigated against
any Group company, the Controlling Shareholders or any Directors or senior
management of the Company; or
(x) any material contravention by any member of the Group or any Director or any member
of senior management of the Company of any applicable laws or the Listing Rules; or
(xi) the commencement by any governmental, regulatory or political body or organisation of
any action against a Director in his or her capacity as such or an announcement by any
governmental, regulatory or political body or organisation that it intends to take any
such action; or
(xii) a material contravention by any Group company or any Director of the Listing Rules,
the Companies Ordinance or any other laws applicable to the Global Offering; or
(xiii) a prohibition on the Company for whatever reason from allotting, issuing the Offer
Shares and/or the Over-allotment Shares pursuant to the terms of the Global Offering;
or
(xiv) non-compliance of this prospectus and the ot her Relevant Documents or any aspect of
the Global Offering with the Listing Rules or any other laws applicable to the Global
Offering; or
(xv) the issue or requirement to issue by the Company of a supplement or amendment to this
prospectus and/or any other Relevant Documents pursuant to the Companies (Winding
Up and Miscellaneous Provisions) Ordinance, the Listing Rules or any requirement or
request of the Stock Exchange and/or the SFC; or
(xvi) a demand by any creditor for repayment or payment of any indebtedness of any Group
company or in respect of which any Group company is liable prior to its stated
maturity, or an order or petition for the winding up or liquidation of any Group
company or any composition or arrange ment made by any Group company with its
creditors or a scheme of arrangement e ntered into by any Group company or any
resolution for the winding-up of any Group company or the appointment of a
provisional liquidator, recei ver or manager over all or part of the assets or undertaking
of any Group company or anything analogous thereto occurring in respect of any Group
company;
which in each case individually or in aggregate at the sole and absolute opinion of the Sole
Sponsor and the Overall Coordinator (for itself and on behalf of the Hong Kong
Underwriters):
(a) has or is or will or may or could be expected to have an adverse effect on the assets,
liabilities, business, general affairs, management, shareholders ’ equity, profits, losses,
results of operation, financial, trading or other condition or position or prospects or
risks of the Company or the Group or any Group company or on any present or
prospective shareholder of the Company in his, her or its capacity as such; or
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(b) has or will or may have or could be expected to have an adverse effect on the success,
marketability or pricing of the Global Offering or the level of applications under the
Hong Kong Public Offering or the level of interest under the International Offering; or
(c) makes or will make or may make it inadvisable, inexpedient or impracticable for any
part of the Hong Kong Underwriting Agreement or the Global Offering to be performed
or implemented or proceeded with as envisaged or to market the Global Offering or the
delivery or distribution of the Offer Shares on the terms and manner contemplated by
the offer documents or shall otherwise result in an interruption to or delay thereof; or
(d) has or will or may have the effect of making any part of the Hong Kong Underwriting
Agreement (including underw riting) incapable of performance in accordance with its
terms in material respect or which preven ts the processing of applications and/or
payments pursuant to the Global Offering or pursuant to the underwriting thereof.
Undertakings to the Stock Exchange Pursuant to the Listing Rules
Undertakings by our Company
Pursuant to Rule 10.08 of the Listing Rules, we have undertaken to the Stock Exchange that no
further shares or securities convertible into equity securities of our Company (whether or not of a class
already listed) may be issued or sold or transferred o ut of treasury or form the subject of any agreement
to such an issue, or sale or transfer out of treasury w ithin six months from the Listing Date (whether or
not such issue of shares or securities or sale or transfer out of treasury will be completed within six
months from the Listing Date), except any capitalisation issue, capital reduction or consolidation or sub-
division of shares and pursuant to the Global Offering.
Undertakings by our Controlling Shareholders
Pursuant to Rule 10.07 of the Listing Rules, our Controlling Shareholders have jointly and
severally undertaken to the Stock Exchange that, except pursuant to the Global Offering or the Stock
Borrowing Agreement (including the exercise of the Over-allotment Option), they will not and shall
procure that the relevant registered holder(s) of t he Shares, any associates or companies controlled by
the Controlling Shareholders or any nominees or trustees holding the Shares in trust for the Controlling
Shareholders (as the case may be) shall not:
(i) in the period commencing on the date by ref erence on which disclosure of the respective
shareholding is made in this prospectus and ending on the date which is six months from the
Listing Date (the ‘‘Relevant Period ’’), dispose of, or enter into any agreement to dispose of
or otherwise create any options, rights, interests nor encumbrances in respect of (but save
pursuant to a pledge or charge as security in favour of an unauthorised institution for a bona
fide commercial loan) any of the Shares or securities of the Company owned by the
Controlling Shareholders or the relevant registered holder(s), nominee or trustee (including
any interest in any shares in any company controlled by the Controlling Shareholders which
is, directly or indirectly, the beneficial owner of any of our Shares or securities of the
Company) (the ‘‘Relevant Shares ’’); and
(ii) in the period of further six months commencing from the expiry of the Relevant Period (the
‘‘Second Period ’’), dispose of, or enter into any agreement to dispose of or otherwise create
any options, rights, interests or encumbrances in respect of (but save pursuant to a pledge or
charge as security in favour of an unauthorised institution for a bona fide commercial loan)
any of the Relevant Shares if, immediately following such disposal or upon the exercise or
enforcement of such options, rights, interests or encumbrances, they would cease to be the
controlling shareholders of our Company for the purpose of the Listing Rules.
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Pursuant to Note 3 to Rule 10.07(2) of the Listing Rules, our Controlling Shareholders have further
jointly and severally undertaken to the Stock Exchange that, during the Relevant Period and the Second
Period, they will:
(i) when any of them pledges or charges any Shares beneficially owned by them in favour of an
authorized institution (as defined in the Banking Ordinance (Chapter 155 of the Laws of
Hong Kong)) for a bona fide commercial loan, immediately inform our Company of such
pledge or charge together with the number of Shares so pledged or charged; and
(ii) when any of them receives indications, eithe r verbal or written, from the pledgee or chargee
that any of the pledged or charged Shares will be disposed of, immediately inform our
Company in writing of such indications.
Our Company will inform the Stock Exchange as soon as we have been informed of the matters
referred to in paragraph (i) and (ii) above (if any) by our Controlling Shareholders and subject to the
then applicable requirements of the Listing Rules disclose such matters by way of an announcement.
Undertakings to the Hong Kong Underwrite rs pursuant to the Hong Kong Underwriting
Agreement
Undertakings by our Company
Pursuant to the Hong Kong Underwriting Agreement, we have undertaken to each of the Sole
Sponsor, the Overall Coordinator, the Sole Global Coordinator, the Joint Bookrunners, the Joint Lead
Managers, the Hong Kong Underwriters and the Capital Market Intermediaries that except pursuant to
the Global Offering (including pursuant to the exercise of the Over-Allotment Option), our Company
will not, and will procure each other member of our Gr oup not to, without the pr ior written consent of
the Sole Sponsor and the Overall Coordinator (for itself and on behalf of the Hong Kong Underwriters)
and unless in compliance with the requirements of the Listing Rules, during the period commencing on
the date of the Hong Kong Underwriting Agreement and ending on, and including, the date that is six
months after the Listing Date (the ‘‘First Six-Month Period ’’):
(a) allot, issue, sell, accept subscri ption for, offer to allot, issue o r sell, contract or agree to allot,
issue or sell, mortgage, charge, pledge, hypothecate, lend, grant or sell any option, warrant,
contract or right to subscribe for or purchase, grant or purchase any option, warrant, contract
or right to allot, issue or sell, or otherwise transfer or dispose of or create an encumbrance
over, or agree to transfer or dispose of or cr eate an encumbrance over, either directly or
indirectly, conditionally or unconditionally, any Shares or other securities of the Company or
any shares or other securities of any member of our Group, as applicable, or any interest in
any of the foregoing (including, without limitation, any securities convertible into or
exchangeable or exercisable for or that represent the right to receive, or any other warrants or
other rights to purchase any Shares or any shares of any other member of our Group, as
applicable) or deposit any Shares or other securities of the Company or any shares or other
securities of any other member of our Group, as applicable, with a depositary in connection
with the issue of depositary receipts; or re purchase any Shares or other securities of the
Company or any shares or other securities of any other member of our Group, as applicable;
or
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(b) enter into any swap, derivative or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of any Shares or other securities of the
Company or any shares or other securities of an y other member of our Group, as applicable,
or any interest in any of the foregoing (including, without limitation, any securities
convertible into or exchangeable or exercisabl e for, or that represent the right to receive, or
any warrants or other rights to purchase, any Shares or other securities of the Company or
any shares or other securities of any oth er member of our Group, as applicable); or
(c) enter into any transaction with the same econo mic effect as any transaction described in (a)
or (b) above; or
(d) offer to or agree to or announce any intention to effect any transaction set out in (a), (b) or
(c) above,
in each case, whether any of the transactions specified in (a), (b), (c) or (d) above is to be settled by
delivery of Shares or other securities of the Company or shares or other securities of any other member
of our Group, as applicable, or in cash or otherwise (whether or not the issue of such Shares or other
shares or securities will be completed within the First Six-Month Period).
We have further undertaken that, in the event that during the period of six months immediately
following the expiry of the First Six-Month Period (the ‘‘Second Six-Month Period ’’), our Company
enters into any of the transactions specified in (a ), (b), (c) or (d) above or offers to or agrees to, or
announces any intention to effect any such transaction, our Company shall take all reasonable steps to
ensure that it will not create a disorderly or false market in the Shares or other securities of our
Company. Each of the Controlling Shareholders an d executive Directors has also undertaken to each of
the Sole Sponsor, the Overall Coordinator, the Sole Global Coordinator, the Joint Bookrunners, the Joint
Lead Managers, the Hong Kong Underwriters and the Capital Market Intermediaries to procure our
Company ’s compliance with the foregoing undertakings.
Undertakings by the Controlling Shareholders
Each of the Controlling Sharehol ders has jointly and severally undertaken to each of the Company,
the Sole Sponsor, the Overall Coordinator, the Sole Global Coordinator, the Joint Bookrunners, the Joint
Lead Managers, the Hong Kong Underwriters and the Capital Market Intermediaries that, save as
pursuant to the Stock Borrowing Agreement, without the prior written consent of the Sole Sponsor and
the Overall Coordinator (for itself and on behalf of the Hong Kong Underwriters) and unless in
compliance with the require ments of the Listing Rules:
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(a) at any time during the First Six-Month Period, it/he/she shall not, and shall procure that the
relevant registered holder(s), any nominee or trustee holding on trust for it/him/her and the
companies controlled by it/he/she (together, the ‘‘Controlled Entities ’’) shall not, (i) allot,
issue, sell, offer to allot, issue, sell, contract or agree to allot, issue, se ll, mortgage, charge,
pledge, hypothecate, lend, grant or sell any optio n, warrant, contract or right to allot, issue,
sell, or otherwise transfer or dispose of or cre ate an encumbrance over, or agree to transfer or
dispose of or create an encumbrance over, either directly or indirectly, conditionally or
unconditionally, any Shares or other securities of our Company or any interest therein
(including, without limitation, any securities convertible into or exchangeable or exercisable
for or that represent the right to receive, or any warrants or other rights to purchase, any
Shares) beneficially owned by it/him/her directly or indirectly through its Controlled Entities
(the ‘‘Relevant Securities ’’), or deposit any Relevant Secu rities with a depositary in
connection with the issue of depositary recei pts; or (ii) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Relevant Securities; (iii) enter into or effect any transaction with the
same economic effect as any of the transactions re ferred to in paragraphs (i) or (ii) above; or
(iv) offer to or agree to or announce any intention to enter into or effect any of the
transactions referred to in paragraphs (i), ( ii) or (iii) above, in each case whether any of the
foregoing transactions referred to in paragraphs (i), (ii) or (iii) is to be settled by delivery of
Shares or any other securities of our Company or in cash or otherwise (whether or not the
issue of such Shares or other securities will be completed within the First Six-Month Period);
(b) in the event that it/he/she enters into any of the transactions specified in paragraphs (a)(i),
(a)(ii) and (a)(iii) above or offer to or agrees to or announce any intention to effect any such
transaction within the Second Six-Month Period, it/he/she shall take all reasonable steps to
ensure that it/he/she will not create a disorderly or false market for any Shares or other
securities of our Company; and
(c) it/he/she shall, and shall procure that the relevant registered holder(s) and other Controlled
Entities shall, comply with all the restrictions and requirements under the Listing Rules on
the sale, transfer or disposal by it/him/her or by the registered holder(s) and/or other
Controlled Entities of any Shares or other securities of our Company.
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(d) within the period from the date by reference to which disclosure of their shareholding in the
Company is made in this prospectus and ending on the date which is 12 months from the
Listing Date, it/he/she will:
(i) when it/he/she pledges or charges any securities or interests in the Relevant Securities
in favour of an authorised institution, immediately inform our Company, the Sole
Sponsor and the Overall Coordinator in writing of such pledges or charges together with
the number of securities and nature of interest so pledged or charged; and
(ii) when it/he/she receives indications, eit her verbal or written, from any pledgee or
chargee that any of the pledged or charged securities or interests in the securities of our
Company will be sold, transf erred or disposed of, immediately inform our Company, the
Sole Sponsor and the Overall Coordinator in writing of such indications.
Our Company shall inform the Stock Exchange in writing as soon as it has been informed of any
of the matters referred to above (if any) by the Controlling Shareholders and disclose such matters by
way of an announcement to be published in accordance with the Listing Rules as soon as possible.
Indemnity
We, the executive Directors and the Controlling Sh areholders have agreed to jointly and severally
indemnify the Sole Sponsor, the Overall Coordinator, the Sole Global Coordinator, the Joint
Bookrunners, the Joint Lead Managers, the Capital Market Intermediaries and the Hong Kong
Underwriters for certain losses which they may su ffer, including losses i ncurred arising from our
performance of our obligations under the Hong Kong Underwriting Agreement and any breach by our
Company of the Hong Kong Underwriting Agreement.
The International Offering
In connection with the International Offering, it is expected that our Company will enter into the
International Underwriting Agreement with the International Underwriters, among others. Under the
International Underwriting Agreement, the International Underwriters will, subject to certain conditions
set out therein, severally and not jointly, agree to procure subscribers or purchasers for the International
Offer Shares, failing which they agree to subscribe fo r or purchase their respective proportions of the
International Offer Shares which are not taken up under the International Offering.
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Our Company is expected to grant to the International Underwriters the Over-allotment Option,
exercisable by the Overall Coordinator (for itself and on behalf of the International Underwriters) at any
time from the date of the International Underwriting Agreement until the 30th day from the last day for
the lodging of applications under the Hong Kong Public Offering, to require our Company to issue and
allot up to an aggregate of 18,750,000 additional Offer Shares, representing 15% of the initial Offer
Shares, at the Offer Price under the International Offering to cover, among other things, over allocations
(if any) in the International Offering.
It is expected the International Underwriting Agreement may be terminated on similar grounds as
the Hong Kong Underwriting Agreement. Potential investors shall be reminded that in the event that the
International Underwriting Agreement is not ente red into, the Global Offering will not proceed.
Underwriting Commission and Expenses
The Underwriters will receive an underwriting commission of 2.38% of the aggregate Offer Price
of all the Offer Shares (including any Offer Shares to be issued pursuant to the exercise of the Over-
allotment Option) (the ‘‘Fixed Fees ’’), out of which they will pay any sub-underwriting commission and
other fees. For unsubscribed Hong Kong Offer Share s reallocated to the International Offering, our
Company will pay an underwriting commission to the relevant International Underwriters (but not the
Hong Kong Underwriters). The Company may also in its sole discretion pay the Underwriters an
additional incentive fee of up to 1.0% of the aggregate Offer Price of all the Offer Shares (including any
Offer Shares to be issued pursuant to the exercise of the Over-allotment Option) (the ‘‘Discretionary
Fees ’’).
Assuming that all of the Discretionary Fees will be paid in full to the Underwriters, the aggregate
amount of fees payable by us to all syndicate mem bers will be 3.38% of the gross proceeds from the
Global Offering, comprising 70.4% in Fixed Fees and 29.6% in Discretionary Fees.
Assuming an Offer Price of HK$5.78 per Offer Share (being the mid-point of the indicative Offer
Price range), the aggregate commissions and fees (assuming the full payment of Discretionary Fees and
no exercise of the Over-allotment Option), together with listing fees, SFC transaction levy, AFRC
transaction levy, Stock Exchange trading fee, legal and other professional fees and printing and other
expenses, payable by our Company relating to the Global Offering are estimated to be approximately
HK$50.4 million in total.
The commission and expenses were determined after arm ’s length negotiation between the
Company and the Hong Kong Underwriters or other parties by reference to the current market
conditions.
HONG KONG UNDERWRITERS ’ INTERESTS IN THE COMPANY
Save for its obligations under the Hong Kong Underwriting Agreement or otherwise disclosed in
this prospectus, none of the Hong Kong Underwriters has any shareholding interests in our Company or
the right or option (whether legally enforceable or not) to subscribe for or nominate persons to subscribe
for securities in our Company.
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Following the completion of the Global Offering, the Underwriters and their affiliated companies
may hold a certain portion of the Shares as a result of fulfilling their obligations under the Underwriting
Agreements.
SOLE SPONSOR ’S INDEPENDENCE
The Sole Sponsor satisfies the independence criteria applicable to sponsor set out in Rule 3A.07 of
the Listing Rules.
RESTRICTIONS ON THE OFFER SHARES
No action has been taken to permit a public offering of the Offer Shares other than in Hong Kong,
or the distribution of this prospectus in any jurisdiction other than in Hong Kong. Accordingly, this
prospectus may not be used for the purpose of, and does not constitute, an offer or invitation in any
jurisdiction or in any circumstances in which such an offer or invitation is not authorised or to any
person to whom it is unlawful to make such an offer or invitation. In particular, the Offer Shares have
not been offered or sold, and will not be offered or sold, directly or indirectly, in China and the U.S.
ACTIVITIES BY SYNDICATE MEMBERS
The underwriters of the Hong Kong Public Offering and the International Offering (together, the
‘‘Syndicate Members ’’) and their affiliates may each individually undertake a variety of activities (as
further described below) which do not form part of the underwriting or stabilising process.
The Syndicate Members and their affiliates are diver sified financial institutions with relationships
in countries around the world. These entities engage in a wide range of commercial and investment
banking, brokerage, funds management, trading, hedging, investing and other activities for their own
account and for the account of others. In the ordinary course of their va rious business activities, the
Syndicate Members and their resp ective affiliates may purchase, sell or hold a broad array of
investments and actively trade securities, derivatives, loans, commodities, currencies, credit default
swaps and other financial instruments for thei r own account and for the accounts of their customers.
Such investment and trading activities may involve or r elate to assets, securities and/or instruments our
Company and/or persons and entities with relationships with our Company and may also include swaps
and other financial instruments entered into for hedging purposes in connection with our Group ’s loans
and other debt.
In relation to the Shares, the activities of the Syndicate Members and their affiliates could include
acting as agent for buyers and sellers of the Shares, entering into transactions with those buyers and
sellers in a principal capacity, including as a lender to initial purchasers of the Shares (which financing
may be secured by the Shares) in the Global Offering, proprietary trading in the Shares, and entering
into over the counter or listed derivative transactions or listed or unlisted securities transactions
(including issuing securities such as derivative warrants listed on a stock exchange) which have as their
underlying assets, assets including the Shares. Such transactions may be carried out as bilateral
agreements or trades with selected counterparties. Th ose activities may require hedging activity by those
entities involving, directly or indirectly, the buying and selling of the Shares, which may have a negative
impact on the trading price of the Shares. All such activities could occur in Hong Kong and elsewhere in
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the world and may result in the Syndicate Members and their affiliates holding long and/or short
positions in the Shares, in baskets of securities or in dices including the Shares, in units of funds that
may purchase the Shares, or in derivatives related to any of the foregoing.
In relation to issues by Syndicate Members or thei r affiliates of any listed securities having the
Shares as their underlying securi ties, whether on the Stock Exchange or on any other stock exchange,
the relevant rules of the exchange may require the issuer of those securities (or one of its affiliates or
agents) to act as a market maker or liquidity provider in the security, and this will also result in hedging
activity in the Shares in most cases.
All such activities may occur both during and after the end of the stabilising period described in
the section headed ‘‘Structure of the Global Offering ’’in this prospectus. Such activities may affect the
market price or value of the Shares, the liquidity or trading volume in the Shares and the volatility of the
price of the Shares, and the extent to which th is occurs from day to day cannot be estimated.
It should be noted that when engaging in any of these activities, the Syndicate Members will be
subject to certain restrictions, including the following:
(a) the Syndicate Members (other than the Stabilising Manager or any person acting for it) must
not, in connection with the distribution of the Offer Shares, effect any transactions (including
issuing or entering into any option or other derivative transactions relating to the Offer
Shares) whether in the open market or otherwi se, with a view to stabilising or maintaining
the market price of any of the Offer Shares at levels other than those which might otherwise
prevail in the open market; and
(b) the Syndicate Members must comply with all applicable laws and regulations, including the
market misconduct provisions of the SFO, including the provisions prohibiting insider
dealing, false trading, price rigging and stock market manipulation.
Certain of the Syndicate Members or their respective affiliates expect to provide in the future,
investment banking and other services to our Company and its affiliates for which such Syndicate
Members or their respective affiliates will receive customary fees and commissions. In addition, the
Syndicate Members or their respectiv e affiliates may provide financing to investors to finance their
subscriptions of Offer Shares in the Global Offering.
OVER-ALLOTMENT AND STABILISATION
Details of the arrangements relating to the Over-allotment Option and stabilisation are set forth in
the section headed ‘‘Structure of the Global Offering ’’in this prospectus.
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THE GLOBAL OFFERING
This prospectus is published in connection with the Hong Kong Public Offering as part of the
Global Offering.
The Global Offering comprises:
(a) the Hong Kong Public Offering of initially 12,500,000 Shares (subject to reallocation as
mentioned below) in Hong Kong as described in the paragraph headed ‘‘ — The Hong Kong
Public Offering ’’in this section; and
(b) the International Offering of initially 112,500,000 Shares (subject to reallocation and the
Over-allotment Option as mentioned below) to be offered only outside the United States
(including to professional and institutional investors within Hong Kong) in offshore
transactions in reliance on Regulation S, as described in the paragraph headed ‘‘ — The
International Offering ’’in this section.
Investors may apply for Offer Shares under the Hong Kong Public Offering or apply for or indicate
an interest for Offer Shares under the International Offering, but may not do both.
The Offer Shares will represent 25.0% of the enl arged registered share capital of our Company
immediately after completion of the Global Offeri ng without taking into account the exercise of the
Over-allotment Option, if any. If the Over-allotment Option is exercised in full, the additional
International Offer Shares will represent approximately 3.6% of the enlarged registered share capital of
our Company immediately after completion of the Global Offering and the exercise of the Over-
allotment Option as set out in the paragraph headed ‘‘ — Over-allotment Option ’’in this section.
References in this prospectus to applications, application monies or the procedure for applications
relate solely to the Hong Kong Public Offering.
The number of Offer Shares to be offered under the Hong Kong Public Offering and the
International Offering, respectively, may be subject to reallocation as described in the paragraph headed
‘‘ — The Hong Kong Public Offering — Reallocation ’’in this section.
THE HONG KONG PUBLIC OFFERING
Number of Offer Shares Initially Offered
Our Company is initially offering 12,500,000 Shares for subscription by the public in Hong Kong
at the Offer Price, representing 10% of the total num ber of Offer Shares initially available under the
Global Offering.
The number of Offer Shares initially offered under the Hong Kong Public Offering, subject to any
reallocation of Offer Shares between the International Offering and the Hong Kong Public Offering and
assuming that the Over-allotment O ption is not exercised, will represent 2.5% of the total Shares in issue
immediately following the completion of the Global Offering.
STRUCTURE OF THE GLOBAL OFFERING
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The Hong Kong Public Offering is open to members of the public in Hong Kong as well as to
institutional and professional investors. Professi onal investors generally include brokers, dealers,
companies (including fund managers) whose ordinary business involves dealing in shares and other
securities and corporate entities that regul arly invest in shares and other securities.
Completion of the Hong Kong Public Offering is subject to the conditions set out in the paragraph
headed ‘‘ — Conditions of the Global Offering ’’in this section.
Allocation
The allocation of Offer Shares to investors under the Hong Kong Public Offering will be based
solely on the level of valid applications received under the Hong Kong Public Offering. The basis of
allocation may vary, depending on the number of Hong Kong Offer Shares validly applied for by
applicants. Such allocation could, where appropriate, consist of balloting, which could mean that some
applicants may receive a higher allocation than others who have applied for the same number of Hong
Kong Offer Shares, and those applicants who are not successful in the ballot may not receive any Hong
Kong Offer Shares.
For allocation purposes only, the total number of Hong Kong Offer Shares available under the
Hong Kong Public Offering (after taking into account any reallocation referred to below) will be divided
equally into two pools: pool A and pool B (with any odd board lots being allocated to pool A). The
Hong Kong Offer Shares in pool A will be allocated on an equitable basis to valid applicants who have
applied for Hong Kong Offer Shares with an aggregate subscription price of HK$5 million (excluding
the brokerage, SFC transaction levy, AFRC transaction levy and the Stock Exchange trading fee
payable) or less. The Hong Kong Offer Shares in pool B will be allocated on an equitable basis to valid
applicants who have applied for Hong Kong Offer Shares with an aggregate subscription price of more
than HK$5 million (excluding the brokerage, SFC transaction levy, AFRC transaction levy and the Stock
Exchange trading fee payable) and up to the total value in pool B.
Investors should be aware that applications in pool A and applicatio ns in pool B may receive
different allocation ratios. If any Hong Kong Offer Shares in one (but not both) of the pools are
unsubscribed, such unsubscribed Hong Kong Offer Shares will be transferred to the other pool to satisfy
demand in that other pool and be allocated according ly. For the purpose of the immediately preceding
paragraph only, the ‘‘price ’’ for Hong Kong Offer Shares means the price payable on application
therefor (without regard to the Offer Price determined). Applicants can only receive an allocation of
Hong Kong Offer Shares from either pool A or pool B and not from both pools. Multiple or suspected
multiple applications under the Hong Kong Public Offering and any application for more than 6,250,000
Hong Kong Offer Shares (being 50% of the Offer Shares initially available under the Hong Kong Public
Offering) is liable to be rejected.
Reallocation
The Offer Shares to be offered in the Hong Kong Public Offering and the International Offering
may, in certain circumstances, be reallocated as betw een these offerings at the discretion of the Overall
Coordinator. In each case, based on the additiona l Offer Shares reallocat ed to the Hong Kong Public
Offering, the number of Offer Shares allocated to the International Placing will be correspondingly
reduced, in such manner as the Overall Coordinat or deemed appropriate. S ubject to the allocation cap
described in the subsequent paragraph, the Overall Coordinator may in their discretion reallocate Offer
Shares from the International Offering to the Hong Kong Public Offering to satisfy valid applications
under the Hong Kong Public Offering in accordance with the guidance in Chapter 4.14 of the Guide. In
STRUCTURE OF THE GLOBAL OFFERING
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addition, if the Hong Kong Public Offering is not fully subscribed, the Overall Coordinator will have the
discretion (but shall not under an obligation) to reallocate to the International Offering all or any
unsubscribed Hong Kong Offer Shares in such amounts as they deem appropriate.
If: (i) the International Offer Shares are unders ubscribed and the Hong Kong Offer Shares are fully
subscribed or oversubscribed irrespective of the num b e ro ft i m e s ;o r( i i )t h eI n t e r n a t i o n a lO f f e rS h a r e s
are fully subscribed or oversubscribed and the Hong Kong Offer Shares are fully subscribed or
oversubscribed irrespective of t he number of times, up to 6,250,000 Offer Shares may be reallocated to
the Hong Kong Public Offering from the Internationa l Offering, so that the total number of the Offer
Shares available under the Hong Kong Public Offering following such reallocation will be increased to
18,750,000 Offer Shares, representing 15% of the number of the Offer Shares initially available under
the Global Offering (before exercise of the Over-allotment Option), and the final Offer Price shall be
fixed at the bottom end of the indicative Offer Price range (i.e. HK$5.18 per Offer Share). If the Hong
Kong Offer Shares and International Offer Shares are undersubscribed, the Global Offering will not
proceed unless the shortfall can be taken up by the Underwriters. In case where the International Offer
Shares are fully subscribed or oversubscribed but the Hong Kong Offer Shares are undersubscribed, no
reallocation or overallocation will take place.
Given the initial allocation of the Offer Shares to the Hong Kong Public Offering and the
International Offering follows the Mechanism B set out under paragraph 2 of Chapter 4.14 of the Guide
and the provision of Paragraph 4.2(b) of Practice Note 18 of the Listing Rules, no mandatory clawback
or reallocation mechanism is required to increas e the number of Offer Shares under the Hong Kong
Public Offering to a certain percentage of the total number of Offer Shares offered under the Global
Offering.
Details of any reallocation of Offer Shares between the Hong Kong Public Offering and the
International Offering will be disclosed in the res ults announcement of the Global Offering expected to
be published on Thursday, 4 June 2026.
Applications
Each applicant under the Hong Kong Public Offering will be required to give an undertaking and
confirmation in the application submitted by him/her/it that he/she/it and any person(s) for whose benefit
he/she/it is making the application has not applied for or taken up, or indicated an interest for, and will
not apply for or take up, or indicate an interest for, any International Offer Shares under the
International Offering. Such applicant ’s application under the International Offering is liable to be
rejected if such undertaking and/or confirmation is /are breached and/or untrue (as the case may be).
Applicants under the Hong Kong Public Offering may be required to pay, on application (subject
to application channels), the maximum Offer Price of HK$6.38 per Offer Share in addition to the
brokerage, SFC transaction levy, AF RC transaction levy and the Stock Exchange trading fee payable on
each Offer Share, amounting to a to tal of HK$3,222.17 for one board lot of 500 Shares. If the Offer
Price, as finally determined in the manner described in the paragraph headed ‘‘ — Pricing and
Allocation ’’ in this section, is less than the maximum Offer Price of HK$6.38 per Offer Share,
appropriate refund payments (including the brokera ge, SFC transaction levy, AFRC transaction levy and
the Stock Exchange trading fee attr ibutable to the surplus application monies) will be made to successful
applicants (subject to application channels), without interest. Please refer to the section headed ‘‘How to
Apply for Hong Kong Offer Shares ’’in this prospectus for further details.
STRUCTURE OF THE GLOBAL OFFERING
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THE INTERNATIONAL OFFERING
Number of Offer Shares Initially Offered
The number of Offer Shares initially offered under the International Offering, subject to any
reallocation of Offer Shares between the Internatio nal Offering and the Hong Kong Public Offering, will
consist of an initial offering of 112,500,000 Shares, representing 90% of the total number of Offer
Shares initially available under the Global Offering (assuming that the Over-allotment Option is not
exercised).
Allocation
The International Offering will involve private placements of the Offer Shares to institutional and
professional investors and other investors antici pated to have a sizeable demand for our International
Offer Shares. Professional investors generally incl ude brokers, dealers, companies (including fund
managers) whose ordinary business involves dealing in shares and other securities and corporate entities
which regularly invest in shares and other secur ities. Allocation of Offer Shares pursuant to the
International Offering will be effected in accordance with the ‘‘book-building ’’process described in the
paragraph headed ‘‘ — Pricing and Allocation ’’ in this section and based on a number of factors,
including the level and timing of demand, the total size of the relevant investor ‘s invested assets or
equity assets in the relevant sector and whether or not i t is expected that the relevant investor is likely to
buy further Shares and/or hold or sell its Shares after the Listing. Such allocation is intended to result in
a distribution of the Shares on a basis which would lead to the establishment of a solid professional and
institutional shareholder base to the benefit of our Group and our Shareholders as a whole.
The Overall Coordinator (for itself on behalf of the Underwriters) may require any investor who
has been offered Offer Shares under the International Offering and who has made an application under
the Hong Kong Public Offering to provide sufficient information to the Overall Coordinator so as to
allow them to identify the relevant applications under the Hong Kong Public Offering and to ensure that
they are excluded from any allocation of Offer Shares under the International Offering.
Reallocation
The total number of Offer Shares to be issued or sold pursuant to the International Offering may
change as a result of the reallocation arrang ement described in the paragraph headed ‘‘ — The Hong
Kong Public Offering — Reallocation ’’in this section or the exercise of the Over-allotment Option in
whole or in part and/or any reallocation of unsubscribed Offer Shares originally included in the Hong
Kong Public Offering.
OVER-ALLOTMENT OPTION
In connection with the Global Offering, our Company is expected to grant the Over-allotment
Option to the International Underwriters, exercisabl e by the Overall Coordinator (for itself and on behalf
of the International Underwriters).
Pursuant to the Over-allotment Option, the International Underwriters will have the right,
exercisable by the Overall Coordinator (for itself and on behalf of the International Underwriters) at any
time from the Listing Date until 30 days after the last day for lodging applications under the Hong Kong
STRUCTURE OF THE GLOBAL OFFERING
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Public Offering, to require our Company to issue up to an aggregate of 18,750,000 additional Offer
Shares, representing not more than 15% of the total number of Offer Shares under the Global Offering,
at the Offer Price under the International Offering to cover over-allocations in the International Offering,
if any.
If the Over-allotment Option is exercised in full, the additional Offer Shares to be issued pursuant
thereto will represent approximately 3.6% of the total Shares in issue immediately following the
completion of the Global Offering and the exercise of the Over- allotment Option.
If the Over-allotment Option is exercised, an announcement will be made.
STABILISATION
Stabilisation is a practise used by underwriters i n some markets to facilitate the distribution of
securities. To stabilise, the underwriters may bid fo r, or purchase, the securities in the secondary market
during a specified period of time, to retard and, if possible, prevent a decline in the initial public market
price of the securities below the offer price. Such tr ansactions may be effected in all jurisdictions where
it is permissible to do so, in each case in compliance with all applicable laws and regulatory
requirements, including those of Hong Kong. In Hong Kong, the price at which stabilisation is effected
is not permitted to exceed the offer price.
In connection with the Global Offering, the Stabilization Manager (or any person acting for it), on
behalf of the Underwriters, may over-allocate or effect transactions with a view to stabilising or
supporting the market price of our Shares at a level higher than that which might otherwise prevail for a
limited period after the Listing Date. However, there is no obligation on the Stabilization Manager (or
any person acting for it) to conduct any such stabilising action. Such stabilising action, if taken, (a) will
be conducted at the absolute discretion of the Stabilization Manager (or any person acting for it) and in
what the Stabilization Manager reasonably regards as the best interest of our Company, (b) may be
discontinued at any time and (c) is required to be brought to an end within 30 days from the last day for
lodging applications under the Hong Kong Public Offering.
Stabilisation actions permitted in Hong Kong pursuant to the Securities and Futures (Price
Stabilizing) Rules of the SFO include (a) over-allocating for the purpose of preventing or minimising
any reduction in the market price of our Shares, ( b) selling or agreeing to sell our Shares so as to
establish a short position in them for the purpose of preventing or minimising any reduction in the
market price of our Shares, (c) purchasing, or agr eeing to purchase, our Shares pursuant to the Over-
allotment Option in order to close out any position established under paragraph (a) or (b) above, (d)
purchasing, or agreeing to purchase, any of our Shares for the sole purpose of preventing or minimising
any reduction in the market price of our Shares, (e) selling or agreeing to sell any Shares in order to
liquidate any position established as a result of those purchases and (f) offering or attempting to do
anything as described in paragraph (b), (c), (d) or (e) above.
STRUCTURE OF THE GLOBAL OFFERING
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Specifically, prospective applicants for and investors in our Offer Shares should note that:
(a) the Stabilization Manager (or any person actin g for it) may, in connection with the stabilising
action, maintain a long position in our Shares;
(b) there is no certainty as to the extent to which and the time or period for which the
Stabilization Manager (or any person acting for it) will maintain such a long position;
(c) liquidation of any such long position by the Stabilization Manager (or any person acting for
it) and selling in the open market may have an adverse impact on the market price of our
Shares;
(d) no stabilising action can be taken to support the price of our Shares for longer than the
stabilisation period, which will begin on the Listing Date, and is expected to expire on the
30th day after the last day for lodging applications under the Hong Kong Public Offering.
After this date, when no further stabilising action may be taken, demand for our Shares, and
therefore the price of the Shares, could fall;
(e) the price of our Shares cannot be assured to stay at or above the Offer Price by the taking of
any stabilising action; and
(f) stabilising bids or transactions effected in th e course of the stabilising action may be made at
any price at or below the Offer Price and can, therefore, be done at a price below the price
paid by applicants for, or investors in, the Offer Shares.
In order to effect stabilisation actions, the Stab ilization Manager may arrange cover of up to an
aggregate of 18,750,000 Offer Shares, representing up to 15% of the total number of the initial Offer
Shares under the G lobal Offering.
Following any overallocation of Shares in connected with the Global Offering, the Stabilization
M a n a g e r( o ra n yp e r s o na c t i n gf o ri t )m a yc o v e rs u c ho v e r a l l o c a t i o nb ye x e r c i s i n gt h eO v e r - a l l o t m e n t
Options in full or in part, by using Shares purchased by the Stabilization Manager (or any person acting
for it) in the secondary market at prices that do not exceed the Offer Price or through stock borrowing
arrangement or a combination of this means.
Our Company will ensure or procure that an announcement in compliance with the Securities and
Futures (Price Stabilizing) Rules of the SFO will be made within seven days of the expiration of the
stabilisation period.
STOCK BORROWING ARRANGEMENT
In order to facilitate the settlement of over-allocations in connection with the Global Offering, the
Stabilization Manager (or its affiliates, acting o n its behalf) may choose to borrow up to 18,750,000
Shares (being the maximum number of Shares which may be issued upon exercise of the Over-allotment
Option) from TTK Holding pursuant to the Stock Borrowing Agreement. The stock borrowing
arrangements under the Stock Borrowing Agreement will comply with the requirements set out in Rule
10.07(3) of the Listing Rules. The same number of Shares as that borrowed must be returned to TTK
Holding on or before the third Business Day following the earlier of (i) the last day on which the Over-
allotment Option may be exercised and (ii) the day on which the Over-allotment Option is exercised in
full.
No payment will be made to TTK Holding by the St abilization Manager (o r its affiliates) in
relation to such stock borrowing arrangement.
PRICING AND ALLOCATION
Pricing for the Offer Shares for the purpose of the various offerings under the Global Offering will
be fixed on the Price Determination Date, which is expected to be on or about Wednesday, 3 June 2026
and, in any event, no later than 12:00 noon on W ednesday, 3 June 2026 by a greement between the
Overall Coordinator (for itself and on behalf of the Underwriters) and our Company, and the number of
Offer Shares to be allocated under the various offerings will be determined shortly thereafter.
STRUCTURE OF THE GLOBAL OFFERING
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The Offer Price will not be more than HK$6.38 per Offer Share and is expected to be not less than
HK$5.18 per Offer Share, unless otherwise announced, as further explained below. Applicants under the
Hong Kong Public Offering may be required to pay, on application (subject to application channels), the
maximum Offer Price of HK$6.38 per Offer Share plus brokerage of 1.0%, SFC transaction levy of
0.0027%, AFRC transaction levy of 0.00015% and Stock Exchange trading fee of 0.00565%, amounting
to a total of HK$3,222.17 for one board lot of 500 Shares. Prospective investors should be aware that
the Offer Price to be determined on the Price Det ermination Date may be, but is not expected to
be, lower than the minimum Offer P rice stated in this prospectus.
The International Underwriters will be soliciting from prospective investors indications of interest
in acquiring Offer Shares in the International Offer ing. Prospective professional and institutional
investors will be required to specify the number of Offer Shares under the International Offering they
would be prepared to acquire either at different pri ces or at a particular price. This process, known as
‘‘book-building, ’’is expected to continue up to, and to cease on or about, the last day for lodging
applications under the Hong Kong Public Offering.
The Overall Coordinator (for itself and on behalf of the Underwriters) may, where it deems
appropriate, based on the level of interest express ed by prospective investors during the book-building
process in respect of the International Offering, and with the consent of our Company, reduce the
number of Offer Shares offered and/or the Offer Price range below that stated in this prospectus at any
time on or prior to the morning of the last day for lodging applications under the Hong Kong Public
Offering. In such a case, our Company will, as soon as practicable following the decision to make such
reduction, and in any event not later than the morning of the last day for lodging applications under the
Hong Kong Public Offering, cause to be published on the website of our Company at www.lungfung.hk
and the Stock Exchange at www.hkexnews.hk , respectively, an announ cement, cancel the Global
Offering and relaunch the Global Offering at the revised number of Offer Shares and/or the revised
Offer Price range and the requirements under Rule 11.13 of the Listing Rules (which include the issue of
a supplemental prospectus or a new prospectus (as appropriate)). Such announcement and/or
supplemental prospectus will also include confir mation or revision, as appropriate, of the working
capital statement and the offering sta tistics as currently set out in this prospectus and any other financial
information which may change as a result of such reduction. In case of any significant change affecting
any matter contained in this prospectus or a signi ficant new matter has arisen, the inclusion of
information in respect of which would have been required to be in this prospectus if it had arisen before
this prospectus was issued, our Company will, as soon as practicable, and in any event before the
commencement of dealings in our Shares on the Stock Exchange, cause to be published on the website
of our Company at www.lungfung.hk and the Stock Exchange at www.hkexnews.hk , respectively, an
announcement, cancel the Global Offering and rel aunch the Global Offering in accordance with the
requirements of Rule 11.13 of the Listing Rules (which include the issue of a supplemental prospectus
or a new prospectus (as appropriate)). Upon issue of s uch announcement or suppl emental prospectus (as
appropriate), the number of Offer Shares offered in the Global Offering and/or the revised Offer Price
will be final and conclusive. The Global Offering must first be cancelled and subsequently relaunched
on FINI pursuant to the supplemental prospectus.
Before submitting applications for the Hong Kong Offer Shares, applicants should have regard to
the possibility that any announcement of a reduction in the number of Offer Shares and/or the Offer
Price range may not be made until the last day for lodging applications under the Hong Kong Public
Offering. In the absence of any such announcement so published, the number of Offer Shares will not be
reduced and/or the Offer Price, if agreed upon by the Overall Coordinator (for itself and on behalf of the
Underwriters) and our Company, will under no circumstances be set outside the Offer Price range as
stated in this prospectus.
STRUCTURE OF THE GLOBAL OFFERING
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In the event of a reduction in the number of Offer Shares, the Overall Coordinator (for itself and
on behalf of the Underwriters) may, at its sole and aboslute discretion, reallocate the number of Offer
Shares to be offered in the Hong Kong Public Offering and the International Offering. The Offer Shares
to be offered in the Hong Kong Public Offering and the Offer Shares to be offered in the International
Offering may, in certain circumstances, be reallocat ed between these offerings at the discretion of the
Overall Coordinator (for itself and on behalf of the Underwriters).
ANNOUNCEMENT OF FINAL OFFER PRICE
The final Offer Price, the level of indications of interest in the International Offering, the level of
applications in the Hong Kong Public Offering, the basis of allocations of the Hong Kong Offer Shares
and the results of allocations in the Hong Kong Public Offering are expected to be announced on
Thursday, 4 June 2026 on the website of our Company at www.lungfung.hk and the website of the
Stock Exchange at www.hkexnews.hk .
HONG KONG UNDERWRITING AGREEMENT
The Hong Kong Public Offering is fully underwritten by the Hong Kong Underwriters under the
terms and conditions of the Hong Kong Underwriting Agreement and is subject to the Overall
Coordinator (for itself and on behalf of the Underwriters) and our Company agreeing on the Offer Price.
Our Company expects to enter into the International Underwriting Agreement relating to the
International Offering on the Price Determination Date.
These underwriting arrangements, including the Underwriting Agreements, are summarised in the
section headed ‘‘Underwriting ’’in this prospectus.
CONDITIONS OF THE GLOBAL OFFERING
Acceptance of all applications for O ffer Shares will be conditional on:
(a) the Stock Exchange granting approval for the listing of, and permission to deal in, the Shares
to be offered pursuant to the Global Offering (including any additional Shares which may be
issued pursuant to the exercise of the Over-allotment Option), on the Main Board of the
Stock Exchange, and such approval not subsequently having been withdrawn or revoked prior
to the Listing Date;
(b) the Offer Price having been agreed between the Overall Coordinator (for itself and on behalf
of the Underwriters) and our Company;
(c) the execution and delivery of the International Underwriting Agreement on or about the Price
Determination Date; and
(d) the obligations of the Hong Kong Underwriters under the Hong Kong Underwriting
Agreement and the obligations of the International Underwriters under the International
Underwriting Agreement becoming and remaining unconditional and not having been
terminated in accordance with the terms of the respective agreements,
in each case on or before the dates and times speci fied in the respective U nderwriting Agreements
(unless and to the extent such conditions are validly waived on or before such dates and times).
STRUCTURE OF THE GLOBAL OFFERING
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If, for any reason, the Offer Price is not agreed between the Overall Coordinator (for itself and on
behalf of the Underwriters) and our Company at or before 12:00 noon on Wednesday, 3 June 2026, the
Global Offering will not proceed and will lapse.
The consummation of each of the Hong Kong Public Offering and the International Offering is
conditional upon the other offering becoming unconditional and not having been terminated in
accordance with its terms.
If the above conditions are not fulfilled or waived prior to the dates and times specified, the Global
Offering will lapse and the Stock Exchange will be notified immediately. Notice of the lapse of the
Hong Kong Public Offering will be published by our Company on the website of our Company at
www.lungfung.hk and the Stock Exchange at www.hkexnews.hk , respectively, on the next day
following such lapse. In such a situation, all application monies will be returned (subject to application
channels), without interest, on the t erms set out in the paragraph headed ‘‘How to Apply for Hong Kong
Offer Shares — D. Despatch/Collection of Share Certif icates and Refund o f Application Monies ’’in this
prospectus.
Share certificates for the Offer Shares will only become valid at 8:00 a.m. on Friday, 5 June 2026
provided that the Global Offering has become unconditional in all respects at or before that time and the
right of termination as described in the paragraph headed ‘‘Underwriting — Underwriting Arrangements
and Expenses — Hong Kong Public Offering — Grounds for Termination ’’in this prospectus has not
been exercised.
ADMISSION OF THE SHARES INTO CCASS
All necessary arrangements have been made ena bling the Shares to be admitted into CCASS.
If the Stock Exchange grants the listing of, and pe rmission to deal in, the Shares and the Company
complies with the stock admission requirements of HKSCC, the Shares will be accepted as eligible
securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the date of
commencement of dealings in the Shares on the Stock Exchange or any other date HKSCC chooses.
Settlement of transactions between participants of the Stock Exchange is required to take place in
CCASS on the second settlement day after any trading day.
All activities under CCASS are subject to the General Rules of HKSCC and HKSCC Operational
Procedures in effect from time to time.
Investors should seek the advice of their stockbroker or other professional advisor for details of the
settlement arrangements as such arrangeme nt may affect their rights and interests.
DEALINGS ARRANGEMENTS
Assuming that the Hong Kong Public Offering becomes unconditional at or before 8:00 a.m. in
Hong Kong on Friday, 5 June 2026, it is expected that dealings in the Shares on the Stock Exchange
will commence at 9:00 a.m. on Friday, 5 June 2026. The Shares will be traded in board lots of 500
Shares each and the stock cod e of our Shares will be 2290.
STRUCTURE OF THE GLOBAL OFFERING
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IMPORTANT NOTICE TO INVESTORS OF HONG KONG OFFER SHARES
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Hong Kong Public Offer
and below are the proced ures for application.
This prospectus is available at the website of the Stock Exchange at www.hkexnews.hk
under the ‘‘HKEXnews > New Listings > New Listing Information ’’section, and our website at
www.lungfung.hk.
The contents of this prospectus are identical to the prospectus as registered with the Registrar of
Companies in Hong Kong pursuant to Section 342C of the Companies (Winding Up and
Miscellaneous Provisions) Ordinance.
A. APPLICATION FOR HONG KONG OFFER SHARES
1. Who Can Apply
You can apply for Hong Kong Offer Shares if you or the person(s) for whose benefit you are
applying for:
. are 18 years of age or older;
. have a Hong Kong address (for the HK eIPO White Form service only) ;a n d
. are outside the United States (within the meaning of Regulation S), and are a person
described in paragraph (h)(3) of Rule 902 of Regulation S.
Unless permitted by the Listing Rules or a waiver and/or consent has been granted by the
Stock Exchange to us, you cannot apply for any Hong Kong Offer Shares if you or the person(s)
for whose benefit you are applying for:
. are an existing Shareholder or close associates; or
. are a Director or any of his/her close associates.
2. Application Channels
The Hong Kong Public Offer period will be gin at 9:00 a.m. on Thursday, 28 May 2026
and end at 12:00 noon on Tuesday, 2 June 2026 (Hong Kong time).
HOW TO APPLY FOR HONG KONG OFFER SHARES
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To apply for Hong Kong Offer Shares, you may use one of the following application
channels:
Application
Channel Platform Target Investors Application Time
HK eIPO
White Form
service
www.hkeipo.hk Investors who would like to
receive a physical Share
certificate. Hong Kong Offer
Shares successfully applied
for will be allotted and issued
in your own name.
From 9:00 a.m. on Thursday, 28
May 2026 to 11:30 a.m. on
Tuesday, 2 June 2026, Hong
Kong time.
The latest time for completing
full payment of Application
monies will be 12:00 noon on
Tuesday, 2 June 2026, Hong
Kong time.
HKSCC EIPO
channel
Your broker or
custodian who is a
HKSCC Participant
will submit an EIPO
application on your
behalf through
HKSCC ’sF I N I
system in
accordance with
your instruction.
Investors who would not like to
receive a physical Share
certificate. Hong Kong Offer
Shares successfully applied
for will be allotted and issued
in the name of HKSCC
Nominees, deposited directly
into CCASS and credited to
your designated HKSCC
Participant ’s stock account.
Contact your broker or custodian
for the earliest and latest time
for giving such instructions,
a st h i sm a yv a r yb yb r o k e ro r
custodian.
The HK eIPO White Form service and the HKSCC EIPO channel are facilities subject to
capacity limitations and potential service interruptions and you are advised not to wait until the
last day of the application period to apply for Hong Kong Offer Shares.
For those applying through the HK eIPO White Form service, once you complete payment
in respect of any application instructions given by you or for your benefit through the HK eIPO
White Form service to make an application for Hong Ko ng Offer Shares, an actual application
shall be deemed to have been made. If you are a person for whose benefit the electronic
application instructions are g iven, you shall be deemed to have declared that only one set of
electronic application instructions has been given for your benefit. If you are an agent for another
person, you shall be deemed to have declared th at you have only given one set of electronic
application instructions for the benefit of the person for whom you are an agent and that you are
duly authorised to give those instructions as an agent.
For the avoidance of doubt, giving an application instruction under the HK eIPO White
Form service more than once and obtaining different payment reference numbers without effecting
full payment in respect of a particular reference n umber will not constitute an actual application.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 304 ---
If you apply through the HK eIPO White Form service, you are deemed to have authorised
the HK eIPO White Form Service Provider to apply on the terms and conditions in this
prospectus, as supplemented and amended by the terms and conditions of the HK eIPO White
Form service.
By instructing your broker or custodian to apply for the Hong Kong Offer Shares on your
behalf through the HKSCC EIPO channel, you (and, if you are joint applicants, each of you
jointly and severally) are deemed to have inst ructed and authorised HKSCC to cause HKSCC
Nominees (acting as nominee for the relevant HKSCC Participants) to apply for Hong Kong Offer
Shares on your behalf and to do on your behalf all the things stated in this prospectus and any
supplement to it.
For those applying through HKSCC EIPO channel, an actual application will be deemed to
have been made for any application instructions given by you or for your benefit to HKSCC (in
w h i c hc a s ea na p p l i c a t i o nw i l lb em a d eb yH K SCC Nominees on your behalf) provided such
application instruction has not been withdrawn or otherwise invalidated before the closing time of
the Hong Kong Public Offer.
HKSCC Nominees will only be acting as a nominee for you and neither HKSCC nor HKSCC
Nominees shall be liable to you or any other person in respect of any actions taken by HKSCC or
HKSCC Nominees on your behalf to apply for Hong Kong Offer Shares or for any breach of the
terms and conditions of this prospectus.
3. Information R equired to Apply
You must provide the following information with your application:
For Individual Applicants For Corporate Applicants
. Full name(s)
2 as shown on your identity
document
. Full name(s) 2 as shown on your
identity document
. Identity document ’s issuing country or
jurisdiction
. Identity document ’s issuing country
or jurisdiction
. Identity document type, with order of
priority:
. Identity document type, with order
of priority:
i. HKID card; or i. LEI registration document; or
ii. National identification document; or ii. Certificate of incorporation; or
iii. Passport; and iii. Business registration
certificate; or
iv. Other equivalent document; and
. Identity document number . Identity document number
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Notes:
1. If you are applying through the HK eIPO White Form service, you are required to provide a valid e-mail
address, a contact telephone number and a Hong Kong address. You are also required to declare that the
identity information provided by you follows the requi rements as described in Note 2 below. In particular,
where you cannot provide a HKID number, you must confirm that you do not hold a HKID card. The number
of joint applicants may not exceed four. If you are a firm, the applicant must be in the individual members ’
names.
2. The applicant ’s full name as shown on their identity document must be used and the surname, given name,
middle and other names (if any) must be input in the same order as shown on the identity document. If an
applicant ’s identity document contains both an English and Chinese name, both English and Chinese names
must be used. Otherwise, either English or Chinese names will be accepted. The order of priority of the
applicant ’s identity document type must be strictly followe d and where an individual applicant has a valid
HKID card (including both Hong Kong Residents and Hong Kong Permanent Residents), the HKID number
must be used when making an application to subscribe for shares in a public offer. Similarly for corporate
applicants, a LEI number must be used if an entity has a LEI certificate.
3. If the applicant is a trustee, the client identification data ( ‘‘CID’’) of the trustee, as set out above, will be
required. If the applicant is an investment fund (i.e. a collective investment scheme, or CIS), the CID of the
asset management company or the individual fund, as appropriate, which has opened a trading account with
the broker will be required, as above.
4. The maximum number of joint account holders on FINI is capped at 4
1 in accordance with market practise.
5. If you are applying as a nominee, you must provide: (i) the full name (as shown on the identity document),
the identity document ’s issuing country or jurisdiction, the identity document type; and (ii) the identity
document number, for each of the beneficial owners or, in the case(s) of joint beneficial owners, for each joint
beneficial owner. If you do not include this information, the application will be treated as being made for
your benefit.
6. If you are applying as an unlisted company and (i) the principal business of that company is dealing in
securities; and (ii) you exercise statutory control ove r that company, then the application will be treated as
being for your benefit and you should provide the required information in your application as stated above.
‘‘Unlisted company ’’means a company with no equity securities listed on the Stock Exchange or any other
stock exchange.
‘‘Statutory control ’’means you:
. control the composition of the board of directors of the company;
. control more than half of the voting power of the company; or
. hold more than half of the registered share capital of the company (not counting any part of it which
carries no right to participate beyond a specified amount in a distribution of either profits or capital).
For those applying through HKSCC EIPO channel, and making an application under a power
of attorney, we and the Overall Coordinator, as our agents, have discretion to consider whether to
accept it on any conditions we think fit, including evidence of the attorney ’s authority.
Failing to provide any required information may result in your application being rejected.
1 Subject to change, if the Company ’s Articles of Incorporation and applicable company law prescribe a lower cap.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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4. Permitted Number of Hong Kong Offer Shares for Application
Board lot size : 500 Shares
Permitted number of
Hong Kong Offer
Shares for application
and amount payable on
application/successful
allotment
: Hong Kong Offer Shares are available for application in
specified board lot sizes only. Please refer to the amount
payable associated with each specified board lot size in
the table below.
The maximum Offer Price is HK$6.38 per Offer Share.
If you are applying through the HKSCC EIPO channel,
your broker or custodian may require you to pre-fund
your application, in such amount as determined by the
broker or custodian, based on the applicable laws and
regulations in Hong Kong. You are responsible for
complying with any such pre-funding requirement
imposed by your broker or custodian with respect to the
Hong Kong Offer Shares you applied for.
By instructing your broker or custodian to apply for the
Hong Kong Offer Shares on your behalf through the
HKSCC EIPO channel, you (and, if you are joint
applicants, each of you joint ly and severally) are deemed
to have instructed and authorised HKSCC to cause
HKSCC Nominees (acting as nominee for the relevant
HKSCC Participants) to arrange payment of the final
Offer Price, brokerage, SFC t ransaction levy, the Stock
Exchange trading fee and the AFRC transaction levy by
debiting the relevant nominee bank account at the
Designated Bank for your broker or custodian.
If you are applying through the HK eIPO White Form
service, you may refer to the table below for the amount
payable for the number of Shares you have selected. You
must pay the respective maximum amount payable on
application in full upon application for Hong Kong Offer
Shares.
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--- page 307 ---
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of
Hong Kong
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
HK$ HK$ HK$ HK$
500 3,222.17 7,000 45,110.40 50,000 322,217.11 700,000 4,511,039.61
1,000 6,444.34 8,000 51,554.74 60,000 386,660.54 800,000 5,155,473.85
1,500 9,666.51 9,000 57,999.08 70,000 451,103.96 900,000 5,799,908.06
2,000 12,888.68 10,000 64,443.42 80,000 515,547.39 1,000,000 6,444,342.30
2,500 16,110.85 15,000 96,665.13 90,000 579,990.80 2,000,000 12,888,684.60
3,000 19,333.03 20,000 128,886.85 100,000 644,434.24 3,000,000 19,333,026.90
3,500 22,555.19 25,000 161,108.56 200,000 1,288,868.45 4,000,000 25,777,369.20
4,000 25,777.37 30,000 193,330.27 300,000 1,933,302.69 5,000,000 32,221,711.50
4,500 28,999.54 35,000 225,551.98 400,000 2,577,736.92 6,250,000
(1) 40,277,139.38
5,000 32,221.71 40,000 257,773.69 500,000 3,222,171.16
6,000 38,666.05 45,000 289,995.40 600,000 3,866,605.38
(1) Maximum number of Hong Kong Offer Shares you may apply for and this is 50% of the Hong Kong Offer
Shares initially offered.
(2) The amount payable is inclusive of brokerage, SFC transaction levy, the Stock Exchange trading fee and
AFRC transaction levy. If your application is successful, brokerage will be paid to the Exchange Participants
(as defined in the Listing Rules) or to the HK eIPO White Form Service Provider (for applications made
through the application channel of the HK eIPO White Form service) while the SFC transaction levy, the
Stock Exchange trading fee and the AFRC transaction levy will be paid to the SFC, the Stock Exchange and
the AFRC, respectively.
5. Multiple Applications Prohibited
You or your joint applicant(s) shall not make more than one application for your own benefit,
except where you are a nominee and provide the information of the underlying investor in your
application as required under the paragraph headed ‘‘ — A. Application for Hong Kong Offer
Shares — 3. Information Required to Apply ’’in this section. If you are suspected of submitting or
cause to submit more than one application, al l of your applications will be rejected.
Multiple applications made either through (i) the HK eIPO White Form service, (ii)
HKSCC EIPO channel, or (iii) both channels concurrently are prohibited and will be rejected. If
you have made an application through the HK eIPO White Form service or HKSCC EIPO
channel, you or the person(s) for whose benefit you have made the application shall not apply
further for any Offer Shares.
The Hong Kong Share Registrar would record all applications into its system and identify
suspected multiple applications with identical names and identification document numbers
according to the Best Practice Note on Treatment of Multiple/Suspected Multiple Applications
(‘‘Best Practice Note ’’) issued by the Federation of Share Registrars Limited.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 308 ---
Since applications are subject to personal information collection statements, identification
document numbers displayed are redacted.
6. Terms and Conditions of an Application
By applying for Hong Kong Offer Shares through the HK eIPO White Form service or
HKSCC EIPO channel, you (or as the case may be, HKSCC Nominees will do the following
things on your behalf):
(i) undertake to execute all relevant documen ts and instruct and authorise us and/or the
Overall Coordinator, as our agents, to execute any documents for you and to do on your
behalf all things necessary to register any Hong Kong Offer Shares allocated to you in
your name or in the name of HKSCC Nominees as required by the Articles of
Association, and (if you are applying through the HKSCC EIPO channel) to deposit
the allotted Hong Kong Offer Shares directly into CCASS for the credit of your
designated HKSCC Participant ’s stock account on your behalf;
(ii) confirm that you have read and understand the terms and conditions and application
procedures set out in this prospectus and the designated website of the HK eIPO White
Form service (or as the case may be, the agreement you entered into with your broker
or custodian), and agree to be bound by them;
(iii) (if you are applying through the HKSCC EIPO channel) agree to the arrangements,
undertakings and warranties under the participant agreement between your broker or
custodian and HKSCC and observe the General Rules of HKSCC and the HKSCC
Operational Procedures for giving application instructions to apply for Hong Kong
Offer Shares;
(iv) confirm that you are aware of the restrictions on offers and sales of shares set out in
this prospectus and they do not apply to you, or the person(s) for whose benefit you
have made the application;
(v) confirm that you have read this prospectus and any supplement to it and have relied
only on the information and representations contained therein in making your
application (or as the case may be, causing your application to b e made) and will not
rely on any other information or representations;
(vi) agree that the Sole Sponsor, the Overall Coordinator, the Sole Global Coordinator, the
Joint Bookrunners, the Joint Lead Managers, the Capital Market Intermediaries, the
Underwriters, their directors, officers, em ployees, partners, ag ents, advisors and any
other parties involved in the Global Offering (the ‘‘Relevant Persons ’’), the Hong Kong
Share Registrar and HKSCC will not be liable for any information and representations
not in this prospectus and any supplement to it;
(vii) agree to disclose the details of your application and your personal data and any other
personal data which may be required about you and the person(s) for whose benefit you
have made the application to us, the Relevant Persons, the Hong Kong Share Registrar,
HKSCC, HKSCC Nominees, the Stock Exchange, the SFC and any other statutory
regulatory or governmental bodies or otherwise as required by laws, rules or
regulations, for the purposes under the paragraphs headed ‘‘ — G. Personal Data — 3.
Purposes ’’and ‘‘ — G. Personal Data — 4. Transfer of personal data ’’in this section;
(viii) agree (without prejudice to any other rights which you may have once your application
(or as the case may be, HKSCC Nominees ’ application) has been accepted) that you
will not rescind it because of an innocent misrepresentation;
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--- page 309 ---
(ix) agree that subject to Section 44A(6) of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance, any application made by you or HKSCC Nominees on your
behalf cannot be revoked once it is accepted, which will be evidenced by the
notification of the result of the ballot by the Hong Kong Share Registrar by way of
publication of the results at the time and in the manner as specified in the paragraph
headed ‘‘ — B. Publication of Results ’’in this section;
(x) confirm that you are aware of the situations specified in the paragraph headed ‘‘ — C.
Circumstances in which you will not be allocated Hong Kong Offer Shares ’’in this
section;
(xi) agree that your application or HKSCC Nominees ’ application, any acceptance of it and
the resulting contract will be governed by and construed in accordance with the laws of
Hong Kong;
(xii) agree to comply with the Companies Ordinance, the Companies (Winding Up and
Miscellaneous Provisions) Ordinance, the Articles of Association and laws of any place
outside Hong Kong that apply to your application and that neither we nor the Relevant
Persons will breach any law inside and/or outside Hong Kong as a result of the
acceptance of your offer to purchase, or an y action arising from your rights and
obligations under the terms and conditions contained in this prospectus;
(xiii) confirm that (a) your application or HKSCC Nominees ’ application on your behalf is
not financed directly or indirectly by the Company, any of the directors, chief
executives, substantial Shareholder(s) or existing shareholder(s) of our Company or any
of our subsidiaries or any of their respect ive close associates; and (b) you are not
accustomed or will not be accustomed to takin g instructions from our Company, any of
the directors, chief executives, substantial shareholder(s) or existing shareholder(s) of
our Company or any of our subsidiaries or any of their respective close associates in
relation to the acquisition, disposal, voting or other disposition of the Shares registered
in your name or otherwise held by you;
(xiv) warrant that the information you have provided is true and accurate;
(xv) confirm that you understand that we and the Overall Coordinator will rely on your
declarations and representations in deciding whether or not to allocate any Hong Kong
Offer Shares to you and that you may be prosecuted for making a false declaration;
(xvi) agree to accept Hong Kong Offer Shares applied for or any lesser number allocated to
you under the application;
(xvii) declare and represent that this is the only application made and the only application
intended by you to be made to benefit you or the person for whose benefit you are
applying;
(xviii) (if the application is made for your own benefit) warrant that no other application has
been or will be made for your benefit by giving electronic application instructions to
HKSCC directly or indirectly or through the application channel of the HK eIPO White
Form service or by any one as your agent or by any other person; and
(xix) (if you are making the application as an agent for the benefit of another person) warrant
that (1) no other application has been or will be made by you as agent for or for the
benefit of that person or by that person or by any other person as agent for that person
by giving electronic application instructions to HKSCC or the HK eIPO White Form
Service Provider and (2) you have due authority to give electronic application
instructions on behalf of that other person as its agent.
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B. PUBLICATION OF RESULTS
Results of Allocation
You can check whether you are successfully al located any Hong Kong off er Shares through:
Platform Date/Time
Applying through the HK eIPO White Form services or HKSCC EIPO channel:
Website From the ‘‘Allotment Results ’’page at
www.tricor.com.hk/ipo/result or
www.hkeipo.hk/IPOResult with a ‘‘search by
ID’’function.
The full list of (i) wholly or partially successful
applicants using the HK eIPO White Form
service and HKSCC EIPO channel, and (ii) the
number of Hong Kong Offer Shares
conditionally allotted to them, among other
things, will be displayed at www.hkeipo.hk/
IPOResult or www.tricor.com.hk/ipo/result .
24 hours, from 11:00 p.m. on
Thursday, 4 June 2026 to 12:00
midnight on Wednesday, 10 June
2026 (Hong Kong time).
The Stock Exchange ’s website at
www.hkexnews.hk and our website at
www.lungfung.hk which will provide links to
the abovementioned websites of the Hong Kong
Share Registrar.
No later than 11:00 p.m. on
Thursday, 4 June 2026 (Hong Kong
time).
Telephone +852 3691 8488 — the allocation results
telephone enquiry line provided by the Hong
Kong Share Registrar.
between 9:00 a.m. and 6:00 p.m.,
from Friday, 5 June 2026 to
Wednesday, 10 June 2026 (Hong
Kong time) on a business day.
For those applying through HKSCC EIPO channel, you may also check with your broker or
custodian from 6:00 p.m. on Wednesday, 3 June 2026 (Hong Kong time).
HKSCC Participants can log into FINI and review the allotment result from 6:00 p.m. on
Wednesday, 3 June 2026 (Hong Kong time) on a 24-hour basis and should report any discrepancies
on allotments to HKSCC as soon as practicable.
Allocation Announcement
We expect to announce the results of the final Offer Price, the level of indications of interest
in the Global Offering, the level of applications in the Hong Kong Public Offer and the basis of
allocations of Hong Kong Offer Shares on the Stock Exchange ’s website at www.hkexnews.hk and
our website at www.lungfung.hk by no later than 11:00 p.m. on Thursday, 4 June 2026 (Hong
Kong time).
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--- page 311 ---
C. CIRCUMSTANCES IN WHICH YOU WILL NOT BE ALLOCATED HONG KONG OFFER
SHARES
You should note the following situations in which Hong Kong Offer Shares will not be allocated to
you or the person(s) for whose benefit you are applying for:
1. If your application is revoked:
Your application or the ap plication made by HKSCC No minees on your behalf may be
revoked pursuant to Section 44A(6) of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance.
2. If we or our agents exercise our dis cretion to reject your application:
We, the Overall Coordinator, the Hong Kong Sh are Registrar and their respective agents and
nominees have full discretion to reject or acc ept any application, or to accept only part of any
application, without giving any reasons.
3. If the allocation of Hong Kong Offer Shares is void:
The allocation of Hong Kong Offer Shares will be void if the Stock Exchange does not grant
permission to list the Shares either:
. within three weeks from the closing date of the application lists; or
. within a longer period of up to six weeks if the Stock Exchange notifies us of that
longer period within three weeks of the closing date of the application lists.
4. If:
. you make multiple applications or suspected multiple applications. You may refer to the
paragraph headed ‘‘ — A. Application for Hong Kong Offer Shares — 5. Multiple
Applications Prohibited ’’in this section on what constitutes multiple applications;
. your application instruction is incomplete;
. your payment (or confirmation of funds, as the case may be) is not made correctly;
. the Underwriting Agreements do not become unconditional or are terminated; or
. we or the Overall Coordinator believe that by accepting your application, it or we
would violate applicable securities or other laws, rules or regulations.
5. If there is money settlement failure for allotted Shares:
Based on the arrangements between HKSCC Par ticipants and HKSCC, HKSCC Participants
will be required to hold sufficient application funds on deposit with their Designated Bank before
balloting. After balloting of Hong Kong Offer Shar es, the Receiving Bank will collect the portion
of these funds required to settle each HKSCC Participant ’s actual allotment of Hong Kong Offer
Shares from their Designated Bank.
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There is a risk of money settlement failure. In the extreme event of money settlement failure
by a HKSCC Participant (or its Designated Bank), who is acting on your behalf in settling payment
for your allotted shares, HKSCC will contact the defaulting HKSCC Participant and its Designated
Bank to determine the cause of failure and request such defaulting HKSCC Participant to rectify or
procure to rectify the failure.
However, if it is determined that such settlement obligation cannot be met, the affected Hong
Kong Offer Shares will be reallocated to the Global Offering. Hong Kong Offer Shares applied for
by you through the broker or custodian may be affected to the extent of the settlement failure. In
the extreme case, you will not be allocated any Hong Kong Offer Shares due to the money
settlement failure by such HKSCC Participant. None of us, the Relevant Persons, the Hong Kong
Share Registrar and HKSCC is or will be liable if Hong Kong Offer Shares are not allocated to you
due to the money settlement failure.
D. DESPATCH/COLLECTION OF SHAR E CERTIFICATES AND REFUND OF
APPLICATION MONIES
You will receive one Share certifi cate for all Hong Kong Offer Shares allotted to you under the
Hong Kong Public Offering (except pursuant to applications made through the HKSCC EIPO channel
where the Share certificates will be deposited into CCASS as described below).
No temporary document of title will be issued in respect of the Shares. No receipt will be issued
for sums paid on application.
Share certificates will only become valid at 8:00 a.m. on Friday, 5 June 2026 (Hong Kong time),
provided that the Global Offering has become unconditional and the right of termination described in the
section headed ‘‘Underwriting ’’in this prospectus has not been exercised. Investors who trade Shares
prior to the receipt of Share certificates or the Share certificates becoming valid do so entirely at their
own risk.
The right is reserved to retain any Share certificate(s) and (if applicable) any surplus application
monies pending clearance of application monies.
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--- page 313 ---
The following sets out the relevant procedures and time:
HK eIPO White Form service HKSCC EIPO channel
Despatch/collection of Share certificate 2
For application of
1,000,000 Hong
Kong Offer
Shares or more
Collection in person at the Hong Kong Share
Registrar, Tricor Investor Services Limited,
at 17/F, Far East Finance Centre,
16 Harcourt Road, Hong Kong
Share certificate(s) will be
issued in the name of HKSCC
Nominees, deposited into
CCASS and credited to your
designated HKSCC
Participant ’s stock account
Time: from 9:00 a.m. to 1:00 p.m. on Friday,
5 June 2026 (Hong Kong time)
If you are an individual, you must not authorise
any other person to collect for you. If you are a
corporate applicant, your authorised representative
must bear a letter of authorisation from your
corporation stamped with your corporation ’sc h o p
Both individuals and auth orised representatives
must produce, at the time of collection, evidence
of identity acceptable to the Hong Kong Share
Registrar
No action by you is required
Note: If you do not collect your Share certificate(s)
personally within the time above, it/they will be sent to
the address specified in your application instructions by
ordinary post at your own risk
For application of
less than
1,000,000 Hong
Kong Offer
Shares
Your Share certificate( s) will be sent to the
address specified in your application instructions
by ordinary post at your own risk
Date: Thursday, 4 June 2026
2 Except in the event of a tropical cyclone warning signal number 8 or above, a black rainstorm warning and/or an ‘‘extreme
conditions ’’announcement issued after a super typhoon in force in Hong Kong in the morning on Thursday, 4 June 2026
rendering it impossible for the relevant Share certificates to be dispatched to HKSCC in a timely manner, our Company
shall procure the Hong Kong Share Registrar to arrange for delivery of the supporting documents and Share certificates in
accordance with the contingency arrangements as agreed between them. You may refer to the paragraph headed ‘‘ — E.
Severe Weather Arrangements ’’in this section.
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--- page 314 ---
HK eIPO White Form service HKSCC EIPO channel
Refund mechanism for surplus a pplication monies paid by you
Date Friday, 5 June 2026 Subj ect to the arrangement
between you and your broker
or custodian
Responsible party Hong Kong Share Reg istrar Your broker or custodian
Application monies
paid through
single bank
account
HK eIPO White Form e-Auto Refund payment
instructions to your designated bank account
Your broker or custodian will
arrange refund to your
designated bank account
subject to the arrangement
between you and it
Application monies
paid through
multiple bank
accounts
Refund cheque(s) will be despatched to the
address as specified in your application
instructions by ordinary post at your own risk
E. SEVERE WEATHER ARRANGEMENTS
The Opening and Closing of the Application Lists
The application lists will not open or close on Tuesday, 2 June 2026 if, there is:
. a tropical cyclone warning signal number 8 or above;
. a black rainstorm warning; and/or
. Extreme Conditions
(collectively, ‘‘Severe Weather Signals ’’),
in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Tuesday, 2 June 2026.
Instead they will open between 11:45 a.m. and 12:00 noon and/or close at 12:00 noon on the
next business day which does not have Severe Weather Signals in force at any time between 9:00
a.m. and 12:00 noon.
Prospective investors should be aware that a postponement of the opening/closing of the
application lists may result in a delay in the listing date. Should there be any changes to the dates
m e n t i o n e di nt h es e c t i o nh e a d e d‘‘Expected Timetable ’’in this prospectus, an announcement will
be made and published on the Stock Exchange ’s website at www.hkexnews.hk and our website at
www.lungfung.hk of the revised timetable.
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If a Severe Weather Signal is hoisted on Thursday, 4 June 2026, the Hong Kong Share
Registrar will make appropriate arrangements for the delivery of the Share certificates to the
CCASS Depository ’s service counter so that they would be available for trading on Friday,
5 June 2026.
If a Severe Weather Signal is hoisted on Thursday, 4 June 2026, for application of less than
1,000,000 Hong Kong Offer Shares, the despatch of physical Share certificate(s) will be made by
ordinary post when the post office re-opens after the Severe Weather Signal is lowered or
cancelled (e.g. in the afternoon of Thursday, 4 June 2026 or on Friday, 5 June 2026).
If a Severe Weather Signal is hoisted on Friday, 5 June 2026, for application of 1,000,000
Hong Kong Offer Shares or more, physical Share certif icate(s) will be available for collection in
person at the Hong Kong Share Registrar ’s office after the Severe Weather Signal is lowered or
cancelled (e.g. in the afternoon of Friday, 5 June 2026 or on Monday, 8 June 2026).
Prospective investors should be aware th at if they choose to receive physical Share
certificates issued in their own name, there ma y be a delay in receiving the Share certificates.
F. ADMISSION OF THE SHARES INTO CCASS
If the Stock Exchange grants the listing of, an d permission to deal in, the Shares on the Stock
Exchange and we comply with the stock admission requirements of HKSCC, the Shares will be accepted
as eligible securities by HKSCC f or deposit, clearance an d settlement in CCASS with effect from the
date of commencement of dealings in the Shares o r any other date HKSCC chooses. Settlement of
transactions between Exchange Participants is required to take place in CCASS on the second settlement
Day after any trading day.
All activities under CCASS are subject to the General Rules of HKSCC and HKSCC Operational
Procedures in effect from time to time.
All necessary arrangements have been made ena bling the Shares to be admitted into CCASS.
You should seek the advice of your broker or other professional advisor for details of the
settlement arrangement as such arrangeme nts may affect your rights and interests.
G. PERSONAL DATA
The following Personal Information Collection Statement applies to any personal data collected
and held by our Company, the Hong Kong Share Registrar, the Receiving Bank and the Relevant
Persons about you in the same way as it applies to personal data about applicants other than HKSCC
Nominees. This personal data may in clude client identifier(s) and your identification information. By
giving application instructions to HKSCC, you acknowledge that you have read, understood and agree to
all of the terms of the Personal Information Collection Statement below.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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--- page 316 ---
1. Personal Information Collection Statement
This Personal Information Collection Statement informs the applicant for, and holder of,
Hong Kong Offer Shares, of the policies and practices of our Company and the Hong Kong Share
R e g i s t r a ri nr e l a t i o nt op e r s o n a ld a t aa n dt h ePersonal Data (Privacy) Ordinance (Chapter 486 of
the Laws of Hong Kong).
2. Reasons for the Collection of Your Personal Data
It is necessary for applicants and registered h olders of Hong Kong Offer Shares to ensure that
personal data supplied to our Company or our agents and the Hong Kong Share Registrar is
accurate and up-to-date when applying for Hong Kong Offer Shares or transferring Hong Kong
Offer Shares into or out of their names or in procuring the services of the Hong Kong Share
Registrar.
Failure to supply the requested data or supplying inaccurate data may result in your
application for Hong Kong Offer Shares being rejected, or in the delay or the inability of our
Company or the Hong Kong Share Registrar to effect tr ansfers or otherwise render their services. It
may also prevent or delay registration or transfers of Hong Kong Offer Shares which you have
successfully applied for and/or the despatch o f Share certificate(s) to which you are entitled.
It is important that applicants for and holders of Hong Kong Offer Shares inform our
Company and the Hong Kong Share Re gistrar immediately of any in accuracies in the personal data
supplied.
3. Purposes
Your personal data may be used, held, processed, and/or stored (by whatever means) for the
following purposes:
. processing your application and refund cheque and HK eIPO White Form e-Auto
Refund payment instruction(s), where applicable, verification of compliance with the
terms and application procedures set out in this prospectus and announcing results of
allocation of Hong Kong Offer Shares;
. compliance with applicable laws and r egulations in Hong Kong and elsewhere;
. registering new issues or transfers into or out of the names of the holders of the Shares
including, where applicable, HKSCC Nominees;
. maintaining or updating the register of members of our Company;
. verifying identities of applicants for and holders of the Shares and identifying any
duplicate applications for the Shares;
. facilitating Hong Kong Offer Shares balloting;
. establishing benefit entitlements of holders of the Shares, such as dividends, rights
issues, bonus issues, etc.;
. distributing communications from our Company and our subsidiaries;
. compiling statistical information and profiles of the holder of the Shares;
. disclosing relevant information to facilitate claims on entitlements; and
HOW TO APPLY FOR HONG KONG OFFER SHARES
– 307 –


--- page 317 ---
. any other incidental or associated purposes relating to the above and/or to enable our
Company and the Hong Kong Share Registrar to discharge our and their obligations to
applicants and holders of the Shares and/or regulators and/or any other purposes to
which applicants and holders of the Shares may from time to time agree.
4. Transfer of Personal Data
Personal data held by our Company and the Hong Kong Share Registrar relating to the
applicants for and holders of Hong Kong Offer Shares will be kept confidential but our Company
and the Hong Kong Share Registrar may, to the extent necessary for achieving any of the above
purposes, disclose, obtain or transfer (whether within or outside Hong Kong) the personal data to,
from or with any of the following:
. our Company ’s appointed agents such as financ ial advisers, Receiving Bank and
overseas principal share registrar;
. HKSCC or HKSCC Nominees, who will use the personal data and may transfer the
personal data to the Hong Kong Share Registrar, in each case for the purposes of
providing its services or faci lities or performing its functions in accordance with its
rules or procedures and operating FINI and CCASS (including where applicants for the
Hong Kong Offer Shares request a deposit into CCASS);
. any agents, contractors or third-party service providers who offer administrative,
telecommunications, computer, payment or other services to the Company or the Hong
Kong Share Registrar in connection with their respective business operation;
. the Stock Exchange, the SFC and any other stat utory regulatory or governmental bodies
or otherwise as required by laws, rules or regulations, including for the purpose of the
Stock Exchange ’s administration of the Listing Rules and the SFC ’s performance of its
statutory functions; and
. any persons or institutions with which the holders of Hong Kong Offer Shares have or
propose to have dealings, such as their bank ers, solicitors, accountants or brokers etc.
5. Retention of Personal Data
Our Company and the Hong Kong Share Registrar will keep the personal data of the
applicants and holders of Hong Kong Offer Shares for as long as necessary to fulfil the purposes
for which the personal data were collected. Per sonal data which is no longer required will be
destroyed or dealt with in accordance with the Per sonal Data (Privacy) Ordinance (Chapter 486 of
the Laws of Hong Kong).
6. Access to and Correction of Personal Data
Applicants for and holders of Hong Kong Offer Shares have the right to ascertain whether
our Company or the Hong Kong Share Registrar hold their personal data, to obtain a copy of that
data, and to correct any data that is inaccurate. Our Company and the Hong Kong Share Registrar
have the right to charge a reasonable fee for the pr ocessing of such reques ts. All requests for
access to data or correction of data should be ad dressed to our Company and the Hong Kong Share
Registrar, at their registered addre ss disclosed in the section headed ‘‘Corporate Information ’’in
this prospectus or as notified from time to time, for the attention of the company secretary, or the
Hong Kong Share Registrar for the attention of the privacy compliance officer.
HOW TO APPLY FOR HONG KONG OFFER SHARES
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The following is the text of a report set out o n pages I-1 to I-74, received from the Company ’s
reporting accountants, Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong, for the
purpose of incorporation in this prospectus.

ACCOUNTANTS ’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE
DIRECTORS OF LUNG FUNG GROUP HOLDINGS LIMITED AND DBS ASIA CAPITAL
LIMITED
Introduction
We report on the historical financial information of Lung Fung Group Holdings Limited (the
‘‘Company ’’) and its subsidiaries (together, the ‘‘Group ’’) set out on pages I-4 to I-74, which comprises
the consolidated statements of financial position of the Group as at 31 March 2023, 2024 and 2025 and
30 November 2025, the statement of financial position of the Company as at 30 November 2025, and the
consolidated statements of profit or loss and other comprehensive income, the consolidated statements of
changes in equity and the consolidated statements of cash flows of the Group for each of the three years
ended 31 March 2025 and the eight months ended 30 November 2025 (the ‘‘Track Record Period ’’)
and material accounting policy information and o ther explanatory information (together, the ‘‘Historical
Financial Information ’’). The Historical Financial Informat ion set out on pages I-4 to I-74 forms an
integral part of this report, which has been prepared for inclusion in the prospectus of the Company
d a t e d2 8M a y2 0 2 6( t h e‘‘Prospectus ’’) in connection with the initial listing of shares of the Company
on the Main Board 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 the Historical Financial
Information that gives a true and fair view in accord ance with the basis of prep aration and presentation
set out in note 2 to the Historical Financial Information, and for such internal control as the directors of
the Company determine is necessary to enable the pre paration of the 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 and to report
our opinion to you. We co nducted our work in accordance with Hong Kong Standard on Investment
Circular Reporting Engagements 200 ‘‘Accountants ’ Reports on Historical Financial Information in
Investment Circulars ’’ issued by the Hong Kong Institute of Certified Public Accountants (the
‘‘HKICPA ’’). This standard requires that we comply with ethical standards and plan and perform our
work to obtain reasonable assurance about whether the Historical Financial Information is free from
material misstatement.
APPENDIX I ACCOUNTANTS ’ REPORT
– I-1 –


--- page 319 ---
Our work involved performing procedures to obtain evidence about the amounts and disclosures in
the Historical Financial Information. The procedures selected depend on the reporting accountants ’
judgement, including the assessment of risks of material misstatement of the Historical Financial
Information, whether due to fraud or error. In maki ng those risk assessments , the reporting accountants
consider internal control relevant to the entity ’s preparation of Historical Financial Information that
gives a true and fair view in accordance with the bas is of preparation and presentation set out in note 2
to the Historical Financial Information in order to design procedures that are appropriate in the
circumstances, but not for the purpose of expressi ng an opinion on the effectiveness of the entity ’s
internal control. Our work also included evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by t he directors of the Company, as well as evaluating
the overall presentation of the Historical Financial Information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Opinion
In our opinion, the Historical Financial Information gives, for the purposes of the accountants ’
report, a true and fair view of the Group ’s financial position as at 31 March 2023, 2024 and 2025 and 30
November 2025, of the Company ’s financial position as at 30 November 2025, and of the Group ’s
financial performance and cash flows for the Tr ack Record Period in accordance with the basis of
preparation and presentation set out in note 2 to the Historical Financial Information.
Review of stub period comparat ive financial information
We have reviewed the stub period comparative financial information of the Group which comprises
the consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the eight months ended 30
November 2024 and other explanatory information (the ‘‘Stub Period Comparative Financial
Information ’’). The directors of the Company are responsible for the preparation and presentation of
the Stub Period Comparative Financial Informati on in accordance with the b asis of preparation and
presentation set out in note 2 to the Historical Financial Information. Our responsibility is to express a
conclusion on the Stub Period Comparative Financi al Information based on our review. We conducted
our review in accordance wi th Hong Kong Standard on Review Engagements 2410 ‘‘Review of Interim
Financial Information Performed by the Independent Auditor of the Entity ’’issued by the HKICPA. A
review consists of making inquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical an d other review procedures. A review is substantially less in scope
than an audit conducted in accordance with Hong Kong Standards on Auditing and consequently does
not enable us to obtain assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion. Based on our review, nothing
has come to our attention that causes us to believe that the Stub Period Comparative Financial
Information, for the pu rposes of the accountants ’ report, is not prepared, in all material respects, in
accordance with the basis of preparation and presen tation set out in note 2 to the Historical Financial
Information.
APPENDIX I ACCOUNTANTS ’ REPORT
– I-2 –


--- page 320 ---
Report on matters under the Rules Governing the Li sting of Securities on th e Stock Exchange and
the Companies (Winding Up and Miscellaneous Provisions) Ordinance
Adjustments
In preparing the Historical Financial Information, no adjustments to the Underlying Financial
Statements as defined on page I-4 have been made.
Dividends
We refer to note 14 to the Historical Financial Information which contains information about the
dividends declared and paid by the Company ’s subsidiaries in respect of the Track Record Period and
states that no dividend was declared or paid by the Company since its incorporation and up to the end of
the Track Record Period.
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong
28 May 2026
APPENDIX I ACCOUNTANTS ’ REPORT
– I-3 –


--- page 321 ---
HISTORICAL FINANCIAL INFORMATION OF THE GROUP
Preparation of Historica l Financial Information
Set out below is the Historical Financial Information which forms an integral part of this
accountants ’ report.
The consolidated financial statements of the Group for the Track Record Period, on which the
Historical Financial Information is based, have b een prepared in accordance wi th the accounting policies
which conform with HKFRS Accounting Standards issued by the HKICPA and were audited by us in
accordance with Hong Kong Standards on Auditing issued by the HKICPA (the ‘‘Underlying Financial
Statements ’’).
The Historical Financial Information is presented in HK dollars ( ‘‘HK$’’) and all values are
rounded to the nearest thousand ( ‘‘HK$’000’’) except when otherwise indicated.
APPENDIX I ACCOUNTANTS ’ REPORT
– I-4 –


--- page 322 ---
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME FOR EACH OF THE THREE YEARS ENDED 31 MARCH 2025 AND THE EIGHT
MONTHS ENDED 30 NOVEMBER 2025
Year ended 31 March
Eight months ended
30 November
Notes 2023 2024 2025 2024 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
Revenue 6 1,094,011 2,020,731 2,460,478 1,510,369 2,035,135
Cost of sales (821,802) (1,427,915) (1,682,861) (1,031,402) (1,406,405)
Gross profit 272,209 592,816 777,617 478,967 628,730
Other income 7 26,345 26,629 30,326 20,317 22,822
Other gains and losses 8 7 (471) (700) (671) (578)
Decrease in fair value of
investment properties (17,690) (16,596) (53,482) (47,162) (11,140)
Selling and distribution expenses (232,462) (321,738) (431,606) (272,806) (380,946)
Administrative expenses (41,110) (47,067) (52,584) (36,165) (41,111)
Finance costs 9 (32,506) (52,716) (51,550) (35,329) (27,881)
Listing expenses ———— (11,132)
(Loss) profit before tax (25,207) 180,857 218,021 107,151 178,764
Income tax expense 10 (1,933) (36,321) (47,589) (27,277) (30,381)
(Loss) profit for the year/period 11 (27,140) 144,536 170,432 79,874 148,383
Other comprehensive income
(expense) for the year/period
Item that will not be reclassified to
profit or loss:
Remeasurement of defined
benefit plan 236 128 (557) (259) (207)
Item that may be reclassified
subsequently to profit or loss:
Exchange differences arising on
translation of foreign operations (15) (92) (13) 7 (127)
Other comprehensive income
(expense) for the year/period 221 36 (570) (252) (334)
Total comprehensive (expense)
income for the year/period (26,919) 144,572 169,862 79,622 148,049
HK$ HK$ HK$ HK$ HK$
(Loss) earnings per share
Basic 13 (0.07) 0.39 0.45 0.21 0.40
APPENDIX I ACCOUNTANTS ’ REPORT
– I-5 –


--- page 323 ---
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT 31 MARCH 2023, 2024 AND 2025 AND 30 NOVEMBER 2025
As at 31 March
As at
30 November
Notes 2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Non-current assets
Property, plant and equipment 15 21,967 35,217 73,084 112,848
Investment properties 16 257,320 242,140 189,470 150,850
Right-of-use assets 17 184,976 216,183 261,366 339,357
Deposits 19 29,167 45,679 52,960 62,504
Amounts due from related parties 20 355,468 392,638 273,696 —
Deferred tax assets 26 42,573 10,079 1,798 7,018
891,471 941,936 852,374 672,577
Current assets
Inventories 18 176,016 225,394 336,038 402,353
Trade and other receivables 19 16,170 31,092 23,996 48,242
Amounts due from related parties 20 52,880 75,131 15,381 163,918
Cash and cash equivalents 21 43,137 61,408 61,182 49,896
288,203 393,025 436,597 664,409
Current liabilities
Trade and other payables 22 101,522 114,482 154,992 185,333
Amounts due to related parties 20 50,223 48,141 12,836 25,199
Tax payable 1,345 3,861 20,699 49,471
Bank borrowings 23 680,428 669,279 651,523 540,506
Lease liabilities 24 102,126 106,378 135,034 168,069
Contract liabilities 25 2,725 781 126 187
Bank overdrafts 21 143,685 123,699 105,049 92,755
1,082,054 1,066,621 1,080,259 1,061,520
Net current liabilities (793,851) (673,596) (643,662) (397,111)
Total assets less current liabilities 97,620 268,340 208,712 275,466
APPENDIX I ACCOUNTANTS ’ REPORT
– I-6 –


--- page 324 ---
As at 31 March
As at
30 November
Notes 2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Non-current liabilities
Lease liabilities 24 92,173 114,881 130,233 179,330
Provisions 27 18,852 21,978 31,038 36,825
Retirement benefit obligations 28 1,647 1,961 3,059 3,880
112,672 138,820 164,330 220,035
Net (liabilities) assets (15,052) 129,520 44,382 55,431
Capital and reserves
Capital 29 137,023 137,023 137,023 — *
Reserves (152,075) (7,503) (92,641) 55,431
Total (deficit)/equity (15,052) 129,520 44,382 55,431
* Less than HK$1,000
APPENDIX I ACCOUNTANTS ’ REPORT
– I-7 –


--- page 325 ---
STATEMENT OF FINANCIAL POSITION OF THE COMPANY
Notes
As at
30 November
2025
HK$’000
Non-current asset
Investments in subsidiaries 37 58,663
Current asset
Other receivables and prepayments 19 3,593
Current liabilities
Other payables and accruals 22 6,469
Amount due to a subsidiary 37 8,256
14,725
Net current liabilities (11,132)
Net assets 47,531
Capital and reserves
Share capital 29 — *
Reserves 37 47,531
47,531
* Less than HK$1,000
APPENDIX I ACCOUNTANTS ’ REPORT
– I-8 –


--- page 326 ---
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR EACH OF THE THREE YEARS ENDED 31 MARCH 2025 AND THE EIGHT MONTHS
ENDED 30 NOVEMBER 2025
Share
capital
Share
premium
Other
reserve
Exchange
reserve
(Accumulated
losses)
retained
earnings Total
HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
At 1 April 2022 23 —— 248 (112,404) (112,133)
Loss for the year ———— (27,140) (27,140)
Remeasurement of defined benefit plan ———— 236 236
Exchange differences arising on translation
of foreign operations ——— (15) — (15)
Total comprehensive expense
for the year ——— (15) (26,904) (26,919)
Issue and allotment of shares (note 29) 137,000 ———— 137,000
Dividends recognized as distributions
(note 14) ———— (13,000) (13,000)
At 31 March 2023 137,023 —— 233 (152,308) (15,052)
Profit for the year ———— 144,536 144,536
Remeasurement of defined benefit plan ———— 128 128
Exchange differences arising on translation
of foreign operations ——— (92) — (92)
Total comprehensive (expense) income
for the year ——— (92) 144,664 144,572
At 31 March 2024 137,023 —— 141 (7,644) 129,520
APPENDIX I ACCOUNTANTS ’ REPORT
– I-9 –


--- page 327 ---
Share
capital
Share
premium
Other
reserve
Exchange
reserve
(Accumulated
losses)
retained
earnings Total
HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
Profit for the year ———— 170,432 170,432
Remeasurement of defined benefit plan ———— (557) (557)
Exchange differences arising on translation
of foreign operations ——— (13) — (13)
Total comprehensive (expense) income
for the year ——— (13) 169,875 169,862
Dividends recognized as distributions
(note 14) ———— (255,000) (255,000)
At 31 March 2025 137,023 —— 128 (92,769) 44,382
Profit for the period ———— 148,383 148,383
Remeasurement of defined benefit plan ———— (207) (207)
Exchange differences arising on translation
of foreign operations ——— (127) — (127)
Total comprehensive (expense) income
for the period ——— (127) 148,176 148,049
Issue and allotment of shares (Note) — * 58,663 (58,663) ——— *
Transfer upon group reorganization
(note 2) (137,023) — 137,023 ———
Deemed distribution (note 2) —— (137,000) —— (137,000)
At 30 November 2025 — * 58,663 (58,640) 1 55,407 55,431
* Less than HK$1,000
APPENDIX I ACCOUNTANTS ’ REPORT
– I-10 –


--- page 328 ---
Share
capital
Share
premium
Other
reserve
Exchange
reserve
(Accumulated
losses)
retained
earnings Total
HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
For the eight months ended
30 November 2024 (unaudited)
At 1 April 2024 137,023 —— 141 (7,644) 129,520
Profit for the period ———— 79,874 79,874
Remeasurement of defined benefit plan ———— (259) (259)
Exchange differences arising on translation
of foreign operations ——— 7 — 7
Total comprehensive income for the period ——— 7 79,615 79,622
At 30 November 2024 137,023 —— 148 71,971 209,142
APPENDIX I ACCOUNTANTS ’ REPORT
– I-11 –


--- page 329 ---
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR EACH OF THE THREE YEARS ENDED 31 MARCH 2025 AND THE EIGHT MONTHS
ENDED 30 NOVEMBER 2025
Year ended 31 March
Eight months ended
30 November
2023 2024 2025 2024 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
OPERATING ACTIVITIES
(Loss) profit before tax (25,207) 180,857 218,021 107,151 178,764
Adjustments for:
Finance costs 32,506 52,716 51,550 35,329 27,881
Interest income (14,415) (14,530) (16,157) (10,335) (12,215)
Depreciation of property, plant and
equipment 12,433 12,597 16,922 10,795 16,345
Depreciation of right-of-use assets 115,664 121,603 157,420 103,015 131,576
Decrease in fair value of investment
properties 17,690 16,596 53,482 47,162 11,140
Net loss on disposal/write-off of
property, plant and equipment 68 149 79 67 91
Operating cash flows before
movements in working capital 138,739 369,988 481,317 293,184 353,582
Increase in inventories (67,780) (49,372) (110,643) (78,349) (66,313)
Decrease (increase) in trade and other
receivables 11,336 (16,983) 7,318 (14,505) (23,178)
Increase in trade and other payables 637,440 937,721 1,110,204 698,853 825,129
Increase in retirement benefit
obligations 1,607 255 1,015 532 748
Cash generated from operations 721,342 1,241,609 1,489,211 899,715 1,089,968
Interests paid on bank overdrafts (5,002) (6,376) (4,326) (3,196) (1,527)
Income tax paid (160) (1,313) (22,470) (174) (6,829)
NET CASH FROM OPERATING
ACTIVITIES 716,180 1,233,920 1,462,415 896,345 1,081,612
INVESTING ACTIVITIES
Purchase of property, plant and
equipment (10,760) (25,999) (54,870) (30,139) (28,716)
Addition of investment property — (1,416) ———
Payments for rental deposits (10,823) (16,838) (22,710) (10,939) (13,224)
Refund of rental deposits 2,572 421 12,568 3,764 822
Advances to related parties (74,221) (122,641) (141,883) (69,447) (22,189)
Repayments from related parties 75,377 76,661 113,282 55,282 21,176
Interests received 1 27 65 37 4
NET CASH USED IN INVESTING
ACTIVITIES (17,854) (89,785) (93,548) (51,442) (42,127)
APPENDIX I ACCOUNTANTS ’ REPORT
– I-12 –


--- page 330 ---
Year ended 31 March
Eight months ended
30 November
2023 2024 2025 2024 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
FINANCING ACTIVITIES
New bank borrowings raised 458,167 389,226 311,594 206,594 162,944
Repayments of bank borrowings (977,684) (1,327,083) (1,400,013) (932,695) (1,066,829)
Interests paid on bank borrowings (20,686) (34,359) (29,073) (20,130) (13,509)
Repayments of lease liabilities (86,891) (119,650) (146,566) (93,280) (118,855)
Interests paid on lease liabilities (6,778) (11,922) (18,068) (11,948) (12,772)
Advances from related parties 23,508 10,047 7,769 4,261 16,111
Repayments to related parties (21,368) (12,129) (76,074) (1,033) (3,748)
Issue costs paid ———— (1,854)
NET CASH USED IN FINANCING
ACTIVITIES (631,732) (1,105,870 ) (1,350,431) (848,231) (1,038,512)
NET INCREASE (DECREASE) IN
CASH AND CASH
EQUIVALENTS 66,594 38,265 18,436 (3,328) 973
CASH AND CASH EQUIVALENTS
AT BEGINNING OF THE YEAR/
PERIOD (167,062) (100,548) (62,291) (62,291) (43,867)
Effect of foreign exchange rate
changes (80) (8) (12) 5 35
TOTAL CASH AND CASH
EQUIVALENTS AT END OF
YEAR/PERIOD (100,548) (62,291) (43,867) (65,614) (42,859)
REPRESENTED BY:
Cash and cash equivalents 43,137 61,408 61,182 31,671 49,896
Bank overdrafts (143,685) (123,699) (105,049) (97,285) (92,755)
(100,548) (62,291) (43,867) (65,614) (42,859)
APPENDIX I ACCOUNTANTS ’ REPORT
– I-13 –


--- page 331 ---
NOTES TO THE HISTORICAL FINANCIAL INFORMATION
FOR EACH OF THE THREE YEARS ENDED 31 MARCH 2025 AND THE EIGHT MONTHS
ENDED 30 NOVEMBER 2025
1. GENERAL INFORMATION
Lung Fung Group Holdings Limited (the ‘‘Company ’’) was incorporated on 3 October 2025 as an exempted company with
limited liability under the laws of the Cayman Islands. The addresses of the Company ’s registered office and principal place of
business are disclosed in the section headed ‘‘Corporate Information ’’in the Prospectus.
The Company ’s ultimate and immediate holding company is TTK Holding Limited ( ‘‘TTK Holding ’’), a company
incorporated under the laws of the British Virgin Islands (the ‘‘BVI’’) with limited liability on 25 September 2025, which is owned
as to 97.29%, 2.70% and 0.01% by Mr. Tse Siu Hoi ( ‘‘Mr. Tse ’’), Ms. Chan Yuen Fong Shirley ( ‘‘Mrs. Tse ’’), the spouse of Mr.
Tse, and Ms. Tse Chui Ying, the daughter of Mr. Tse and Mrs. Tse ( ‘‘Ms. Tse ’’), respectively. Mr. Tse, Mrs. Tse and Ms. Tse
have been acting in concert historically and throughout the Track R ecord Period and collectively exercised their control over the
entities now comprising the Group, and are collectively the ultimate controlling shareholders (the ‘‘Controlling Shareholders ’’)o f
the Company and its subsidiaries (together referred to as the ‘‘Group ’’).
The Company is an investment holding company. Prior to the incorporation of the Company and the completion of the
group reorganization as set out in note 2, the entities now comprisi ng the Group are principally en gaged in the sales of beauty
products, health products, pharmaceutical products and other consumer products. Details of the entities now comprising the Group
are disclosed in note 38.
The Historical Financial Info rmation is presented in HK$, which is the same as the Company ’s functional currency.
2. BASIS OF PREPARATION AND PRESENTATION OF HISTORICAL FINANCIAL INFORMATION
The Historical Financial Information has been prepared based on the accounting policies which conform with HKFRS
Accounting Standards and the principle of merger accounting under Accounting Guideline 5 ‘‘Merger Accounting for Common
Control Combinations ’’issued by the HKICPA.
In preparation for the proposed listing of the Company ’s shares on the Main Board of The Stock Exchange of Hong Kong
Limited (the ‘‘Listing ’’), the entities now comprising the Group underwent a group reorganization (referred to as the
‘‘Reorganization ’’) as follows:
(a) Incorporation of the Company
The Company was incorporated on 3 October 2025 as an exempted company with limited liability under the laws of
the Cayman Islands, with an authorized share capital of HK$390 ,000 divided into 3,900,000,000 ordinary shares with a par
value of HK$0.0001 each. Upon the Company ’s incorporation, one fully-paid subscriber ’s share was immediately transferred
to TTK Holding.
(b) Incorporation of LF Retail Holding Limited, TH Wholesale Holding Limited, PL Beautie Limited and LF
Consultancy Limited
On 9 October 2025, each of LF Retail Holding Limited, TH Wholesale Holding Limited, PL Beautie Limited and LF
Consultancy Limited was incorporated in the BVI with an au thorized share capital of US$10,000 divided into 10,000
ordinary shares of a single class with par value of US$1.00 each. Upon the incorporation of these companies, one share
(being 100% of the issued share capital of each of LF Retail Holding Limited, TH Wholesale Holding Limited, PL Beautie
Limited and LF Consultancy Limited) was issued and allotted t o the Company. Upon completion of such issuance, each of
LF Retail Holding Limited, TH Wholesale Holding Limite d, PL Beautie Limited and LF Consultancy Limited became a
direct wholly-owned subsidiary of the Company.
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(c) Acquisition of the Retail Companies (as defined in note 38), San Fung Health Limited and Fancy Mind
Corporation Limited
Prior to the Reorganization, each of the Retail Companies, San Fung Health Limited and Fancy Mind Corporation
Limited was, either directly or indirec tly, wholly-owned by Mr. Tse or Ms. Tse.
On 20 October 2025, the Company, via LF Retail Holding Limited as the purchaser ’s nominee, acquired all shares of
the Retail Companies, San Fung Health Limited and Fancy M ind Corporation Limited from their respective legal and
beneficial owner(s).
The consideration for the transfer of share(s) in five of t he Retail Companies was settled by the allotment and issue
of an aggregate of 73 shares in the Company, all credited as fully paid, free from all encumbrances and together with the
benefit of all rights and profits attaching thereto, to TTK Ho lding. The determination of the relevant consideration was
based on the net asset value of each of these Retail Companies as at the reference date. For the transfer of share(s) in each
of the rest of the Retail Companies, San Fung Health Limite d and Fancy Mind Corporation Limited, the consideration is
HK$1 and was settled in cash.
In consideration of the nomination by the Company of LF Retail Holding Limited to take up the relevant shares in
those five Retail Companies, LF Retail Holding Limited allotted and issued five shares to the Company.
Upon completion of the above, all Retail Companies, San Fung Health Limited and Fancy Mind Corporation Limited
became indirectly wholly-owned subsidiaries of the Company.
(d) Allotment of shares and capital reduction in Lung Fung Pharmaceutical (Group) Limited ( ‘‘LFP’’)
Prior to the Reorganization, LFP was directly wholly-owned by Mr. Tse.
On 16 October 2025, LF Retail Holding Limited subscribed for 100,000 shares in LFP. Upon completion of the
shares subscription in LFP, LFP was owned as to 99% by LF Re tail Holding Limited and 1% by Mr. Tse. In consideration
of HK$10 for the 100,000 new shares in LFP issued to LF Retail Holding Limited, LF Retail Holding Limited allotted and
issued one share, credited as fully paid, to the Company.
On 22 October 2025, LFP passed a shareholder ’s resolution in relation to a reduction of its registered capital by
repaying HK$137,000,000 paid-up share capital comprising 1 ,000 ordinary shares to Mr. Tse, through the offsetting of
HK$137,000,000 due from an entity indirectly wholly-owned by Mr. Tse.
In consideration of Mr. Tse agreeing to have his shares in LFP cancelled, Mr. Tse directed TTK Holding to receive
935,079 new shares as his nominee, all credited as fully paid, issued by the Company.
The share reduction was completed on 28 November 2025 and LFP became an indirectly wholly-owned subsidiary of
the Company. Such share reduction was debited to other reserve as a deemed distribution to Mr. Tse in the consolidated
statements of changes in equity for the eight months ende d 30 November 2025, and was settled through the amount due
from a related party.
(e) Acquisition of the Wholesale Companies (as defined in note 38)
Prior to the Reorganization, each of the Wholesale Companies was, directly or indirectly, wholly owned by Mr. Tse
and/or Mrs. Tse.
On 20 October 2025, the Company, via TH Wholesale Holding Limited as the purchaser ’s nominee, acquired all
shares in the Wholesale Companies from their respective legal and beneficial owner(s).
The consideration for the transfer of shares in two of the Wholesale Companies was settled by the allotment and
issue of an aggregate of 34,043 shares in the Company, all credited as fully paid, free from all encumbrances and together
with the benefit of all rights and profits attaching thereto, to T TK Holding. The determination of the relevant consideration
was based on the net asset value of each of these Wholesale Companies as at the reference date. For the transfer of shares
in each of the rest of the Wholesale Companies, the consideration is HK$1 a nd was settled in cash.
APPENDIX I ACCOUNTANTS ’ REPORT
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In consideration of the nomination by the Company of TH Wholesale Holding Limited to take up the relevant shares
in those two Wholesale Companies, TH Wholesale Holding Limited allotted and issued two shares to the Company.
Upon completion of the above, all Wholesale Companies became indirectly wholly-owned subsidiaries of the
Company.
(f) Acquisition of Pearl Lake Global Limited, Lung Fung Investment (China) Limited and Lung Fung Investment
(Japan) Limited
Prior to the Reorganization, each of Pearl Lake Global L imited, Lung Fung Investment (China) Limited and Lung
Fung Investment (Japan) Limited was, directly or indirectly, wholly owned by Lung Fung Group Co., Ltd ( ‘‘LFG’’), a
company incorporated in Hong Kong and is wholly owned by Mr. Tse.
On 20 October 2025, the Company, via PL Beautie Limited as its nominee, acquired all shares in each of Pearl Lake
Global Limited, Lung Fung Investment (China) Limited and Lung Fung Investment (Japan) Limited from LFG.
The consideration for the transfer of share in Pearl Lake G lobal Limited was settled by the allotment and issue of an
aggregate of 30,592 shares in the Company, all credited as fully paid, free from all encumbrances and together with the
benefit of all rights and profits attaching thereto, to TTK Ho lding. The determination of the consideration was based on the
net asset value of Pearl Lake Global Limited as at the reference date. For the transfer of share in each of Lung Fung
Investment (China) Limited and Lung Fung Investment (Japan ) Limited, the consideration is HK$1 and was settled in cash.
In consideration of the nomination by the Company of PL B eautie Limited to take up the shares in Pearl Lake Global
Limited, PL Beautie Limited allotted a nd issued one share to the Company.
Upon completion of the above, each of Pearl Lake Global Limited, Lung Fung Investment (China) Limited and Lung
Fung Investment (Japan) Limited became an indirectly wholly-owned subsidiary of the Company.
(g) Acquisition of Dragon Mind Creation Limited
Prior to the Reorganization, Dragon Mind Creation Limited was directly wholly owned by Mr. Tse.
On 20 October 2025, the Company, via LF Consultancy Limited as its nominee, acquired all shares of Dragon Mind
Creation Limited from Mr. Tse, who was the sole legal and beneficial owner of Dragon Mind Creation Limited.
The consideration for the transfer of share in Dragon Mi nd Creation Limited was settled by the allotment and issue
of 212 shares in the Company, all credited as fully paid, free f rom all encumbrances and together with the benefit of all
rights and profits attaching thereto, to TTK Holding. The d etermination of the consideration was based on the net asset
value of Dragon Mind Creation Limited as at the reference date.
In consideration of the nomination by the Company of LF Consultancy Limited to take up the shares in Dragon Mind
Creation Limited, LF Consulta ncy Limited allotted and issued one share to the Company.
Upon completion of the above, Dragon Mind Creation Limited became an indirectly wholly-owned subsidiary of the
Company.
Pursuant to the Reorganization, the Com pany became the holding company of the entities now comprising the Group on 20
October 2025.
The consolidated statements of profit or loss and other comprehensive income, the consolidated statements of changes in
equity and the consolidated statements of cash flows which in clude the results, changes in equity and cash flows of the entities
now comprising the Group for the Track Record Period, have been prepared as if the Company had always been the holding
company of the Group and the current group structure had been in existence throughout the Track Record Period, or since their
respective dates of incorporation, where this is a shorter period.
The consolidated statements of financial position of the Group as at 31 March 2023, 2024 and 2025 have been prepared to
present the assets and liabilities of the entities now comprising th e Group as if the current group structure had been in existence at
those dates, taking into account the respective date of incorporation, where applicable.
APPENDIX I ACCOUNTANTS ’ REPORT
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No statutory financial statements of the Company have been pr epared since its date of incorporation as it is incorporated in
the jurisdiction where there are no statutory audit requirements.
Going concern assessment
The Historical Financial Information has been prepared on the going concern basis.
As at 30 November 2025, the Group has net current liab ilities of HK$397,111,000. The directors of the Company
have prepared a cash flow forecast covering a period of not less than twelve months from the date of this report. Based on
this forecast, which takes into account expected operating cash inflows and available banking facilities, the directors of the
Company are of the opinion that the Group will have sufficient working capital to meet its financial obligations as and
when they fall due and to sustain its operations for the next twelve months from the date of this report. Accordingly, the
directors of the Company consider it appr opriate to prepare the Historical Financ ial Information on a going concern basis.
3. APPLICATION OF NEW AND AMENDMENTS TO HKFRS ACCOUNTING STANDARDS
For the purpose of preparing and presenting the Historical Fi nancial Information for the Track Record Period, the Group
has consistently applied the accounting policies which confor m with HKFRS Accounting Standards, which are effective for the
accounting period beginning on 1 April 2025 throughout the Track Record Period.
New and amendments to HKFRS Accounting Standards in issue but not yet effective
At the date of this report, the following new and amendments to HKFRS Accounting Standards have been issued but
are not yet effective:
HKFRS 18 Presentation and Disclo sure in Financial Statements
3
Amendments to HKAS 21 Translation to a Hype rinflationary Pres entation Currency 3
Amendments to HKFRS 9 and HKFRS 7 Amendments to th e Classification and Measurement of Financial
Instruments 2
Amendments to HKFRS 9 and HKFRS 7 Contracts Referencing Nature-dependent Electricity 2
Amendments to HKFRS 10 and
HKAS 28
Sale or Contribution of Assets between an Investor and its Associate or
Joint Venture 1
Amendments to HKFRS Accounting
Standards
Annual Improvements to HKFRS Accounting Standards — Volume 11 2
1 Effective for annual periods beginning on or after a date to be determined.
2 Effective for annual periods beginning on or after 1 January 2026.
3 Effective for annual periods beginning on or after 1 January 2027.
Except for the new HKFRS Accounting Standard mentioned below, the directors of the Company anticipate that the
application of all amendments to HKFRS Accounting S tandards will have no material impact on the Group ’s future
consolidated financial statements.
HKFRS 18 ‘‘Presentation and Disclosure in Financial Statements ’’(‘‘HKFRS 18 ’’)
HKFRS 18, which sets out requirements on presentation and disclosures in financial statements, will replace HKAS 1
‘‘Presentation of Financial Statements ’’(‘‘HKAS 1 ’’). This new HKFRS Accounting Standard, while carrying forward many
of the requirements in HKAS 1, introduces new requirements t o present specified categories and defined subtotals in the
statement of profit or loss; provide disclosures on management-defined performance measures in the notes to the financial
statements and improve aggregation and disaggregation of i nformation to be disclosed in the financial statements. In
addition, some HKAS 1 paragraphs have been moved to HKAS 8 ‘‘Accounting Policies, Changes in Accounting Estimates
and Errors ’’and HKFRS 7 ‘‘Financial Instruments: Disclosures ’’. Minor amendments to HKAS 7 ‘‘Statement of Cash
Flows ’’and HKAS 33 ‘‘Earnings per Share ’’are also made.
HKFRS 18, and amendments to other standards, will be effective for annual periods beginning on or after 1 January
2027, with early application permitted. The application of the new standard is expected to affect the presentation of the
statement of profit or loss and disclosures in the future financial statements. The directors of the Company anticipate that
the application of HKFRS 18 will have no material impact on the Group ’s financial position and performance in the future.
APPENDIX I ACCOUNTANTS ’ REPORT
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4. MATERIAL ACCOUNTING POLICY INFORMATION
Basis of consolidation
The Historical Financial Information incorporates the fi nancial statements of the Company and entities 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 that there are changes
to one or more of the three elements of control listed above.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group
loses control of the subsidiary. Specifically, income and ex penses of a subsidiary acquired or disposed of during the year
are included in the consolidated statement of profit or loss and other comprehensive income from the date the Group gains
control until the date when the Group ceases to control the subsidiary.
All intragroup assets and liabilities, equity, income, ex penses and cash flows relating to transactions between
members of the Group are eliminated in full on consolidation.
Merger accounting for combination involving entities under common control
The Historical Financial Information incorporates the fin ancial statements items of the combining entities in which
the common control combination occurs as if they had been comb ined from the date when the combining entities first came
under the control of the controlling party.
The net assets of the combining entities are combined using the existing book values from the controlling party ’s
perspective. No amount is recognized in respect of goodwill or bargain purchase gain at the time of common control
combination.
Expenditure incurred in relation to a common control combination that is to be accounted for by using merger
accounting is recognized as an expense in the period in which it is incurred.
The consolidated statements of profit or loss and other comprehensive income include the results of each of the
combining entities from the earliest date presented or since the date when the combining entities first came under the
common control, where this is a shorter period.
Investments in subsidiaries
Investments in subsidiaries are stated at c ost less any identifie d impairment losses.
Revenue from contracts with customers
Information about the Group ’s accounting policies relating to revenue from contracts with customers is provided in
note 6.
Leases
The Group assesses whether a contract is or contains a l ease based on the definition under HKFRS 16 at inception of
the contract. Such contract will not be reassessed unless the terms and conditions of the contract are subsequently changed.
APPENDIX I ACCOUNTANTS ’ REPORT
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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 leases or non-lease components, the Group
allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the non-
lease components.
Non-lease components are separated from lease component and are accounted for by applying other applicable
standards.
Right-of-use assets
The cost of right-of-use assets includes:
. the amounts of the initial measurement of the lease liabilities;
. any lease payments made at or before the commencement date, less any lease incentives received;
. any initial direct costs incurred by the Group; and
. an estimate of costs to be incurred by the Group in disman tling and removing the underlying assets, restoring
the site on which it is located or restoring the underlying asset to the condition required by the terms and
conditions of the lease.
Except for those that are classified as investment propertie s and measured under fair value model, right-of-use assets
are measured at cost, less any accumulated depreciation and im pairment losses, and adjusted for any remeasurement of lease
liabilities.
Right-of-use assets are depreciated on a straight-line bas is over the shorter of its estimated useful life and the lease
term.
The Group presents right-of-use assets that do not meet th e definition of investment prop erty as a separate line item
on the consolidated statements of financial position. Right-o f-use assets that meet the definition of investment property is
presented within ‘‘investment properties ’’.
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 l ease payments and included in the cost of right-of-use assets.
Lease liabilities
At the commencement date of a lease, the Group recognizes and measures the lease liability at the present value of
lease payments that are unpaid at that date. In calculating the present value of lease payments, the Group uses the
incremental borrowing rate at the lease commencement dat e if the interest rate 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 do not depend on an index or a rate are not included in the measurement of lease
liabilities and right-of-use assets, and are recognized as expense in the period in which the event or condition that triggers
the payment occurs.
After the commencement date, leas e liabilities are adjusted by intere st accretion and lease payments.
APPENDIX I ACCOUNTANTS ’ REPORT
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The Group remeasures lease liabilities (and makes a corre sponding adjustment to the related right-of-use assets)
whenever:
. the lease term has changed, in which case the related lease liability is remeasured by discounting the revised
lease payments using a revised discount rate at the date of reassessment;
. the lease payments change due to changes in market rental rates following a market rent review, in which case
the related lease liability is remeasured by discounting the revised lease payments using the initial discount
rate; and
. a lease contract is modified and the lease modification is not accounted for as a separate lease.
The Group presents lease liabilities as a separate line ite m on the consolidated statements of financial position.
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 more underlying assets; and
. the consideration for the leases increases by an amount commensurate with the stand-alone price for the
increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the
particular contract.
For a lease modification that is not accounted for as a sepa rate lease, the Group remeasures the lease liability, less
any lease incentives receivable, based on the lease term of th e modified lease by discounting the revised lease payments
using a revised discount rate at the effective date of the modification.
The Group accounts for the remeasurement of lease liabiliti es by making corresponding adjustments to the relevant
right-of-use asset.
When the modified contract contains a lease component and one or more additional lease or non-lease components,
the Group allocates the consideration in the modified contract to each lease component on the basis of the relative stand-
alone price of the lease component and the aggregate stand-alone price of the non-lease components.
The Group as a lessor
Classification and measurement of leases
Leases for which the Group is a lessor are classified as finance or operating leases. Whenever the terms of the lease
transfer substantially all the risks and rewards incidental t o ownership of an underlying asset to the lessee, the contract is
classified as a finance lease. All other leases are classified as operating leases.
Rental income from operating leases is recognized in profit or loss on a straight-line basis over the term of the
relevant lease.
Allocation of consideration to components of a contract
When a contract includes both lease and non-lease components, the Group applies HKFRS 15 ‘‘Revenue from
Contracts with Customers ’’ to allocate consideration in a contract to lease and non-lease components. Non-lease
components are separated from leases components on th e basis of their relative stand-alone selling prices.
Refundable rental deposits
Refundable rental deposits received are accounted under HKFRS 9 ‘‘Financial Instruments ’’and initially measured at
fair value. Adjustments to fair value at initial recognition a re considered as additional lease payments from lessees.
APPENDIX I ACCOUNTANTS ’ REPORT
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Government grants
Government grants are not recognized until there is reasonable assurance that the Group will comply with the
conditions attaching to them and that the grants will be received.
Government grants are recognized in profit or loss on a systematic basis over the periods in which the Group
recognizes as expenses the related costs for which the grants are intended to compensate. Specifically, government grants
whose primary condition is that the Group s hould purchase, construct or otherwise acquire non-current assets are recognized
as a deduction from the carrying amount of the relevant asset in the consolidated statements of financial position and
transferred to profit or loss on a systematic and rational basis over the useful lives of the relevant assets.
Government grants related to income that are receivable as compensation for expenses or losses already incurred or
for giving immediate financial support to the Group with no future related costs are recognized in profit or loss in the
period they become receivable. Such grants are presented under ‘‘other income ’’.
Employee benefits
Retirement benefit costs
Payments to defined contribution retirement benefit plan (representing the Mandatory Provident Fund ( ‘‘MPF’’)
Scheme) are recognized as an expense when employees have rendered service entitling them to the contributions.
For defined benefit retirement benefit plan (representing the Long Service Payment ( ‘‘LSP’’) under the Hong Kong
Employment Ordinance), the cost of providing benefits is determ ined using the projected unit credit method, with actuarial
valuations being carried out at the end of each reporting period. In determining the present value of the Group ’s defined
benefit obligations and related current service cost and, wher e applicable, past service cost, the Group attributes benefit to
periods of service under the plan ’s benefit formula.
Remeasurement, comprising actuarial gains and losses, is reflected immediately in the consolidated statements of
financial position with a charge or credit recognized in other comprehensive income in the period in which they occur.
Remeasurement recognized in other comprehensive income i s reflected immediately in retained profits and will not be
reclassified to profit or loss.
Interest is calculated by applying the discount rate at the beginning of the period to the defined benefit liability.
Defined benefit costs are categorized as follows:
. service cost (including current service cost and past service cost);
. interest expense on the defined benefit liability; and
. remeasurement on the defined benefit liability in other comprehensive income.
The retirement benefit obligation recognized in the consolid ated statements of financial position represents the actual
deficit in the Group ’s defined benefit plans.
For LSP obligation, the Group accounts for the employer MPF contributions expected to be offset as a deemed
employee contribution towards the LSP obligation in terms of paragraph 93(a) of HKAS 19 ‘‘Employee Benefits ’’and it is
measured on a net basis. The estimated amount of LSP obligation is determined after deducting the negative service cost
arising from the accrued benefits (being projected and attributed to periods of service) derived from the Group ’sM P F
contributions that have been vested with employees and would be used to offset the employee ’s LSP benefits, which are
deemed to be contributions from the relevant employees.
APPENDIX I ACCOUNTANTS ’ REPORT
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Short-term employee benefits
Short-term employee benefits are recognized at the undiscounted amount of the benefits expected to be paid as and
when employees rendered the services. All short-term employee benefits are recognized as an expense unless another
HKFRS Accounting Standards requires or permits the i nclusion of the benefit in the cost of an asset.
A liability is recognized for benefits accruing to employees after deducting any amount already paid.
Taxation
Income tax expense represents the sum of current and deferred income tax expense.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit or loss before tax
because of income or expense that are taxable or deductible in other years and items that are never taxable or deductible.
The Group ’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end
of the reporting period.
Deferred tax is recognized on temporary differences betw een the carrying amounts of assets and liabilities in the
Historical Financial Information and the corresponding tax b ases used in the computation of taxable profits. Deferred tax
liabilities are generally recognized for all taxable temporary diffe rences. Deferred tax assets are generally recognized for all
deductible temporary differences to the extent that it is proba ble that taxable profits will be available against which those
deductible temporary differences can be utilized. Such defer red tax assets and liabilities are not recognized if the temporary
difference arises from the initial recognition (other than in a bu siness combination) of assets and liabilities in a transaction
that affects neither the taxable profit nor the accounting profi t and at the time of the transaction does not give rise to equal
taxable and deductible temporary differences.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent
that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are me asured at the tax rates that are expected to apply in the period in which the
liability is settled or the asset is realized, based on tax rates (a nd tax laws) that have been enac ted or substantively enacted
by the end of the reporting period.
The measurement of deferred tax liabilities and assets re flects the tax consequences that would follow from the
manner in which the Group expects, at the end of the reporting p eriod, to recover or settle the carrying amount of its assets
and liabilities.
For the purposes of measuring deferred tax for investment p roperties that are measured using the fair value model,
the carrying amounts of such properties are presumed to be re covered entirely through sale, unless the presumption is
rebutted. The presumption is rebutted when the investment property is depreciable and is held within a business model
whose objective is to consume substantially all of the econom ic benefits embodied in the investment property over time,
rather than through sale.
Deferred tax assets and liabilities are o ffset when there is a legally enforceabl e right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied to the same taxable entity by the same taxation
authority.
Current and deferred tax are recognized in profit or loss.
APPENDIX I ACCOUNTANTS ’ REPORT
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Property, plant and equipment
Property, plant and equipment are tangible assets that are held for use in the supply of goods or services, or for
administrative purposes. Property, plant and equipment are stat ed in the consolidated statements of financial position at cost
less subsequent accumulated depreciation and subsequent accumulated impairment losses, if any.
When the Group makes payments for ownership interes ts of properties which includes both leasehold land and
building elements, the entire consideration is allocated betwee n the leasehold land and the building elements in proportion
to the relative fair values at initial recognition. To the exten t the allocation of the relevant payments can be made reliably,
interest in leasehold land is presented as ‘‘right-of-use assets ’’in the consolidated statements of financial position. When
the consideration cannot be allocated reliably between non-leas e building element and undivided interest in the underlying
leasehold land, the entire properties are cl assified as property, plant and equipment.
Depreciation is recognized so as to write off the cost of asse ts less their residual values over their estimated useful
lives, using the straight-line method. The estimated useful liv es, residual values and depreciation method are reviewed at
the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any ga in or loss arising on the disposal or retirement of an item of
property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the
asset and is recognized in profit or loss.
Investment properties
Investment properties are properties held to earn rentals and/or for capital appreciation.
Investment properties also include leased properties which are being recognized as right-of-use assets and subleased
by the Group under operating leases.
Investment properties are initially measured at cost, inclu ding any directly attributable expenditure. Subsequent to
initial recognition, investment properties a re measured at fair value, adjusted to exclude any prepaid or accrued operating
lease income.
Gains or losses arising from changes in the fair value of i nvestment properties are included in profit or loss for the
period in which they arise.
An investment property is derecognized upon disposal or wh en the investment property is permanently withdrawn
from use and no future economic benefits are expected from its disposal. Any gain or loss arising on derecognition of the
property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in
profit or loss in the period in which the property is derecognized.
If a property becomes an owner-occupied property because its use has been changed as evidenced by commencement
of owner-occupation, the carrying amount of the property at the date of change in use is considered as the deemed cost for
subsequent accounting.
Impairment on property, plant and equipment and right-of-use assets
At the end of the reporting period, the Group reviews the carrying amounts of its property, plant and equipment and
right-of-use assets to determine whether there is any indica tion that these assets have suff ered an impairment loss. If any
such indication exists, the recoverable amount of the releva nt asset is estimated 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 estimated individually. When it
is not possible to estimate the recoverable amount individua lly, the Group estimates the recoverable amount of the cash-
generating unit to which the asset belongs.
APPENDIX I ACCOUNTANTS ’ REPORT
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In testing a cash-generating unit for impairment, corporate a ssets are allocated to the relevant cash-generating unit
when a reasonable and consistent basis of allocation can be es tablished, or otherwise the y are allocated to the smallest
group of cash generating units for which a reasonable and consis tent allocation basis can be established. The recoverable
amount is determined for the cash-generating unit or group of ca sh-generating units to which the corporate asset belongs,
and is compared with the carrying amount 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 assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specif ic to the asset (or a cash-generating unit) for 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 its carrying amount, the
carrying amount of the asset (or a cash-generating unit) is red uced to its recoverable amount. For corporate assets or portion
of corporate assets which cannot be allocated on a reasonable a nd consistent basis to a cash-generating unit, the Group
compares the carrying amount of a group of cash-generating units , including the carrying amounts of the corporate assets or
portion of corporate assets allocated to that group of cash-gen erating units, with the recoverable amount of the group of
cash-generating units. In allocating the im pairment loss, the impairment loss is allocated first to reduce the carrying amount
of any goodwill (if applicable) and then to the other assets on a pro-rata basis based on the carrying amount of each asset in
the unit or the group of cash-generating units. The carrying am ount of an asset is not reduced below the highest of its fair
value less costs of disposal (if measurable), its value in use (i f determinable) and zero. The amount of the impairment loss
that would otherwise have been allocated to the asset is allo cated pro rata to the other assets of the unit or the group of
cash-generating units. An impairment loss is recognized immediately in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit or a group
of cash-generating units) is increased to the revised estimat e of its recoverable amount, but so that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for
the asset (or a cash-generating unit or a group of cash-generati ng units) in prior years. A reversal of an impairment loss is
recognized immediately in profit or loss.
Cash and cash equivalents
Cash and cash equivalents presented on the consolidated statements of financial position include:
. cash, which comprises of cash on hand and demand deposits, excluding bank balances that are subject to
regulatory restrictions that result in such balances no longer meeting the definition of cash; and
. cash equivalents, which comprises of short-term (gen erally with original maturity of three months or less),
highly liquid investments that are readily convertible to a known amount of cash and which are subject to an
insignificant risk of changes in value. Cash equivale nts are held for the purpose of meeting short-term cash
commitments rather than for investment or other purposes.
For the purposes of the consolidated statements of cash flows, cash and cash equivalents consist of cash and cash
equivalents as defined above, net of outstanding bank overdrafts which are repayable on demand and form an integral part
of the Group ’s cash management.
Inventories
Inventories are stated at the lower of cost and net realisab le value. Costs of inventories are determined on a weighted
average method. Net realisable value represents the estima ted selling price for inventories less all estimated costs of
completion and costs necessary to make the sale. Costs neces sary to make the sale include incremental costs directly
attributable to the sale and non-incremental costs which the Group must incur to make the sale.
Provisions
Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event,
it is probable that the Group will be required to settle that ob ligation, and a reliable estimate can be made of the amount of
the obligation.
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The amount recognized as a provision is the best estimate of the consideration required to settle the present
obligation at the end of the reporting period, taking into acco unt the risks and uncertainties surrounding the obligation.
When a provision is measured using the cash flows estimat ed to settle the present obligation, its carrying amount is the
present value of those cash flows (when the e ffect of the time value of money is material).
Provisions for the costs to restore leased assets to their original condition, as required by the terms and conditions of
the lease, are recognized at the date of inception of the lease at the directors ’ best estimate of the expenditure that would be
required to restore the assets. Estimates are regularly reviewed and adjusted as appropriate for new circumstances.
Financial instruments
Financial assets and financial liabilities are recogni zed when a group entity becomes a party to the contractual
provisions of the instrument.
Financial assets and financial liabilitie s are initially measured at fair value except for trade receivables arising from
contracts with customers which are initially measured in accordance with HKFRS 15 ‘‘Revenue from Contracts with
Customers ’’(‘‘HKFRS 15 ’’). Transaction costs that are directly attributab le to the acquisition or issue of financial assets
and financial liabilities are added to or deducted from the fair value of the financial assets or financial liabilities, as
appropriate, on initial recognition.
The effective interest method is a method of calculating the amortized cost of a financial asset or financial liability
and of allocating interest income and interest expense over the relevant period. The effective 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 cos ts and other premiums or discounts) through the expected life of
the financial asset or financial liability, or, where appropr iate, a shorter period, to the net carrying amount on initial
recognition.
Financial assets
All regular way purchases or sales of financial assets ar e recognized and derecognized on a trade date basis. Regular
way purchases or sales are purchases or sales of financial assets that require delivery o f assets within the time frame
established by regulation or convention in the market place.
All recognized financial assets are measured subsequen tly in their entirety at either amortized cost or fair value,
depending on the classification of the financial assets.
Classification and subsequent measurement of financial assets
Financial assets that meet the following conditions are subsequently measured at amortized cost:
. the financial asset is held within a business model whos e objective is to hold financial assets in order to
collect contractual cash flows; and
. the contractual terms give rise on specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
Amortized cost and interest income
Interest income is recognized using the effective interes t method for financial assets measured subsequently at
amortized cost. Interest income is calculated by applying th e effective interest rate to the gross carrying amount of a
financial asset, except for financial assets that have subseq uently become credit-impaired. For financial assets that have
subsequently become credit-impaired, interest income is rec ognized by applying the effective interest rate to the amortized
cost of the financial asset from the next reporting period. If the credit risk on the credit-im paired financial instrument
improves so that the financial asset is no longer credit-impaired, interest income is recognized by applying the effective
interest rate to the gross carrying amount of the financial as set from the beginning of the reporting period following the
determination that the asset is no longer credit-impaired.
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Impairment of financial assets and other item subject to impairment assessment under HKFRS 9
The Group performs impairment assessment under expected credit losses ( ‘‘ECL’’) model on financial assets
(including trade receivables, other receivables and depos its, amounts due from related parties and bank balances) and
financial guarantee contracts which are subject to impair ment assessment under HKFRS 9. The amount of ECL is updated
at each reporting date to reflect changes in credit risk since initial recognition.
Lifetime ECL represents the ECL that will result from al l possible default events over the expected life of the
relevant instrument. In contrast, 12-month ECL ( ‘‘12m ECL ’’) represents the portion of lifetime ECL that is expected to
result from default events that are possible within 12 months after the reporting date. Assessments are done based on the
Group ’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions
and an assessment of past events and current conditions at the reporting date as well as the forecast of future economic
conditions.
The Group always recognizes lifetime ECL for trade receivables.
For all other instruments, the Group measures the l oss allowance equal to 12m ECL, unless there has been a
significant increase in credit risk since initial recognition, in which case the Group recognizes lifetime ECL. The assessment
of whether lifetime ECL should be recognized is based on si gnificant increases in the likelihood or risk of a default
occurring since initial recognition.
(i) Significant increase in credit risk
In assessing whether the credi t risk has increased significa ntly since initial recognition, the Group compares the risk
of a default occurring on the financial instrument as at the reporting date with the risk of a default occurring on the
financial instrument as at the date of initial recognition. In ma king this assessment, the Group considers both quantitative
and qualitative information that is reasonable and supportabl e, including historical experience and forward-looking
information that is available without undue cost or effort. For ward-looking information considered includes the future
prospects of the industries in which the Group ’s debtors operate, as well as consideration of various external sources of
actual and forecast economic information that relate to the Group ’s core operations.
In particular, the following information is taken into account when assessing whether credit risk has increased
significantly:
. an actual or expected significant deter ioration in the financial instrument ’s external (if available) or internal
credit rating;
. significant deterioration in external market indicators of c redit risk, e.g. a significant increase in the credit
spread, the credit default swap prices for the debtor;
. existing or forecast adverse changes in business, financ ial or economic conditions that are expected 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; or
. an actual or expected significant adverse change in the regulatory, economic, or technological environment of
the debtor that results in a significant decrease in the debtor ’s ability to meet its debt obligations.
Irrespective of the outcome of the above assessment, the Group presumes that the credit risk has increased
significantly since initial recognition when contractual payments are more than 30 days past due, unless the Group has
reasonable and supportable informa tion that demonstrates otherwise.
For financial guarantee contracts, the date that the Group becomes a party to the irrevocable commitment is
considered to be the date of initial recognition for the purpose s of assessing impairment. In assessing whether there has
been a significant increase in the credit risk since initial rec ognition of financial guarantee contracts, the Group considers
the changes in the risk that the specified debtor will default on the contract.
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The Group regularly monitors the effectiveness of the crite ria used to identify whether there has been a significant
increase in credit risk and revises them as appropriate to ensu re that the criteria are capable of identifying significant
increase in credit risk before the amount becomes past due.
(ii) Definition of default
For internal credit risk management, the Group consider s an event of default occurs when information developed
internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Group, in
full (without taking into account any collaterals held by the Group).
Irrespective of the above, the Group considers that default has occurred when a financial asset is more than 90 days
past due unless the Group has reasonable and supportable infor mation to demonstrate that 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 the estimated future
cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data
about the following events:
. significant financial difficulty of the issuer or the borrower;
. a breach of contract, such as a default or past due event;
. the lender(s) of the borrower, for economic or contractual reasons relating to the borrower ’s financial
difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider; or
. it is becoming probable that the borrower will enter bankruptcy or other financial reorganization.
(iv) Write-off policy
The Group writes off a financial asset when there is info rmation indicating that the counterparty is in severe
financial difficulty and there is no realistic prospect of rec overy, for example, when the counterparty has been placed under
liquidation or has entered into bankruptcy proceedings. Finan cial assets written off may still be subject to enforcement
activities under the Group ’s recovery procedures, taking into account legal a dvice where appropriate. A write-off constitutes
a derecognition event. Any subsequent recoveries are recognized in profit or loss.
(v) Measurement and recognition of ECL
The measurement of ECL is a function of the probability of defa ult, loss given default (i.e. the magnitude of the loss
if there is a default) and the exposure at default. The assessmen t of the probability of default and loss given default is based
on historical data and forward-looking information. Estim ation of ECL reflects an unbiased and probability-weighted
amount that is determined with the respective risks of default occurring as the weights.
Generally, the ECL is the difference between all contractual cash flows that are due to the Group in accordance with
the contract and the cash flows that the Group expects to receive, discounted at the effective interest rate determined at
initial recognition.
For a financial guarantee contract, the Group is required to make payments only in the event of a default by the
debtor in accordance with the terms of the instrument that is guaranteed. Accordingly, the ECL is the present value of the
expected payments to reimburse the holder for a credit loss that it incurs less any amounts that the Group expects to receive
from the holder, the debtor or any other party.
Lifetime ECL for certain trade receivables are considered on a collective basis taking into consideration past due
information and relevant credit information such as forward looking macroeconomic information.
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For collective assessment, the Group takes into conside ration the following characteristics when formulating the
grouping:
. Past-due status;
. Nature, size and industry of debtors; and
. External credit ratin gs where available.
The grouping is regularly reviewed by management to ensure the constituents of each group continue to share similar
credit risk characteristics.
Interest income is calculated based on the gross carrying amount of the financial asset unless the financial asset is
credit-impaired, in which case interest income is calcu lated based on amortized cost of the financial asset.
The Group recognizes an impairment gain or loss in profit or loss for all financial instruments by adjusting their
carrying amount through a loss allowance account.
Derecognition of financial assets
The Group derecognizes a financial asset only when the cont ractual rights to the cash flows from the asset expire.
On derecognition of a financial ass et measured at amortized cost, the difference between the asset ’s carrying amount
and the sum of the consideration received and receivable is recognized in profit or loss.
Financial liabilities and equity
Classification as debt or equity
Debt and equity instruments are classified as either fina ncial liabilities or as equity in accordance with the substance
of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a resi dual interest in the assets of an entity after deducting all of
its liabilities. Equity instruments issued by the Group are reco gnized at the proceeds received, net of direct issue costs.
Financial liabilities
All financial liabilities are subsequently measured at amortized cost using the effective interest method.
Financial liabilities at amortized cost
Financial liabilities including trade and other payables, am ounts due to related parties and bank borrowings and bank
overdrafts are subsequently measured at amor tized cost, using the effective interest method.
Derecognition of financial liabilities
The Group derecognizes financial liabilities when, and only when, the Group ’s obligations are discharged, cancelled
or have expired. The difference between the carrying amount of the financial liability derecognized and the consideration
paid and payable is recognized in profit or loss.
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Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the
holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a
debt instrument. Financial guarantee contract liabilities are measured initially at their fair values. It is subsequently
measured at the higher of:
. the amount of the loss allowance determined in accordance with HKFRS 9; and
. the amount initially recognized less, where appropriate, cumulative amortisation recognized over the
guarantee period.
5. KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group ’s accounting policies, which are described in note 4, the directors of the Company are
required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and underlying assumpti ons are based on historical experience and other factors that
are considered to be relevant. Actual re sults may differ from these estimates.
The estimates and underlying assumptions are reviewed o n an on-going basis. Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the r evision affects only that period, or in the period of the revision
and future periods if the revision affects both current and future periods.
The following is the key assumption concerning the future, an d other key sources of estimation uncertainty at the end of
each of the reporting periods that may have a significant risk of causing a material adjustment to the carrying amounts of assets
and liabilities within the next twelve months.
Estimated allowances for inventories
The Group monitors inventory levels, turnover days and sales performance of individual stock-keeping units
(‘‘SKU’’) in order to identify slow-moving items. Specific inve ntory allowances are made at the SKU level based on an
assessment of net realisable value taking into account historical sales records, ageing analysis, marketing and promotion
plans and subsequent selling prices of the inventories.
The identification of slow-moving inventories and the e stimation of related allowances involve significant
management judgement and the use of estimates. Changes in the se estimates may affect the carrying amount of inventories
and the recognized allowances in the periods in which revisions are made.
As at 31 March 2023, 2024 and 2025 and 30 November 2025, the carrying amounts of inventories are
HK$176,016,000, HK$225,394,000, HK$336,038,000 and HK$402,353,000, respectively.
Fair values of investment properties
Investment properties are stated at fair value based on the valuation performed by independent professional valuer.
The determination of the fair value involves certain assumptions of market conditions which are set out in note 16.
In relying on the valuation report, the directors of the Company have exercised their judgement and are satisfied that
the method of valuation is reflective of the current market conditions. Changes to these assumptions would result in changes
in the fair values of the Group ’s investment properties and the corresponding adjustments to the amount of gain or loss
reported in the consolidated statements of profit or loss and other comprehensive income.
As at 31 March 2023, 2024 and 2025 and 30 November 2025, the carrying amount of the Group ’s investment
properties amounted to HK$257,320,000, HK$242,140,000, HK$189,470,000 and HK$150,850,000, respectively.
APPENDIX I ACCOUNTANTS ’ REPORT
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6. REVENUE AND SEGMENT INFORMATION
Revenue
Disaggregation of revenue from contracts with customers
Year ended 31 March
Eight months ended
30 November
2023 2024 2025 2024 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
Sales channels
Retail sales through retail stores 1,027,169 1,958,982 2,391,643 1,464,799 1,988,312
Retail sales through online platforms 44,637 38,160 42,682 27,330 30,203
Wholesale sales 22,205 23,589 26,153 18,240 16,620
1,094,011 2,020,731 2,460,478 1,510,369 2,035,135
Product categories
Beauty products 306,014 668,228 818,044 499,932 667,216
Health products 174,752 357,656 433,752 276,827 369,039
Pharmaceutical products 246,529 398,219 473,105 277,446 354,641
Other consumer products 366,716 596,628 735,577 456,164 644,239
1,094,011 2,020,731 2,460,478 1,510,369 2,035,135
Geographical markets
Hong Kong 1,042,634 1,978,086 2,412,855 1,481,230 2,007,398
Chinese Mainland 51,377 42,645 47,623 29,139 27,737
1,094,011 2,020,731 2,460,478 1,510,369 2,035,135
Timing of revenue recognition
A point in time 1,094,011 2,020,731 2,460,478 1,510,369 2,035,135
Performance obligations for contracts with customers and revenue recognition policies
The Group is engaged in the sales of beauty products, health products, pharmaceutical products and other consumer
products through its own retail stores, online platforms and wholesale channels.
For sales of products to customers through the Group ’s retail stores, revenue is recognized at a point in time when
control of the goods has been transferred, being at the point the customer purchases the goods at the retail store. Payment of
the transaction price is due immediately at the point the customer purchases the goods.
For sales of products through online platforms, revenue is recognized at a point in time when control of the goods
has transferred to the customer, being at the point the goods are delivered to the customer ’s specific location. When the
customer initially purchases the goods online, th e payment for transaction is due immediately.
For sales of products to wholesale customers, revenue is recognized at a point in time when control of the goods has
been transferred, being when the goods have been delivered to the customer ’s specific location. Transportation and handling
activities that occur before customers obtain control are consid ered as fulfilment activities. The credit term is generally 60
days upon delivery.
Under the Group ’s standard contract terms, customers have a right to exchange only for products with quality issues
within 7 days from the date of purchase. The directors of the Company determine that, based on historical experience of the
Group, the amount of assurance-type warranty provision is not significant.
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The Group operates a customer loyalty program for sales through which retail customers accumulate points on
purchases of products at the Group ’s retail stores that entitle them to discounts on future purchases. The membership points
expire at the end of each calendar year. Customers can redeem the membership points any time before expiry. The directors
of the Company consider that the amount of unsatisfied performance obligations arising from unutilized membership points
at the end of each of the reporting periods is not significant.
Transaction price allocated to the remaining per formance obligation for contracts with customers
During the Track Record Period, contracts with customer s with unsatisfied performance obligations, including the
customer loyalty program, have durations of one year or le ss. As permitted under HKFRS 15, the transaction prices
allocated to these unsatisfied contracts or the customer loyalty program are not disclosed.
Segment information
Information reported to Mr. Tse, being the chief operatin g decision maker, for the purposes of resources allocation
and performance assessment focuses on revenue analysis as di sclosed above. No other discrete financial information is
provided other than the Group ’s overall results and financial as a whole. Accordingly, only entity-wide disclosures, major
customers and geographic information are presented.
Geographical information
The geographical information of the Group ’s revenue based on the location of the goods delivered is disclosed above.
The Group ’s non-current assets are all located in Hong Kong.
Information about major customers
None of the Group ’s customers contributed over 10% of the Group ’s total revenue during the Track Record Period.
7. OTHER INCOME
Year ended 31 March
Eight months ended
30 November
2023 2024 2025 2024 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
Interest income:
— B a n k b a l a n c e s 12 76 53 7 4
— Amounts due from related parties 13,287 13,441 14,707 8,959 10,828
— Rental deposits 1,127 1,062 1,385 1,339 1,383
Management fee income from related
parties 1,974 1,974 1,974 1,316 1,316
Fixed operating lease income 5,984 6,781 6,380 4,280 3,851
Government grants (Note) 2,463 384 ———
Others 1,509 2,960 5,815 4,386 5,440
26,345 26,629 30,326 20,317 22,822
Note: During the year ended 31 March 2023, the Group recognized government grants of approximately HK$2,400,000 in
respect of the Employment Support Scheme launched by the Hong Kong government.
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8. OTHER GAINS AND LOSSES
Year ended 31 March
Eight months ended
30 November
2023 2024 2025 2024 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
Net loss on disposal/write-off of
property, plant and equipment (68) (149) (79) (67) (91)
Net foreign exchange gains (losses) 75 (322) (1,001) (604) (487)
Others —— 380 ——
7 (471) (700) (671) (578)
9. FINANCE COSTS
Year ended 31 March
Eight months ended
30 November
2023 2024 2025 2024 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
Interests on:
— Lease liabilities 6,778 11,922 18,068 11,948 12,772
— Bank overdrafts 5,002 6,376 4,326 3,196 1,527
— Bank borrowings 20,686 34,359 29,073 20,130 13,509
— Retirement benefit obligations 40 59 83 55 73
32,506 52,716 51,550 35,329 27,881
10. INCOME TAX EXPENSE
Year ended 31 March
Eight months ended
30 November
2023 2024 2025 2024 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
Current tax
— Hong Kong Profits Tax 1,030 3,827 39,308 19,795 35,601
Deferred tax charge (credit) (note 26) 903 32,494 8,281 7,482 (5,220)
1,933 36,321 47,589 27,277 30,381
Under the two-tiered profits tax rates regime of Hong Kong Pr ofits Tax, the first HK$2 million of profits of the qualifying
group entity will be taxed at 8.25%, and profits above HK$2 million will be taxed at 16.5%. Accordingly, the Hong Kong Profits
Tax of the qualifying group entity now comprising the Group is calculated at 8.25% on the first HK$2 million of the estimated
assessable profits and at 16.5% on the estimated assess able profits above HK$2 million for the Track Record Period.
Under the Law of the PRC on Enterprise Income Tax (the ‘‘EIT Law ’’) and Implementation Regulation of the EIT Law, the
tax rate of the relevant PRC subsidiary is 25% for the Track Re cord Period. No PRC Enterprise Income Tax has been made during
the Track Record Period as the relevant PRC subsidiary has no ass essable profits or has sufficient tax losses brought forward to
offset assessable profits duri ng the Track Record Period.
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The income tax expense for the years ended 31 March 2023, 2024 and 2025 and the eight months ended 30 November 2024
and 2025 can be reconciled to the (loss) profit before tax per the consolidated statements of profit or loss and other comprehensive
income as follows:
Year ended 31 March
Eight months ended
30 November
2023 2024 2025 2024 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
(Loss) profit before tax (25,207) 180,857 218,021 107,151 178,764
Tax at the Hong Kong Profits Tax rate
of 16.5% (4,159) 29,841 35,973 17,680 29,496
Tax effect of expense not deductible for
tax purpose 4,994 5,324 10,212 7,726 3,965
Tax effect of income not taxable for tax
purpose (583) (667) (442) (211) (109)
Tax effect of tax losses not recognized 833 820 770 625 463
Utilization of tax losses previously not
recognized (347) (39) (29) — (144)
Tax effect of deductible temporary
differences not recognized 1,119 1,066 1,098 1,473 652
Tax effect of previously unrecognized
temporary differences ———— (3,988)
Effect of different tax rate applicable to
a PRC subsidiary 76 (24) 7 (16) 46
Income tax expense 1,933 36,321 47,589 27,277 30,381
11. (LOSS) PROFIT FOR THE YEAR/PERIOD
Year ended 31 March
Eight months ended
30 November
2023 2024 2025 2024 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
(Loss) profit for the year/period has
been arrived at after charging:
Directors ’ emoluments (note 12) 1,097 1,292 1,362 812 1,016
Other staff costs (excluding the
directors ’ emoluments)
— Salaries, allowances and other
benefits 98,117 165,496 212,575 134,626 184,707
— Retirement benefits 5,959 7,226 9,481 6,156 8,731
Total staff costs 105,173 174,014 223,418 141,594 194,454
Depreciation of property, plant and
equipment 12,433 12,597 16,922 10,795 16,345
Depreciation of right-of-use assets 115,664 121,603 157,420 103,015 131,576
Auditor ’s remuneration 334 366 380 193 885
Cost of inventories recognized as an
expense 811,191 1,421,849 1,675,086 1,026,340 1,400,842
Listing expenses recognized in profit or
loss ———— 11,132
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12. DIRECTORS ’ AND CHIEF EXECUTIVE ’S EMOLUMENTS
(a) Directors ’ and the Chief Executive ’s emoluments
Mr. Tse was appointed as a Director in October 2025 and re-designated as an Executive Director of the Company in
November 2025. He is the chairman of the Board of Directors and the Chief Executive Officer of the Company.
Ms. Tse was appointed as a Director of the Company in October 2025 and re-designated as an Executive Director of
the Company in November 2025.
Mr. Chu Woon Ming, Mr. Yau Sheung Yu and Ms. Woo Pui Yan Joyce were appointed as the Independent Non-
executive Directors of the Company in November 2025.
The Directors ’ and Chief Executive ’s remuneration (including emoluments for services as directors/employees of
entities now comprising the Group) disclosed pursuant to the applicable Listing Rules and the Hong Kong Companies
Ordinance is as follows:
Fee
Salaries,
allowances
and benefits
Retirement
benefits Total
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
For the year ended 31 March 2023
Executive Directors
Mr. Tse — 839 20 859
Ms. Tse — 226 12 238
— 1,065 32 1,097
For the year ended 31 March 2024
Executive Directors
Mr. Tse — 936 21 957
Ms. Tse — 320 15 335
— 1,256 36 1,292
For the year ended 31 March 2025
Executive Directors
Mr. Tse — 932 21 953
Ms. Tse — 390 19 409
— 1,322 40 1,362
For the eight months ended 30 November
2024 (unaudited)
Executive Directors
Mr. Tse — 558 14 572
Ms. Tse — 228 12 240
— 786 26 812
For the eight months ended 30 November
2025
Executive Directors
Mr. Tse — 691 14 705
Ms. Tse — 298 13 311
— 989 27 1,016
APPENDIX I ACCOUNTANTS ’ REPORT
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--- page 352 ---
In addition, the Group provided accommodation leased fr om related parties to Mr. Tse for use by him and his family
members at no charge during the Track Record Period. The estimated money value of the benefit in kind amounted to
HK$658,000, HK$658,000, HK$569,000, HK$409,000 (unaudited) and HK$320,000 for the years ended 31 March 2023,
2024 and 2025 and the eight months ended 30 November 2024 and 2025, respectively.
The directors ’ emoluments shown above were for their services in connection with the management of the affairs of
the Group.
No emoluments were paid to the Company ’s independent non-executive directors during the Track Record Period.
There was no compensation for loss of office and/or inducement for joining the Group paid/payable to the directors
of the Company during the Track Record Period.
There was no arrangement under which a director or the chief executive waived or agreed to waive any remuneration
during the Track Record Period.
(b) Five highest paid individuals
The five highest paid employees included 1, 1, 1, 1 (unaudited) and 1 director for the years ended 31 March 2023,
2024 and 2025 and the eight months ended 30 November 2024 and 2025, respectively, details of whose remuneration are
set out in (a) above.
Details of the remuneration of the remaining 4, 4, 4, 4 (unaudited) and 4 highest paid employees who are neither a
director nor chief executive of the Company for the years ended 31 March 2023, 2024 and 2025 and the eight months ended
30 November 2024 and 2025, respectively, are as follows:
Year ended 31 March
Eight months ended
30 November
2023 2024 2025 2024 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
Salaries allowances and other
benefits 3,100 3,884 4,011 2,425 2,286
Retirement benefits 78 81 81 54 53
3,178 3,965 4,092 2,479 2,339
The number of the highest paid employees who are not the directors of the Company whose remuneration fell within
the following bands is as follows:
Year ended 31 March
Eight months ended
30 November
2023 2024 2025 2024 2025
(Unaudited)
Nil to HK$1,000,000 33344
HK$1,000,001 to HK$1,500,000 1 1 1 ——
44444
During the Track Record Period, no remuneration was paid by the Group to the five highest paid individuals of the
Group as an inducement to join or upon joining the Group or as compensation for loss of office.
APPENDIX I ACCOUNTANTS ’ REPORT
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13. (LOSS) EARNINGS PER SHARE
The calculation of the basic (loss) earnings per share attributable to owners of the Company is based on the following data:
Year ended 31 March
Eight months ended
30 November
2023 2024 2025 2024 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
(Loss) profit for the year/period
attributable to owners of the
Company for the purpose of basic
(loss) earnings per share (27,140) 144,536 170,432 79,874 148,383
Number of shares
Year ended 31 March
Eight months ended
30 November
2023 2024 2025 2024 2025
’000 ’000 ’000 ’000 ’000
Weighted average number of shares for
the purpose of basic (loss) earnings
per share 375,000 375,000 375,000 375,000 375,000
The weighted average number of ordinary shares for the purpose of calculating basic (loss) earnings per share for the Track
Record Period has been adjusted retrospectively for the effects in connection with (i) the Reorganization as set out in note 2; and
(ii) the effect of the capitalization issue subsequent to the end of the reporting period as set out in note 39, as if both the
Reorganization and the capitalization issue had been effective since 1 April 2022.
No diluted (loss) earnings per share for the Track Record Period is presented as there were no potential ordinary shares in
i s s u ed u r i n gt h eT r a c kR e c o r dP e r i o d .
14. DIVIDENDS
During the year ended 31 March 2023, Dragon Mind Creation Limited declared dividends of HK$13,000,000 to its
shareholder. During the year ended 31 March 2025, LFP, Top Harvest Pharmaceuticals Company Limited and Pearl Lake Global
Limited declared dividends of HK$200,000,000, HK$33,000,000 and HK$22,000,000 respectively to their respective shareholders.
The rate of dividends and number of shares ranking for the dividends are not presented as such information is not
considered meaningful having regard to the purpose of this report.
No dividend was declared or paid by the Company since its incorporation and up to the end of the Track Record Period.
On 10 February 2026 and 21 May 2026, the Company declared dividends of HK$130 per share totaling HK$130,000,000
and HK$23 per share totaling HK$23,000,000, respectively, which were settled by way of an offsetting with the Group ’s amounts
due from related parties.
APPENDIX I ACCOUNTANTS ’ REPORT
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15. PROPERTY, PLANT AND EQUIPMENT
Owned
properties
Leasehold
improvements
Furniture and
fixtures
Computer
equipment
Motor
vehicles Total
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
COST
At 1 April 2022 — 50,646 12,247 11,693 3,228 77,814
Additions — 6,989 1,175 2,596 — 10,760
Disposals/write-off — (4,083) (500) (561) — (5,144)
Exchange realignment ——— (30) — (30)
At 31 March 2023 — 53,552 12,922 13,698 3,228 83,400
Additions — 9,536 9,130 4,320 3,013 25,999
Disposals/write-off —— (448) — (850) (1,298)
Exchange realignment ——— (23) — (23)
At 31 March 2024 — 63,088 21,604 17,995 5,391 108,078
Additions — 21,332 20,812 10,146 2,580 54,870
Disposals/write-off — (1,981) (371) (245) — (2,597)
Exchange realignment ——— (5) — (5)
At 31 March 2025 — 82,439 42,045 27,891 7,971 160,346
Additions — 10,608 13,132 4,032 944 28,716
Transfer from
investment properties 27,480 ———— 27,480
Disposals/write-off — (315) (40) —— (355)
Exchange realignment ——— 9 — 9
At 30 November 2025 27,480 92,732 55,137 31,932 8,915 216,196
APPENDIX I ACCOUNTANTS ’ REPORT
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--- page 355 ---
Owned
properties
Leasehold
improvements
Furniture and
fixtures
Computer
equipment
Motor
vehicles Total
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
DEPRECIATION
At 1 April 2022 — 33,957 8,365 8,846 2,928 54,096
Provided for the year — 8,530 1,945 1,814 144 12,433
Eliminated on disposals/
write-off — (4,077) (484) (515) — (5,076)
Exchange realignment ——— (20) — (20)
At 31 March 2023 — 38,410 9,826 10,125 3,072 61,433
Provided for the year — 8,133 2,308 1,788 368 12,597
Eliminated on disposals/
write-off —— (299) — (850) (1,149)
Exchange realignment ——— (20) — (20)
At 31 March 2024 — 46,543 11,835 11,893 2,590 72,861
Provided for the year — 8,610 4,654 2,710 948 16,922
Eliminated on disposals/
write-off — (1,910) (361) (247) — (2,518)
Exchange realignment ——— (3) — (3)
At 31 March 2025 — 53,243 16,128 14,353 3,538 87,262
Provided for the period 622 6,502 5,504 2,845 872 16,345
Eliminated on disposals/
write-off — (224) (40) —— (264)
Exchange realignment ——— 5 — 5
At 30 November 2025 622 59,521 21,592 17,203 4,410 103,348
CARRYING
AMOUNTS
At 31 March 2023 — 15,142 3,096 3,573 156 21,967
At 31 March 2024 — 16,545 9,769 6,102 2,801 35,217
At 31 March 2025 — 29,196 25,917 13,538 4,433 73,084
At 30 November 2025 26,858 33,211 33,545 14,729 4,505 112,848
The above items of property, plant and equipment are depreciated on a straight-line basis at the following rates per annum:
Owned properties 4.5%
Leasehold improvements Over the shorter o f lease terms of the properties or 5 years
Furniture and fixtures 20%
Computer equipment 20%
Motor vehicles 20%
The Group pledged motor vehicles with carrying amounts of HK$2,789,000, HK$4,432,000 and HK$4,496,000 as at 31
March 2024 and 2025 and 30 November 2025 and owned properties with carrying amount of HK$26,858,000 as at 30 November
2025 to secure bank facilities granted to the Group.
APPENDIX I ACCOUNTANTS ’ REPORT
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16. INVESTMENT PROPERTIES
HK$’000
FAIR VALUE
At 1 April 2022 275,010
Decrease in fair value recognized in profit or loss, unrealized (17,690)
At 31 March 2023 257,320
Additions 1,416
Decrease in fair value recognized in profit or loss, unrealized (16,596)
At 31 March 2024 242,140
Additions 812
Decrease in fair value recognized in profit or loss, unrealized (53,482)
At 31 March 2025 189,470
Transfer to property, plant and equipment (27,480)
Decrease in fair value recognized in profit or loss, unrealized (11,140)
At 30 November 2025 150,850
The Group leases out retail shop units and residential units located in Hong Kong under operating leases with rentals
payable monthly. The leases typically run for an initial period of 3 years, 3 years, 2 years to 3 year s and 1 year to 3 years during
the years ended 31 March 2023, 2024 and 2025 and the eight months ended 30 November 2025.
The total cash outflow for leases paid for leased properties under subleases amounted to HK$333,000, HK$345,000,
HK$391,000, HK$235,000 (unaudited) and HK$244,000, for the three years ended 31 March 2023, 2024 and 2025 and the eight
months ended 30 November 2024 and 2025, respectively.
The fair values of the Group ’s investment properties as at 31 March 2023, 2024 and 2025 and 30 November 2025 have been
arrived at on the basis of a valuation carried out on the respec tive dates by Messrs AVISTA Valu ation Advisory Limited, located
at Suites 2401 –06, 24/F, Everbright Centre, 108 Gloucester Road, Wanchai, Hong Kong, independent qualified professional valuer
not connected to the Group.
Retail shop units and residential units located in Hong Kong with aggregate fair values of HK$232,040,000,
HK$222,330,000, HK$173,170,000 and HK$134,430,000 as at 31 March 2023, 2024 and 2025 and 30 November 2025,
respectively, are determined based on the i ncome capitalization approach, where the mar ket rentals of all lettable units of the
properties are assessed and discounted at the market yiel d expected by investors for the same types of properties.
Residential units located in Hong Kong with aggregate fair values of HK$25,280,000, HK$19,810,000, HK$16,300,000 and
HK$16,420,000 as at 31 March 2023, 2024 and 2025 and 30 November 2025, respectively, are determined based on the direct
comparison approach, which reflects recent transaction prices for si milar properties adjusted for differences in the nature, location
and condition of the properties under review.
In determining the fair value of the relevant properties, the management of the Group would determine the appropriate
valuation techniques and inputs for fair value measurements.
In estimating the fair value of the properties, the highe st and best use of the properties is their current use.
APPENDIX I ACCOUNTANTS ’ REPORT
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The following table shows the valuation techniques used in the determination of fair values for investment properties and
unobservable inputs used in the valuation models.
Valuation
technique(s)
Significant
unobservable input(s)
Range of significant
unobservable input(s)
Relationship of
unobservable inputs to
fair value
Retail shop units located
in Hong Kong
31 March 2023:
HK$231,220,000
31 March 2024:
HK$219,920,000
31 March 2025:
HK$171,620,000
30 November 2025:
HK$133,340,000
Income
capitalization
approach
Capitalization rate,
taking into account the
capitalization of rental
income potential, nature
of the property and
prevailing market
condition.
31 March 2023: 2.45%
to 2.70%.
31 March 2024: 2.65%
to 2.90%.
31 March 2025: 3.05%
to 3.30%.
30 November 2025:
3.35% to 3.60%.
An increase in the
capitalization rate used
would result in a
decrease in fair value,
and vice versa.
Monthly market rent,
taking into account the
differences in location,
and individual factors,
such as frontage and
size, between the
comparables and the
property
31 March 2023:
HK$103 to HK$127 per
square foot.
31 March 2024:
HK$105 to HK$129 per
square foot.
31 March 2025: HK$94
to HK$116 per square
foot.
30 November 2025:
HK$96 to HK$119 per
square foot.
An increase in the
market rent used would
result in an increase in
fair value, and vice
versa.
Residential units located
in Hong Kong
31 March 2023:
HK$25,280,000
31 March 2024:
HK$19,810,000
31 March 2025:
HK$16,300,000
30 November 2025:
HK$16,420,000
Direct
comparison
approach
Market unit rate, taking
into account the recent
transaction prices for
similar properties
adjusted for nature,
location and conditions
of the property
31 March 2023:
HK$5,844 to HK$6,430
per square foot.
31 March 2024:
HK$4,580 to HK$5,038
per square foot.
31 March 2025:
HK$3,768 to HK$4,146
per square foot.
30 November 2025:
HK$3,795 to HK$4,175
per square foot.
An increase in the
market unit rate used
would result in an
increase in fair value,
and vice versa.
APPENDIX I ACCOUNTANTS ’ REPORT
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--- page 358 ---
Valuation
technique(s)
Significant
unobservable input(s)
Range of significant
unobservable input(s)
Relationship of
unobservable inputs to
fair value
Residential units located
in Hong Kong
31 March 2023:
HK$820,000
31 March 2024:
HK$2,410,000
31 March 2025:
HK$1,550,000
30 November 2025:
HK$1,090,000
Income
capitalization
approach
Capitalization rate,
taking into account the
capitalization of rental
income potential, nature
of the property and
prevailing market
condition.
31 March 2023: 3.05%
to 3.30%.
31 March 2024: 3.55%
to 3.80%.
31 March 2025: 3.95%
to 4.20%.
30 November 2025:
3.95% to 4.20%.
An increase in the
capitalization rate used
would result in a
decrease in fair value,
and vice versa.
Monthly market rent,
taking into account the
differences in location,
and individual factors,
such as frontage and
size, between the
comparables and the
property
31 March 2023: HK$24
to HK$25 per square
foot.
31 March 2024: HK$24
to HK$25 per square
foot.
31 March 2025: HK$23
to HK$24 per square
foot.
30 November 2025:
HK$24 to HK$25 per
square foot.
An increase in the
market rent used would
result in an increase in
fair value, and vice
versa.
The fair value measurement is categorized into Level 3 fair value hierarchy. There were no transfers into or out of Level 3
during the Track Record Period.
As at 31 March 2023, 2024 and 2025 and 30 November 2025, investment properties amounting to HK$256,500,000,
HK$239,730,000, HK$187,920,000 and HK$149,760,000 respectively have been pledged to secure bank facilities granted to the
Group.
APPENDIX I ACCOUNTANTS ’ REPORT
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--- page 359 ---
17. RIGHT-OF-USE ASSETS
Office premises
and staff
quarters Warehouses Retail stores Total
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
CARRYING AMOUNT
At 1 April 2022 2,375 — 168,285 170,660
At 31 March 2023 6,469 4,821 173,686 184,976
At 31 March 2024 965 1,154 214,064 216,183
At 31 March 2025 1,939 4,084 255,343 261,366
At 30 November 2025 3,611 8,483 327,263 339,357
DEPRECIATION
For the year ended 31 March 2023 8,173 4,260 103,231 115,664
For the year ended 31 March 2024 6,009 3,668 111,926 121,603
For the year ended 31 March 2025 6,842 6,758 143,820 157,420
For the eight months ended 30 November
2024 (unaudited) 6,070 3,705 93,240 103,015
For the eight months ended 30 November
2025 6,189 7,162 118,225 131,576
Year ended 31 March
Eight months ended
30 November
2023 2024 2025 2024 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
Expenses relating to leases of low value
assets 18 59 26 20 107
Variable lease payments not included in
the measurement of lease liabilities 26 1,841 4,549 1,918 2,291
Total cash outflow for leases 93,380 133,127 168,818 106,931 133,781
Additions to right-of-use assets
(including adjustments on lease
modifications) 129,980 152,810 202,961 138,704 209,567
The Group leases various offices premises and staff quarters, w arehouses and retail stores for its operations. Lease contracts
are entered into for fixed term of 1 year to 12 years, 1 year to 12 years, 1 year to 12 years and 1 year to 12 years for the years
ended 31 March 2023, 2024 and 2025 and the eight months ended 30 November 2025, respectively. Lease terms are negotiated on
an individual basis and contain different terms and conditions . In determining the lease term and assessing the length of the non-
cancellable period, the Group applies the de finition of a contract and determines the pe riod for which the contract is enforceable.
Leases of retail stores are either with only fixed lease payme nts or contain variable lease payments that are based on 3% to
6% of sales and minimum annual lease payment that are fixed over the lease term. Some variable payment terms include cap
clauses. The payment terms are common in retail stores in Hong Kong where the Group operates.
APPENDIX I ACCOUNTANTS ’ REPORT
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--- page 360 ---
Restrictions or covenants on leases
In addition, lease liabilities of HK$193,505,000, HK $220,464,000, HK$264,472,000, and HK$347,399,000 are
recognized with related right-of-use assets of HK$1 84,976,000, HK$216,183,000, HK$261,366,000 and HK$339,357,000 as
at 31 March 2023, 2024 and 2025 and 30 November 2025, respectively. The lease agreements do not impose any covenants
other than the security interests in the leased assets that are held by the lessor. Leased assets may not be used as security
for borrowing purposes.
Lease committed
As at 31 March 2023 and 2025 and 30 November 2025, the Group entered into new leases for several retail stores
that have not yet commenced, with average non-cancellable period ranging from 1 to 3 years, 1 to 3 years and 3 years
respectively, and the total future undiscounted cash flows over the non-cancellable period amounted to HK$10,800,000,
HK$30,437,000 and HK$17,428,000, respectively. There was no lease committed as at 31 March 2024.
18. INVENTORIES
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Finished goods 176,016 225,394 336,038 402,353
19. TRADE AND OTHER RECEIVABLES
The Group The Company
As at 31 March
As at
30 November
As at
30 November
2023 2024 2025 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
Trade receivables from contracts with
customers 3,948 17,332 8,193 22,600 —
Rental, utilities and other deposits 29,167 45,679 52,960 62,504 —
Other receivables 928 585 954 84 —
Prepayments to suppliers 4,354 3,436 3,498 8,140 —
Prepaid expenses 6,940 9,739 11,351 13,825 —
Prepaid listing expenses ——— 229 229
Prepaid issue costs ——— 13 13
Deferred issue costs ——— 3,351 3,351
45,337 76,771 76,956 110,746 3,593
Analyzed for reporting purposes
as:
Deposits under non-current assets 29,167 45,679 52,960 62,504 —
Trade and other receivables under
current assets 16,170 31,092 23,996 48,242 3,593
45,337 76,771 76,956 110,746 3,593
As at 1 April 2022, trade receivables from contracts with customers amounted to HK$3,561,000.
APPENDIX I ACCOUNTANTS ’ REPORT
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--- page 361 ---
Retail sales made through retail stores are settled by cash or electronic payments. Retail sales made through online
platforms are settled by electronic payments. Trade receivable s arising from retail sales represent amounts receivable from
electronic payment service providers and online platform provi ders who generally settle the amounts with the Group within 2 days
and 1 month respectively after the sales.
For trade receivables arising from wholesale sales, the Gr oup generally grants credit terms of 60 days to its wholesale
customers after the month of the relevant sale.
The following is an ageing analysis of trade receivables presented based on the invoice dates at the end of each of the
reporting periods is as follows:
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Within 30 days 3,029 16,709 7,379 22,344
31 to 60 days 99 108 552 —
61 to 90 days 640 90 82 120
Over 90 days 180 425 180 136
3,948 17,332 8,193 22,600
Details of impairment assessment of trade and other receivables are set out in note 32(b).
APPENDIX I ACCOUNTANTS ’ REPORT
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--- page 362 ---
20. AMOUNTS DUE FROM (TO) RELATED PARTIES
Maximum amounts outstanding
As at
1 April As at 31 March
As at
30
November Year ended 31 March
Eight months ended
30 November
2 0 2 22 0 2 32 0 2 42 0 2 52 0 2 52 0 2 32 0 2 42 0 2 52 0 2 42 0 2 5
HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
Amount due from a director (Note i)
Amount due from Mr. Tse 34,701 42,113 55,459 12,252 9,180 46,910 55,459 69,891 60,408 14,324
Amounts due from related parties (Note ii)
B e s t E a r n I n t e r n a t i o n a l D e v e l o p m e n t L i m i t e d 1118811888
China Harvest Creation Limited —— 394 247 1,819 — 394 394 394 1,819
C H K D u t y F r e e G r o u p L i m i t e d 1 62 12 12 12 12 12 12 12 12 1
Click Limited 65 178 178 178 178 178 178 178 178 178
Dragon Grace Corporation Limited 108,074 111,307 114,391 — 1,496 111,307 114,391 115,145 115,145 97,863
E x p r e s s H a r v e s t L i m i t e d 6633366333
Full Group Corporation Limited — 5,337 6,002 20,674 20,847 5,337 6,002 24,305 24,305 20,847
Great Dragon International Development Limited 18,170 19,172 20,634 22,346 23,370 19,173 20,634 22,427 21,531 23,370
Huge Max Development Limited 5,017 5,136 4,745 561 — 5,138 5,255 73,833 4,897 769
Huge Max (Hong Kong) Limited 185,546 184,445 209,091 224,501 97,661 218,489 209,091 224,501 211,980 227,243
Luck Dragon International Development Limited 281 281 281 281 281 281 281 281 281 281
Lung Fung Charitable Foundation Limited 15 15 15 — 61 51 51 51 5 6
Lung Fung Dispensary Limited 3,341 3,341 3,340 —— 3,341 3,341 3,347 3,347 —
Lung Fung Group Co., Limited 5,575 5,575 5,619 —— 5,575 5,619 5,627 5,619 6
Lung Fung International Trading Limited 233 11,805 14,464 5,351 5,905 11,805 15,063 14,965 14,655 15,519
Max Profit Investment (Holdings) Limited — 18,983 24,204 1,979 2,468 18,983 24,204 24,378 24,378 22,703
Most Harvest (HK) Limited ———— 2 ———— 2
Power Max (Hong Kong) Limited 35 35 35 35 — 35 35 35 35 35
Prospects Group Limited 382 382 470 470 487 382 967 470 470 487
Sky Harvest Medicine Company Limited ——— 52 52 —— 52 52 52
S u n n y R i c h H o l d i n g s L i m i t e d 3 25 94 55 15 15 98 55 14 75 1
Tse ’s Pharmaceutical Factory (HK) Limited 54 58 65 67 70 58 65 67 65 70
W o r l dS t e p( C h i n a )L i m i t e d —— 8,312 — 13 — 8,312 8,337 8,334 8,353
新龍豐(深圳)購物資訊
有限公司 90 98 ——— 98 98 ———
326,933 366,235 412,310 276,825 154,738
361,634 408,348 467,769 289,077 163,918
Analyzed for reporting purposes as:
Non-current 355,468 392,638 273,696 —
Current 52,880 75,131 15,381 163,918
408,348 467,769 289,077 163,918
APPENDIX I ACCOUNTANTS ’ REPORT
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--- page 363 ---
As at
1 April As at 31 March
As at
30 November
2022 2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
Amount due to a director (Note i)
Amount due to Mr. Tse 16,378 14,496 16,894 10,928 10,928
Amounts due to related parties (Note iii)
China Harvest Creation Limited 7,243 6,631 ———
Dragon Grace Corporation Limited ——— 979 —
Easy Hill International Limited 9 17 17 17 17
Full Group Corporation Limited 57,128 ————
Harbour Harvest Medicine Company Limited 178 178 179 172 172
Huge Max Development Limited ———— 13,450
Lung Fung Group Co., Limited ———— 1
Lung Fung International Trading Limited 5,468 ————
Max Profit Investment (Holdings) Limited 22,205 ————
Most Harvest (HK) Limited 28,167 28,164 30,158 ——
Power Harvest Corporation Limited 724 717 893 737 631
Sunny Rich Holdings Limited — 20 ———
World Step (China) Limited ——— 3 —
121,122 35,727 31,247 1,908 14,271
137,500 50,223 48,141 12,836 25,199
Notes:
(i) The amount due from (to) Mr. Tse is non-trade in natur e, unsecured, interest-free and repayable on demand.
(ii) The amounts due from entities controlled by Mr. Tse are no n-trade in nature, unsecured and repayable on demand.
Other than aggregate amounts of HK$355,468,000, HK$392,638,000, HK$273,696,000 and HK$151,747,000 as at 31
March 2023, 2024 and 2025 and 30 November 2025 respectively which carry interest at 3.5% per annum, other
amounts are interest-free.
In the opinion of the directors of the Company, other than amounts due from related parties amounting to
HK$355,468,000, HK$392,638,000 and HK$273,696,000 as at 31 March 2023, 2024 and 2025 respectively which are
not expected to be repaid within one year from the end of each of the reporting period and classified as non-current,
the remaining amounts are expected to be repaid within one year from the end of each of the reporting periods and
are classified as current.
(iii) The amounts due to entities controlled by Mr. Tse are non-trad e in nature, unsecured, interest-free and repayable on
demand.
On 10 February 2026 and 21 May 2026, the Company declared dividends of HK$130 per share totaling HK$130,000,000
and HK$23 per share totaling HK$23,000,000, respectively, which were settled by way of an offsetting with the Group ’s amounts
due from related parties. Accordingly, all outstanding balances with related parties had been settled in full.
APPENDIX I ACCOUNTANTS ’ REPORT
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21. CASH AND CASH EQUIVALENTS/BANK OVERDRAFTS
Cash and cash equivalents
Cash and cash equivalents include demand deposits an d short-term deposits for the purpose of meeting the Group ’s
short term cash commitments, which carry interest at market rates range from 0.001% to 0.126%, 0.001% to 5.1%, 0.001%
to 0.126% and 0.001% to 0.126% per annum as at 31 March 2023, 2024 and 2025 and 30 November 2025.
Details of impairment assessment of bank balances as at 31 March 2023, 2024 and 2025 and 30 November 2025 are
set out in note 32(b).
Bank balances and cash denominated in currencies other than the functional currency of the relevant entities now
comprising the Group are set out below:
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Japanese Yen ( ‘‘JPY’’) 425 719 202 205
Renminbi ( ‘‘RMB’’) 253 889 678 1,434
Bank overdrafts
Bank overdrafts carry interest at market rates which range from 3.48% to 5.88%, 3.73% to 6.60%, 3.10% to 5.81%,
and 2.02% to 5.50% per annum as at 31 March 2023, 2024 and 2025 and 30 November 2025, respectively.
22. TRADE AND OTHER PAYABLES
The Group The Company
As at 31 March
As at
30 November
As at
30 November
2023 2024 2025 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
Trade payables 81,389 86,480 108,598 123,334 —
Other payables 6,166 6,557 16,895 6,373 —
Accrued expenses 3,276 4,462 5,767 10,868 —
Accrued staff costs 10,691 16,983 23,732 38,289 —
Accrued listing expenses ——— 4,959 4,959
Accrued issue costs ——— 1,510 1,510
101,522 114,482 154,992 185,333 6,469
APPENDIX I ACCOUNTANTS ’ REPORT
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The credit period granted by suppliers ranged from 0 to 30 days. The following is an ageing analysis of trade payables
presented based on the invoice date at the end of each of the reporting periods:
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Within 30 days 54,749 55,054 79,740 93,714
31 to 60 days 12,580 12,514 11,731 13,287
61 to 90 days 5,210 8,113 6,426 4,600
Over 90 days 8,850 10,799 10,701 11,733
81,389 86,480 108,598 123,334
Trade payables denominated in currencies other than the functional currency of the relevant entities now comprising the
Group are set out below:
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
US dollars ( ‘‘US$’’) 1,718 2,021 3,306 2,787
JPY 2,016 1,172 787 1,329
RMB 808 808 808 808
23. BANK BORROWINGS
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Mortgage loans (Note i) 143,343 134,253 110,556 103,572
Bank loans under supplier finance
arrangements (Note ii) 200,911 237,009 287,111 299,182
Term loans under the Small and Medium
Enterprises ( ‘‘SME’’) Financing Guarantee
Scheme (Note iii) 124,017 108,886 91,059 —
Other loans (Note iv) 212,157 189,131 162,797 137,752
680,428 669,279 651,523 540,506
Secured 556,411 560,393 560,464 540,506
Unsecured 124,017 108,886 91,059 —
680,428 669,279 651,523 540,506
Guaranteed 680,428 666,590 647,623 536,830
Unguaranteed — 2,689 3,900 3,676
680,428 669,279 651,523 540,506
APPENDIX I ACCOUNTANTS ’ REPORT
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The carrying amounts of the above borrowings are analyzed based on contractual repayment date as follows:
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
The carrying amounts of borrowings that
contain a repayment on demand clause
(shown under current liabilities) but
repayable:
Within one year 423,288 443,382 461,539 443,039
Within a period of more than one year but
not exceeding two years 42,436 48,330 41,461 14,911
Within a period of more than two years
but not exceeding five years 94,357 81,615 71,247 33,262
Within a period of more than five years 120,347 95,952 77,276 49,294
680,428 669,279 651,523 540,506
The exposure of the Group ’s borrowings is as follows:
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Fixed-rate borrowings 200,911 239,698 291,011 302,858
Variable-rate borrowings 479,517 429,581 360,512 237,648
680,428 669,279 651,523 540,506
The ranges of effective interest rates on the Group ’s borrowings are as follows:
As at 31 March
As at
30 November
2023 2024 2025 2025
Effective interest rates:
— Fixed-rate borrowings 2.99% to 5.77% 2.75% to 6.34% 2.75% to 6.74% 1.38% to 5.83%
— Variable-rate borrowings 2.01% to 4.97% 2.68% to 6.85% 2.05% to 6.32% 1.91% to 3.70%
Notes:
(i) Mortgage loans are secured, interest-bearing ranging from 2.43% to 3.08%, 2.68% to 3.33%, 2.05% to 2.71% and
2.01% to 2.71% per annum as at 31 March 2023, 2024 and 2025 and 30 November 2025, respectively, guaranteed by
Mr. Tse, Mrs. Tse and related parties which are entities c ontrolled by Mr. Tse, including Lung Fung International
Trading Limited, Full Group Corporation Limited, Max Profit Investment (Holdings) Limited and/or Huge Max
(Hong Kong) Limited, and repayable on demand.
APPENDIX I ACCOUNTANTS ’ REPORT
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(ii) The Group enters into certain supplier finance arrange ments with banks. Under these arrangements, the banks pay
suppliers the amounts owed by the Group before original due dates. The Group ’s obligations to suppliers are legally
extinguished on settlement by the relevant banks. The Group then settles with the banks between 90 and 120 days
after settlement by the banks with interest ranging from 2.99% to 5.77%, 4.23% to 6.34%, 3.60% to 6.74% and
1.38% to 5.83% per annum as at 31 March 2023, 2024 and 2025 and 30 November 2025, respectively. Such bank
loans are secured, guaranteed by Mr. Tse, Mrs. Tse, and related parties which are e ntities controlled by Mr. Tse,
including Lung Fung International Trading Limited, Full Group Corporation Limited, Max Profit Investment
(Holdings) Limited, Dragon Grace Corporation Limited and/or Huge Max (Hong Kong) Limited, and repayable on
demand. These arrangements have extended the payment terms, which may be extended beyond the original due
dates of respective invoices. The interest rates are consistent with the Group ’s short-term borrowing rates.
Information of the Group ’s supplier finance arrangements is set out in note 33(b).
(iii) Term loans under the SME Financing Guarantee Scheme are unsecured, interest-bearing ranging from 3.05% to
3.38%, 3.24% to 3.74% and 2.63% to 3.00% per annum as at 31 March 2023, 2024 and 2025, respectively,
guaranteed by Mr. Tse, Mrs. Tse, Mr. Tam Shu Wing and Mr. Wong Sze Chun (who were shareholders of certain
entities now comprising the Group holding shares on trust fo r the benefit of Mr. Tse before the Reorganization), and/
or HKMC Insurance Limited, and repayable on demand.
(iv) Other loans represent revolving loans, term loans and other borrowings. The loans are secured, interest-bearing
ranging from 2.75% to 5.87%, 2.75% to 6.70%, 2.75% to 5.92% and 1.91% to 3.70% per annum as at 31 March
2023, 2024 and 2025 and 30 November 2025, respectively and repayable on demand. Other than other borrowings of
HK$2,689,000, HK$3,900,000 and HK$3,676,000 as at 31 March 2024 and 2025 and 30 November 2025 which are
unguaranteed, the remaining amounts are guaranteed by Mr. Tse, Mrs. Tse, and related parties which are entities
controlled by Mr. Tse, including Lung Fung International Trading Limited, Full Group Corporation Limited, Max
Profit Investment (Holdings) Limited, Dragon Grace Corporation Limited and/or Huge Max (Hong Kong) Limited.
As represented by the directors of the Company, all the guarantees will be released upon the Listing.
In respect of bank loans and bank overdrafts from a bank with carrying amounts of HK$284,936,000, HK$337,447,000,
HK$303,913,000 and HK$302,368,000 as at 31 March 2023, 2024 and 2025 and 30 November 2025, the Group breached a
financial covenant of the relevant bank facility stipulating a maxi mum net value of the related party balances of LFP. The relevant
bank has agreed to waive its right to demand immediate repayment of the outstanding bank loans and bank overdrafts as at 31
March 2023, 2024 and 2025. Such waivers were only related to the respective reporting dates and did not stipulate a specific
waiver period. As the carrying amounts of such bank loans and bank overdrafts have already been classified under current
liabilities as at 31 March 2023, 2024 and 2025 and 30 November 2025 as a result of the repayable on demand clause of the
relevant bank facility, the breach has not resulted in a chang e in the classification of the bank loans and bank overdrafts.
APPENDIX I ACCOUNTANTS ’ REPORT
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24. LEASE LIABILITIES
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Lease liabilities payable
Within one year 102,126 106,378 135,034 168,069
Within a period of more than one year but
not more than two years 59,910 74,548 99,510 112,198
Within a period of more than two years but
not more than five years 27,270 36,013 27,128 64,050
Within a period of more than five years 4,993 4,320 3,595 3,082
194,299 221,259 265,267 347,399
Less: Amount due for settlement within 12
months shown under current liabilities (102,126) (106,378) (135,034) (168,069)
Amount due for settlement after 12 months
shown under non-current liabilities 92,173 114,881 130,233 179,330
The weighted average incremental borrowing rate applie d to lease liabilities is 4.10%, 5.28%, 5.86% and 5.27% as at 31
March 2023, 2024 and 2025 and 30 November 2025.
25. CONTRACT LIABILITIES
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Deposits received in advance of delivery 2,725 781 126 187
As at 1 April 2022, contract liabilities amounted to HK$1,066,000.
The Group receives deposits from mainly wholesale customers and recognizes contract liabilities for the amounts received
in advance. The contract liabilities will be recognized as revenue when control of the goods are transferred to the customers upon
delivery of the goods.
The following table shows how much of the revenue recogn ized relates to carried-forward contract liabilities:
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Revenue that was included in the contract
liability balance at the beginning of the
year/period 1,066 2,725 781 126
APPENDIX I ACCOUNTANTS ’ REPORT
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26. DEFERRED TAXATION
The followings are the major deferred tax assets (liabilities) recognized and movements thereon during the Track Record
Period:
Accelerated
tax
depreciation Tax losses Provisions Others Total
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
As at 1 April 2022 2,432 40,956 — 88 43,476
Credit (charge) to profit or loss 791 (1,685) — (9) (903)
As at 31 March 2023 3,223 39,271 — 79 42,573
(Charge) credit to profit or loss (225) (32,667) — 398 (32,494)
As at 31 March 2024 2,998 6,604 — 477 10,079
(Charge) credit to profit or loss (1,856) (6,604) — 179 (8,281)
As at 31 March 2025 1,142 —— 656 1,798
Credit (charge) to profit or loss 707 — 4,862 (349) 5,220
As at 30 November 2025 1,849 — 4,862 307 7,018
As at 31 March 2023 and 2024, the Group has unused tax losses of approximately HK$245,728,000 and HK$52,391,000
available for offset against future profits. A deferred tax asse t has been recognized in respect of approximately HK$238,009,000
and HK$40,024,000 as at 31 March 2023 and 2024. No deferred tax asset has been recognized in respect of the remaining tax
losses of approximately HK$7,719,000 and HK$12,367,000 due to the unpredictability of future profits streams.
As at 31 March 2025 and 30 November 2025, the Group has unused tax losses of approximately HK$16,913,000 and
HK$19,141,000. No deferred tax asset has been recognized in resp ect of such tax losses due to the unpredictability of future
profits streams.
Other than tax losses arising from the PRC subsidiary of approximately HK$2,433,000, HK$2,602,000, HK$2,487,000 and
HK$1,911,000 as at 31 March 2023, 2024 and 2025 and 30 November 2025 which will expire after 5 years from the year such loss
arises, other tax losses may be carried forward indefinitely.
APPENDIX I ACCOUNTANTS ’ REPORT
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27. PROVISIONS
Provision for
restoration
costs
HK$’000
At 1 April 2022 13,572
Additional provision in the year 5,704
Utilization of provision (424)
At 31 March 2023 18,852
Additional provision in the year 3,126
At 31 March 2024 21,978
Additional provision in the year 9,408
Utilization of provision (348)
At 31 March 2025 31,038
Additional provision in the period 5,787
At 30 November 2025 36,825
28. RETIREMENT BENEFIT PLANS
Defined contribution plans
The Group participates in a Mandatory Provident Fund Scheme (the ‘‘MPF Scheme ’’) established under the
Mandatory Provident Fund Schemes Ordinance in Hong Kong. The assets of the schemes are held separately from those of
the Group, in funds under the control of trustees.
For members of the MPF Scheme, the employer and its employees are each required to make contributions to the
plan at 5% of the employees ’ relevant income, subject to a monthly cap of HK$1,500.
The total expenses recognized in profit or loss of HK$5,728,000, HK$6,861,000, HK$8,966,000, HK$5,812,000
(unaudited) and HK$8,217,000 for the years ended 31 March 2023, 2024 and 2025 and the eight months ended 30
November 2024 and 2025, respectively, represent contributions paid/payable to the MPF Scheme by the Group at the rate
specified in the rules of the plan.
Defined benefit plan
Obligation to pay LSP under Hong Kong Employment Ordinance (Chapter 57)
For entities now comprising the Group which operate in Hong Kong, pursuant to the Hong Kong Employment
Ordinance Chapter 57, the Group has the obligation to pay LSP to qualifying employees in Hong Kong under certain
circumstances (e.g. dismissal by employers or upon retirement), subject to a minimum of 5 years employment period, based
on the following formula:
Last monthly wages (before termination of employment) × 2/3 × Years of service
Last monthly wages are capped at HK$22,500 while the amount of long service payment shall not exceed
HK$390,000. This obligation is accounted for as a post-employment defined benefit plan.
APPENDIX I ACCOUNTANTS ’ REPORT
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Meanwhile, the Group has made mandatory MPF contributions under the MPF Scheme to the trustee who administers
the assets held in a trust solely for the retirement benefits of each individual employee. The Mandatory Provident Fund
Schemes Ordinance passed in 1995 permits the Group to utilize the Group ’s mandatory MPF contributions, plus/minus any
positive/negative returns thereof, for the pur pose of offsetting LSP payable to an employee (the ‘‘Offsetting
Arrangement ’’).
On 17 June 2022, the Government of the Hong Kong Special Administrative Region gazetted the Employment and
Retirement Schemes Legislation (Offsetting Arrangement) (Amendment) Ordinance 2022 (the ‘‘Amendment Ordinance ’’)
which abolishes the use of the accrued benefits derived from employers ’ mandatory MPF contributions to offset the LSP
(the ‘‘Abolition ’’). The Abolition will officially take effect on 1 May 2025 (the ‘‘Transition Date ’’).
Under the Amendment Ordinance, the Group ’s mandatory MPF contributions, plus/minus any positive/negative
returns, after the Transition Date can continue to be applie d to offset the pre-Transition Date LSP obligation but are not
eligible to offset the post-Transition Date LSP obligation. Fu rthermore, the LSP obligation before the Transition Date will
be grandfathered and calculated based on the last monthly w ages immediately preceding the Transition Date and the years
of service up to that date. The Amendment Ordinance has impact on the Group ’s LSP obligation with respect to employees
that participate in MPF Scheme and the Group has accounted for the LSP obligation, taking into account the Abolition, in
accordance with the accounting policies disclosed in note 4.
In July 2023, the HKICPA published ‘‘Accounting implications of the abolition of the MPF-LSP offsetting
m e c h a n i s mi nH o n gK o n g’’which provides guidance for the accounting for th e offsetting mechanism and the impact arising
from the abolition of the MPF-LSP offsetting mechanism in Ho ng Kong. In light of this, the Group has implemented the
guidance published by the HKICPA in connection with the LSP obligation retrospectively for the year ended 31 March
2023.
The Group considered the accrued benefits arising from employer MPF contributions that have been vested with the
employee and which could be used to offset the employee ’s LSP benefits as a deemed contribution by the employee towards
the LSP. Historically, the Group has been applying the practical expedient in paragraph 93(b) of HKAS 19 to account for
the deemed employee contributions as a reduction of the service cost in the period in which the related service is rendered.
Based on the HKICPA ’s guidance, as a result of the Abolition, these contributions are no longer considered ‘‘linked
solely to the employee ’s service in that period ’’since the mandatory employer MPF contributions after the Transition Date
can still be used to offset the pre-transition LSP obligation. Th erefore, it would not be appropr iate to view the contributions
as ‘‘independent of the number of years of service ’’and the practical expedient in paragraph 93(b) of HKAS 19 is no longer
applicable. Instead, these deemed contributions should be a ttributed to periods of service in the same manner as the gross
LSP benefit applying paragraph 93(a) of HKAS 19. Accor dingly, the Group has recognized a cumulative catch-up
adjustment of HK$1,580,000 in profit or loss for the service c ost, interest expense and remeasurement effect from changes
in actuarial assumptions for the year ended 31 March 2023, with corresponding adjustment to the LSP obligation. The
cumulative catch-up adjustment is calculated as the difference at the enactment date (16 June 2022) between the carrying
amount of the LSP liability calculated under paragraph 93(b) of HKAS 19 before the Abolition and the carrying amount of
the LSP liability calculated under paragr aph 93(a) of HKAS 19 after the Abolition.
APPENDIX I ACCOUNTANTS ’ REPORT
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--- page 372 ---
Movements in the present value of LSP obligation for the Track Record Period were as follows:
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Opening LSP obligation — 1,647 1,961 3,059
Cumulative catch-up adjustment upon
enactment of the Amendment
Ordinance 1,580 ———
Current service cost 263 401 555 541
Interest cost 40 59 83 73
Remeasurements recognized in other
comprehensive income
— Actuarial (gains) losses arising
from changes in financial
assumptions (58) (230) 310 (61)
— Actuarial (gains) losses arising
from experience adjustments (178) 102 247 268
Benefits paid — (18) (97) —
Closing LSP obligation 1,647 1,961 3,059 3,880
Year ended 31 March
Eight months ended
30 November
2023 2024 2025 2024 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
The service cost is recognized
within:
Selling and distribution expenses 202 302 447 298 467
Administrative expenses 61 99 108 72 74
263 401 555 370 541
The average duration of the benefit obligation is 17.7, 16.2, 16.1 and 16.0 years as at 31 March 2023, 2024 and 2025 and
30 November 2025, respectively.
Significant actuarial assumptions for the determination of the LSP obligation are discount rates of 3.6%, 4.3%, 3.6% and
3.7% and expected salary increase of 3.0%, 3.0%, 3.0% and 3.0% as at 31 March 2023, 2024 and 2025 and 30 November 2025,
respectively.
The sensitivity analysis below have been determined based on reasonably possible changes of the respective assumptions
occurring at the end of the reporting period, while holding all other assumptions constant.
. If the discount rate is 25 basis points higher (lower), the LSP obligation would decrease by HK$69,000, HK$74,000,
HK$116,000 and HK$145,000 (increase by HK$72,000, HK$78,000, HK$123,000 and HK$154,000) as at 31 March
2023, 2024 and 2025 and 30 November 2025.
. If the expected salary increases (decreases) by 0.25%, the LSP obligation would increase by HK$8,000, HK$10,000,
HK$21,000 and HK$31,000 (decrease by HK$9,000, HK$12,000, HK$23,000, HK$33,000) as at 31 March 2023,
2024 and 2025 and 30 November 2025.
The sensitivity analysis presented above may not be representative of the actual change in the LSP obligation as it is
unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
APPENDIX I ACCOUNTANTS ’ REPORT
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--- page 373 ---
29. CAPITAL
The Group
The Group ’s capital as at 1 April 2022, 31 March 2023, 2024 and 2025 represents the aggregate issued share capital/
registered capital of entities now comprising the Group as follows:
As at
1 April As at 31 March
2022 2023 2024 2025
HK$ HK$ HK$ HK$
Able Harvest Asia Investment Limited 1 1 1 1
Access Holdings Limited ——— 1
Allied Way International Investment Limited 100 100 100 100
Best Harvest Enterprises Limited 100 100 100 100
China Smart Capital Investment Limited 10,000 10,000 10,000 10,000
Dai Ching Holdings Company Limited 100 100 100 100
Dragon Mind Creation Limited 100 100 100 100
Fancy Mind Corporation Limited 1 1 1 1
Forever Rising Worldwide Limited 1,000 1,000 1,000 1,000
Full Honest Asia Limited 1 1 1 1
Full Well International Enterprise Limited 1 1 1 1
Gain Ocean International Limited 100 100 100 100
Golden Period Management Limited 1 1 1 1
Great Dragon Industrial Limited 1 1 1 1
Great Harvest Asia Investment Limited 1 1 1 1
Great Harvest Enterprise Limited 1 1 1 1
Harvest Concept International Limited ——— 1
Huge Harvest Trading Limited 100 100 100 100
Leader Harvest Asia Pacific Limited 100 100 ——
Lucky Talent Corporation Limited 1 1 1 1
Lung Fung Dispensary (3rd Store) Limited 100 100 100 100
Lung Fung Dispensary (Main Store) Limited 100 100 100 100
Lung Fung Investment (China) Limited 100 100 100 100
Lung Fung Investment (Japan) Limited 100 100 100 100
Lung Fung Pharmaceutical (Group) Limited 100 137,000,000 137,000,000 137,000,000
Man Fung Dispensary Limited 100 100 100 100
Man Wah Dispensary Limited 100 100 100 100
Max Dragon Capital Investment Limited 10,000 10,000 10,000 10,000
Max Great Corporation Limited 1 1 1 1
Pearl Lake Global Limited 8 8 8 8
Rich More Investment Limited ——— 1
Rich Stand Limited ——— 1
Robust Harvest Asia Limited 100 100 100 100
San Fung Health Limited 1 1 1 1
Success Power Industrial Limited 1 1 1 1
Tai Fung Medicine Company Limited 100 100 100 100
Tai Tak Pharmacy Limited 100 100 100 100
Top Harvest Pharmaceuticals Company Limited 100 100 100 100
True Harvest Dispensary Company Limited 100 100 100 100
Well Harvest (China) Limited 100 100 100 100
23,020 137,022,920 137,022,820 137,022,824
The Group ’s capital as at 30 November 2025 represents the share capital of the Company.
APPENDIX I ACCOUNTANTS ’ REPORT
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The movements in capital during the Track Record Period are as follows:
HK$
At 1 April 2022 23,020
Issue of shares — Lung Fung Pharmaceutical (Group) Limited 136,999,900
At 31 March 2023 137,022,920
Release upon deregistration — Leader Harvest Asia Pacific Limited (100)
At 31 March 2024 137,022,820
Issue of shares:
— Access Holdings Limited 1
— Rich More Investment Limited 1
— Rich Stand Limited 1
— Harvest Concept Investment Limited 1
At 31 March 2025 137,022,824
Transfer to other reserve upon group reorganization (137,022,824)
Issue of shares by the Company 100
At 30 November 2025 100
The Company
Ordinary shares of HK$0.0001 each
Authorized
Number of
shares
Nominal value
of ordinary
shares
HK$
At 3 October 2025 (date of incorporation) and 30 November 2025 3,900,000,000 390,000
Issued and fully paid
At 3 October 2025 (date of incorporation) 1 — *
Issue of shares as part of the Reorganization (note 2) 999,999 100
At 30 November 2025 1,000,000 100
* Less than HK$1
APPENDIX I ACCOUNTANTS ’ REPORT
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--- page 375 ---
30. OPERATING LEASE ARRANGEMENTS
The Group as lessor
All of the properties held by the Group for rental purpose s have committed lessees for the next 3 years, 3 years, 3
years and 3 years as at 31 March 2023, 2024, 2025 and 30 November 2025 respectively. The lessee does not have an option
to purchase the property at the expiry of the lease period.
Undiscounted lease payments receivable on leases are as follows:
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Within one year 5,765 6,073 5,759 3,540
In the second year 5,533 5,212 2,154 1,100
In the third year 4,672 2,053 648 —
15,970 13,338 8,561 4,640
31. CAPITAL RISK MANAGEMENT
The Group manages its capital to ensure that entities in t he Group will be able to continue as a going concern while
maximising the return to shareholders through the optimisation of the debt and equity balance. The Group ’s overall strategy
remains unchanged throughout the Track Record Period.
The capital structure of the Group consists of net debt, which i ncludes amounts due to related parties, bank borrowings and
lease liabilities discl osed in notes 20, 23 and 24 respectively, net of cash and cash equivalents and equity of the Group, comprising
capital and reserves.
The management reviews the capital structure from time to time. As a part of this review, the management considers the
cost of capital and the risks associated w ith the capital. Based on recommendations of th e management, the Group will balance its
overall capital structure through new share issues, the payment of dividends and the issue of new debt or the redemption of
existing debt.
32. FINANCIAL INSTRUMENTS
(a) Categories of financial instruments
The Group The Company
As at 31 March
As at
30 November
As at
30 November
2023 2024 2025 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
Financial assets
At amortized cost 485,528 592,773 412,366 299,002 —
Financial liabilities
At amortized cost 961,891 934,156 894,901 788,167 8.256
APPENDIX I ACCOUNTANTS ’ REPORT
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--- page 376 ---
(b) Financial risk management objectives and policies
The Group ’s financial instruments include trade and other receivables, amounts due from (to) related parties, cash
and cash equivalents, trade and other payables, bank borrowings and bank overdrafts. The Company ’s financial instruments
include amount due to a subsidiary. Details of the financial instruments are disclosed in respective notes. The risks
associated with these financial instruments include market risk (currency risk and interest rate risk), credit risk and liquidity
risk. The policies on how to mitigate these risks are set out below. The management of the Group manages and monitors
these exposures to ensure appropriate measures ar e implemented on a timely and effective manner.
Market risk
Currency risk
The Group has foreign currency purchases which expose the Group to foreign currency risk. The Company is
not exposed to significant foreign currency risk.
The carrying amounts of the Group ’s significant foreign currency denominated monetary assets and monetary
liabilities at the end of the reporting period are as follows:
Assets Liabilities
As at 31 March
As at
30 November As at 31 March
As at
30 November
2023 2024 2025 2025 2023 2024 2025 2025
HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
US$ ——— — 1,718 2,021 3,306 2,787
JPY 425 719 202 205 2,016 1,172 787 1,329
RMB 253 889 678 1,434 808 808 808 808
The Group currently does not have a foreign exchange hedging policy. However, the management of the
Group monitors foreign exchange exposure and will consid er hedging significant foreign exchange exposure should
the need arise.
Sensitivity analysis
The following table details the Group ’s sensitivity to a 5% increase and decrease in HK$ against the relevant
foreign currencies. 5% is the sensitivity rate used when repor ting foreign currency risk internally to key management
personnel and represents management ’s assessment of the reasonably possible c hange in foreign exchange rates. The
sensitivity analysis includes only outstanding foreign c urrency denominated monetary items and adjusts their
translation at the end of each of the reporting periods for a 5% change in foreign currency rates. A positive number
below indicates a decrease in post-tax loss for the year e nded 31 March 2023 and an increase in post-tax profit for
the years ended 31 March 2024 and 2025 and the eight months ended 30 November 2025, where the HK$
strengthens against the relevant currency. For a 5% weakening of HK$ against the relevant currency, there would be
an equal and opposite impact on profit or loss and the amounts below would be negative.
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Impact on profit or loss
US$ 72 84 138 116
J P Y 6 61 92 44 7
RMB 23 (3) 5 (26)
In management ’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as
the year/period end exposure does not reflect the exposure during the relevant year/period.
APPENDIX I ACCOUNTANTS ’ REPORT
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Interest rate risk
The Group is exposed to fair value interest rate risk in relation to fixed-rate amounts due from related parties,
bank borrowings and lease liabilities. The Group is also ex posed to cash flow interest rate risk in relation to
variable-rate bank balances, bank borrowings and bank ov erdrafts. The Group cash flow interest rate risk is mainly
concentrated on the fluctuation of interest rates on bank balances and Hongkong Interbank Offered Rate arising from
the Group ’s Hong Kong dollar denominated bank borrowings . The Group aims at keeping borrowings at variable
rates. The Group manages its interest rate exposures by ass essing the potential impact arising from any interest rate
movements based on interest rate level and outlook. The management reviews the proportion of borrowings in fixed
and floating rates and ensure they are within reasonable range. The Company is not exposed to significant interest
rate risk.
Total interest income from financial assets that are measured at amortized cost and total expense from
financial liabilities that are measur ed at amortized cost are as follows:
Year ended 31 March
Eight months ended
30 November
2023 2024 2025 2024 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
Interest income on financial
assets at amortized cost 14,415 14,530 16,157 10,335 12,215
Interest expenses on financial
liabilities at amortized
cost 25,688 40,735 33,399 23,326 15,036
Sensitivity analysis
The sensitivity analysis below has been determined ba sed on the exposure to interest rates at the end of each
of the reporting periods. The analysis is prepared assuming the financial instruments outstanding at the end of each
of the reporting periods were outstanding for the whole year/period. A 100 basis point increase or decrease in
variable-rate bank borrowings and bank overdrafts are us ed when reporting interest rate risk internally to key
management personnel and represents management ’s assessment of the reasonably possible change in interest rates.
Bank balances are excluded from sensitivity analysis as th e management of the Group considers that the exposure of
cash flow interest rate risk arising from vari able-rate bank balances is insignificant.
If interest rates had been 100 basis points higher/lower and all other variables were held constant, the Group ’s
post-tax loss for the year ended 31 March 2023 would increase/decrease by HK$5,204,000, and the Group ’s post-tax
profit for the years ended 31 March 2024 and 2025 and the eight months ended 30 November 2025 would decrease/
increase by HK$4,620,000, HK$3,887,000 and HK$2,759,000, respectively, which is mainly attributable to the
Group ’s exposure to interest rates on its variable-rate bank borrowings and bank overdrafts.
APPENDIX I ACCOUNTANTS ’ REPORT
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Credit risk and impairment assessment
Credit risk refers to the risk that the Group ’s counterparties default on their contractual obligations resulting
in financial losses to the Group. The Group ’s credit risk exposures are primarily attributable to trade receivables,
other receivables and deposits, amounts due from related p arties, bank balances and financial guarantee contracts.
The Group does not hold any collateral or other credit enhancements to cover the credit risk associated with their
financial assets and financial guarantee contracts.
Trade receivables arising fro m contracts with customers
Trade receivables arising from retail sales represen t amounts receivable from electronic payment service
providers and online platforms which are mainly banks and o ther financial institutions and online platform providers
and who have high credit ratings assigned by international credit rating agencies. In this regard, the directors of the
Company consider that the Group ’s credit risk is significantly reduced.
For trade receivables arising from wholesale sales, in order to minimize the credit risk, the management of the
Group has delegated a team responsible for determination of credit limits and credit approvals. Before accepting any
new customer, the Group assesses the credit quality of each potential customer and defines a credit rating and limit
for each customer which are reviewed regularly by the management. Other monitoring procedures are in place to
ensure that follow-up action is taken to recover overdue debts. In this regard, the management considers that the
Group ’s credit risk is significantly reduced.
The Group performs impairment assessment under ECL model on trade receivables and has applied the
simplified approach to measure the loss allowance at lifetime ECL. Trade recei vables arising from retail sales have
been assessed for ECL individually based on external credit rating. Trade receivables from wholesale customers are
assessed for ECL individually based on internal credit rating. No significant lifetime ECL is recognized on the
Group ’s trade receivables considering their external credit ra ting (if available), repayment history and historical
default experience of the counterparties.
Other receivables, deposits and amounts due from related parties
For other receivables and deposits and amounts due fr om related parties, the management makes periodic
individual assessment on the recoverability of other receivables, deposits and amounts due from related parties based
on historical settlement records, past experience, and al so quantitative and qualitative information that is reasonable
and supportive forward-looking information.
As there is no significant change in the credit profile of the counterparties, the management of the Group
considers that there are no significa nt increases in credit risk of these amounts since initial recognition. As such, the
Group assesses the amounts for impairment based on 12m ECL under the ECL model. No significant 12m ECL is
recognized considering the financial background, repaym ent history and historical default experience of the
counterparties.
Bank balances
Credit risk on bank balances is limited because the counterparties are reputable banks with high credit ratings
assigned by international credit agencies. The Group assesses 12m ECL for bank balances by reference to
information relating to probability of default and loss give n default of the respective credit rating grades published
by external credit rating agencies. No significant 12m EC L is recognized based on the low average loss rates of the
counterparties.
APPENDIX I ACCOUNTANTS ’ REPORT
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Financial guarantee contracts
For financial guarantee contracts, the amount of bank facilities utilized by a related party in respect of which
financial guarantee contracts have been issued to banks by the Group amounted to HK$128,599,000,
HK$106,154,000, HK$92,409,000 and HK$82,792,000 as at 31 March 2023, 2024 and 2025 and 30 November 2025
respectively. The fair value of these financial guara ntee, as at dates of initial recognition, were considered
insignificant. At the end of the reporting period, the management of the Group has performed impairment
assessment, and concluded that there has been no signifi cant increase in credit risk since initial recognition of the
financial guarantee contracts. Accordingly, the loss allowa nce for financial guarantee contracts issued by the Group
is measured at an amount equal to 12m ECL. No loss allowance was recognized in the profit or loss as the amount of
the loss allowance was not significant.
The Group is not subject to significant concentration of credit risk.
The Group ’s internal credit risk gra ding assessment comprises the following categories:
Internal credit
rating Description
Trade
receivables
Other financial
assets
Low risk The counterparty has a low risk of default and
does not have any past-due amounts
Lifetime ECL —
not credit-
impaired
12-month ECL
Watch list Debtor frequently repays after due dates but
usually settle after due date
Lifetime ECL —
not credit-
impaired
12-month ECL
Doubtful There have been significant increases in credit
risk since initial recognition through
information developed internally or external
resources
Lifetime ECL —
not credit-
impaired
Lifetime ECL —
not credit-
impaired
Loss There is evidence indicating the asset is credit-
impaired
Lifetime ECL —
credit-impaired
Lifetime ECL —
credit-impaired
Write-off There is evidence indicating that the debtor is in
severe financial difficulty and the Group has
no realistic prospect of recovery
Amount is written
off
Amount is written
off
APPENDIX I ACCOUNTANTS ’ REPORT
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The tables below detail the credit risk exposures of the Group ’s financial assets and financial guarantee
contracts, which are subject to ECL assessment:
Notes
External
credit rating
Internal
credit
rating
12m or lifetime
ECL
Gross carrying amounts
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Financial assets at
amortized cost
Trade receivables 19 P-1 N/A Lifetime ECL
(individual
assessment)
3,198 15,094 5,229 17,869
N/A Low risk Lifetime ECL
(individual
assessment)
750 2,238 2,964 4,731
3,948 17,332 8,193 22,600
Other receivables
and deposits
19 N/A Low risk 12m ECL 30,095 46,264 53,914 62,588
Amounts due from
related parties
20 N/A Low risk 12m ECL 408,348 467,769 289,077 163,918
Bank balances 21 P-1 N/A 12m ECL 38,827 54,109 55,967 36,508
Other item
Financial guarantee
contracts
35 N/A Low risk 12m ECL 128,599 106,154 92,409 82,792
Note: For financial guarantee contracts, the gross carrying amount represents the maximum amount the
Group has guaranteed under the respective contracts.
Liquidity risk
In the management of the liquidity risk, the Group monitors and maintains a level of cash and cash
equivalents deemed adequate by the management to finance the Group ’s operations and mitigate the effects of
fluctuations in cash flows. The management of the Group monitors the utilization of bank borrowings and ensures
compliance with loan covenants.
The Group relies on bank borrowings and bank overdrafts as a significant source of liquidity. As at 31 March
2023, 2024, 2025 and 30 November 2025, the Group has availabl e unutilized overdraft and short-term loan facilities
of HK$82,175,000, HK$112,161,000, HK$185,309,000 and HK$196,942,000, respectively.
APPENDIX I ACCOUNTANTS ’ REPORT
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The Group entered into supplier finance arrangement to ease access to credit for its suppliers. A substantial
portion of the Group ’s trade payables is subject to supplier finance arrangement with a few banks. This results in the
Group having obligation of settlement concentrated in that party. The facility for borrowings under supplier finance
arrangement is entered into for a period of 3 months. As at 31 March 2023, 2024 and 2025 and 30 November 2025,
the Group has available unutilized facility for such sup plier finance arrangements of HK$244,685,000,
HK$235,292,000, HK$224,694,000 and HK$242,402,000, respectively. Details of the arrangements are set out in
note 23.
Considering the aggregated available facilities in resp ect of the above overdraft and short-term loan facilities
and supplier finance arrangements under the respective bank facilities, the aggregate amount of unutilized bank
facilities amounted to HK$275,264,000, HK$273,122,000, HK$308,199,000 and HK$338,421,000 as at 31 March
2023, 2024 and 2025 and 30 November 2025, respectively.
Details of the going concern assessment are set out in note 2.
The following table details the Group ’s remaining contractual maturity for its financial liabilities and lease
liabilities. The table has been drawn up based on the undiscounted cash flows of financial liabilities and lease
liabilities based on the earliest date on which the Group can be required to pay. Specifically, bank loans with a
repayment on demand clause are included in the earliest time band regardless of the probability of the banks
choosing to exercise their rights. The maturity dates for other financial liabilities are based on the agreed repayment
dates.
The table includes both interest and principal cash flows. To the extent that interest cash flows are based on
variable rate, the undiscounted amount is derived based on management ’s best estimates at the end of the reporting
period, taking into consideration interest rate curve, if available.
Liquidity tables
Weighted
average
effective
interest rate
On demand
or less than 1
month
1 month to 3
months
3m o n t h st o1
year
1y e a rt o5
years Over 5 years
Total
undiscounted
cash flows
Carrying
amount
%H K $ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
The Group
As at 31 March 2023
Trade and other payables — 87,555 ———— 87,555 87,555
Amounts due to related
parties — 50,223 ———— 50,223 50,223
Bank borrowings
— fixed-rate 5.06 200,911 ———— 200,911 200,911
— variable-ra te 3.96 479,517 ———— 479,517 479,517
Lease liabilities 4.10 11,006 18,200 74,356 95,465 6,148 205,175 194,299
Bank overdrafts 3.84 143,685 ———— 143,685 143,685
972,897 18,200 74,356 95,465 6,148 1,167,066 1,156,190
Financial guarantee
contracts — 128,599 ———— 128,599 —
APPENDIX I ACCOUNTANTS ’ REPORT
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Weighted
average
effective
interest rate
On demand
or less than 1
month
1 month to 3
months
3m o n t h st o1
year
1y e a rt o5
years Over 5 years
Total
undiscounted
cash flows
Carrying
amount
%H K $ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
As at 31 March 2024
Trade and other payables — 93,037 ———— 93,037 93,037
Amounts due to related
parties — 48,141 ———— 48,141 48,141
Bank borrowings
— fixed-rate 5.95 239,698 ———— 239,698 239,698
— variable-ra te 4.58 429,581 ———— 429,581 429,581
Lease liabilities 5.28 10,271 22,090 86,667 120,708 5,134 244,870 221,259
Bank overdrafts 5.45 123,699 ———— 123,699 123,699
944,427 22,090 86,667 120,708 5,134 1,179,026 1,155,415
Financial guarantee
contracts — 106,154 ———— 106,154 —
As at 31 March 2025
Trade and other payables — 125,493 ———— 125,493 125,493
Amounts due to related
parties — 12,836 ———— 12,836 12,836
Bank borrowings
— fixed-rate 5.48 291,011 ———— 291,011 291,011
— variable-ra te 3.84 360,512 ———— 360,512 360,512
Lease liabilities 5.86 13,865 28,549 109,976 135,682 4,119 292,191 265,267
Bank overdrafts 4.26 105,049 ———— 105,049 105,049
908,766 28,549 109,976 135,682 4,119 1,187,092 1,160,168
Financial guarantee
contracts — 92,409 ———— 92,409 —
As at 30 November 2025
Trade and other payables — 129,707 ———— 129,707 129,707
Amounts due to related
parties — 25,199 ———— 25,199 25,199
Bank borrowings
— fixed-rate 2.14 302,858 ———— 302,858 302,858
— variable-ra te 2.57 237,648 ———— 237,648 237,648
Lease liabilities 5.27 17,384 35,602 134,229 197,096 3,443 387,754 347,399
Bank overdrafts 2.26 92,755 ———— 92,755 92,755
805,551 35,602 134,229 197,096 3,443 1,175,921 1,135,566
Financial guarantee
contracts — 82,792 ———— 82,792 —
The Company
As at 30 November 2025
Amount due to a subsidiary — 8,256 ———— 8,256 8,256
APPENDIX I ACCOUNTANTS ’ REPORT
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Bank loans with a repayment on demand clause are included in the ‘‘on demand or less than 1 month ’’time
band in the above maturity analysis. Taking into account the Group ’s financial position, the management does not
believe that it is probable that the banks will exercise their discretionary rights to demand immediate repayment. The
management of the Group believes that such bank loans will be repaid after the end of each of the reporting periods
in accordance with the scheduled repayment dates set out in the loan agreements. Details are set out in the table
below:
Less than 1
year
1y e a rt o2
years
2 years to 5
years Over 5 years
Total
undiscounted
cash flows
Carrying
amount
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
As at 31 March 2023 437,499 49,791 107,275 193,582 788,147 680,428
As at 31 March 2024 464,544 53,490 90,838 103,590 712,462 669,279
As at 31 March 2025 472,666 46,068 79,820 84,490 683,044 651,523
As at 30 November 2025 450,311 17,451 38,572 54,842 561,176 540,506
The amounts included above for financial guarantee contracts are the maximum amounts the Group could be
required to settle under the arrangement for the full guaranteed amount if that amount is claimed by the counterparty
to the guarantee. Based on expectations at the end of each of the reporting periods, the management considers that it
is more likely that no amount will be payable under the arrangement. However, this estimate is subject to change
depending on the probability of the counterparty claiming under the guarantee which is a function of the likelihood
that the financial receivables held by the counterparty which are guaranteed suffer credit losses.
The amounts included above for variable interest rate instruments are subject to change if changes in variable
interest rates differ to those estimates of interest rates determined at the end of each of the reporting periods.
(c) Fair value measurements of financial instruments
The directors of the Company consider that the Group ’s carrying amounts of financial assets and financial liabilities
recorded at amortized cost in the Historical Financ ial Information approxima te to their fair values.
APPENDIX I ACCOUNTANTS ’ REPORT
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33. NOTES TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS
(a) Reconciliation of liabilities arising from financing activities
The table below details changes in the Group ’s liabilities arising from financing activities, including both cash and
non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will
be, classified in the Group ’s consolidated statements of cash flows as cash flows from financing activities.
Amounts due
to related
parties
Lease
liabilities
Bank
borrowings
Accrued
issue costs Total
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
At 1 April 2022 137,500 157,645 598,180 — 893,325
Financing cash flows 2,140 (93,669) (540,203) — (631,732)
Borrowings raised under supplier
finance arrangement —— 601,765 — 601,765
New leases entered/leases modified — 123,545 —— 123,545
Interest expenses — 6,778 20,686 — 27,464
Settlement of issue of shares (note 34) (89,417) ——— (89,417)
At 31 March 2023 50,223 194,299 680,428 — 924,950
Financing cash flows (2,082) (131,572) (972,216) — (1,105,870)
Borrowings raised under supplier
finance arrangement —— 926,708 — 926,708
New leases entered/leases modified — 146,610 —— 146,610
Interest expenses — 11,922 34,359 — 46,281
At 31 March 2024 48,141 221,259 669,279 — 938,679
Financing cash flows (68,305) (164,634) (1,117,492) — (1,350,431)
Borrowings raised under supplier
finance arrangement —— 1,070,663 — 1,070,663
New leases entered/leases modified — 190,574 —— 190,574
Interest expenses — 18,068 29,073 — 47,141
Dividends declared 33,000 ——— 33,000
At 31 March 2025 12,836 265,267 651,523 — 929,626
Financing cash flows 12,363 (131,627) (917,394) (1,854) (1,038,512)
Borrowings raised under supplier
finance arrangement —— 792,868 — 792,868
New leases entered/leases modified — 200,987 —— 200,987
Issue costs recognized ——— 3,351 3,351
Prepaid issue costs recognized ——— 13 13
Interest expenses — 12,772 13,509 — 26,281
At 30 November 2025 25,199 347,399 540,506 1,510 914,614
For the eight months ended
30 November 2024 (unaudited)
At 1 April 2024 48,141 221,259 669,279 — 938,679
Financing cash flows 3,228 (105,228) (746,231) — (848,231)
Borrowings raised under supplier
finance arrangement —— 679,700 — 679,700
New leases entered/leases modified — 130,643 —— 130,643
Interest expenses — 11,948 20,130 — 32,078
At 30 November 2024 51,369 258,622 622,878 — 932,869
APPENDIX I ACCOUNTANTS ’ REPORT
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--- page 385 ---
(b) Information of supplier finance arrangements
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Carrying amount of the financial
liabilities that are subject to
supplier finance arrangements
— Presented as part of ‘‘bank
borrowings ’’(note 23) 200,911 237,009 287,111 299,182
— Of which suppliers have already
received payment from
the finance provider 200,911 237,009 287,111 299,182
As at 31 March
As at
30 November
2023 2024 2025 2025
Days Days Days Days
Range of payment due dates
For liabilities presented as part of
‘‘bank borrowings ’’:
— Liabilities that are part of supplier
finance arrangements 90 to 120 90 to 120 90 to 120 90 to 120
— Comparable trade payables that are
not part of supplier finance
arrangements 0 to 60 0 to 60 0 to 60 0 to 60
Changes in liabilities that are subject to supplier finan ce arrangements are primarily attributable to additions
resulting from purchases of goods and subsequent cash settlements. During the years ended 31 March 2023, 2024 and 2025
and the eight months ended 30 November 2024 and 2025, borrowings under supplier finance arrangement of
HK$601,765,000, HK$926,708,000, HK$1,070,663,000, HK$679,700,000 (unaudited) and HK$792,868,000, respectively,
represent the payments to the suppliers by the relevant banks directly. There were no other material non-cash changes in
these liabilities.
34. MAJOR NON-CASH TRANSACTIONS
During the Track Record Period, the Group entered i nto the following major non-cash transactions:
. During the years ended 31 March 2023, 2024 and 2025 and the eight months ended 30 November 2024 and 2025, the
Group entered into new lease agreements and modified existing lease agreements for the use of leased properties and
recognized right-of-use assets of HK$129,980,000, HK$152,810,000, HK$202,961,000, HK$138,704,000 (unaudited)
HK$209,567,000, and lease liabilities of HK$123,545,000, HK$146,610,000, HK$190,574,000 and HK$130,643,000
(unaudited) and HK$200,987,000 respectively on the lease commencement/modification.
. Dividends declared by Dragon Mind Creation Limited of HK$13,000,000 during the year ended 31 March 2023 were
charged to amounts due to related parties. Dividends de clared by LFP, Top Harvest Pharmaceuticals Company
Limited and Pearl Lake Global Limited of HK$200,000,000, HK$33,000,000 and HK$22,000,000 respectively during
the year ended 31 March 2025 were settled through amounts due from related parties as to HK$222,000,000 and
charged to amounts due to related parties as to HK$33,000,000.
. During the year ended 31 March 2023, share capital issued by LFP of HK$137,000,000 was settled through the
amounts due from related parties as to HK$47,583,000 and charged to amounts due to related parties as to
HK$89,417,000.
. During the eight months ended 30 November 2025, the registered capital of LFP was reduced by HK$137,000,000,
which was settled through the amount due from a related party.
APPENDIX I ACCOUNTANTS ’ REPORT
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35. RELATED PARTY DISCLOSURES
(a) Related party transactions
Other than as disclosed elsewhere in the Historical Financ ial Information, the Group has f ollowing transactions with
related parties which are entities controlled by Mr. Tse:
Year ended 31 March
Eight months ended
30 November
2023 2024 2025 2024 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
Management fee income 1,974 1,974 1,974 1,316 1,316
Interest income 13,287 13,441 14,707 8,959 10,828
Building management expenses 1,110 1,360 1,818 1,201 2,287
(b) The Group entered into lease agreements with related par ties (which are entities controlled by Mr. Tse) for the use of
office premises, warehouses and retail stores. The lease terms range from 0.5 to 5 years, from 1.5 to 5 years, from 2
to 5 years, 2 to 5 years (unaudited) and from 2 to 5 years for the years ended 31 March 2023, 2024 and 2025 and the
eight months ended 30 November 2024 and 2025 respectivel y. The related lease liabilities as at 31 March 2023, 2024
and 2025 and 30 November 2025 amounted to HK$14,204,000, HK$6,143,000, HK$11,317,000 and HK$14,005,000,
respectively.
Further information about the Group ’s leases with related parties for the years ended 31 March 2023, 2024 and 2025
and the eight months ended 30 November 2025 is as follows:
Year ended 31 March
Eight months ended
30 November
2023 2024 2025 2024 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
Adjustments to lease liabilities
upon lease modification 25,601 3,815 19,330 8,432 18,521
Interest expenses on lease
liabilities 550 492 540 349 871
Lease payments 13,331 12,368 14,696 9,269 16,704
(c) Related party balances
Details of the Group ’s balances with related parties are set out in the c onsolidated statements of financial position
and note 20.
(d) As disclosed in note 23, Mr. Tse and Mrs. Tse provided personal guarantees to an unlimited extent to banks for bank
facilities granted to the Group for the years ended 31 March 2023, 2024 and 2025 and the eight months ended 30
November 2025. As represented by the directors of the Company, the personal guarantees will be released upon the
Listing.
(e) As disclosed in note 23, related parties which are entities controlled by Mr. Tse provided corporate guarantees to
banks to an unlimited extent for bank facilities granted to the Group for the three years ended 31 March 2023, 2024
and 2025 and the eight months ended 30 November 2025. As represented by the directors of the Company, the
corporate guarantees will be released upon the Listing.
(f) As disclosed in note 23, bank borrowings of HK$556,411,000, HK$557,704,000, HK$556,564,000 and
HK$536,830,000 as at 31 March 2023, 2024, 2025 and 30 November 2025 are secured by pledge of properties held
by related parties which are entities controlled by Mr. Tse. As represented by the directors of the Company, the
pledge will be released upon the Listing.
APPENDIX I ACCOUNTANTS ’ REPORT
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(g) The Group provided a corporate guarantee to an unlimited extent to a bank for banking facilities granted to a related
party. As at 31 March 2023, 2024 and 2025 and 30 November 2025, bank facilities utilized by the related party
amounted to HK$128,599,000, HK$106,154,000, HK$92,409,000 and HK$82,792,000 respectively. As represented
by the directors of the Company, the corporat e guarantee will be released upon the Listing.
(h) Compensation of key management personnel
The remuneration of directors and other members of key management during the Track Record Period was as
follows:
Year ended 31 March
Eight months ended
30 November
2023 2024 2025 2024 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000 HK$ ’000
(Unaudited)
Short-term employee benefits 4,697 5,502 5,957 2,972 3,070
Post-employment benefits 119 123 126 84 23
4,816 5,625 6,083 3,056 3,093
36. PLEDGE OF ASSETS
The Group ’s borrowings had been secured by the pledge of the Group ’s assets and the carrying amounts of the respective
assets are as follows:
As at 31 March
As at
30 November
2023 2024 2025 2025
HK$’000 HK$ ’000 HK$ ’000 HK$ ’000
Investment properties 256,500 239,730 187,920 149,760
Property, plant and equipment — 2,789 4,432 31,354
256,500 242,519 192,352 181,114
37. FINANCIAL INFORMATION OF THE COMPANY
(a) Investments in subsidiaries
As at 30 November
2025
HK$’000
Unlisted investment at cost 58,663
(b) Amount due to a subsidiary
Amount due to a subsidiary as at 30 November 2025 is non-trade related, unsecured, interest-free and repayable on
demand.
APPENDIX I ACCOUNTANTS ’ REPORT
– I-70 –


--- page 388 ---
(c) Reserves
Share premium
Accumulated
losses Total
HK$’000 HK$ ’000 HK$ ’000
At 3 October 2025 (date of incorporation) ———
Issue and allotment of shares 58,663 — 58,663
Loss and total comprehensive expense for the period — (11,132) (11,132)
At 30 November 2025 58,663 (11,132) 47,531
38. PARTICULARS OF SUBSIDIARIES
During the Track Record Period and as at the date of this report, the Company has direct and indirect shareholding/equity
interests in the following subsidiaries:
Name of subsidiary
Place
the date of
incorporation/
establishment
Issued and
fully paid
capital/
registered
capital
Shareholding/equity interests attributable
to the Group
As at
date of
this
report Principal activities Notes
As at 31 March
As at
30
November
2023 2024 2025 2025
Directly held
LF Retail Holding Limited BVI
9 October 2025
US$1 N/A N/A N/A N/A 100% Investment holding (a)
TH Wholesale Holding
Limited
BVI
9 October 2025
US$1 N/A N/A N/A N/A 100% Investment holding (a)
PL Beautie Limited BVI
9 October 2025
US$1 N/A N/A N/A N/A 100% Investment holding (a)
LF Consultancy Limited BVI
9 October 2025
US$1 N/A N/A N/A N/A 100% Investment holding (a)
Indirectly held
Able Harvest Asia Investment
Limited*
Hong Kong
7 March 2013
HK$1 100% 100% 100% 100% 100% Operation of retail
stores
(f)
Access Holdings Limited* Hong Kong
10 January 2025
HK$1 N/A N/A 100% 100% 100% Operation of retail
stores
(f)
Allied Way International
Investment Limited*
Hong Kong
17 June 2016
HK$100 N/A N/A 100% 100% 100% Operation of retail
stores
(f)
Best Harvest Enterprises
Limited*
Hong Kong
13 January 2009
HK$100 100% 100% 100% 100% 100% Operation of retail
stores
(f)
China Smart Capital
Investment Limited*
Hong Kong
1 November 2016
HK$10,000 100% 100% 100% 100% 100% Operation of retail
stores
(f)
Dai Ching Holdings Company
Limited
#
Hong Kong
10 June 2009
HK$100 100% 100% 100% 100% 100% Wholesale (d)
Dragon Mind Creation
Limited
Hong Kong
3 August 2015
HK$100 100% 100% 100% 100% 100% Advertising and
promotion
agency
(b)
Fancy Mind Corporation
Limited
Hong Kong
4 January 2019
HK$1 100% 100% 100% 100% 100% Inactive (f)
APPENDIX I ACCOUNTANTS ’ REPORT
– I-71 –


--- page 389 ---
Name of subsidiary
Place
the date of
incorporation/
establishment
Issued and
fully paid
capital/
registered
capital
Shareholding/equity interests attributable
to the Group
As at
date of
this
report Principal activities Notes
As at 31 March
As at
30
November
2023 2024 2025 2025
Forever Rising Worldwide
Limited*
Hong Kong
30 October 2009
HK$1,000 100% 100% 100% 100% 100% Operation of retail
stores
(f)
Full Honest Asia Limited* Hong Kong
18 January 2018
HK$1 100% 100% 100% 100% 100% Operation of retail
stores
(f)
Full Well International
Enterprise Limited*
Hong Kong
18 October 2019
HK$1 100% 100% 100% 100% 100% Operation of retail
stores
(f)
Gain Ocean International
Limited*
Hong Kong
23 July 2009
HK$100 100% 100% 100% 100% 100% Operation of retail
stores
(f)
Golden Period Management
Limited*
Hong Kong
28 June 2023
HK$1 100% 100% 100% 100% 100% Operation of retail
stores
(f)
Grand Harvest Worldwide
Limited
Hong Kong
3 November 2010
HK$100 N/A 100% 100% 100% 100% Lease management (f)
Great Dragon Industrial
Limited*
Hong Kong
17 January 2013
HK$1 100% 100% 100% 100% 100% Operation of retail
stores
(f)
Great Harvest Asia
Investment Limited*
Hong Kong
23 May 2018
HK$1 100% 100% 100% 100% 100% Operation of retail
stores
(f)
Great Harvest Enterprise
Limited*
Hong Kong
5 June 2006
HK$1 100% 100% 100% 100% 100% Operation of retail
stores
(f)
Harvest Concept International
Limited*
Hong Kong
15 October 2024
HK$1 N/A N/A 100% 100% 100% Operation of retail
stores
(f)
Harvest Smart Holdings
Limited
Hong Kong
12 January 2018
HK$1 100% 100% 100% 100% 100% Property holding (c)
Huge Harvest Trading
Limited #
Hong Kong
16 November
2006
HK$100 100% 100% 100% 100% 100% Wholesale (f)
Kidbrooke Group Limited Samoa
16 September
1997
US$1 100% 100% 100% 100% 100% Property holding (c)
Leader Harvest Asia Pacific
Limited
Hong Kong
15 November
2018
(Note e) 60% N/A N/A N/A N/A N/A (f)
Lucky Talent Corporation
Limited #
Hong Kong
13 October 2016
HK$1 100% 100% 100% 100% 100% Wholesale (f)
Lung Fung Dispensary (3rd
Store) Limited*
Hong Kong
15 October 2007
HK$100 100% 100% 100% 100% 100% Operation of retail
stores
(f)
Lung Fung Dispensary (Main
Store) Limited*
Hong Kong
2 June 2004
HK$100 100% 100% 100% 100% 100% Operation of retail
stores
(f)
Lung Fung Investment
(China) Limited
Hong Kong
3 August 2018
HK$100 100% 100% 100% 100% 100% Investment holding (f)
Lung Fung Investment (Japan)
Limited
Hong Kong
22 May 2018
HK$100 100% 100% 100% 100% 100% Overseas sourcing (f)
APPENDIX I ACCOUNTANTS ’ REPORT
– I-72 –


--- page 390 ---
Name of subsidiary
Place
the date of
incorporation/
establishment
Issued and
fully paid
capital/
registered
capital
Shareholding/equity interests attributable
to the Group
As at
date of
this
report Principal activities Notes
As at 31 March
As at
30
November
2023 2024 2025 2025
Lung Fung Pharmaceutical
(Group) Limited
Hong Kong
8 June 2007
(Note f) 100% 100% 100% 100% 100% Retail, wholesale
and investment
holding
(d)
Man Fung Dispensary
Limited*
Hong Kong
3 August 2011
HK$100 100% 100% 100% 100% 100% Operation of retail
stores
(f)
Man Wah Dispensary
Limited*
Hong Kong
7 June 2011
HK$100 100% 100% 100% 100% 100% Operation of retail
stores
(f)
Master Grand Investment
Limited*
Hong Kong
8 April 2025
HK$1 N/A N/A N/A 100% 100% Operation of retail
stores
(f)
Max Dragon Capital
Investment Limited*
Hong Kong
1 November 2016
HK$10,000 100% 100% 100% 100% 100% Operation of retail
stores
(f)
Max Great Corporation
Limited*
Hong Kong
31 August 2018
HK$1 100% 100% 100% 100% 100% Operation of retail
shops
(f)
Pearl Lake (Hong Kong)
Limited
Hong Kong
24 October 2016
HK$1 100% 100% 100% 100% 100% Private label
business
(e)
Pearl Lake Global Limited BVI
23 October 2019
US$1 100% 100% 100% 100% 100% Investment holding (a)
Rich More Investment
Limited*
Hong Kong
12 July 2024
HK$1 N/A N/A 100% 100% 100% Operation of retail
stores
(e)
Rich Stand Limited* Hong Kong
10 May 2024
HK$1 N/A N/A 100% 100% 100% Operation of retail
stores
(e)
Robust Harvest Asia Limited* Hong Kong
17 April 2008
HK$100 100% 100% 100% 100% 100% Operation of retail
stores
(f)
San Fung Health Limited Hong Kong
30 April 2005
HK$1 100% 100% 100% 100% 100% Inactive (f)
Success Power Industrial
Limited*
Hong Kong
2 January 2018
HK$1 100% 100% 100% 100% 100% Operation of retail
stores
(f)
Tai Fung Medicine Company
Limited*
Hong Kong
4 June 2010
HK$100 100% 100% 100% 100% 100% Operation of retail
stores
(f)
Tai Tak Pharmacy Limited* Hong Kong
16 October 2009
HK$100 100% 100% 100% 100% 100% Operation of retail
stores
(f)
Tak Fung International
Trading Development
(Guangzhou) Co., Limited
德豐國際貿易發展(廣州)
有限公司
PRC
12 March 2021
RMB6,400,000 100% 100% 100% 100% 100% Wholesale (f)
Top Harvest Pharmaceuticals
Company Limited #
Hong Kong
26 April 2002
HK$100 100% 100% 100% 100% 100% Wholesale (d)
True Harvest Dispensary
Company Limited*
Hong Kong
12 August 2010
HK$100 100% 100% 100% 100% 100% Operation of retail
stores
(f)
Well Harvest (China)
Limited*
Hong Kong
1 September
2015
HK$100 100% 100% 100% 100% 100% Operation of retail
stores
(f)
* For the purpose of the Reorganization as set out in note 2, these entities are collectively referred to as the ‘‘Retail
Companies ’’
APPENDIX I ACCOUNTANTS ’ REPORT
– I-73 –


--- page 391 ---
# For the purpose of the Reorganization as set out in note 2, these entities are collectively referred to as the
‘‘Wholesale Companies ’’
All entities now comprising the Group are limited liability companies. Other than Tak Fung International Trading
Development (Guangzhou) Co., Limited which was established in the PRC and has a financial year end date of 31 December, all
other entities now comprising the Group have adopted 31 March as their financial year end date.
Notes:
(a) No audited financial statements for these companies have been prepared since their respective dates of incorporation
as they are incorporated in the jurisdiction whe re there are no statutory audit requirements.
(b) The statutory financial statements for this entity for the year ended 31 March 2023 was prepared in accordance with
HKFRS Accounting Standards for Private Entities as iss ued by the HKICPA and were audited by World Link CPA
Limited, Certified Public Accountants registered in Hong Kong. No statutory audited financial statements have been
prepared for the year ended 31 March 2024 and 2025.
(c) The statutory financial statements for these entities for each of the years ended 31 March 2023 and 2024 were
prepared in accordance with HKFRS A ccounting Standards for Private Entitie s as issued by the HKICPA and were
audited by World Link CPA Limited, Certified Public Accountants registered in Hong Kong. No statutory audited
financial statements have been prepared for the year ended 31 March 2025.
(d) The statutory financial statements for these entities for each of the years ended 31 March 2023, 2024 and 2025 were
prepared in accordance with HKFRS A ccounting Standards for Private Entitie s as issued by the HKICPA and were
audited by World Link CPA Limited, Certified Public Accountants registered in Hong Kong.
(e) No statutory audited financial statements have been prepared for these entities for each of the years ended 31 March
2023 and 2024. The statutory financial statements for this entity for the year ended 31 March 2025 was prepared in
accordance with HKFRS Accounting Standards for Private Entities as issued by the HKICPA and were audited by
World Link CPA Limited, Certified Public Accountants registered in Hong Kong.
(f) No statutory audited financial statements have be en prepared for these entities for each of years ended 31 March
2023, 2024 and 2025.
(g) The issued share capital of Leader Harvest Asia Pacific Limited as at 31 March 2023 amounted to HK$100. Leader
Harvest Asia Pacific Limited was deregistered on 8 September 2023.
(h) The issued and fully paid-up share capital of LFP as at 31 March 2023, 2024 and 2025 amounted to
HK$137,000,000. As disclosed in note 2, as part of the Reorganization, on 16 October 2025, LFP issued and
allotted 100,000 new shares to LF Retail Holding Limited at a total consideration of HK$10; and on 28 November
2025, 1,000 existing shares amounting to HK$137,000,000 were cancelled and repaid through the offsetting of
HK$137,000,000 due from an entity indirectly wholly-owned by Mr. Tse. Accordingly, the share capital of LFP as at
30 November 2025 and the date of this report amounted to HK$10.
39. SUBSEQUENT EVENTS
Saved as disclosed in the report, subsequent to the end of th e Track Record Period, the following significant events took
place:
. On 10 February 2026 and 21 May 2026, the Company declared dividends of HK$130 per share totaling
HK$130,000,000 and HK$23 per share totaling HK$23,000,000, respectively, which were settled by way of an
offsetting with the Group ’s amounts due from related parties.
. On 18 May 2026, TTK Holding has resolved that, conditional upon the share premium account of the Company
being credited as a result of the issue of the offer shares pursuant to the Global Offering (as defined in the
Prospectus), the directors of the Company were authorized to capitalize HK$37,400 standing to the credit of the
share premium account of the Company by applying such sums towards the paying up in full at par a total of
374,000,000 shares for allotment and issue to the holders of shares whose names appear on the register of members
of the Company on at the close of business on 11 May 2026 in proportion (as near as possible without involving
fractions so that no fraction of a share shall be allotted and issued) to their then existing respective shareholding in
the Company.
40. SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements of the Group, the Company or any of its subsidiaries have been prepared in respect of any
period subsequent to the end of the Track Record Period.
APPENDIX I ACCOUNTANTS ’ REPORT
– I-74 –


--- page 392 ---
The information set out in this Appendix II does not form part of the Accountants ’ Report from
Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong, the reporting accountants of the
Company, as set out in Appendix I to this prospectus and is included herein for information only. The
unaudited pro forma financial information should be read in conjunction with the section headed
‘‘Financial Information ’’of this prospectus and the Accountants ’ Report set forth in Appendix I, to this
prospectus.
A. UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET
TANGIBLE ASSETS OF THE GROUP
The following unaudited pro forma statement of adjusted consolidated net tangible assets of the
Group prepared in accordance with Rule 4.29 of the Lis ting Rules is set out below to illustrate the effect
of the Global Offering (as defined in this prospectus) on the audited consolidated net tangible assets of
the Group as at 30 November 2025, as if the propose d Global Offering had taken place on that date.
The unaudited pro forma statement of adjusted consolidated net tangible assets of the Group has
been prepared for illustrative pu rposes only and, because of its hypot hetical nature, it may not give a
true picture of the consolidated net tangible assets of the Group as at 30 November 2025 or any future
dates following the Global Offering.
The following unaudited pro forma statement of adjusted consolidated net tangible assets of the
Group is based on the audited consolidated net tangible assets of the Group as at 30 November 2025 as
set out in Appendix I to this prospectus, and adjusted as follows:
Audited
consolidated net
tangible assets of
the Group as at
30 November
2025
Estimated net
proceeds from
the Global
Offering
Unaudited pro
forma adjusted
consolidated net
tangible assets of
the Group as at
30 November
2025
Unaudited pro
forma adjusted
consolidated net
tangible assets of
the Group as at
30 November
2025 per Share
HK$ ’000 HK$ ’000 HK$ ’000 HK$
(Note 1) (Note 2) (Note 3)
Based on Offer Price of HK$5.18 per Offer Share 55,431 610,765 666,196 1.33
Based on Offer Price of HK$6.38 per Offer Share 55,431 755,682 811,113 1.62
APPENDIX IIA UNAUDITED PRO F ORMA FINANCIAL INFORMATION
– IIA-1 –


--- page 393 ---
Notes:
(1) The audited consolidated net tangible assets of the Group as at 30 November 2025 is extracted from the audited
consolidated net assets of HK$55,431,000 as at 30 November 2025, as shown in the audited consolidated statements
of financial position set out in Appendix I to this prospectus.
(2) The estimated net proceeds from the Global Offering ar e based on 125,000,000 Shares to be issued at the Offer Price
of HK$5.18 and HK$6.38 per Offer Share, being the low-end and high-end of the indicative Offer Price range,
respectively, after deduction of the estimated underwriting fees and commissions and other listing related expenses
payable by the Company (excluding the listing expenses that have been charged to profit or loss during the Track
Record Period). It does not take into account (i) any Shares which may be allotted and issued upon the exercise of
the Over-allotment Option, or (ii) any Shares which may be issued or repurchased by the Company pursuant to the
general mandates.
(3) The number of shares used for the calculation of unaudited pro forma adjusted consolidated net tangible assets of the
Group per Share is based on 500,000,000 Shares, being Shares in issue as at 30 November 2025 and after the
completion of the Capitalization Issue and the Global Offe ring, assuming the Capitaliz ation and the Global Offering
had been completed on 30 November 2025. It does not take into account (i) any Shares which may be allotted and
issued upon the exercise of the Over-allotment Option, or ( ii) any Shares which may be issued or repurchased by the
Company pursuant to the general mandates.
(4) No adjustment has been made to the unaudited pro forma a djusted consolidated net tangible assets of the Group as at
30 November 2025 to reflect any operating results or other transactions of the Group entered into subsequent to 30
November 2025.
(5) By comparing the valuation of properties set out in the valuation report prepared by AVISTA Valuation Advisory
Limited dated 28 May 2026, the net valuation surplus is approximately HK$492,000 as compared to the carrying
amounts of the owned properties as at 30 November 2025, which has not been included in the above consolidated net
tangible assets of the Group. The valuation surplus of the properties will not be incorporated in the Group ’s financial
statements in the future. If the valuation surplus were to be included in the financial statements, an additional annual
depreciation charge of approximately HK$23,000 would be incurred.
(6) As described in note 39 to the historical financial information of the Accountants ’ Report as set forth in Appendix I,
the Company declared dividends of HK$130,000,000 on 10 February 2026 and HK$23,000,000 on 21 May 2026
which were settled by way of offsetting with the Group ’s amounts due from related parties. Accordingly, the
unaudited pro forma adjusted consolidated net tangible a ssets of the Group would therefore have decreased to
HK$513,196,000 and HK$658,113,000, based on Offer Price of HK$5.18 and HK$6.38 per Offer Share, respectively,
and the unaudited pro forma adjusted consolidated net tangible assets of the Group per Share would have decreased
to approximately HK$1.03 and HK$1.32, based on Offer Price of HK$5.18 and HK$6.38 per Offer Share,
respectively.
APPENDIX IIA UNAUDITED PRO F ORMA FINANCIAL INFORMATION
– IIA-2 –


--- page 394 ---
B. REPORTING ACCOUNTANTS ’ REPORT ON UNAUDITED PRO FORMA FINANCIAL
INFORMATION
The following is the text of the independent reporting accountants ’ assurance report received from
Deloitte Touche Tohmatsu, Certified Public Accountants, Hong Kong, the reporting accountants of the
Company, in respect of the Group ’s unaudited pro forma financial information prepared for the purpose
of incorporation in this prospectus.

INDEPENDENT REPORTING ACCOUNTANTS ’ ASSURANCE REPORT ON THE
COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION
To the Directors of Lung Fung Group Holdings Limited
We have completed our assurance engagement to r eport on the compilation of unaudited pro forma
financial information of Lung Fung Group Holdings Limited (the ‘‘Company ’’) and its subsidiaries
(hereinafter collectively referred to as the ‘‘Group ’’) by the directors of the Company (the ‘‘Directors ’’)
for illustrative purposes only. The unaudited pro forma financial information consists of the unaudited
pro forma statement of adjusted consolidated ne t tangible assets as at 30 November 2025 and related
notes as set out on pages IIA-1 to IIA-2 of Appendix II to the prospectus issued by the Company dated
2 8M a y2 0 2 6( t h e ‘‘Prospectus ’’). The applicable criteria on the b asis of which the Directors have
compiled the unaudited pro forma financial info rmation are described on pages IIA-1 to IIA-2 of
Appendix II to the Prospectus.
The unaudited pro forma financial information has been compiled by the Directors to illustrate the
impact of the Global Offering (as defined in the Prospectus) on the Group ’s financial position as at 30
November 2025 as if the Global Offering had taken place at 30 November 2025. As part of this process,
information about the Group ’s financial position has been extract ed by the Directors from the Group ’s
historical financial information for each of the three years ended 31 March 2025 and the eight months
ended 30 November 2025, on which an accountants ’ report set out in Appendix I to the Prospectus has
been published.
Directors ’ Responsibilities for the Unaudited Pro Forma Financial Information
The Directors are responsible for compiling the unaudited pro forma financial information in
accordance with paragraph 4.29 of the Rules Governin g the Listing of Securities on The Stock Exchange
of Hong Kong Limited (the ‘‘Listing Rules ’’) and with reference to Accounting Guideline 7
‘‘Preparation of Pro Forma Financial Informat ion for Inclusion in Investment Circulars ’’(‘‘AG 7 ’’)
issued by the Hong Kong Institute of Certified Public Accountants (the ‘‘HKICPA ’’).
APPENDIX IIA UNAUDITED PRO F ORMA FINANCIAL INFORMATION
– IIA-3 –


--- page 395 ---
Our Independence and Quality Management
We have complied with the independence and other ethical requirements of the ‘‘Code of Ethics
for Professional Accountants ’’issued by the HKICPA, which is founded on fundamental principles of
integrity, objectivity, professional competence and d ue care, confidentiality and professional behavior.
Our firm applies Hong Kong Standard on Quality Management (HKSQM) 1 ‘‘Quality Management
for Firms that Perform Audits or Reviews of Financi al Statements, or Other Assurance or Related
Services Engagements ’’ issued by the HKICPA, which requires the firm to design, implement and
operate a system of quality management including policies and procedures regarding compliance with
ethical requirements, professional standards and applicable legal and regulatory requirements.
Reporting Accountants ’ Responsibilities
Our responsibility is to express an opinion, as required by paragraph 4.29(7) of the Listing Rules,
on the unaudited pro forma financial information a nd to report our opinion to you. We do not accept any
responsibility for any reports previously given by us on any financial information used in the
compilation of the unaudited pro forma financial information beyond that owed to those to whom those
reports were addressed by us at the dates of their issue.
We conducted our engagement in accordance with Hong Kong Standard on Assurance
Engagements 3420 ‘‘Assurance Engagements to Report on the Compilation of Pro Forma Financial
Information Included in a Prospectus ’’issued by the HKICPA. This standard requires that the reporting
accountants plan and perform procedures to obtain r easonable assurance about whether the Directors
have compiled the unaudited pro forma financial inf ormation in accordance wi th paragraph 4.29 of the
Listing Rules and with reference to AG 7 issued by the HKICPA.
For purposes of this engagement, we are not responsible for updating or reissuing any reports or
opinions on any historical financial information used in compiling the unaudited pro forma financial
information, nor have we, in the course of this engagement, performed an audit or review of the
financial information used in compiling the unaudited pro forma financial information.
The purpose of unaudited pro forma financial information included in an investment circular is
solely to illustrate the impact of a significant event or transaction on unadjusted financial information of
the Group as if the event had occurred or the transaction had been undertaken at an earlier date selected
for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of
the event or transaction at 30 November 2025 would have been as presented.
APPENDIX IIA UNAUDITED PRO F ORMA FINANCIAL INFORMATION
– IIA-4 –


--- page 396 ---
A reasonable assurance engagement to report on whether the unaudited pro forma financial
information has been prop erly compiled on the basis of the applicable criteria involves performing
procedures to assess whether the applicable criteria used by the Directors in the compilation of the
unaudited pro forma financial information provide a reasonable basis for presenting the significant
effects directly attributable to the event or transact ion, and to obtain sufficient appropriate evidence
about whether:
. the related pro forma adjustments give a ppropriate effect to those criteria; and
. the unaudited pro forma financial information reflects the proper application of those
adjustments to the unadjusted financial information.
The procedures selected depend on the reporting accountants ’ judgment, having regard to the
reporting accountants ’ understanding of the nature of the Group, the event or transaction in respect of
which the unaudited pro forma financial information has been compiled, and other relevant engagement
circumstances.
The engagement also involves evaluating the overall presentation of the unaudited pro forma
financial information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Opinion
In our opinion:
(a) the unaudited pro forma finan cial information has been properly compiled on the basis stated;
(b) such basis is consistent with th e accounting policies of the Group; and
(c) the adjustments are appropriate for the purposes of the unaudited pro forma financial
information as disclosed pursuant to paragraph 4.29(1) of the Listing Rules.
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong
28 May 2026
APPENDIX IIA UNAUDITED PRO F ORMA FINANCIAL INFORMATION
– IIA-5 –


--- page 397 ---
A. BASES
The Directors have prepared the estimate of consolidated profit for the year ended 31 March 2026
based on the audited consolidated results of the Group for the eight months ended 30 November 2025
and the unaudited consolidated results based on the management accounts of the Group for the four
months ended 31 March 2026.
The estimate has been prepared on a basis consis tent in all material respects with the accounting
policies normally adopted by the Group as set out in note 4 to the Accountants ’ Report, the text of
which is set out in Appendix I to this prospectus.
B. PROFIT ESTIMATE FOR THE YEAR ENDED 31 MARCH 2026
Estimated consolidated profit attributable to owners of
t h e C o m p a n y f o r t h e y e a r e n d e d 3 1 M a r c h 2 0 2 6 ................N o t l e s s t h a n H K $ 2 6 5 m i l l i o n
APPENDIX IIB PROFIT ESTIMATE
– IIB-1 –


--- page 398 ---
C. LETTER FROM THE REPORTING ACCOUNTANTS
The following is the text of a letter received from Deloitte Touche Tohmatsu, Certified Public
Accountants, Hong Kong, the reporting accountants of the Company, in respect of the Group ’sp r o f i t
estimate prepared for the purpose of incorporation in this prospectus.

28 May 2026
The Board of Directors
Lung Fung Group Holdings Limited
5/F, Lung Fung Group Centre
23 Yip Cheong Street
Fanling, New Territories
Hong Kong
DBS Asia Capital Limited
73/F
The Center
99 Queen ’s Road Central
Hong Kong
Dear Sirs,
Lung Fung Group Holdings Limited (the ‘‘Company ’’)
Profit Estimate for Year Ended 31 March 2026
We refer to the estimate of the consolidated profit of the Group for the year ended 31 March 2026
(the ‘‘Profit Estimate ’’) set forth in the section headed Profit Estimate for the Year Ended 31 March
2026 in Part B of Appendix IIB in the prospectus of the Company dated 28 May 2026 (the
‘‘Prospectus ’’).
Directors ’ Responsibilities
The Profit Estimate has been prepared by the d irectors of the Company based on the audited
consolidated results of the Company and its s ubsidiaries (collectively referred to as the ‘‘Group ’’)f o r
the eight months ended 30 November 2025 and the unaudited consolidated results based on the
management accounts of the Group for t he four months ended 31 March 2026.
The Company ’s directors are solely responsible for the Profit Estimate.
Our Independence and Quality Management
We have complied with the independence and other ethical requirements of the ‘‘Code of Ethics
for Professional Accountants ’’issued by the Hong Kong Institute of Certified Public Accountants (the
‘‘HKICPA ’’), which is founded on fundamental principles of integrity, objectivity, professional
competence and due care, confidentiality and professional behavior.
APPENDIX IIB PROFIT ESTIMATE
– IIB-2 –


--- page 399 ---
Our firm applies Hong Kong Standard on Quality Management (HKSQM) 1 ‘‘Quality Management
for Firms that Perform Audits or Reviews of Financi al Statements, or Other Assurance or Related
Services Engagements ’’ issued by the HKICPA, which requires the firm to design, implement and
operate a system of quality management including policies and procedures regarding compliance with
ethical requirements, professional standards and applicable legal and regulatory requirements.
Reporting Accountants ’ Responsibilities
Our responsibility is to express an opinion on the accounting policies and calculations of the Profit
Estimate based on our procedures.
We conducted our engagement in accordance with Hong Kong Standard on Investment Circular
Reporting Engagements 500 ‘‘Reporting on Profit Forecasts, State ments of Sufficiency of Working
Capital and Statements of Indebtedness ’’and with reference to Hong Kong Standard on Assurance
Engagements 3000 (Revised) ‘‘Assurance Engagements Other Than Audits or Reviews of Historical
Financial Information ’’issued by the HKICPA. Those standards require that we plan and perform our
work to obtain reasonable assurance a s to whether, so far as the accounting policies and calculations are
concerned, the Company ’s directors have properly compiled the Profit Estimate in accordance with the
bases adopted by the directors and as to whether the Profit Estimate is presented on a basis consistent in
all material respects with the accounting polic ies normally adopted by the Group. Our work is
substantially less in scope than an audit conduc ted in accordance with Hong Kong Standards on
Auditing issued by the HKICPA. Accordingly, we do not express an audit opinion.
Opinion
In our opinion, so far as the accounting policies and calculations are concerned, the Profit Estimate
has been properly compiled in accordance with the bases adopted by the directors as set out in Appendix
IIB of the Prospectus and is presented on a basis cons istent in all material respects with the accounting
policies normally adopted by the Group as set out in our accountants ’ report dated 28 May 2026, the text
of which is set out in Appendix I of the Prospectus.
Yours faithfully,
Deloitte Touche Tohmatsu
Certified Public Accountants
Hong Kong
APPENDIX IIB PROFIT ESTIMATE
– IIB-3 –


--- page 400 ---
D. LETTER FROM THE SOLE SPONSOR
The following is the text of a letter, prepared fo r the inclusion in this prospectus, received from
DBS Asia Capital Limited, the Sole Sponsor, in relation to our Group ’s profit estimate for the year
ended 31 March 2026.
The Directors
Lung Fung Group Holdings Limited
28 May 2026
Dear Sirs,
We refer to the estimate of the consolidated profit of Lung Fung Group Holdings Limited (the
‘‘Company ’’) and its subsidiaries (collectively, the ‘‘Group ’’) for the year ended 31 March 2026 (the
‘‘Profit Estimate ’’), for which you as the Directors of the Company are solely responsible for, set forth
in the paragraph headed ‘‘Profit Estimate for the Year Ended 31 March 2026 ’’in the prospectus of the
Company dated 28 May 2026 (the ‘‘Prospectus ’’).
The Profit Estimate, for which you as the Directors of the Company are solely responsible for, has
been prepared by the Directors of the Company based on the audited consolidated results of the Group
for the eight months ended 30 November 2025, and the unaudited consolidated results based on the
management accounts of the Group for t he four months ended 31 March 2026.
We have reviewed and discussed with you the bas es made by the Directors of the Company as set
forth in Appendix IIB to the Prospectus, upon which the Profit Estimate has been made. We have also
considered, and relied upon, the letter dated 28 May 2026 addressed to you and us from Deloitte Touche
Tohmatsu, the reporting acco untants of the Company (the ‘‘Reporting Accountants ’’), regarding the
accounting policies and calculations upon which the Profit Estimate has been made.
On the basis of the information comprising the Pr ofit Estimate and on the basis of the accounting
policies and calculations adopted by you and reviewed by the Reporting Accountants, we are of the
opinion that the Profit Estimate, for which you as the Directors of the Company are solely responsible
for, has been made after due and careful enquiry.
Yours faithfully
For and on behalf of
DBS Asia Capital Limited
CHEUNG Yan To
Senior Vice President
APPENDIX IIB PROFIT ESTIMATE
– IIB-4 –


--- page 401 ---
The following is the text of a letter, a summary of values and valuation certificates prepared for
the purpose of incorporation in this prospectus r eceived from AVISTA Valuation Advisory Limited, an
independent valuer, in connection with its valuation as at 31 March 2026 of the property interests held
by the Company.
Suites 2401-06, 24/F, Everbright Centre, 108 Gloucester Road,
Wan Chai, Hong Kong
൙Пፔ༔
28 May 2026
The Board of Directors
Lung Fung Group Holdings Limited ( 龍豐集團控股有限公司)
5/F, Lung Fung Group Centre,
23 Yip Cheong Street,
Fanling, New Territories,
Hong Kong
Dear Sirs/Madams,
INSTRUCTIONS
In accordance with the ins tructions of Lung Fung Gr oup Holdings Limited ( 龍豐集團控股有限公
司)( t h e ‘‘Company ’’) and its subsidiaries (hereinafter together referred to as the ‘‘Group ’’) for us to
carry out the valuation of the property interests (the ‘‘Properties ’’) located in Hong Kong held by the
Company, we confirm that we have carried out insp ection, made relevant enquiries and searches and
obtained such further information as we consider necessary for the purpose of providing you with our
opinion of the market value of the Properties as at 31 March 2026 (the ‘‘Valuation Date ’’).
APPENDIX III VALUATION REPORT
– III-1 –


--- page 402 ---
BASIS OF VALUATION AND VALUATION STANDARDS
Our valuation is carried out on a market value basis, which is defined by the Royal Institution of
Chartered Surveyors as ‘‘the estimated amount for which an asset or liability should exchange on the
v a l u a t i o nd a t eb e t w e e naw i l l i n gb u y e ra n daw i l l i n gs e l l e ri na na r m’s length transaction, after proper
marketing and where the parties had each acted knowledgeably, prudently and without compulsion ’’.
In valuing the Properties, we have complied with all the requirements set out in Chapter 5 of the
Rules Governing the Listing of Securities issued by The Stock Exchange of Hong Kong Limited (the
‘‘Listing Rules ’’), the RICS Valuation — Global Standards 2024 published by the Royal Institution of
Chartered Surveyors ( ‘‘RICS ’’) and the International Valuation Standards published from time to time
by the International Valuation Standards Council.
CATEGORISATION OF PROPERTY INTERESTS
In the course of our valuation, the appraised Properties have been categorized according firstly to
type of interests held by the Company, which in turn being classified into the following groups:
Group I — Property interests held for investment by the Company in Hong Kong
Group II — Property interests held for owner occupation by the Company in Hong Kong
VALUATION ASSUMPTIONS
Our valuation of the Properties excludes an estimated price inflated or deflated by special terms or
circumstances such as atypical financing, sale an d leaseback arrangement, sp ecial considerations or
concessions granted by anyone associated with the s ale, or any element of special value or costs of sale
and purchase or offset for any associated taxes.
No allowance has been made in our report for any charges, mortgages or amounts owing on any of
the Properties valued nor for any expenses or taxation which may be incurred in effecting a sale. Unless
otherwise stated, it is assumed that the Properties are free from encumbrances, restrictions and outgoings
of an onerous nature, which c ould affect their values.
No environmental impact study has been ordered or made. Full compliance with applicable
national, provincial and local environmental regulations and laws is assumed.
APPENDIX III VALUATION REPORT
– III-2 –


--- page 403 ---
VALUATION METHODOLOGY
Residential portions of the Properties have been valued by market approach, which generally
involves comparing recent market evidence of similar properties located in the neighborhood area of the
subject properties. Adjustments are considered to reflect differences in various aspects including market
conditions, size, location, time, age, quality, and any other relevant factors when comparing such sales
against the subject properties. This approach is commonly used to value properties where reliable market
evidence is available.
Retail portions of the Properties have been valued by the income approach. The income approach
takes into considerations of the term value of the property by capitalizing the rental income over the
existing lease terms and the reversionary value by c apitalizing the current market rental income of the
property until the end of the land use right terms. The current market rent adopted in determining the
reversionary value is based on the findings of rental comparables in the locality which share similar
characteristics with the subject properties. When d etermining the parameter of capitalization rate or
market yield, reference has been made to the current sale price and rental income of the properties in the
locality which share similar charact eristics with the subject properti es. The income approach estimates
the value of the property by taking into consideration the existing rental level and current market
condition, without specifically involving the forecasting of future profits.
TITLE INVESTIGATION
We have not been provided with copies of the title documents relating to the Properties in Hong
Kong. We have conducted searches at the Land Registry in Hong Kong on 12 May 2026. However, we
have not examined the original documents to verify ownership and encumbrances, or to ascertain any
amendment which may or may not appear on the l and search. All documents have been used for
reference only and all dimensions, m easurements and areas are approximate.
SITE INVESTIGATION
We have inspected the exteriors and, where possibl e, the interior of the subject properties. The site
inspection was carried out on 10 October 2025 by Samuel Lau (Senior Analyst) and Josh Chow (Senior
Analyst). They have more than 4 years ’ experience in valuation of properties in Hong Kong.
In the course of our inspection, we did not note any serious defects. However, we have not carried
out an investigation on site to determine the suitability of ground conditions and services for any
development thereon, nor have we conducted structural surveys to ascertain whether the subject
properties are free of rot, infestation, or any other structural defects. Additionally, no tests have been
carried out on any of the utility services. Our valuation has been prepared on the assumption that these
aspects are satisfactory. We have further assumed that there is no significant pollution or contamination
in the locality which may aff ect any future developments.
APPENDIX III VALUATION REPORT
– III-3 –


--- page 404 ---
SOURCE OF INFORMATION
Unless otherwise stated, we shall rely to a considerable extent on the information provided to us by
the Group or other professional advisors on such matters as statutory notices, planning approvals,
zoning, easements, tenures, compl etion date of buildings, development proposal, identification of the
properties, particulars of occupation, site areas, fl oor areas, matters relating to tenure, tenancies and all
other relevant matters.
We have had no reason to doubt the truth and accuracy of the information provided to us by the
Group. We have also sought confirmation from the Group that no material factors have been omitted
from the information supplied. We consider that we have been provided with sufficient information to
reach an informed view and we have no reason to s uspect that any material information has been
withheld.
We have not carried out detailed measurements to ve rify the correctness of the areas in respect of
the properties but have assumed that the areas shown on the title documents and official site plans
handed to us are correct. All documents and contracts have been used as reference only and all
dimensions, measurements and areas are approxi mations. No on-site measurement has been taken.
LIMITING CONDITION
Wherever the content of this report is extracted and translated from the relevant documents
supplied in Chinese context and there are discrepancies in wordings, those parts of the original
documents will take prevalent.
CURRENCY
Unless otherwise stated, all monetary amounts stated in this report are in Hong Kong Dollar
(HKD).
Our valuations are summarized below, and the valuation certificates are attached.
Yours faithfully,
For and on behalf of
AVISTA Valuation Advisory Limited
Vincent C B Pang
MRICS CFA FCPA FCPA Australia
RICS Registered Valuer
Managing Partner
Note: Mr. Vincent C B Pang is a member of Royal Institution of Charter ed Surveyors (RICS) and a registered valuer of RICS. He
has over 15 years ’ experience in valuation of properties including Hong Kong, the PRC, the U.S., and East and Southeast
Asia.
APPENDIX III VALUATION REPORT
– III-4 –


--- page 405 ---
SUMMARY OF VALUES
Abbreviation
Group I: Property interests held for investment by the Company in Hong
Kong
Group II: Property interests held for owner occupation by the Company in
Hong Kong
‘‘ – ’’or N/A: Not applicable or not available
No. Property
Market value
in existing state
as at
31 March 2026
Market value
in existing state
as at
31 March 2026
Interest
Attributable to
the Company
Market value
Attributable to
the Company
as at
31 March 2026
HKD HKD HKD
Group I Group II
1. G/F and cockloft, 1/F
with flat roof and 2/F
with roof, Nos. 41A –41B
Fu Hing Street and Nos.
15–19 San Fat Street,
Sheung Shui, New
Territories, Hong Kong
109,460,000 N/A 100% 109,460,000
2. G/F and cockloft, No. 49
Fu Hing Street and No.
87 San Fung Avenue,
Sheung Shui, New
Territories, Hong Kong
34,950,000 25,890,000 100% 60,840,000
Total: 144,410,000 25,890,000 170,300,000
APPENDIX III VALUATION REPORT
– III-5 –


--- page 406 ---
VALUATION CERTIFICATE
No. Property Description and tenure
Particulars of
occupancy
Market value in
existing state as at
31 March 2026
HKD
1. G/F and cockloft,
1/F with flat roof
and 2/F with roof,
Nos. 41A –41B Fu
Hing Street and
Nos. 15 –19 San Fat
Street, Sheung Shui,
New Territories,
Hong Kong
Lot Number:
Lot No. 3874 in
D.D.91
Share of the Lot:
—
The property comprises 10 retail units located on
the ground floor and 2 residential units located on
the 1
st and 2 nd floor with a total saleable area of
approximately 6,075.75 sq.ft., of which certain units
are provided with adjoining ancillary
accommodation.
As measured from the approved building plans, the
area details are listed as below:
Units
Saleable
Area
Area of
Adjoining
Ancillary
Accommo-
dation
(sq.ft.) (sq.ft.)
Units 1 & 2, G/F 1,069.94 2,060.37
(Cockloft)
Unit 3A, G/F 293.90 —
Unit 3B, G/F 48.34 —
Unit 3C, G/F 101.38 —
Unit 4, G/F 135.79 —
Unit 5A, G/F 124.25 —
Unit 5B, G/F 142.17 —
Unit 6A, G/F 188.21 —
Unit 6B, G/F 86.48 —
Unit 7, G/F 59.19 —
1/F 1,913.05 588.59
(Flat Roof)
2/F 1,913.05 1,597.96
(Roof)
6,075.75 4,246.92
Portions of the
property, with a
saleable area of
approximately 5,534.64
sq.ft., comprising 6
retail units and 2
residential units, were
leased to 6 tenants for
retail or residential use
as at the Valuation
Date. The remaining
portions of the property
were vacant.
109,460,000
(100% interest
attributable to the
Company:
109,460,000)
The property was held for investment as at the
Valuation Date.
Pursuant to the Occupation Permit No. N.T. 180/72,
the property was completed in November 1972.
APPENDIX III VALUATION REPORT
– III-6 –


--- page 407 ---
The property is located at the junction of Fu Hing
Street and San Fat Street in Sheung Shui, the
Northern District of Hong Kong, with
approximately 0.3 km to Sheung Shui MTR Station
and 4.0 km to Lo Wu Immigration Control Point,
Luohu Port. The surrounding locality is
characterized by low-rise residential buildings with
retail shops.
The property is held under New Grant no. 10386
for a lease term of 99 years commencing from 1
July 1898. The term has been extended until 30
June 2047 pursuant to Section 6 of the New
Territories Leases (Extension) Ordinance. The
annual Government Rent payable is equivalent to
3% of the rateable value for the time being.
Notes:
1. As at the Valuation Date, the registered owner of the property is Kidbrooke Group Limited, in which the Company holds an
indirect ownership stake of 100%.
2. The property is zoned for ‘‘Commercial/Residential Use ’’under Approved Fanling/Sheung Shui Outline Zoning Plan No. S/
FSS/28.
3. Pursuant to 6 tenancy agreements, 6 reta il units and 2 residential units with a saleable area of approximately 5,534.64 sq.ft.
had been leased to various independent third parties with a total monthly rent of HKD325,580 as at the Valuation Date,
exclusive of management fee, utility fees, government rent and rates, for various terms with the expiry dates between 22
May 2026 to 31 March 2028.
4. The property is subject to the following encumbrances or registrations:
a. Occupation Permit No. N.T. 180/72 dated 20 November 1972;
b. Sealed copy of Judgement in High Court action no. A 7714 of 1985 dated 4 January 1986, registered vide memorial
No. N221096;
c. Government Notice No. ‘‘UMB/5OD101/1501 –013/0001 ’’under Section 30B(3) of the Buildings Ordinance (Cap.
123) dated 2 June 2016, registered vide memorial no. 16122002240235; and
d. Mortgage in favour of Hang Seng Bank Limited to secure all money dated 18 July 2018, registered vide memorial
no. 18073102380307.
5. Our valuation has been made on the following basis and analysis:
In the course of valuation of the residential portions of the property, we have made reference to comparables located in the
area close to the subject property with similar nature, use, si ze and accessibility as the subject property. The adjusted unit
prices of the comparables range from HKD3,490 to HKD4,910 per sq.ft. for residential units on effective saleable area
basis. The unit rate adopted in the valuation is consistent with the unit rates of the relevant comparables after due
adjustments in terms of floor, time and size, etc.
In the course of our valuation of the retail portions of the property, we have made reference to various relevant rental
evidence in the locality with characteristics similar to t hose of the subject property such as nature, use, size and
accessibility. The adjusted unit rents of the comparables rang e from HKD75 to HKD130 per sq.ft. per month for retail units
on the ground floor on effective saleable area basis. The ma rket yield assumed by us is 3.80% for retail units, which is
consistent with the prevailing mar ket yields of the property sector.
APPENDIX III VALUATION REPORT
– III-7 –


--- page 408 ---
VALUATION CERTIFICATE
No. Property Description and tenure
Particulars of
occupancy
Market value in
existing state as at
31 March 2026
HKD
2. G/F and cockloft,
N o .4 9F uH i n g
Street and No. 87
San Fung Avenue,
Sheung Shui, New
Territories, Hong
Kong
Lot Number:
Lot No. 3855 in
D.D.91
Share of the Lot:
4/12
The property comprises 5 retail units located
on the ground floor with a total saleable floor
area of approximately 1,373.31 sq.ft., of which
certain units are provided with adjoining
ancillary accommodation.
As measured from the approved building
plans, the area details are listed as below:
Units
Saleable
Area
Area of
Adjoining
Ancillary
Accommo-
dation
(sq.ft.) (sq.ft.)
G/F, No. 49 Fu
Hing Street
755.17 —
Unit A, G/F, No.
87 San Fung
Avenue
101.69 —
Unit B, G/F, No.
87 San Fung
Avenue
128.07 —
Unit C, G/F, No.
87 San Fung
Avenue
137.01 —
Unit D & E, G/F,
No. 87 San
Fung Avenue
251.37 1,353.13
(Cockloft)
1,373.31 1,353.13
Portions of the property, with a total saleable
area of approximately 755.17 sq.ft., were held
and occupied by the Group (the ‘‘Owner-
occupied Property ’’). The remaining portions
were held for investment (the ‘‘Investment
Property ’’).
Pursuant to the Occupation Permit No. N.T.
47/68, the property was completed in July
1968.
Portions of the
Investment Property,
with a saleable area of
approximately 366.77
sq.ft., comprising 3
retail units, were leased
to 3 tenants for retail
use as at the Valuation
Date. The remaining
portions of the
Investment Property
were vacant.
The Owner-occupied
Property was occupied
by the Group as at the
Valuation Date for
retail pharmaceutical
purposes.
60,840,000
(100% interest
attributable to the
Company:
60,840,000)
APPENDIX III VALUATION REPORT
– III-8 –


--- page 409 ---
The property is located at the junction of San
Fung Ave and Fu Hing Street in Sheung Shui,
the Northern District of Hong Kong, with
approximately 0.2 km to Sheung Shui MTR
S t a t i o na n d4 . 0k mt oL oW uI m m i g r a t i o n
Control Point, Luohu Port. The surrounding
locality is characterized by low-rise residential
buildings with retail shops.
The property is held under New Grant no.
N9711 for a lease term of 99 years
commencing from 1 July 1898. The term has
been extended until 30 June 2047 pursuant to
Section 6 of the New Territories Leases
(Extension) Ordinance. The annual
Government Rent payable is equivalent to 3%
of the rateable value for the time being.
Notes:
1. As at the Valuation Date, the registered owner of the prope rty is Harvest Smart Holdings Limited, in which the Company
holds an indirect ownership stake of 100%.
2. The property is zoned for ‘‘Commercial/Residential Use ’’under Approved Fanling/Sheung Shui Outline Zoning Plan No. S/
FSS/28.
3. Pursuant to 3 tenancy agreements, 3 retail units with a saleable area of approximately 366.77 sq.ft. had been leased to
various independent third parties with a total monthly rent of HKD155,357 as at the Valuation Date, exclusive of
management fee, utility fees, government rent and rates, for various terms with the expiry dates between 30 April 2026 to
22 April 2028.
4. The property is subject to the following encumbrances or registrations:
a. Occupation Permit No. N.T. 47/68 dated 9 July 1968;
b. Deed of Mutual Covenant dated 2 October 1968, registered vide memorial No. N162403;
c. Government Notice No. ‘‘UMB/MB061203 –004/0001 ’’under Section 30B(3) of the Buildings Ordinance dated 29
November 2013, registered vide memorial no. 15060300730027;
d. Mortgage in favour of Hang Seng Bank Limited to secure all money dated 22 January 2020, registered vide
memorial no. 20020402230024; and
e. Second Mortgage in favour of Hang Seng Bank Limited to secure all money dated 22 January 2020, registered vide
memorial no. 20021101360012.
5. Our valuation has been made on the following basis and analysis:
In the course of our valuation of the property, we have made ref erence to various relevant rental evidence in the locality
with characteristics similar to those of the subject propert y such as nature, use, size and accessibility. The adjusted unit
rents of the comparables range from HKD75 to HKD130 per sq.ft. per month for retail units on the ground floor on
effective saleable area basis. The market yield assumed by us is 3.80% for retail units, which is consistent with the
prevailing market yields of the property sector.
APPENDIX III VALUATION REPORT
– III-9 –


--- page 410 ---
6. For the purpose of this report, the property is classified into the following groups according to the purpose for which it is
held, we are of the opinion that the market value of each group as at the Valuation Date in its existing state is set out as
below:
Classification
Market value in
existing state as at
the Valuation Date
(HKD)
Group I — Property interests held for investment by the Company in Hong Kong 34,950,000
Group II — Property interests held for owner-occupation by the Company in Hong Kong 25,890,000
Total: 60,840,000
APPENDIX III VALUATION REPORT
– III-10 –


--- page 411 ---
Set out below is a summary of certain provisions of the Memorandum and Articles of Association
of the Company and of certain aspects of Cayman company law.
The Company was incorporated in the Cayman Islands as an exempted company with limited
liability on 3 October 2025 under the Companies Act (As Revised) of the Cayman Islands (the
‘‘Companies Act ’’). The Company ’s constitutional documents consist of its Memorandum of
Association (the ‘‘Memorandum ’’) and its Articles of Association (the ‘‘Articles ’’).
1. MEMORANDUM OF ASSOCIATION
(a) The Memorandum states, inter alia , that the liability of members of the Company is limited
to the amount, if any, for the time being unpaid on the shares respectively held by them and
that the objects for which the Company is established are unrestricted (including acting as an
investment company), and that the Company shall have and be capable of exercising all the
functions of a natural person of full capacity irrespective of any question of corporate benefit,
as provided in section 27(2) of the Companies Act and in view of the fact that the Company
is an exempted company that the Company wil l not trade in the Cayman Islands with any
person, firm or corporation except in further ance of the business of the Company carried on
outside the Cayman Islands.
(b) The Company may by special resolution alt er its Memorandum with respect to any objects,
powers or other matters specified therein.
2. ARTICLES OF ASSOCIATION
The Articles were conditionally adopted on 18 May 2026 with effect from the Listing Date. The
following is a summary of certain provisions of the Articles:
(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 the Company is
divided into different classes of shares, all or any of the special rights attached to the shares
or any class of shares may (unless otherwise provided for by the terms of issue of that class)
be varied, modified or abrogated either with the consent in writing of the holders of not less
than three-fourths in nominal value of the issued shares of that class or with the sanction of a
special resolution passed at a separate general meeting of the holders of the shares of that
class. To every such separate general meetin g the provisions of the Articles relating to
general meetings will mutatis mutandis apply, but so that the necessary quorum (including at
an adjourned meeting) shall be two persons holding or representing by proxy not less than
one-third in nominal value of the issued shares of that class (excluding treasury shares).
Every holder of shares of the class shall be entitled to one vote for every such share held by
him.
APPENDIX IV SUMMARY OF THE CONSTITUTION OF OUR
COMPANY AND CAYMAN ISLANDS COMPANY LAW
– IV-1 –


--- page 412 ---
Any special rights conferred upon the holders of any shares or class of shares shall not,
unless otherwise expressly provided in the rights attaching to the terms of issue of such
shares, be deemed to be varied by the crea tion or issue of further shares ranking pari passu
therewith.
(iii) Alteration of capital
The Company may by ordinary resolution of its members:
(i) increase its share capital b y the creation of new shares;
(ii) consolidate all or any of its capital into shares of larger amount than its existing
shares;
(iii) divide its shares into several classes a nd attach to such shares any preferential,
deferred, qualified or special rights, priv ileges, conditions or restrictions as the
Company in general meeting or a s the directors may determine;
(iv) subdivide its shares or any of them into shares of smaller amount than is fixed by
the Memorandum; or
(v) cancel any shares which, at the date of passing of the resolution, have not been
taken and diminish the amount of its capital by the amount of the shares so
cancelled.
The Company may reduce its share capital or any capital redemption reserve or other
undistributable reserve in any way by special resolution.
(iv) Transfer of shares
All transfers of shares may be effected by an instrument of transfer in the usual or
common form or in a form prescribed by The Stock Exchange of Hong Kong Limited (the
‘‘Stock Exchange ’’) or in such other form as the board may approve and which may be under
hand or, if the transferor or transferee is a c learing house or its nominee(s), by hand or by
machine imprinted signature or by such other manner of execution as the board may approve
from time to time.
Notwithstanding the foregoing, for so long as any shares are listed on the Stock
Exchange, titles to such listed shares may be evidenced and transferred in accordance with
the laws applicable to and the rules and regulations of the Stock Exchange that are or shall be
applicable to such listed shares. The regist er of members in respect of its listed shares
(whether the principal register or a branch register) may be kept by recording the particulars
required by Section 40 of the Companies Act in a form otherwise than legible if such
recording otherwise complies with the laws applicable to and the rules and regulations of the
Stock Exchange that are or shall be applicable to such listed shares. Further, subject to the
Companies Act and all applicable laws and regul ations, including the Securities and Futures
Ordinance and the Securities and Futures (Unce rtificated Securities Market) Rules (Cap.
571AS) made under the Securities and Futures Ordinance (the ‘‘USM Rules ’’)( i fa n dw h e n
effective), transfers of shares may be effected in uncertificated form through such electronic
system as permissible under the applicable laws and regulations, without the need for a
written instrument of transfer.
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For certificated sh ares, the instrument of transfer shall be executed by or on behalf of
the transferor and the transferee provided that the board may dispense with the execution of
the instrument of transfer by the transferee . The transferor shall be deemed to remain the
holder of the share until the name of the transf eree is entered in the register of members in
respect of that share.
The board may, in its absolute discretion, at any time transfer any share upon the
principal register to any branch register or an ys h a r eo na n yb r a n c hr e g i s t e rt ot h ep r i n c i p a l
register or any other branch register.
The board may decline to recognise any instrument of transfer unless a fee (not
exceeding the maximum sum as the Stock Exchange may determine to be payable)
determined by the Directors is paid to the Company, the instrument of transfer is properly
stamped (if applicable), it is in respect of only one class of share and is lodged at the relevant
registration office or registered office or such other place at which the principal register is
kept accompanied by the relevant share certifi cate(s) and such other evidence as the board
may reasonably require to show the right of the transferor to make the transfer (and if the
instrument of transfer is executed by some oth er person on his behalf, the authority of that
person so to do).
The registration of transfers may be suspended and the register closed on giving notice
by advertisement in any newspaper or b y any other means in accordance with the
requirements of the Stock Exchange, at suc h times and for such periods as the board may
determine. The register of members must not be closed for periods exceeding in the whole
thirty (30) days in any year. The period of thi rty (30) days may be extended for a further
period or periods not exceeding thirty (30) days in respect of any year if approved by
members by ordinary resolution.
Subject to the above, fully paid shares are free from any restriction on transfer and free
of all liens in favour of the Company.
(v) Power of the Company to purchase its own shares
The Company is empowered by the Companies Act and the Articles to purchase its own
shares subject to certain restrictions and the board may only exercise this power on behalf of
the Company subject to any applicable requirem ents imposed from time to time by the Stock
Exchange. Subject to the Companies Act, the rules of the Stock Exchange and of any
competent regulatory authority, the Company is also authorized to hold any repurchased,
redeemed or surrendered shares as treasury shares without the need for a separate resolution
of the board for each instance.
The board may accept the surrender for no consideration of any fully paid share.
(vi) Power of any subsidiary of the Company to own shares in the Company
There are no provisions in the Articles relating to ownership of shares in the 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 upon the members 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). A call may be made payable either in one lump
sum or by installments. If the sum payable in respect of any call or instalment is not paid on
or before the day appointed for payment thereof, the person or persons from whom the sum is
due shall pay interest on the same at such rate not exceeding twenty per cent. (20%) per
annum as the board may agree to accept from the day appointed for the payment thereof to
the time of actual payment, but the board may waive payment of such interest wholly or in
part. The board may, if it thinks fit, receive from any member willing to advance the same,
either in money or money ’s worth, all or any part of the monies uncalled and unpaid or
installments payable upon any shares held by him, and upon all or any of the monies so
advanced the Company may pay interest at such rate (if any) as the board may decide.
If a member fails to pay any call on the day appointed for payment thereof, the board
may serve not less than fourteen (14) clear days ’ notice on him requiring payment of so much
of the call as is unpaid, together with any i nterest which may have accrued and which may
still accrue up to the date of actual payment and stating that, in the event of non-payment at
or before the time appointed, the shares in respect of which the call was made will be liable
to be forfeited.
If the requirements of any such notice are n ot complied with, any share in respect of
which the notice has been given may at any time thereafter, before the payment required by
the notice has been made, be forfeited by a resolution of the board to that effect. Such
forfeiture will include all dividends and bonuses declared in respect of the forfeited share and
not actually paid before the forfeiture.
A person whose shares have been forfeited s hall cease to be a member in respect of the
forfeited shares but shall, notw ithstanding, remain liable to pay to the Company all monies
which, at the date of forfeiture, were payable by him to the Company in respect of the shares,
together with (if the board shall in its discretion so require) interest thereon from the date of
forfeiture until the date of actual payment at such rate not exceeding twenty per cent. (20%)
per annum as the board determines.
(b) Directors
(i) Appointment, retirement and removal
At each annual general meeting, one third of the Directors for the time being (or if their
number is not a multiple of three, then the numbe r nearest to but not less than one third) shall
retire from office by rotation provided that every Director shall be subject to retirement at an
annual general meeting at least once every thre e years. The Directors to retire by rotation
shall include any Director who wishes to retir e and not offer himself for re-election. Any
further Directors so to retire shall be those who have been longest in office since their last re-
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election or appointment but as between persons wh o became or were last re-elected Directors
on the same day those to retire will (unless they otherwise agree among themselves) be
determined by lot.
Neither a Director nor an alternate Director is required to hold any shares in the
Company by way of qualification. Further, there are no provisions in the Articles relating to
retirement of Directors upon reaching any age limit.
The Directors have the power to appoint any person as a Director either to fill a casual
vacancy on the board or as an addition to the exi sting board. Any Direct or so appointed shall
hold office only until the first annual general meeting of the Company after his appointment
and shall then be eligible for re-election.
A Director (including a managing or other executive Director) may be removed by an
ordinary resolution of the Company before the expiration of his term of office (but without
prejudice to any claim which such Director may have for damages for any breach of any
contract between him and the Company) and members of the Company may by ordinary
resolution appoint another in his place. Unless otherwise determined by the Company in
general meeting, the number of Directors shall not be less than two. There is no maximum
number of Directors.
The office of director shall be vacated if:
(aa) he resigns by notice in writing delivered to the Company;
(bb) he becomes of unsound mind or dies;
(cc) without special leave, he is abse nt from meetings of the board for six (6)
consecutive months, and the board resolves that his office is vacated;
(dd) he becomes bankrupt or has a receiving order made against him or suspends
payment or compounds with his creditors;
(ee) he is prohibited from being a director by law; or
(ff) he ceases to be a director by virtue of any provision of law or is removed from
office pursuant to the Articles.
The board may appoint one or more of its body to be managing director, joint managing
director, or deputy managing director or to ho ld any other employment or executive office
with the Company for such period and upon such terms as the board may determine and the
board may revoke or terminate any of such appointments. The board may delegate any of its
powers, authorities and discretions to committees consisting of such Director or Directors and
other persons as the board thinks fit, and it m ay from time to time revoke such delegation or
revoke the appointment of and discharge any such committees either wholly or in part, and
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either as to persons or purposes, but every com mittee so formed must, in the exercise of the
powers, authorities and discretions so delegated, conform to any regulations that may from
time to time be imposed upon it by the board.
(ii) Power to allot and i ssue shares and warrants
Subject to the provisions of the Companies Act and the Memorandum and Articles and
to any special rights conferred on the holders of any shares or class of shares, any share may
be issued (a) with or have attached thereto such rights, or such restrictions, whether with
regard to dividend, voting, return of capital, or otherwise, as the Directors may determine, or
(b) on terms that, at the option of the Company or the holder thereof, it is liable to be
redeemed.
The board may issue warrants or convertible se curities or securiti es of similar nature
conferring the right upon the holders thereof to subscribe for any class of shares or securities
in the capital of the Company on such terms as it may determine.
Subject to the provisions of the Companies Act and the Articles and, where applicable,
the rules of the Stock Exchange and without prejudice to any special rights or restrictions for
the time being attached to any shares or any class of shares, all unissued shares in the
Company are at the disposal of the board, which may offer, allot, grant options over or
otherwise dispose of them to such persons, at such times, for such consideration and on such
terms and conditions as it in its absolute discretion thinks fit, but so that no shares shall be
issued at a discount to their nominal value.
Neither the Company nor the board is obliged, when making or granting any allotment
of, offer of, option over or disposal of shares, to make, or make available, any such
allotment, offer, option or shares to members or others with registered addresses in any
particular territory or territories being a te rritory or territories where, in the absence of a
registration statement or other special formalities, this would or might, in the opinion of the
board, be unlawful or impracticable. Members affected as a result of the foregoing sentence
shall not be, or be deemed to be, a separate class of members for any purpose whatsoever.
(iii) Power to dispose of the assets of the Company or any of its subsidiaries
There are no specific provisions in the Articl es relating to the disposal of the assets of
the Company or any of its subsidiaries. The Di rectors may, however, exercise all powers and
do all acts and things which may be exercised or done or approved by the Company and
which are not required by the Articles or the Companies Act to be exercised or done by the
Company in general meeting.
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(iv) Borrowing powers
The board may exercise all the powers of the Company to raise or borrow money, to
mortgage or charge all or any part of the undertaking, property and assets and uncalled
capital of the Company and, subject to the Companies Act, to issue debentures, bonds and
other securities of the Company, whether outright or as collateral security for any debt,
liability or obligation of the Company or of any third party.
(v) Remuneration
The ordinary remuneration of the Directors is to be determined by the Company in
general meeting, such sum (unless otherwise directed by the resolution by which it is voted)
to be divided amongst the Directors in such proportions and in such manner as the board may
agree or, failing agreement, equally, except that any Director holding office for part only of
the period in respect of which the remuneration is payable shall only rank in such division in
proportion to the time during such period for which he held office. The Directors are also
entitled to be prepaid or repaid all travelling, hotel and incidental expenses reasonably
expected to be incurred or incurred by them in attending any boar d meetings, committee
meetings or general meetings or separate meetings of any class of shares or of debentures of
the Company or otherwise in connection with the discharge of their duties as Directors.
Any Director who, by request, goes or resides abroad for any purpose of the Company
or who performs services which in the opinion of the board go beyond the ordinary duties of
a Director may be paid such extra remuneration as the board may determine and such extra
r e m u n e r a t i o ns h a l lb ei na d d i t i o nt oo ri ns u b s t i t u t i o nf o ra n yo r d i n a r yr e m u n e r a t i o na sa
Director. An executive Director appointed to be a managing director, joint managing director,
deputy managing director or other executive of ficer shall receive such remuneration and such
other benefits and allowances as the board may f rom time to time decide. Such remuneration
may be either in addition to or in lieu of his remuneration as a Director.
T h eb o a r dm a ye s t a b l i s ho rc o n c u ro rj o i nw i t ho t h e rc o m p a n i e s( b e i n gs u b s i d i a r y
companies of the Company or companies with which it is associated in business) in
establishing and making contributions out of the Company ’s monies to any schemes or funds
for providing pensions, sickness or compassionate allowances, life assurance or other benefits
for employees (which expression as used in this and the following paragraph shall include
any Director or past Director who may hold or have held any executive office or any office
of profit with the Company or any of its subsidiaries) and ex-employees of the Company and
their dependents or any class or classes of such persons.
The board may pay, enter into agreemen ts to pay or make grants of revocable or
irrevocable, and either subject or not subject to any terms or conditions, pensions or other
benefits to employees and ex-employees and their dependents, or to any of such persons,
including pensions or benefits additional to those, if any, to which such employees or ex-
employees or their dependents are or may beco me entitled under any such scheme or fund as
is mentioned in the previous paragraph. Any such pension or benefit may, as the board
considers desirable, be granted to an employee either before and in anticipation of, or upon or
at any time after, his actual retirement.
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The board may resolve to capitalise all or any part of any amount for the time being
standing to the credit of any reserve or fun d (including a share premium account and the
profit and loss account) whether or not the same is available for distribution by applying such
sum in paying up unissued shares to be allotted to (i) employees (including directors) of the
Company and/or its affiliates (meaning any individual, corporation, partnership, association,
joint-stock company, trust, unincorporated association or other entity (other than the
Company) that directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, the Company) upon exercise or vesting of
any options or awards granted under any share incentive scheme or employee benefit scheme
or other arrangement which relates to such persons that has been adopted or approved by the
members in general meeting, or (ii) any trustee of any trust to whom shares are to be allotted
and issued by the Company in connection with the operation of any share incentive scheme
or employee benefit scheme or other arrangement which relates to such persons that has been
adopted or approved by the members in general meeting.
(vi) Compensation or payments for loss of office
Pursuant to the Articles, payments to any Director or past Director of any sum by way
of compensation for loss of office or as consider ation for or in connection with his retirement
from office (not being a payment to which the Director is contractually entitled) must be
approved by the Company in general meeting.
(vii) Loans and provision of security for loans to Directors
The Company must not make any loan, directly or indirectly, to a Director or his close
associate(s) if and to the extent it would be pro hibited by the Companies Ordinance (Chapter
622 of the laws of Hong Kong) as if the Company were a company incorporated in Hong
Kong.
(viii) Disclosure of interests in contracts with the Company or any of its subsidiaries
A Director may hold any other office or place of profit with the Company (except that
of the auditor of the Company) in conjunction with his office of Director for such period and
upon such terms as the board may determine, and may be paid such extra remuneration
therefor in addition to any remuneration provided for by or pursuant to the Articles. A
Director may be or become a director or other o fficer of, or otherwise interested in, any
company promoted by the Company or any other company in which the Company may be
interested, and shall not be liable to account to the Company or the members for any
remuneration, profits or other benefits recei ved by him as a director, officer or member of, or
from his interest in, such other company. The board may also cause the voting power
conferred by the shares in any other company h eld or owned by the Company to be exercised
in such manner in all respects as it thinks fit, in cluding the exercise thereof in favour of any
resolution appointing the Directors or any of them to be directors or officers of such other
company, or voting or providing for the payment of remuneration to the directors or officers
of such other company.
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No Director or proposed or intended Director shall be disqualified by his office from
contracting with the Company, either with regard to his tenure of any office or place of profit
or as vendor, purchaser or in any other manner whatsoever, nor shall any such contract or any
other contract or arrangement in which any Director is in any way interested be liable to be
avoided, nor shall any Director so contractin g or being so interested be liable to account to
the Company or the members for any remuneration, profit or other benefits realised by any
such contract or arrangement by reason of such Di rector holding that office or the fiduciary
relationship thereby established. A Director who to his knowledge is in any way, whether
directly or indirectly, interested in a contract or arrangement or proposed contract or
arrangement with the Company must declare the nature of his interest at the meeting of the
board at which the question of entering into the contract or arrangement is first taken into
consideration, if he knows his interest then exists, or in any other case, at the first meeting of
the board after he knows that he is or has become so interested.
A Director shall not vote (nor be counted in the quorum) on any resolution of the board
approving any contract or arrangement or other proposal in which he or any of his close
associates is materially interested, but this prohibition does not apply to any of the following
matters, namely:
(aa) the giving of any security or indemnity either:
(aaa) to the Director or his close associ ate(s) in respect of money lent or
obligations incurred or undertaken by him or any of them at the request of or
for the benefit of the Company or any of its subsidiaries; or
(bbb) to a third party in respect of a debt o r obligation of the Company or any of
its subsidiaries for which the Director or his close associate(s) has himself/
themselves assumed responsibility in whole or in part and whether alone or
jointly under a guarantee or indemnity or by the giving of security;
(bb) any proposal concerning an offer of sha res or debentures or other securities of or
by the Company or any other company which the Company may promote or be
interested in for subscription or purchase where the Director or his close
associate(s) is/are or is/are to be intere sted as a participant in the underwriting or
sub-underwriting of the offer;
(cc) any proposal or arrangement concerning the benefit of employees of the Company
or its subsidiaries including:
(aaa) the adoption, modification or operation of any employees ’ share scheme or
any share incentive or share option scheme under which the Director or his
close associate(s) may benefit; or
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(bbb) the adoption, modification or operation of a pension fund or retirement,
death or disability benefits scheme which relates to the Directors, his close
associate(s) and employee(s) of the C ompany or any of its subsidiaries and
does not provide in respect of any Direct or, or his close associate(s), as such
any privilege or advantage not generally accorded to the class of persons to
which such scheme or fund relates;
(dd) any contract or arrangement in which the Director or his close associate(s) is/are
interested in the same manner as other holders of shares or debentures or other
securities of the Company by virtue only of his/their interest in shares or
debentures or other securities of the Company.
(c) Proceedings of the Board
The board may meet for the despatch of business, adjourn and otherwise regulate its meetings
as it considers appropriate. Questions arising at any meeting shall be determined by a majority of
votes. In the case of an equality of votes, the ch airman of the meeting shall have an additional or
casting vote.
(d) Alterations to constitutional documents and the Company ’sn a m e
The Articles may be rescinded, altered or amended by the Company in general meeting by
special resolution. The Articles state that a special resolution shall be required to alter the
provisions of the Memorandum, to amend the Articles or to change the name of the Company.
(e) Meetings of members
(i) Special and ordinary resolutions
A special resolution of the Company must be passed by a majority of not less than
three-fourths of the votes cast by such members as, being entitled so to do, vote in person or,
in the case of such members as are corporations, by their duly authorised representatives or,
where proxies are allowed, by proxy at a general meeting of which notice has been duly
given in accordance with the Articles.
Under the Companies Act, a copy of any special resolution must be forwarded to the
Registrar of Companies in the Cayman Islands within fifteen (15) days of being passed.
An ordinary resolution is defined in the Articles to mean a resolution passed by a
simple majority of the votes of such members of the Company as, being entitled to do so,
vote in person or, in the case of corporations, by their duly authorised representatives or,
where proxies are allowed, by proxy at a general meeting of which notice has been duly
given in accordance with the Articles.
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(ii) Voting rights and right to demand a poll
Subject to any special rights or restrictio ns as to voting for the time being attached to
any shares, at any general meeting on a poll eve ry member present in person or by proxy or,
in the case of a member being a corporation, by its duly authorised representative shall have
one vote for every fully paid share of which he is the holder but so that no amount paid up or
credited as paid up on a share in advance of calls or installments is treated for the foregoing
purposes as paid up on the share. A member entitled to more than one vote need not use all
his votes or cast all the votes he uses in the same way.
At any general meeting a resolution put t o the vote of the meeting is to be decided by
way of a poll save that the chairman of the meeting may in good faith, allow a resolution
which relates purely to a procedural or administrative matter to be voted on by a show of
hands in which case every member present in per son (or being a corporation, is present by a
duly authorized representative), or by proxy(ies) shall have one vote provided that where
more than one proxy is appointed by a member which is a clearing house (or its nominee(s)),
each such proxy shall have one vote on a show of hands. Votes (whether on a show of hands
or by way of poll) may be cast by such means, electronic or otherwise, as the Directors or the
chairman of the meeting may determine.
Any corporation which is a member may by resolution of its directors or other
governing body authorise such person as it thin ks fit to act as its representative at any general
meeting of the Company or at any meeting of any class of members. The person so
authorised shall be entitled to exercise the same powers on behalf of such corporation as the
corporation could exercise if it were an individual member and such corporation shall for the
purposes of the Articles be deemed to be presen ti np e r s o na ta n ys u c hm e e t i n gi fap e r s o ns o
authorised is present thereat.
If a recognised clearing house (or its nominee(s)) is a member of the Company it may
authorise such person or persons as it thinks fi t to act as its representative(s) at any meeting
of the Company or at any meeting of any class of members 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 which each such person is so authorised. A person authorised pursuant to
this provision shall be deemed to have been duly authorised without further evidence of the
facts and be entitled to exercise the same powers on behalf of the recognised clearing house
(or its nominee(s)) as if such person was the registered holder of the shares of the Company
held by that clearing house (or its nominee(s)) including, the right to speak and to vote, and
where a show of hands is allowed, the right to vote individually on a show of hands.
All members have the right to speak and vote at a general meeting except where a
member is required, by the rules of the Stock Exchange, to abstain from voting to approve
the matter under consideration.
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Where the Company has any knowledge that any member is, under the rules of the
Stock Exchange, required to abstain from voting on any particular resolution of the Company
or restricted to voting only for or only against any particular resolution of the Company, any
votes cast by or on behalf of such member in contr avention of such requirement or restriction
shall not be counted.
(iii) Annual general meetings and extraordinary general meetings
The Company must hold an annual general m eeting of the Company for each financial
year and such general meeting must be hel d within six (6) months after the end of the
Company ’s financial year unless a longer period would not infringe the rules of the Stock
Exchange.
Extraordinary general meetings may be convened on the requisition of one or more
members holding, at the date of deposit of the requisition, not less than one-tenth of the paid
up capital of the Company (excluding treasury s hares) having the right of voting at general
meetings, on a one vote per share basis. Such requisition shall be made in writing to the
board or the secretary for the purpose of requiring an extraordinary general meeting to be
called by the board for the transaction of any business or resolution specified in such
requisition. Such meeting shall be held within 2 months after the deposit of such requisition.
If within 21 days of such deposit, the board fails to proceed to convene such meeting, the
requisitionist(s) himself/herself (themselves) may do so in the same manner, and all
reasonable expenses incurred by the requisiti onist(s) as a result of the failure of the board
shall be reimbursed to the requisitionist(s) by the Company.
Notwithstanding any provisions in the Articles, any general meeting or any class
meeting may be held physically, as a hybrid m eeting (partially phys ical and partially
electronic) or wholly by electronic means using such telephone, electronic or other
communication facilities as to permit all persons participating in the meeting to communicate
with each other, and participation in such a meetin g shall constitute presence at such meeting.
Unless otherwise determined by the Director s, the manner of convening and the proceedings
at a general meeting set out i n the Articles shall apply, mutatis mutandis , to hybrid or wholly
electronic meetings.
(iv) Notices of meetings and business to be conducted
An annual general meeting must be called by notice of not less than twenty-one (21)
clear days. All other general meetings must be called by notice of at least fourteen (14) clear
days. The notice is exclusive of the day on which it is served or deemed to be served and of
the day for which it is given, and must specify the time and place of the meeting and
particulars of resolutions to be considered at the meeting and, in the case of special business,
the general nature of that business.
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In addition, notice of every general meeting must be given to all members of the
Company other than to such members as, under the provisions of the Articles or the terms of
issue of the shares they hold, are not entitle d to receive such notices from the Company, and
also to, among others, the auditors for the time being of the Company.
Any notice to be given to or by any person pursuant to the Articles may be served on or
delivered to any member of the Company personally, by post to such member ’sr e g i s t e r e d
address or by advertisement in newspapers in accordance with the requirements of the Stock
Exchange. Subject to compliance with Ca yman Islands law and the rules of the Stock
Exchange, notice may also be served or delivered by the Company to any member by
electronic means.
All business that is transacted at an extraordinary general meeting and at an annual
general meeting is deemed special, save that i n the case of an annual general meeting, each
of the following business is deemed an ordinary business:
(aa) the declaration and sanctioning of dividends;
(bb) the consideration and adoption of the accounts and balance sheet and the reports
of the directors and the auditors;
(cc) the election of directors in place of those retiring;
(dd) the appointment of auditors and other officers; and
(ee) the fixing of the remuneration of the directors and of the auditors.
(v) Quorum for meetings and separate class meetings
No business shall be transacted at any general meeting unless a quorum is present when
the meeting proceeds to business, but the absence of a quorum shall not preclude the
appointment of a chairman.
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 authorised representative) or by proxy or,
for quorum purposes only, two persons appointed by the clearing house as authorized
representative or proxy, and entitled to vote. In respect of a separate class meeting (including
an adjourned meeting) convened to sanction t he modification of class rights the necessary
quorum shall be two persons holding or representing by proxy not less than one-third in
nominal value of the issued shares of that class (excluding treasury shares).
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(vi) Proxies
Any member of the Company entitled to attend and vote at a meeting of the Company is
entitled to appoint another person as his proxy to attend and vote instead of him. A member
who is the holder of two or more shares may appoint more than one proxy to represent him
and vote on his behalf at a general meeting o f the Company or at a class meeting. A proxy
need not be a member of the Company and is entitled to exercise the same powers on behalf
of a member who is an individual and for whom he acts as proxy as such member could
exercise. In addition, a proxy is entitled to exercise the same powers on behalf of a member
which is a corporation and for which he acts as p roxy as such member could exercise as if it
were an individual member. Votes may be giv en either personally (or, in the case of a
member being a corporation, by its duly authorised representative) or by proxy.
(f) Accounts and audit
The board shall cause true accounts to be kept of the sums of money received and expended
by the Company, and the matters in respect of whi ch such receipt and expenditure take place, and
of the property, assets, credits and liabilities o f the Company and of all other matters required by
the Companies Act or necessary to give a true and fair view of the Company ’sa f f a i r sa n dt o
explain its transactions.
The accounting records must be kept at the registered office or at such other place or places
as the board decides and shall always be open to inspection by any Director. No member (other
than a Director) shall have any right to inspect any accounting record or book or document of the
Company except as conferred by law or authorised by the board or the Company in general
meeting. However, an exempted company must make a vailable at its registered office in electronic
form or any other medium, copies of its books of account or parts thereof as may be required of it
upon service of an order or notice by the Tax Information Authority pursuant to the Tax
Information Authority Act of the Cayman Islands.
A copy of every balance sheet and profit and loss account (including every document
required by law to be annexed thereto) which is to be laid before the Company at its general
meeting, together with a printed copy of the Directors ’ report and a copy of the auditors ’ report,
shall not less than twenty-one (21) days before the date of the meeting and at the same time as the
notice of annual general meeting be sent to every person entitled to receive notices of general
meetings of the Company under the provisions of the Articles; however, subject to compliance
with all applicable laws, including the rules of the Stock Exchange, the Company may send to such
persons summarised financial statements derived from the Company ’s annual accounts and the
directors ’ r e p o r ti n s t e a dp r o v i d e dt h a ta n ys u c hp e r s o nm a yb yn o t i c ei nw r i t i n gs e r v e do nt h e
Company, demand that the Company sends to him, in addition to summarised financial statements,
a complete printed copy of the Company ’s annual financial stat ement and the directors ’ report
thereon.
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At the annual general meeting or at a subsequent extraordinary general meeting in each year,
the members shall by ordinary r esolution appoint an auditor t o audit the accounts of the Company
and such auditor shall hold office until the next annual general meeting. Moreover, the members
may, at any general meeting, by ordinary resolution remove the auditor at any time before the
expiration of his terms of office and shall by ordinary resolution at that meeting appoint another
auditor for the remainder of his term. The remuner ation of the auditors shall be fixed and approved
by the Company by an ordinary resolution passed at a general meeting or in such manner as the
members may by ordinary resolution determine.
The financial statements of the Company shall be audited by the auditor in accordance with
generally accepted auditing standards which may b e those of a country or jurisdiction other than
the Cayman Islands. The auditor shall make a wri tten report thereon in accordance with generally
accepted auditing standards and the report of the auditor must be submitted to the members in
general meeting.
(g) Dividends and other methods of distribution
The Company in general meeting may declare dividends in any currency to be paid to the
members but no dividend shall be declared in excess of the amount recommended by the board.
The Articles provide dividends may be declared and paid out of the profits of the Company,
realised or unrealised, or from any reserve set as ide from profits which the directors determine is
no longer needed. With the sanction of an ordinar y resolution dividends may also be declared and
paid out of share premium account or any other fund or account which can be authorised for this
purpose in accordance with the Companies Act.
Except in so far as the rights attaching to, or th e terms of issue of, any share may otherwise
provide, (i) all dividends shall be declared and paid according to the amounts paid up on the shares
in respect whereof the dividend is paid but no amount paid up on a share in advance of calls shall
for this purpose be treated as paid up on the share and (ii) all dividends shall be apportioned and
paid pro rata according to the amount paid up on the shares during any portion or portions of the
period in respect of which the dividend is paid. The Directors may deduct from any dividend or
other monies payable to any member or in respect of any shares all sums of money (if any)
presently payable by him to the Company on account of calls or otherwise.
Whenever the board or the Company in general meeting has resolved that a dividend be paid
or declared on the share capital of the Company, th e board may further resolve either (a) that such
dividend be satisfied wholly or in part in the form of an allotment of shares credited as fully paid
up, provided that the members entitled thereto will be entitled to elect to receive such dividend (or
part thereof) in cash in lieu of such allotment, or (b) that members entitled to such dividend will be
entitled to elect to receive an allotment of share s credited as fully paid up in lieu of the whole or
such part of the dividend as the board may think fit.
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The Company may also upon the recommendation of the board by an ordinary resolution
resolve in respect of any one particular dividend of the Company that it may be satisfied wholly in
the form of an allotment of shares credited as fully paid up without offering any right to members
to elect to receive such dividend in cash in lieu of such allotment.
Any dividend, interest or other sum payable in cash to the holder of shares may be paid by
cheque or warrant sent through the post addressed to the holder at his registered address, or in the
case of joint holders, addressed to the holder whose name stands first in the register of the
Company in respect of the shares a t his address as appearing in the register or addressed to such
person and at such addresses as the holder or joint holders may in writing direct. Every such
cheque or warrant shall, unless the holder or joint holders otherwise direct, be made payable to the
order of the holder or, in the case of joint holders, to the order of the holder whose name stands
first on the register in respect of such shares, and shall be sent at his or their risk and payment of
the cheque or warrant by the bank on which it is drawn shall constitute a good discharge to the
Company. Any one of two or more joint holders may give effectual receipts for any dividends or
other moneys payable or property distributable in respect of the shares held by such joint holders.
For the avoidance of doubt, any dividend, interest, or other sum payable in cash may also be paid
by electronic funds transfer on such terms and conditions as the Directors may determine.
Whenever the board or the Company in general meeting has resolved that a dividend be paid
or declared the board may further resolve that such dividend be satisfied wholly or in part by the
distribution of specific assets of any kind.
All dividends or bonuses unclaimed for one y ear after having been declared may be invested
or otherwise made use of by the board for the benefit of the Company until claimed and the
Company shall not be constituted a trustee in respect thereof. All dividends or bonuses unclaimed
for six years after having been declared may be f orfeited by the board and shall revert to the
Company.
No dividend or other monies payable by the Company on or in respect of any share shall bear
interest against the Company.
(h) Inspection of corporate records
Pursuant to the Articles, the register and branch register of members maintained in Hong
Kong shall be open to inspection for at least two (2) hours during business hours by members and
holders of Prescribed Securities (as defined in the USM Rules) without charge, or by any other
person upon a maximum payment of HK$2.50 or such lesser sum specified by the board, at the
registered office or such other place at which the register is kept in accordance with the Companies
Act or, upon a maximum payment of HK$1.00 or such lesser sum specified by the board, at the
office where the branch register of members is k ept, unless the register is closed in accordance
with the Articles.
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(i) Rights of minorities in relation to fraud or oppression
There are no provisions in the Articles relating to rights of minority shareholders in relation
to fraud or oppression. However, certain remedies are available to members of the Company under
Cayman Islands law, as summarised in paragraph 3(f) of this Appendix.
(j) Procedures on liquidation
Unless otherwise provided by the Companies Act, a resolution that the Company be wound
up by the court or be wound up voluntarily shall be a special resolution.
Subject to any special rights, privileges or restrictions as to the distribution of available
surplus assets on liquidation for the time being attached to any class or classes of shares:
(i) if the Company is wound up and the assets available for distribution amongst the
members of the Company shall be more than sufficient to repay the whole of the capital
paid up at the commencement of the winding up, the excess shall be distributed pari
passu amongst such members in proportion to the amount paid up on the shares held by
them respectively; and
(ii) if the Company is wound up and the assets available for distribution amongst the
members as such shall be insufficient to repay the whole of the paid-up capital, such
assets shall be distributed so that, as nearly as may be, the losses shall be borne by the
members in proportion to the capital paid up, or which ought to have been paid up, at
the commencement of the winding up on the shares held by them respectively.
If the Company is wound up (whether the liquidation is voluntary or by the court) the
liquidator may, with the authority of a special resolution and any other sanction required by the
Companies Act divide among the members in sp ecie or kind the whole or any part of the assets of
the Company whether the assets shall consist of property of one kind or shall consist of properties
of different kinds and the liquidator may, for such purpose, set such value as he deems fair upon
any one or more class or classes of property to be divided as aforesaid and may determine how
such division shall be carried out as between th e members or different classes of members. The
liquidator may, with the like authority, vest any part of the assets in trustees upon such trusts for
the benefit of members as the liquidator, with the like authority, shall think fit, but so that no
contributory shall be compelled to accept any shares or other property in respect of which there is
a liability.
(k) Subscription rights reserve
The Articles provide that to the extent that it is not prohibited by and is in compliance with
the Companies Act, if warrants to subscribe for shares have been issued by the Company and the
Company does any act or engages in any transaction which would result in the subscription price
of such warrants being reduced below the par value of a share, a subscription rights reserve shall
be established and applied in paying up the differ ence between the subscription price and the par
value of a share on any exercise of the warrants.
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(l) Electronic communication s and securities management
The Articles permit the Company to accept e lectronic instructi ons from members and
securities holders of the Company for activities such as attending meetings, appointing proxies,
voting, and responding to corporate communications, provided such actions comply with applicable
laws, the rules of the Stock Exchange, and authentication measures determined by the board.
Further, the Articles have provisions to align with the Securities and Futures Ordinance and the
Securities and Futures (Uncertif icated Securities Market) Rul es (Cap. 571AS) of Hong Kong (if
and when effective), enabling the holding, transfer , and registration of shares and other securities
in uncertificated form through elec tronic systems, such as the Uncertificated Securities Registration
and Transfer (UNSRT) system, which facilitates title evidencing and transfer without physical
instruments; the Company is also authorised to su pport electronic voting, proxy instructions, and
distribution of corporate action p roceeds, ensuring alignment with the uncertificat ed securities
market framework and Cayman Islands laws.
3. CAYMAN ISLANDS COMPANY LAW
The Company is incorporated in the Cayman Islands subject to the Companies Act and, therefore,
operates subject to Cayman Islands law. Set out below is a summary of certain provisions of Cayman
company law, although this does not purport to contain all applicable qualifications and exceptions or to
be a complete review of all matters of Cayman company law and taxation, which may differ from
equivalent provisions in jurisdictions with which interested parties may be more familiar:
(a) Company operations
As an exempted company, the Company ’s operations must be conducted mainly outside the
Cayman Islands. The Company is required to file an annual return each year with the Registrar of
Companies of the Cayman Islands and pay a fee which is based on the amount of its authorised
share capital.
(b) Share capital
The Companies Act provides that where a company issues shares at a premium, whether for
cash or otherwise, a sum equal to the aggregate amount of the value of the premiums on those
shares shall be transferred to an account, to be called the ‘‘share premium account ’’. At the option
of a company, these provisions may not apply to premiums on shares of that company allotted
pursuant to any arrangement in consideration o f the acquisition or cancellation of shares in any
other company and issued at a premium.
The Companies Act provides that the share p remium account may be applied by the company
subject to the provisions, if any, of its memorandum and articles of association in (a) paying
distributions or dividends to members; (b) paying up unissued shares of the company to be issued
to members as fully paid bonus shares; (c) the redemption and repurchase of shares (subject to the
provisions of section 37 of the Companies Act); (d) writing-off the preliminary expenses of the
company; and (e) writing-off the expenses of, or the commission paid or discount allowed on, any
issue of shares or debentures of the company.
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No distribution or dividend may be paid to memb ers out of the share premium account unless
immediately following the date on which the distribution or dividend is proposed to be paid, the
company will be able to pay its debts as they fall due in the ordinary course of business.
The Companies Act provides that a company limited by shares or a company limited by
guarantee and having a share capital may, if so authorised by its articles of association, reduce its
s h a r ec a p i t a li na n yw a yb y( i )s p e c i a lr e s o l u t i o na n dc o n f i r m a t i o nt ot h eG r a n dC o u r to ft h e
Cayman Islands (the ‘‘Court ’’); or (ii) special resolution suppor ted by a solvency statement in
accordance with the Companies Act.
(c) Financial assistance to purchase shares of a company or its holding company
There is no statutory restriction in the Cayman Islands on the provision of financial
assistance by a company to another person for the purchase of, or subscription for, its own or its
holding company ’s shares. Accordingly, a company may provide financial assistance if the
directors of the company consider, in dischargin gt h e i rd u t i e so fc a r ea n da c t i n gi ng o o df a i t h ,f o r
a proper purpose and in the interests of the company, that such assistance can properly be given.
Such assistance should be on an arm ’s-length basis.
(d) Purchase of shares and warrants by a company and its subsidiaries
A company limited by shares or a company limite d by guarantee and having a share capital
may, if so authorised by its articles of associatio n, issue shares which are to be redeemed or are
liable to be redeemed at the option of the comp any or a shareholder and the Companies Act
expressly provides that it shall be lawful for the rights attaching to any sh ares to be varied, subject
to the provisions of the company ’s articles of association, so as to provide that such shares are to
be or are liable to be so redeemed. In addition, such a company may, if authorised to do so by its
articles of association, purchase its own shares, including any redeemable shares. However, if the
articles of association do not authorise the manner and terms of purchase, a company cannot
purchase any of its own shares unless the manner and terms of purchase have first been authorised
by an ordinary resolution of the company. At no time may a company redeem or purchase its
shares unless they are fully paid. A company may not redeem or purchase any of its shares if, as a
result of the redemption or purchase, there wou ld no longer be any issued shares of the company
other than shares held as treasury shares. A payment out of capital by a company for the
redemption or purchase of its own shares is not lawful unless immediately following the date on
which the payment is proposed to be made, the company shall be able to pay its debts as they fall
due in the ordinary course of business.
Shares purchased by a company is to be treated as cancelled unless, subject to the
memorandum and articles of association of the company, the directors of the company resolve to
hold such shares in the name of the company as treas ury shares prior to the purchase. Where shares
of a company are held as treasury shares, the company shall be entered in the register of members
as holding those shares, however, notwithstandi ng the foregoing, the company is not to be treated
as a member for any purpose and must not exercise any right in respect of the treasury shares, and
any purported exercise of such a right shall be void, and a treasury share must not be voted,
directly or indirectly, at any meeting of the company and must not be counted in determining the
total number of issued shares at any given time, whether for the purposes of the company ’sa r t i c l e s
of association or the Companies Act.
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A company is not prohibited from purchasing and may purchase its own warrants subject to
and in accordance with the t erms and conditions of the relevant warrant instrument or certificate.
There is no requirement under Cayman Islands law that a company ’s memorandum or articles of
association contain a specific p rovision enabling such purchases and the directors of a company
may rely upon the general power contained in its memorandum of association to buy and sell and
deal in personal property of all kinds.
Under Cayman Islands law, a subsidiary may hold shares in its holding company and, in
certain circumstances, may acquire such shares.
(e) Dividends and distributions
The Companies Act permits, subject to a solvency test and the provisions, if any, of the
company ’s memorandum and articles of association, the payment of dividends and distributions out
of the share premium account. With the exception of the foregoing, there are no statutory
provisions relating to the payment of dividends. B ased upon English case law, which is regarded as
persuasive in the Cayman Islands, dividends may be paid only out of profits.
No dividend may be declared or paid, 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 to the company, in respect of a treasury share.
(f) Protection of minorities and shareholders ’suits
The Courts ordinarily would be expected to fo llow English case law precedents which permit
a minority shareholder to commence a representative action against or derivative actions in the
name of the company to challenge (a) an act which is ultra vires the company or illegal, (b) an act
which constitutes a fraud against the minority and the wrongdoers are themselves in control of the
company, and (c) an irregularity in the passing of a resolution which requires a qualified (or
special) majority.
In the case of a company (not being a bank) havin g a share capital divided into shares, the
Court may, on the application of members holding not less than one fifth of the shares of the
company in issue, appoint an inspector to examin e into the affairs of the company and to report
thereon in such manner as the Court shall direct.
Any shareholder of a company may petition the Court which may make a winding up order if
the Court is of the opinion that it is just and equitable that the company should be wound up or, as
an alternative to a winding up order, (a) an or der regulating the conduct of the company ’s affairs in
the future, (b) an order requiring the comp any to refrain from doing or continuing an act
complained of by the shareholder petitioner or to do an act which the shareholder petitioner has
complained it has omitted to do, (c) an order authorising civil proceedings to be brought in the
name and on behalf of the company by the share holder petitioner on such terms as the Court may
direct, or (d) an order providing for the purchase of the shares of any shareholders of the company
by other shareholders or by the company itself and, in the case of a purchase by the company
itself, a reduction of the company ’s capital accordingly.
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Generally claims against a company by its shareholders must be based on the general laws of
contract or tort applicable in the Cayman Islands or their individual rights as shareholders as
established by the company ’s memorandum and articles of association.
(g) Disposal of assets
The Companies Act contains no specific restrictions on the power of directors to dispose of
assets of a company. However, as a matter of general law, every officer of a company, which
includes a director, managing director and secret ary, in exercising his powers and discharging his
duties must do so honestly and in good faith with a view to the best interests of the company and
exercise the care, diligence and skill that a reasonably prudent person would exercise in
comparable circumstances.
(h) Accounting and auditing requirements
A company must cause proper books of account to be kept with respect to (i) all sums of
money received and expended by the company and the matters in respect of which the receipt and
expenditure takes place; (ii) all s ales and purchases of goods by t he company; and (iii) the assets
and liabilities of the company.
Proper books of account shall not be deemed to be kept if there are not kept such books as
are necessary to give a true and fair view of the state of the company ’s affairs and to explain its
transactions.
An exempted company must make available at its registered office in electronic form or any
other medium, copies of its books of account or parts thereof as may be required of it upon service
of an order or notice by the Tax Information Authority pursuant to the Tax Information Authority
Act of the Cayman Islands.
(i) Exchange control
There are no exchange control regulations or currency restrictions in the Cayman Islands.
(j) Taxation
Pursuant to the Tax Concessions Act of the Cayman Islands, the Company has obtained an
undertaking:
(1) that no law which is enacted in the Cayman Islands imposing any tax to be levied on
profits, income, gains or appreciation shall apply to the Company or its operations; and
(2) that the aforesaid tax or any tax in the nat ure of estate duty or inheritance tax shall not
be payable on or in respect of the shares, debentures or other obligations of the
Company.
The undertaking for the Company is for a period of twenty years from 7 October 2025.
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The Cayman Islands currently levy no taxes on individuals or corporations based upon
profits, income, gains or appreciations and there is no taxation in the nature of inheritance tax or
estate duty. There are no other taxes likel yt ob em a t e r i a lt ot h eC o m p a n yl e v i e db yt h e
Government of the Cayman Islands save for certain stamp duties which may be applicable, from
time to time, on certain instruments executed in or brought within the jurisdiction of the Cayman
Islands. The Cayman Islands are a party to a double tax treaty entered into with the United
Kingdom in 2010 but otherwise is not party to any double tax treaties.
(k) Stamp duty on transfers
No stamp duty is payable in the Cayman Islan ds on transfers of shares of Cayman Islands
companies except those which hold int erests in land in the Cayman Islands.
(l) Loans to directors
There is no express provision in the Companies Act prohibiting the making of loans by a
company to any of its directors.
(m) Inspection of corporate records
The notice of registered office is a matter of public record. A list of the names of the current
directors and alternate directors ( if applicable) is made available by the Registrar of Companies for
inspection by any person on payment of a fee. The register of mortgages is open to inspection by
creditors and members.
Members of the Company have no general right under the Companies Act to inspect or obtain
copies of the register of members or corporate records of the Company. They will, however, have
such rights as may be set out in the Company ’s Articles.
(n) Register of members
An exempted company may maintain its prin cipal register of members and any branch
registers at such locations, whether within or without the Cayman Islands, as the directors may,
from time to time, think fit. The register of member s shall contain such particulars as required by
Section 40 of the Companies Act. A branch register must be kept in the same manner in which a
principal register is by the Companies Act requ ired or permitted to be kept. The company shall
c a u s et ob ek e p ta tt h ep l a c ew h e r et h ec o m p a n y’s principal register is kept a duplicate of any
branch register duly entered up from time to time.
There is no requirement under the Companies Act for an exempted company to make any
returns of members to the Registrar of Companie s of 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, in
electronic form or any other medium, such regist er of members, including any branch register of
members, as may be required of it upon service of an order or notice by the Tax Information
Authority pursuant to the Tax Information Authority Act of the Cayman Islands.
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(o) Register of Directors and Officers
The Company is required to maintain at its registered office a register of directors and
officers which is not available for inspection by t he public. A copy of such register must be filed
with the Registrar of Companies in the Cayman Islands and any change must be notified to the
R e g i s t r a rw i t h i nt h i r t y( 3 0 )d a y so fany change in such directors or officers.
(p) Beneficial Ownership Register
An exempted company is required to identify its beneficial owners and provide details of
these beneficial owners to its corporate service provider ( ‘‘CSP’’) which maintains its beneficial
ownership register in the Cayman Islands. A beneficial owner is defined as an individual who (a)
ultimately owns or controls, whether through dir ector or indirect ownership or control 25% or more
of the shares, voting rights, or partnership interests in the company, (b) otherwise exercises
ultimate effective control over the management of the company, or (c) is identified as exercising
control of the company through other means. The b eneficial ownership register may be accessed by
members of the public who demonstrate a legitimat e interest, subject to approval by the competent
authority. An exempted company with its shares listed on an approved stock exchange, which
includes the Stock Exchange, may provide its CSP with details of its listed status as an alternative
compliance route instead of providing details of it s beneficial owners. Accordingly, as long as the
shares of the Company remain listed on the S tock Exchange, the Co mpany may opt for this
alternative compliance route rather than maintain a beneficial ownership register.
(q) Winding up
A company may be wound up (a) compulsorily by order of the Court, (b) voluntarily, or (c)
under the supervision of the Court.
The Court has authority to order winding up in a number of specified circumstances including
where the members of the company have passed a special resolution requiring the company to be
wound up by the Court, or where the company is unable to pay its debts, or where it is, in the
opinion of the Court, just and equitable to do so. Where a petition is presented by members of the
company as contributories on the ground that it is just and equitable that the company should be
wound up, the Court has the jurisdiction to make certain other orders as an alternative to a
winding-up order, such as making an order regulating the conduct of the company ’sa f f a i r si nt h e
future, making an order authorising civil proceedings to be brought in the name and on behalf of
the company by the petitioner on such terms as the Court may direct, or making an order providing
for the purchase of the shares of any of the members of the company by other members or by the
company itself.
A company (save with respect to a limited duration company) may be wound up voluntarily
when the company so resolves by special resol ution or when the compan y in general meeting
resolves by ordinary resolution that it be wound up voluntarily because it is unable to pay its debts.
In the case of a voluntary winding up, such company is obliged to cease to carry on its business
(except so far as it may be beneficial for its winding up) from the time of passing the resolution
for voluntary winding up or upon the expiry of the period or the occurrence of the event referred to
above.
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For the purpose of conducting the proceedings in winding up a company and assisting the
Court therein, there may be appointed an official liquidator or official liquidators; and the court
may appoint to such office such person, either provisionally or otherwise, as it thinks fit, and if
more persons than one are appointed to such of fice, the Court must declare whether any act
required or authorised to be done by the official liquidator is to be done by all or any one or more
of such persons. The Court may also determine whether any and what security is to be given by an
official liquidator on his appointment; if no offi cial liquidator is appoin ted, or during any vacancy
in such office, all the property of the company shall be in the custody of the Court.
As soon as the affairs of the company are fully wound up, the liquidator must make a report
and an account of the winding up , showing how the winding up has been conducted and how the
property of the company has been disposed of , and thereupon call a general meeting of the
company for the purposes of laying before it the account and giving an explanation thereof. This
final general meeting must be called by at least 21 days ’ notice to each contributory in any manner
authorised by the company ’s articles of association and published in the Gazette.
(r) Reconstructions
There are statutory provisions which facilitate reconstructions and ama lgamations approved
by (i) a majority in number representing seventy-five per cent. (75%) in value of creditors, or (ii)
seventy-five per cent. (75%) in value of shareholders or class of shareholders, as the case may be,
as are present at a meeting called for such purpos e and thereafter sanctioned by the Court. Whilst a
dissenting shareholder would have the right to express to the Court his view that the transaction for
which approval is sought would not provide the shareholders with a fair value for their shares, the
Court is unlikely to disapprove the transaction o n that ground alone in the absence of evidence of
fraud or bad faith on behalf of management.
The Companies Act also contains statutory provisions which provide that a company may
present a petition to the Court for the appointment of a restructuring officer on the grounds that the
company (a) is or is likely to become unable to pay its debts within the meaning of section 93 of
the Companies Act; and (b) intends to present a compromise or arrangement to its creditors (or
classes thereof) either, pursuant to the Companies Act, the law of a foreign country or by way of a
consensual restructuring. The petition may be presented by a company acting by its directors,
without a resolution of its shareholders or an express power in its articles of association. On
hearing such a petition, the Court may, among other things, make an order appointing a
restructuring officer or make any other order as the Court thinks fit.
APPENDIX IV SUMMARY OF THE CONSTITUTION OF OUR
COMPANY AND CAYMAN ISLANDS COMPANY LAW
– IV-24 –


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(s) Take-overs
Where an offer is made by a company for the shares of another company and, upon the
holders of not less than ninety per cent. (90%) of the shares which are the subject of the offer
accepting the offer, the offeror may at any tim e within two (2) months af ter such acceptance, by
notice in the prescribed manner require the dissenting shareholders to transfer their shares on the
terms of the offer. A dissenting shareholder may apply to the Court within one (1) month of the
notice objecting to the transfer. The burden is on the dissenting shareholder to show that the Court
should exercise its discretion, which it will be u n l i k e l yt od ou n l e s st h e r eis evidence of fraud or
bad faith or collusion as between the offeror and the holders of t he shares who have accepted the
offer as a means of unfairly forcing out minority shareholders or non-compliance with the statutory
requirements.
(t) Indemnification
Cayman Islands law does not limit the extent to which a company ’s articles of association
may provide for indemnification of officers and directors, except to the extent any such provision
may be held by the Court to be contrary to public policy (e.g. for purporting to provide
indemnification against the consequences of committing a crime).
(u) Economic Subst ance Requirements
Pursuant to the International Tax Cooperation (Economic Substance) Act of the Cayman
Islands ( ‘‘ES Act ’’) that came into force on 1 January 2019, a ‘‘relevant entity ’’is required to
satisfy the economic substance test set out in the ES Act. A ‘‘relevant entity ’’ includes an
exempted company incorporated in the Cayman Islands as is the Company; however, it does not
include an entity that is tax resident outside the Cayman Islands. Accordingly, for so long as the
Company is a tax resident outside the Cayman Islands, including in Hong Kong, it is not required
to satisfy the economic substance test set out in the ES Act.
4. GENERAL
Conyers Dill & Pearman, the Company ’s special legal counsel on Cayman Islands law, have sent to
the Company a letter of advice summarising certain as pects of Cayman Islands company law. This letter,
together with a copy of the Companies Act, is available for inspection as referred to in the paragraph
headed ‘‘Documents Delivered to the Registrar of Companies and Available on Display ’’in Appendix VI
to this prospectus. Any person wishing to have a detailed summary of Cayman Islands company law or
advice on the differences between it and the laws of any jurisdiction with which he is more familiar is
recommended to seek independent legal advice.
APPENDIX IV SUMMARY OF THE CONSTITUTION OF OUR
COMPANY AND CAYMAN ISLANDS COMPANY LAW
– IV-25 –


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A. FURTHER INFORMATION ABOUT OUR GROUP
1. Incorporation of our Company
Our Company was incorporated in the Cayman Islands under the Cayman Islands Companies
Act as an exempted company with limited liability on 3 October 2025.
We have been registered in Hong Kong under Part 16 of the Companies Ordinance as a non-
Hong Kong company on 12 November 2025, and our principal place of business in Hong Kong is
at 5/F, Lung Fung Group Centre, 23 Yip Cheong Street, Fanling, New Territories, Hong Kong. In
compliance with the requirements of the Compan ies Ordinance, Mr. Tse has been appointed as the
authorized representative in Hong Kong for the acceptance of service of process and any notice
required to be served on our Company in Hong Kong.
Our Company was incorporated in the Cayman Islands and is subject to Cayman Islands law.
Its constitution comprises the Memorandum and th e Articles of Association. A summary of certain
relevant parts of its constitution and certain rele vant aspects of Cayman Islands company law is set
out in ‘‘Appendix IV — Summary of the Constitution of our Company and Cayman Islands
Company Law ’’.
2. Changes in the Share Capital of our Company
(a) As at the date of incorporation of our Company on 3 October 2025, our authorized
share capital was HK$390,000 divided into 3,900,000,000 Shares having a par value of
HK$0.0001 each. On the date of incorporat ion, one Share of HK$0.0001 was allotted
and issued as fully-paid at par to an initial subscriber who is an Independent Third
Party, and such share was transferred to TTK Holding on the same day. On 20 October
2025, our Company allotted and issued 999,999 Shares to TTK Holding, credited as
fully paid; and
(b) Immediately after the Capitalization Issue and the Global Offering (without taking into
account any Shares which may be allotted, issued or sold upon exercise of the Over-
allotment Option or Shares which may be issued under the Share Scheme), the
authorized share capital of our Company will remain to be HK$390,000, divided into
3,900,000,000 Shar es of HK$0.0001 each.
Other than pursuant to the exercise of the Over-allotment Option, our Directors at present
have no intention to issue to any party any of t he authorized but unissued share capital of our
Company, and, without the prior approval of the Shareholders in general meeting, no issue of
Shares will be made which would effectively alter the control of our Company.
Save as disclosed in ‘‘History, Reorganization and Corporate Structure ’’, there has been no
alteration in the share capital of our Company since its incorporation.
Our Company has no founder shares, management shares or deferred shares.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-1 –


--- page 437 ---
3. Resolutions in writing of our sole Shareholder passed on 18 May 2026
Pursuant to the written resolutions passed by our sole Shareholder on 18 May 2026, it was
resolved that, among other matters:
(a) the Articles of Association was conditionally approved and adopted with effect from the
Listing Date
(b) conditional on: (A) the Listing Committee granting listing of, and permission to deal in,
t h eS h a r e si ni s s u ea n dt ob ei s s u e da sm e n t i o n e di nt h i sp r o s p e c t u s ;( B )t h eO f f e rP r i c e
having been determined; (C) the execution and delivery of the Underwriting
Agreements on or before the date as mentioned in this prospectus; and (D) the
obligations of the Underwriters under the Underwriting Agreements becoming
unconditional and not being terminated in accordance with the terms of the
Underwriting Agreements or otherwise, i n each case on or before the day falling 30
days after the date of this prospectus:
(i) the Global Offering and the Over-allotment Option were approved, and our
Directors were authorized to allot and issue the Offer Shares pursuant to the
Global Offering and such number of Shares as may be required to be allotted and
issued upon the exercise of the Over-allotment Option;
(ii) conditional on the share premium account of our Company being credited as a
result of the Global Offering, our Dire ctors were authorized to capitalize
HK$37,400 standing to the credit of the share premium account of our Company
by applying such sum in paying up in full at par 374,000,000 Shares for allotment
and issue to holders of Shares whose names appear on the register of members of
our Company at the close of business on 11 May 2026 in proportion (as nearly as
possible without involving fractions so that no fraction of a Share shall be allotted
and issued) to their then existing holdings in our Company and so that the Shares
to be allotted and issued pursuant to this resolution should rank pari passu in all
respects with the then existing issued Sh ares and our Directors were authorized to
give effect to such capitalization;
(iii) a general unconditional mandate was granted to our Directors to exercise all
powers of our Company to allot, issue and deal with, otherwise than pursuant to
(a) a rights issue, (b) scrip dividend schemes or similar arrangements providing
for allotment of Shares in lieu of the whole or in part of any dividend in
accordance with the Articles, or (c) the Glob al Offering or the Capitalization Issue
or pursuant to the exercise of the Over-allotment Option, an aggregate number of
Shares not exceeding 20% of the aggregate number of Shares in issue immediately
following completion of the Capitalization Issue and the Global Offering (without
taking into account any Shares which may be allotted, issued or sold upon
exercise of the Over-allotment Option) until the conclusion of the next annual
general meeting of our Company, or upon the expiry of the period within which
our Company is required by any applicable law or the Memorandum and Articles
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-2 –


--- page 438 ---
of Association to hold its next annual g eneral meeting, or when it is varied,
revoked or renewed by an ordinary resolution of our Shareholders in a general
meeting, whichever occurs first ( ‘‘Applicable Period ’’);
(iv) a general unconditional mandate (the ‘‘Repurchase Mandate ’’) was granted to our
Directors to exercise all powers of our Company to purchase or repurchase Shares
on the Stock Exchange or another stock exchange on which the securities of our
Company may be listed and recognized by the SFC and the Stock Exchange for
this purpose, with an aggregate number of not exceeding 10% of the number of
Shares in issue immediately following completion of the Capitalization Issue and
the Global Offering (without taking into account any Shares which may be
allotted, issued or sold upon exercise of the Over-allotment Option), until the
conclusion of the next annual general meeting of our Company, or upon the expiry
of the Applicable Period; and
(v) the extension of the general mandate to allot, issue and deal with Shares pursuant
to sub-paragraph (iv) above to include the number of Shares which may be
purchased or repurchased pursuant to sub-paragraph (v) above; and
(c) the form and substance of each of the service agreements made between each of our
executive Directors a nd non-executive Directors and our Company, and the form and
substance of each of the appointment letters made between each of our independent
non-executive Directors and our Company were approved.
4. Reorganization
The companies comprising our Group underwent the Reorganization to rationalize our
Group ’s structure in preparation for the Listing. Following the Reorganization, our Company
became the holding company of our Group. For mor e details regarding the Reorganization, see
‘‘History, Reorganization and Corporate Structure ’’.
5. Changes in the Share Capital of our subsidiaries
The subsidiaries of our Company are listed in ‘‘Appendix I — Accountants ’ Report ’’.
Except as disclosed below and in ‘‘History, Reorganization and Corporate Structure ’’,t h e r e
are no changes in the share capital of each of our Company ’s subsidiaries within the two years
immediately preceding the date of this prospectus.
(a) LFP
On 22 October 2025, LFP passed a Shareholder ’s resolution in relation to a reduction of
its registered capital to HK$10 comprising 100,000 ordinary shares (the ‘‘Capital
Reduction ’’). Subsequent to the Capital Reductio n, the issued share capital of LFP was
decreased from HK$137,000,010 divided into 101,000 shares to HK$10 divided into 100,000
shares. The Capital Reduction was fully completed on 28 November 2025.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-3 –


--- page 439 ---
6. Repurchases of our own securities
This paragraph includes information required by the Stock Exchange to be included in this
prospectus concerning the repurchase by our Company of its own securities.
(a) Shareholders ’ approval
All proposed repurchases of securities (which must be fully paid up in the case of
shares) by a company with a primary listin g on the Stock Exchange must be approved in
a d v a n c eb ya no r d i n a r yr e s o l u t i o no ft h es h a reholders, either by way of general mandate or
by specific approval of a particular transaction.
A resolution in writing was passed by our sole Shareholder on 18 May 2026, pursuant
to which a general unconditional mandate (i.e. the Repurchase Mandate) was granted to our
Directors authorizing the purchase or repurchase of such number of Shares by our Company
on the Stock Exchange or another stock exch ange on which the securities of our Company
may be listed and recognized by the SFC and the Stock Exchange for this purpose, with an
aggregate number of not exceeding 10% of the aggregate number of Shares in issue
immediately following completion of the Capitalization Issue and the Global Offering
(without taking into account any Shares whic h may be allotted, issued or sold upon exercise
of the Over-allotment Option), until the conclusion of the next annual general meeting of our
Company, or upon the expiry of the period within which our Company is required by any
applicable law or the Memorandum and Articles of Association to hold its next annual
general meeting, or when it is varied, revoked or renewed by an ordinary resolution of our
Shareholders in a general meeting, whichever occurs first (the ‘‘Relevant Period ’’).
(b) Source of funds
Any repurchases must be paid out of funds legally available for the purpose in
accordance with the Memorandum and Articles o f Association, the Listing Rules, the Cayman
Islands Companies Act and the applicable laws and regulations of the Cayman Islands. A
listed company is prohibited from repurchasin g its own securities on the Stock Exchange for
a consideration other than cash or for settlement otherwise than in accordance with the
trading rules of the Stock Exchange from time to time. Under the Companies Act, any
repurchase of Shares may be made out of the profits of our Company, the share premium
amount of our Company and/or the proceeds of a fresh issue of Shares made for the purpose
of the repurchase and, in the case of any premium payable on a purchase over the par value
of the Shares to be repurchased must be provided for, out of either or both of the profits of
our Company or from sums standing to the credit of the share premium account of our
Company. Subject to the Companies Act, a repurchase of Shares may also be paid out of
capital.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-4 –


--- page 440 ---
(c) Reasons for repurchases
Our Directors believe that the ability to repu rchase our Shares is in the best interest of
our Company and our Shareholders as a whole. Such repurchases may, depending on market
conditions and funding arrangements at the time, result in an increase in the net assets and/or
earnings per Share. Our Directors have sought the Repurchase Mandate to give our Company
the flexibility to do so if and when appropriate. The number of Shares to be repurchased on
any occasion and the price and other terms u pon which the same are repurchased will be
decided by our Directors at the relevant time , having regard to the circumstances then
prevailing and such repurchases will only b e made if our Directors believe that such
repurchases will benefit our Company and our Shareholders as a whole.
(d) Funding of repurchases
In repurchasing securities, our Company may only apply funds legally available for
such purpose in accordance with the Memorandu m and Articles of Association, the Listing
Rules, the Cayman Islands Companies Act and the applicable laws and regulations of the
Cayman Islands.
On the basis of the current financial position of our Group as disclosed in this
prospectus and taking into account the current working capital position of our Group, our
Directors consider that, if the repurchases under the Repurchase Mandate were to be carried
out in full at any time during the Relevant Period, it might have a material adverse impact on
the working capital and/or the gearing position of our Group as compared with the position
disclosed in this prospectus. However, our Directors do not propose to exercise the
Repurchase Mandate to such extent as would, in the circumstances, have a material adverse
impact on the working capital and/or the gearing position of our Group which in the opinion
of our Directors are from time to time appropriate for our Group.
(e) General
The exercise in full of the Repurchase Mandate, on the basis of 500,000,000 Shares in
issue immediately after the Capitalization Issue and the Global Offering (without taking into
account any Shares which may be allotted, issued or sold upon exercise of the Over-allotment
Option), would result in up to 50,000,000 Shares being repurchased by our Company during
the Relevant Period.
None of our Directors nor, to the best of their knowledge having made all reasonable
enquiries, any of their close associate currently intends to sell any Shares to our Company or
our subsidiaries. No core connected person of our Company has notified our Company that
he/she/it has any present intention to sell Shares to our Company, or has undertaken not to do
so if the Repurchase Mandate is exercised.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-5 –


--- page 441 ---
Our Directors have undertaken to the Stock Exchange that, so far as the same may be
applicable, they will exercise the Repurchase Mandate in accordance with the Memorandum and
Articles of Association, the Listing Rules, the C ayman Islands Companies Act and the applicable
laws and regulations of the Cayman Islands.
If, as a result of a repurchase of Shares, a Shareholder ’s proportionate interest in the voting
rights of our Company increases, such increase wil l be treated as an acquisition for the purpose of
the Takeovers Code. Our Directors are not aware of any consequences which would arise under the
Takeovers Code as a consequence of any repurchases pursuant to the Repurchase Mandate.
No purchase of Shares has been made by our Company within six months prior to the date of
the Prospectus.
Our Directors shall not exercise the Repurchas e Mandate if the repurchase would result in the
number of Shares which are in the hands of the public falling below 25% of the total number of
Shares in issue (or such other percentage as may be prescribed as the minimum public
shareholding under the Listing Rules).
B. FURTHER INFORMATION ABOUT OUR BUSINESS
1. Summary of material contracts
The following contracts (not being contracts in the ordinary course of business) have been
entered into by members of our Group within the two years preceding the date of this prospectus
and are or may be material:
(a) Deed of Indemnity;
(b) Reorganisation agreement dated 20 Octob er 2025 entered into among Lung Fung Group
Co., Ltd, Lung Fung Pharmaceutical (Group ) Limited, Peal Lake Global Limited, Mrs.
Tse, Chan Yuen Yi, Chan Wai Kong, Chan Wai Lung, Kong Yau Kwan, Tam Shu
Wing, Ms. Tse, Mr. Tse and Wong Sze Chun as the vendors and the Company as the
purchaser for the sale and purchase of the entire issued share capital in the relevant
companies as described therein; and
(c) the Hong Kong Underwriting Agreement.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-6 –


--- page 442 ---
2. Our material intellectual property rights
As at the Latest Practicable Date, we had 13 re gistered trademarks in Hong Kong, as well as
3 domain names which we believe are material to our business.
(a) Trademarks
As at the Latest Practicable Date, we hav e registered the following trademarks:
No. Trademarks
Registration
No. Class
Validity
period
Place of
registration
Registered
owner
1.
 300473544 35, 44 9 August
2005 to 8
August 2035
Hong Kong LFP
2.
304602465 35, 44 18 July 2018
to 17 July
2028
Hong Kong LFP
3.
 6281543 35 19 August
2020 to 19
August 2030
Japan LFP
4.
52611062 35 28 December
2021 to 27
December
2031
PRC LFP
5.
15195085 35 7 October
2025 to 6
October 2035
PRC LFP
6.
304528242 3, 5, 30 16 May 2018
to 15 May
2028
Hong Kong LFP
7.
304497931 5, 35 19 April 2018
to 18 April
2028
Hong Kong LFP
8.
304731237 35 12 November
2018 to 11
November
2028
Hong Kong LFP
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-7 –


--- page 443 ---
No. Trademarks
Registration
No. Class
Validity
period
Place of
registration
Registered
owner
9.
 304714641 3, 5, 30 29 October
2018 to 28
October 2028
Hong Kong LFP
10.
303043511 5 23 June 2014
to 22 June
2034
Hong Kong LFP
11.
301098801 5 21 April 2008
to
20 April 2028
Hong Kong LFP
12.
301098829 5 21 April 2008
to
20 April 2028
Hong Kong LFP
13.
306760783 35 18 December
2024 to 17
December
2034
Hong Kong LFP
(b) Domain name
As at the Latest Practicable Date, we hav e registered the following domain names
which we believe are material to our business:
No.
Domain name Registrant
Date of
registration Expiry date
1. https://www.lungfung.hk/ Top Harvest Pharmaceuticals
Company Limited
24 November
2006
7 December
2027
2. https://eshop.lungfung.hk/ Top Harvest Pharmaceuticals
Company Limited
24 November
2006
7 December
2027
3. https://topharvest.hk/en/ Top Harvest Pharmaceuticals
Company Limited
24 November
2006
6 December
2030
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-8 –


--- page 444 ---
3. Connected transactions and related party transactions
Except as disclosed in ‘‘Connected Transactions ’’and in ‘‘Appendix I — Accountants ’ Report
— Notes to the Historical Financial Information — Note 35 ’’, the text of which is set out in
‘‘Appendix I — Accountants ’ Report ’’, during the two years immediately preceding the date of this
prospectus, our Company has not engaged in any oth er material connected transactions or related
party transactions.
C. FURTHER INFORMATION ABOUT OUR DIRECTORS AND SUBSTANTIAL
SHAREHOLDERS
1. Our Directors
(a) Disclosure of interests of our Directors
(i) Each of Mr. Tse and Ms. Tse is interested in the Reorganization, and the
transactions contemplated under the material contracts as set out in ‘‘ — B. Further
Information about our Business — 1. Summary of material contracts ’’.
(ii) Except as disclosed in this prospectus , none of our Directors or their associates
was engaged in any dealings with our Group during the two years immediately
preceding the date of this prospectus.
(b) Particulars of our Directors ’ service contracts
Our executive Directors
Each of our executive Directors has ente red into a service contract with our
Company for a term of three years commencin g from the Listing Date until terminated
by not less than three months ’ notice in writing served by either party on the other.
Our independent non-executive Directors
Each of our independent non-executive Directors has been appointed for an initial
term of three years commencing from the Listing Date until terminated by either party
giving not less than three months ’ written notice to the other pursuant to a letter of
appointment.
Except for directors ’ fees, none of our independent non-executive Directors is
expected to receive any other remuneration for holding his office as an independent
non-executive Director.
Except as aforesaid, none of our Directors has or is proposed to have a service
contract with our Company or any of our subsidiaries other than contracts expiring or
determinable by us within one year without the payment of compensation (other than
statutory compensation).
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-9 –


--- page 445 ---
(c) Our Directors ’ remuneration
(i) The aggregate emoluments paid and benefits in kind granted by our Group to our
Directors in respect of FY2023, FY2024 and FY2025 and 8MFY2026 were
approximately HK$1.1 million, HK$1.3 million, HK$1.4 million and HK$1.0
million, respectively.
(ii) None of our Directors or any past directors of any member of our Group has been
paid any sum of money for FY2023, FY2024 and FY2025 and 8MFY2026 (i) as
an inducement to join or upon joining our Group; or (ii) for loss of office as a
director of any member of our Group or of any other office in connection with the
management of the affairs of any member of our Group.
(iii) There has been no arrangement under which a Director has waived or agreed to
waive any emoluments for FY2023, FY2024 and FY2025 and 8MFY2026.
(d) Interests and/or short positions of our Directors in the shares, underlying shares or
debentures of our Company and its associated corporations
Immediately after the Capitalization Issue an d the Global Offering (without taking into
account any Shares which may be allotted, issued or sold upon exercise of the Over-
Allotment Option), the interests and/or short positions of our Directors and the chief
executive of our Company in the shares, underly ing shares or debentures of our Company and
its associated corporations (within the meaning of Part XV of the SFO) which will have to be
notified to our Company and th e Stock Exchange pursuant to Divisions 7 and 8 of Part XV of
the SFO (including interests and/or short po sitions in which they are taken or deemed to have
taken under such provisions of the SFO) or which will be required, pursuant to Section 352
of the SFO, to be entered in the register referred to therein, or which will be required to be
notified to our Company and the Stock Exchange pursuant to the Model Code for Securities
Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing Rules, in
each case once our Shares are listed, will be as follows:
Long position in the Shares
Name of
Director Capacity/nature of interest
Number of
Shares
(1)
Approximate
percentage
of interest
in our
Company
Mr. Tse (2)(3) Interest in a controlled corporation
and interest jointly held with
other persons
375,000,000 (L) 75%
Ms. Tse
(2)(3) Interest in a controlled corporation
and interest jointly held with
other persons
375,000,000 (L) 75%
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-10 –


--- page 446 ---
Notes:
(1) The letter ‘‘L’’denotes a person ’s long position in our Shares.
(2) Mr. Tse, Mrs. Tse and Ms. Tse are family membe rs of one another. Therefore, pursuant to the SFO,
they are deemed to be interested in any Shares in which one another is interested through their
controlled corporation, TTK Holding.
Long position in the ordinary shares of associated corporation
Name of
Director
Associated
corporation
Capacity/nature of
interest
Number of
share(s) (1)
Percentage
of interest
in the
associated
corporation
Mr. Tse (2)(3) TTK Holding Beneficial owner and
interest jointly held
with other persons
9,729 (L) 97.29%
Ms. Tse
(2)(3) TTK Holding Beneficial owner and
interest jointly held
with other persons
1 (L) 0.01%
Notes:
(1) The letter ‘‘L’’denotes a person ’s long position in the relevant associated corporation.
(2) Mr. Tse, Mrs. Tse and Ms. Tse are family membe rs of one another. Therefore, pursuant to the SFO,
they are deemed to be interested in any shares in TTK Holding in which one another is interested.
2. Disclosure of interests under the SF O and for substantial shareholders
So far as our Directors are aware, immediately a fter the Capitalization Issue and the Global
Offering (without taking into account any Shar es which may be allotted, issued or sold upon
exercise of the Over-allotment Option), other than a Director or chief executive of our Company
whose interests are disclosed under ‘‘ — C. Further Information about our Directors and Substantial
Shareholders — 1. Our Directors ’’, the following persons will have an interest or a short position
in our Shares or underlying Shares which would fall to be disclosed to our Company under the
provisions of Divisions 2 and 3 of Part XV of the SFO, or who will be, directly or indirectly,
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-11 –


--- page 447 ---
interested in 10% or more of the nominal value of any class of share capital carrying rights to vote
in all circumstances at general mee tings of any other member of our Group:
Name of
Shareholder Capacity/nature of interest
Number of
Shares (1)
Approximate
percentage of
shareholding
TTK Holding Beneficial owner 375,000,000 (L) 75%
Notes:
(1) The Letter ‘‘L’’denotes a person ’s long position in our Shares.
(2) TTK Holding is held by Mr. Tse, Mrs. Tse and Ms. T se as to 97.29%, 2.7% and 0.01% respectively. TTK
Holding in interested in 100% of the equity interests of the Company.
3. Disclaimers
Except as disclosed in this prospectus:
(a) our Directors are not aware of any perso n (not being a Director or chief executive of
our Company) who immediately after the Capitalization Issue and the Global Offering
(without taking into account any Shares whi ch may be allotted, issued or sold upon
exercise of the Over-allotment Option) will have an interest or a short position in our
Shares and underlying Shares which would fall to be disclosed to our Company under
the provisions of Divisions 2 and 3 of Part XV of the SFO or who will be, directly or
indirectly, interested in 10% or more of the nominal value of any class of share capital
carrying rights to vote in all circumstances at general meetings of any other member of
our Group;
(b) none of our Directors has any interest or short position in any of the shares, underlying
shares or debentures of our Company or its as sociated corporations (within the meaning
of Part XV of the SFO) which will have to be notified to our Company and the Stock
Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and/
or short positions in which they are taken or is deemed 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 referred to therein, or which will be required to be notified to our
Company and the Stock Exchange pursuant to the Model Code for Securities
Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Listing
Rules, in each case once our Shares are listed;
(c) none of our Directors nor any of the parties listed in ‘‘ — D. Other Information — 8.
Qualifications of experts ’’has been interested in the promotion of, or has any direct or
indirect interest in any assets which have been, within the two years immediately
preceding the date of this prospectus, acquired or disposed of by or leased to our
Company or any of the subsidiaries of our Company, or are proposed to be acquired or
disposed of by or leased to our Company or any other member of our Group nor will
any Director apply for the Offer Shares either in his own name or in the name of a
nominee;
APPENDIX V STATUTORY AND GENERAL INFORMATION
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(d) none of our Directors nor any of the parties listed in ‘‘ — D. Other Information — 8.
Qualifications of experts ’’ is materially interested in any contract or arrangement
subsisting at the date of this prospectus which is significant in relation to the business
of our Group; and
1. except in connection with the Underwriting Agreements, none of the parties listed
in ‘‘ — D. Other Information — 8. Qualifications of experts ’’:
(i) is interested legally or beneficial ly in any securities of any member of our
Group; or
(ii) has any right (whether legally enforceable or not) to subscribe for or to
nominate persons to subscribe for securities in any member of our Group.
D. OTHER INFORMATION
1. Estate duty
Our Directors have been advised that no material liability for estate duty is likely to fall on
our Company or any of our subsidiaries.
2. Litigation
As at the Latest Practicable Date, neither our Co mpany nor any of our subsidiaries is engaged
in any litigation or arbitration of material importance, and no litigation or claim of material
importance is known to our Directors to be pendi ng or threatened against our Company or any of
our subsidiaries, that would have a material adverse effect on the results of operations or financial
condition of our Company.
3. Preliminary expenses
The preliminary expenses of our Company were approximately US$8,944.7 and were paid by
our Company.
4. Promoters
(a) Our Company has no promoter.
(b) Within the two years preceding the date of this prospectus, no amount or benefit has
been paid or given to the promoters named in sub-paragraph (a) above in connection
with the Global Offering or the related transactions described in this prospectus.
5. Sole Sponsor ’s independence
The Sole Sponsor satisfies the independence criteria applicable to sponsor as set out in Rule
3A.07 of the Listing Rules.
APPENDIX V STATUTORY AND GENERAL INFORMATION
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6. Agency fees or commissions received
The Underwriters will receive a g ross underwriting commissi on of 2.38% of the aggregate
Offer Price in respect of all of the Offer Shares. Our Company may also in our sole discretion pay
an aggregate discretionary incentive fee of up to 1 .0% of the aggregate Offer Price in respect of all
of the Offer Shares. The Sole Sponsor will also receive sponsor fee of HK$3.6 million.
7. Application for Listing of Shares
The Sole Sponsor have made an application on behalf of our Company to the Listing
Committee for the listing of, and permission to d eal in, the Shares in issue and to be issued as
mentioned in this prospectus and any Shares which may be issued upon the exercise of the Over-
allotment Option and any options granted.
All necessary arrangements have been made to enable the securities to be admitted into
CCASS.
8. Qualifications of experts
The qualifications of the experts who have given opinions and/or whose names are included
in this prospectus are as follows:
Name Qualification
DBS Asia Capital Limited Licensed to condu ct Type 1 (dealing in securities), Type 4
(advising on securities) and Type 6 (advising on corporate
finance) regulated activities under the SFO
Ms. Queenie W.S. Ng Barrister-at-law in Hong Kong
Jincheng Tongda & Neal
Law Firm
Legal advisor to our Company as to PRC law
Conyers Dill & Pearman Cayman I slands attorn eys-at-law
Deloitte Touche Tohmatsu Certified Public Accountants under Professional Accountant
Ordinance (Chapter 50 of the Laws of Hong Kong) and
Registered Public Interest Entity Auditor under Financial
Reporting Council Ordinance (Chapter 588 of the Laws of
Hong Kong)
Frost & Sullivan Limited Industry consultant
AVISTA Valuation Advisory
Limited
Property Valuer
APPENDIX V STATUTORY AND GENERAL INFORMATION
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9. Consents of experts
Each of the experts named above has given and has not withdrawn its written consent to the
issue of this prospectus with copies of its reports , valuation, letters or opinions (as the case may
be) and the references to its names or summari es of opinions included herein in the form and
context in which they respectively appear.
10. Binding effect
This prospectus shall have the effect, if a n application is made in pursuance of it, of
rendering all persons concerned bound by all of the provisions (other than the penal provisions) of
Sections 44A and 44B of the Companies (Winding Up and Miscellaneous Provisions) Ordinance so
far as applicable.
11. Taxation of holders of Shares
(a) Hong Kong
Dealings in Shares registered on our Company ’s Hong Kong branch register of members
will be subject to Hong Kong stamp duty. The sale, purchase and transfer of Shares are
subject to Hong Kong stamp duty, the current rate charged on each of the purchaser and
seller is 0.13% of the consideration or, if higher, the value of the Shares being sold or
transferred.
Profits from dealings in the Shares arising in or derived from Hong Kong may also be
subject to Hong Kong profits tax.
(b) The Cayman Islands
Under the present Cayman Islands law, there is no stamp duty payable in the Cayman
Islands on transfer of shares of Cayman Islands companies except those which hold interests
in land in the Cayman Islands.
(c) Consultation with professional advisors
Intending holders of Shares are recommended to consult their professional advisors if
they are in any doubt as to the taxation implicati ons of subscribing for, purchasing, holding
or disposing of or dealing in Shares or exercising any rights attaching to them. It is
emphasized that none of our Company, our Directors or the other parties involved in the
Global Offering can accept resp onsibility for any tax effect on, or liabilities of, holders of
Shares resulting from their subscription for, purchase, holding or disposal of or dealing in
Shares or exercising any rights attaching to them.
APPENDIX V STATUTORY AND GENERAL INFORMATION
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12. Estate duty, tax and other indemnities
Our Controlling Shareholders have entered into the Deed of Indemnity with and in favour of
our Company (for ourselves and as trustee for each of our subsidiaries stated therein).
Pursuant to the Deed of Indemnity, the Indemnifiers have agreed to jointly and severally
indemnify each of the members of our Gr oup in respect of, among other matters:
(a) any liability for Hong Kong estate duty which might be incurred by any member of our
Group by reason of any transfer of property (within the meaning of section 35 and
section 43 of the Estate Duty Ordinance (Chapter 111 of the Laws of Hong Kong)) to
any member of our Group on or before the date on which the Global Offering becomes
unconditional (the ‘‘Effective Date ’’);
(b) taxation which might fall on us in respe ct of any income, profits or gains earned,
accrued or received on or before the Effective Date, subject to certain exceptions set out
below;
(c) any and all expenses, payments, sums, outgoings, fees, demands, claims, actions,
proceedings, judgments, damages, losses, co sts (including but not limited to legal and
other professional costs), charges, contributio ns, liabilities, fines, p enalties (collectively
the ‘‘Costs ’’) in connection with any failure, delay or defects of non-compliance under,
or any breach of any provision of, all appl icable laws, rules or regulations by any
member of our Group on or before the Effective Date;
(d) any losses, damages, costs and expenses sustained by our Group as a result of the lack
of relevant mortgagee ’s consent for certain leases of our Group entered into before the
Effective Date;
(e) all liabilities and penalties which may arise as a result of any outstanding and potential
litigations and claims of our Group on or before the Effective Date; and
(f) losses and costs incurred by our Group in relation to the unreleased Building Order and
the Warning Notice.
The Indemnifiers will, however, not be liable in respect of any taxation referred to in
paragraph (b) above:
(i) to the extent that provision or reserve has been made for such taxation in the audited
accounts of our Group for the Track Record Period and to the extent that such taxation
is incurred or accrued since 1 December 2025 which arises in our ordinary course of
business; or
APPENDIX V STATUTORY AND GENERAL INFORMATION
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(ii) to the extent that a claim or liability for such taxation falls on us in respect of the
accounting period commencing on or after 1 December 2025 unless such taxation would
not have arisen but for some act or omission of, or transaction voluntarily effected by
the Indemnifiers or us otherwise than in the ordinary course of business or in the
ordinary course of acquiring or disposing of capital assets, before the Effective Date; or
(iii) to the extent that a claim or liability for such taxation would not have arisen but for a
voluntary act or transaction carried out or e ffected (other than pursuant to a legally
binding commitment created on or before the date of the Deed of Indemnity) by us after
the date of the Deed of Indemnity; or
(iv) to the extent that a claim or liability for such taxation arises as a consequence of any
retrospective change in the law, rules and regulations, or the interpretation or practice
thereof by any relevant authority coming into force after the date of the Deed of
Indemnity or to the extent that such taxati on arises or is increased by an increase in
rates of taxation after the date of the Deed of Indemnity with retrospective effect; or
(v) to the extent of any provision or reserve made for taxation in the audited accounts of
our Group up to the three financial years ended 31 March 2025 and the eight months
ended 30 November 2025 and which is finally established to be an over-provision or an
excessive reserve.
13. Miscellaneous
(a) Except as disclosed herein:
(i) within two years preceding the date of this prospectus:
(aa) no share or loan capital of our Company or of any of our subsidiaries has
been issued, agreed to be issued or is proposed to be issued fully or partly
paid either for cash or for a consideration other than cash;
(bb) no commissions, discounts, brokerages or other special terms have been
granted in connection with the issue or sale of any share or loan capital of
our Company or any of our subsidiaries; and
(cc) no commission has been paid or payable for subscribing or agreeing to
subscribe, or procuring or agreeing to procure the subscriptions, for any
Shares in our Company or any of our subsidiaries;
(ii) no share or loan capital of our Company or any of our subsidiaries is under option
or is agreed conditionally or unconditionally to be put under option;
(iii) our Group does not have any outstanding convertible debt securities or debentures;
APPENDIX V STATUTORY AND GENERAL INFORMATION
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(b) our Directors confirm that there has been no material adverse change in the financial or
trading position or prospects of our Group since 30 November 2025 (being the date to
which the latest consolidated financial statements of our Group were made up);
(c) no equity or debt securities of our Company i s listed or dealt in on any stock exchange,
nor is any listing or permission to deal being or proposed to be sought;
(d) the Global Offering does not involve the exercise of any right of pre-emption or the
transfer of subscription rights;
(e) there has not been any interruption in the business of our Group which may have or has
had a significant effect on the financial position of our Group in the 12 months
preceding the date of this prospectus; and
(f) there is no arrangement under which future dividends are waived or agreed to be
waived.
14. Bilingual prospectus
The English language and Chinese language versions of this prospectus are being published
separately, in reliance upon the exemption provi ded under Section 4 of the Companies (Exemption
of Companies and Prospectuses from Compliance with Provisions) Notice (Chapter 32L of the
Laws of Hong Kong).
APPENDIX V STATUTORY AND GENERAL INFORMATION
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1. DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES
The documents attached to a copy of this prospec tus delivered to the Registrar of Companies in
Hong Kong for registration were:
(a) copies of each of the material contracts referred to in ‘‘Statutory and General Information —
B. Further Information about our Business — 1. Summary of material contracts ’’in Appendix
V to this prospectus; and
(b) the written consents referred to in ‘‘Statutory and General Information — D. Other
Information — 9. Consents of experts ’’in Appendix V to this prospectus.
2. DOCUMENTS AVAILABLE ON DISPLAY
Copies of the following documents will be available on display on the website of the Stock
Exchange at www.hkexnews.hk and our website at https://www.lungfung.hk up to and including the
date which is 14 days from the date of this prospectus:
(a) the Memorandum and Articles of Association;
(b) the Accountants ’ Report of our Group for the three years ended 31 March 2025 and the eight
months ended 30 November 2025 from Deloitte Touche Tohmatsu, the texts of which are set
out in ‘‘Appendix I — Accountants ’ Report ’’;
(c) the report on the unaudited pro forma financial information Deloitte Touche Tohmatsu, the
text of which is set out in ‘‘Appendix IIA — Unaudited Pro Forma Fin ancial Information ’’;
(d) the letters from Deloitte Touche Tohmatsu and the Sole Sponsor relating to the profit
estimate of our Group for the year ended 31 March 2026, the text of which is set out in
Appendix IIB to this Prospectus;
(e) the audited consolidated financial statements of our Group for the three years ended 31
March 2025 and the eight months ended 30 November 2025;
(f) the letter of advice prepared by Conyers D ill & Pearman, our legal advisors as to Cayman
Islands laws, summarizing certain aspects o f Cayman Islands company law, referred to in
‘‘Appendix IV — Summary of the Constitution of Our Company and Cayman Islands
Company Law ’’;
(g) the legal opinion issued by Jincheng Tongda & Neal Law Firm, our legal adviser as to PRC
laws, in respect of certain matters of our Group in the PRC;
(h) the industry report issued by Frost & Sullivan;
(i) the valuation report from Avista Valuation Advisory Limited, the text of which is set out in
Appendix III;
(j) the material contracts, referred to in ‘‘Appendix V — Statutory and General Information —
B. Further Information About Our Business — 1. Summary of material contracts ’’;
APPENDIX VI DOCUMENTS DELIVERED TO THE REGISTRAR
OF COMPANIES AND AVAILABLE ON DISPLAY
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(k) the written consents, referred to in ‘‘Appendix V — Statutory and General Information — D.
Other Information — 9. Consents of experts ’’;
(l) service contracts and letter s of appointment, referred to in ‘‘Appendix V — Statutory and
General Information — C. Further Information about our Directors and Substantial
Shareholders — b. Particulars of Our Directors ’service contracts ’’;
(m) the Cayman Islands Companies Act; and
(n) the legal opinion issued by Ms. Queenie W.S. Ng, our Hong Kong Legal Counsel as to
certain aspects of Hong Kong law.
APPENDIX VI DOCUMENTS DELIVERED TO THE REGISTRAR
OF COMPANIES AND AVAILABLE ON DISPLAY
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