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SHARE
OFFER
Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Sole Sponsor, Sole Overall Coordinator,
Joint Global Coordinator, Joint Bookrunner and
Joint Lead Manager
Shenghui Cleanness Group Holdings Limited
(Incorporated in the Cayman Islands with limited liability)
Stock Code: 2521
升輝清潔集團控股有限公司
Shenghui Cleanness Group Holdings Limited
升輝清潔集團控股有限公司


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If you are in any doubt about any of the contents of this prospectus, you should obtain independent professional advice.
Shenghui Cleanness Group Holdings Limited
ʮ̡
(Incorporated in the Cayman Islands with limited liability)
SHARE OFFER
Number of Offer Shares under the Share Offer : 414,375,000 Shares comprising 373,750,000 new
Shares and 40,625,000 Sale Shares
Number of Public Offer Shares : 41,437,500 Shares (subject to reallocation)
Number of Placing Shares : 372,937,500 Shares comprising 332,312,500 new
Shares and 40,625,000 Sale Shares (subject to
reallocation)
Offer Price : Not more than HK$0.40 per Offer Share and
expected to be not less than HK$0.32 per Offer
Share, plus brokerage of 1%, 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 and subject to refund)
Nominal value : HK$0.01 per Share
Stock code : 2521
Sole Sponsor, Sole Overall Coordinator, Joint Global Coordinator,
Joint Bookrunner and Joint Lead Manager
Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers
Joint Bookrunners and Joint Lead Managers
⳪暲@:9)
Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited 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 completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the
whole or any part of the contents of this prospectus.
A copy of this prospectus, having attached thereto the documents specified in the section headed “Documents delivered to the Registrar of Companies i n Hong Kong and available on
display – Documents delivered to the Registrar of Companies in Hong Kong” in Appendix VI to this prospectus, has been registered by the Registrar of Com panies in Hong Kong as
required by section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Chapter 32 of the Laws of Hong Kong). The Securities an d Futures Commission of
Hong Kong and the Registrar of Companies in Hong Kong take no responsibility for the contents of this prospectus or any other document referred to above .
The Offer Price is expected to be fixed by agreement between the Sole Overall Coordinator and the Joint Global Coordinators (for themselves and on beha lf of the Underwriters) and
our Company (for ourselves and on behalf of our Selling Shareholders) on the Price Determination Date. The Price Determination Date is expected to be o n or around Friday, 1
December 2023. The Offer Price will be not more than HK$0.40 and is currently expected to be not less than HK$0.32 unless otherwise announced. Applican ts for Public Offer Shares
are required to pay, on application, the maximum Offer Price of HK$0.40 for each Share together with a brokerage fee of 1%, SFC transaction levy of 0.002 7%, Stock Exchange trading
fee of 0.00565% and AFRC transaction levy of 0.00015% subject to refund if the Offer Price as finally determined should be lower than HK$0.40.
The Sole Overall Coordinator and the Joint Global Coordinators (for themselves and on behalf of the Underwriters) may, with our consent (for ourselve s and on behalf of our Selling
Shareholders), reduce the number of Offer Shares in the Share Offer and/or the indicative Offer Price range below that stated in this prospectus (whic h is HK$0.32 to HK$0.40 per Offer
Share) at any time on or prior to the morning of the last day for lodging applications under the Public Offer. In such a case, notices of the reduction in th e number of Offer Shares in the
Share Offer and/or the indicative offer price range will be published on the website of the Stock Exchange at www.hkexnews.hk and our Company’s website at www.gzshqj.com not
later than the morning of the day which is the last day for lodging applications under the Public Offer. If, for any reason, the Offer Price is not agreed b etween the Sole Overall
Coordinator and the Joint Global Coordinators (for themselves and on behalf of the Underwriters) and our Company (for ourselves and on behalf of our Se lling Shareholders), the Share
Offer (including the Public Offer) will lapse and will not proceed. For further details, please refer to the sections headed “Structure and condition s of the Share Offer” and “How to
apply for the Public Offer Shares” of this prospectus.
The Offer Shares have not been and will not be registered under the U.S. Securities Act or any state securities law in the United States and may not be offe red, sold, pledged or
transferred within the United States or to, or for the account or benefit of any U.S. persons.
Prior to making an investment decision, prospective investors should carefully consider all of the information set out in this prospectus, includin g the risk factors set out in the section
headed “Risk factors” of this prospectus.
The obligations of the Public Offer Underwriters under the Public Offer Underwriting Agreement to subscribe for, and to procure applicants for the su bscription for, the Public Offer
Shares, are subject to termination by the Sole Overall Coordinator and the Joint Global Coordinators (for themselves and on behalf of the Public Offer Underwriters) if certain grounds
arise prior to 8:00 a.m. on the day that trading in the Offer Shares commences on the Stock Exchange. Such grounds are set out in the section headed “Under writing – Underwriting
arrangements and expenses – Grounds for termination” of this prospectus. It is important that you refer to that section for further details.
ATTENTION
We have adopted a fully electronic application process for the Public Offer. We will not provide printed copies of this prospectus or printed copies of any application forms to the
public in relation to the Public Offer. This prospectus is available at the website of the Hong Kong Stock Exchange at www.hkexnews.hk and our website at www.gzshqj.com .I f
you require a printed copy of this prospectus, you may download and print from the website addresses above.
IMPORTANT
27 November 2023


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Y our application must be for a minimum of 7,500 Public Offer Shares and in one of the
numbers set out in the table. Y ou are required to pay the amount next to the number you select.
No. of Public
Offer Shares
applied for
Amount
payable on
application
No. of Public
Offer Shares
applied for
Amount
payable on
application
No. of Public
Offer Shares
applied for
Amount
payable on
application
No. of Public
Offer Shares
applied for
Amount
payable on
application
HK$ HK$ HK$ HK$
7,500 3,030.25 67,500 27,272.30 600,000 242,420.40 5,250,000 2,121,178.50
15,000 6,060.51 75,000 30,302.56 675,000 272,722.96 6,000,000 2,424,204.00
22,500 9,090.76 150,000 60,605.10 750,000 303,025.50 6,750,000 2,727,229.50
30,000 12,121.02 225,000 90,907.66 1,500,000 606,051.00 7,500,000 3,030,255.00
37,500 15,151.28 300,000 121,210.20 2,250,000 909,076.50 15,000,000 6,060,510.00
45,000 18,181.54 375,000 151,512.76 3,000,000 1,212,102.00 20,715,000* 8,369,564.31
52,500 21,211.79 450,000 181,815.30 3,750,000 1,515,127.50
60,000 24,242.05 525,000 212,117.86 4,500,000 1,818,153.00
* Maximum number of Public Offer Shares you may apply for.
No application for any other number of Public Offer Shares will be considered and any
such application is liable to be rejected.
IMPORTANT


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If there is any change for the following expected timetable of the Share Offer, we will issue
an announcement on the websites of the Stock Exchange at www.hkexnews.hk and our
Company at www.gzshqj.com :
Date (Note 1)
Public Offer commences .......................................... 9:00 a.m. on
Monday, 27 November 2023
Latest time for completing electronic applications under the HK eIPO White Form service
through one of the below ways: (2)
(1) the IPO App , which can be downloaded by
searching “ IPO App ” in App Store or Google Play
or downloaded at www.hkeipo.hk/IPOApp or
www.tricorglobal.com/IPOApp
(2) the designated website www.hkeipo.hk ..........................1 1:30 a.m. on
Thursday, 30 November 2023
Application lists for the Public Offer open (Note 2) ......................1 1:45 a.m. on
Thursday, 30 November 2023
Latest time to complete payment of HK eIPO White Form
applications by effecting internet banking transfer(s) or
PPS payment transfer(s)
(2) ..................................... 12:00 noon on
Thursday, 30 November 2023
Latest time to give electronic application instructions to
HKSCC (Note 3) ............................................... 12:00 noon on
Thursday, 30 November 2023
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 Public 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 for the Public Offer close
(Note 2) ..................... 12:00 noon on
Thursday, 30 November 2023
(1) Expected Price Determination Date on
or before (Note 4) ................................... Friday, 1 December 2023
EXPECTED TIMETABLE
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Announcement of the Offer Price, indication of the levels of
interest in the Placing, the levels of applications of the
Public Offer, the basis of allotment of applications in the
Public Offer to be published on our Company’s website at
www.gzshqj.com and the website of the Stock Exchange
at www.hkexnews.hk on or before ..................... Monday, 4 December 2023
(2) Announcement of results of allocations in the Public
Offer (with successful applicants’ identification
document numbers, where appropriate) to be available
through a variety of channels including our Company’s
website at www.gzshqj.com and the website of the
Stock Exchange at www.hkexnews.hk (for further
details, please refer to the section headed “How to
apply for the Public Offer Shares – B. Publication of
results” of this prospectus) on or before ............... Monday, 4 December 2023
Announcement of the Public Offer containing (1) and (2)
above to be published on the websites of the Company
and the Stock Exchange at www.gzshqj.com and
www.hkexnews.hk from ............................. Monday, 4 December 2023
Results of allocation in the Public Offer will be available at
“IPO Results” function in the IPO App or at
www.tricor.com.hk/ipo/result or
www.hkeipo.hk/IPOResult with a “search by ID”
function .......................................... Monday, 4 December 2023
Despatch/collection of share certificates or deposit of the
share certificates into CCASS in respect of wholly or
partially successful applications pursuant to the Public
Offer on or about
(Notes 5 to 8) . .......................... Monday, 4 December 2023
HK eIPO White Form e-Auto Refund payment
instructions/refund cheques in respect of wholly or
partially successful applications (if applicable) or wholly
or partially unsuccessful applications to be dispatched on
or before
(Notes 6 and 7) ................................T uesday, 5 December 2023
Dealings in the Shares on the Stock Exchange expected to
commence at 9:00 a.m. on ............................T uesday, 5 December 2023
EXPECTED TIMETABLE
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Notes:
1. All times and dates refer to Hong Kong local time, except as otherwise stated. Details of the structures of
the Share Offer, including its conditions, are set out in the section headed “Structure and conditions of the
Share Offer” of this prospectus.
2. Y ou will not be permitted to submit your application under the HK eIPO White Form service through the
IPO App or 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 a payment reference number
from the IPO App or the designated website at or before 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 a “black” rainstorm warning, Extreme Conditions and/or a tropical cyclone warning signal
number 8 or above in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Thursday, 30
November 2023, the application lists will not open on that day. For further details, please refer to the
section headed “How to apply for the Public Offer Shares – E. Severe Weather Arrangements.
4. The Price Determination Date is expected to be on or about Friday, 1 December 2023. If, for any reason,
the Offer Price is not agreed by Friday, 1 December 2023 between our Company (for ourselves and on
behalf of our Selling Shareholders) and the Sole Overall Coordinator and the Joint Global Coordinators
(for themselves and on behalf of the Underwriters), the Share Offer will not proceed and will lapse
accordingly.
5. Share certificates for the Public Offer Shares are expected to be issued on Monday, 4 December 2023 but
will only become valid evidence of title at 8:00 a.m. on Tuesday, 5 December 2023 provided that (a) the
Share Offer has become unconditional in all respects; and (b) none of the Underwriting Agreements has
been terminated in accordance with its terms.
6. e-Auto Refund payment instructions/refund cheques will be issued in respect of wholly or partially
unsuccessful applications pursuant to the Public Offer and also in respect of wholly or partially successful
applications in the event that the final Offer Price is less than the price payable per Offer Share on
application.
7. 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 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 cheques by ordinary post at their own risk.
8. Share certificates will only become valid evidence of title provided that the Share Offer has become
unconditional in all respects and neither of the Underwriting Agreements has been terminated in
accordance with its terms. Investors who trade Shares on the basis of publicly available allocation
details prior to the receipt of their share certificates or prior to the share certificates becoming valid
evidence of title do so entirely at their own risk.
For further details of the structure and conditions of the Share Offer, you should refer to
the section headed “Structure and conditions of the Share Offer” of this prospectus.
EXPECTED TIMETABLE
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IMPORTANT NOTICE TO INVESTORS
This prospectus is issued by our Company solely in connection with the Share Offer and
does not constitute an offer to sell or a solicitation of an offer to buy any security other than
the Offer Shares offered by this prospectus pursuant to the Share Offer . This prospectus may
not be used for the purpose of, and does not constitute, an offer to sell or a solicitation of an
offer in any other jurisdiction or in any other circumstances. 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.
You should rely only on the information contained in this prospectus to make your
investment decision. Our Company, our Selling Shareholders, the Sole Sponsor , the Sole
Overall Coordinator , the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead
Managers and the Underwriters have not authorised anyone to provide you with information
that is different from what is contained in this prospectus. Any information or representation
not made in this prospectus must not be relied on by you as having been authorised by our
Company, our Selling Shareholders, the Sole Sponsor , the Sole Overall Coordinator , the Joint
Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Underwriters, any
of their respective directors, advisers, officers, employees, agents or representatives or any
other person involved in the Share Offer .
Page
EXPECTED TIMETABLE .............................................. i
CONTENTS .......................................................... i v
SUMMARY .......................................................... 1
DEFINITIONS ........................................................ 2 0
GLOSSARY OF TECHNICAL TERMS .................................... 3 8
FORW ARD-LOOKING STATEMENTS .................................... 3 9
RISK FACTORS ...................................................... 4 1
W AIVER FROM STRICT COMPLIANCE WITH THE LISTING RULES ........ 6 4
INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER ....... 6 6
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER ............ 7 1
CORPORATE INFORMATION .......................................... 8 0
CONTENTS
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Page
INDUSTRY OVERVIEW ............................................... 8 2
REGULATORY OVERVIEW ............................................ 9 2
HISTORY, REORGANISATION AND GROUP STRUCTURE .................. 1 0 3
BUSINESS ........................................................... 1 2 6
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS ............. 2 4 1
CONNECTED TRANSACTION .......................................... 2 5 1
DIRECTORS AND SENIOR MANAGEMENT .............................. 2 5 3
SUBSTANTIAL SHAREHOLDERS ........................................ 2 7 0
SHARE CAPITAL ..................................................... 2 7 2
FINANCIAL INFORMATION ........................................... 2 7 6
FUTURE PLANS AND USE OF PROCEEDS ............................... 3 4 6
UNDERWRITING ..................................................... 3 6 3
STRUCTURE AND CONDITIONS OF THE SHARE OFFER .................. 3 7 6
HOW TO APPLY FOR THE PUBLIC OFFER SHARES ...................... 3 8 5
APPENDIX I — ACCOUNTANT’S REPORT .......................... I - 1
APPENDIX II — UNAUDITED PRO FORMA
FINANCIAL INFORMATION ....................... II-1
APPENDIX III — PROPERTY V ALUATION REPORT ................... III-1
APPENDIX IV — SUMMARY OF THE CONSTITUTION OF
THE COMPANY AND CAYMAN ISLANDS
COMPANY LA W ................................. I V - 1
APPENDIX V — STATUTORY AND GENERAL INFORMATION ......... V - 1
APPENDIX VI — DOCUMENTS DELIVERED TO THE REGISTRAR
OF COMPANIES IN HONG KONG AND
A V AILABLE ON DISPLAY ......................... VI-1
CONTENTS
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OVERVIEW
We are a cleaning and maintenance services provider in the PRC and one of the
well-established property cleaning service providers in Guangdong province. With industry
experience of over 20 years and foothold in Guangdong province, we have steadily developed
our business since our establishment in 2000 to offer a wide range of services to over 700
customers and extend the coverage of our operations to 14 provincial-level regions in the PRC.
For the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022
and 2023, the total revenue of the Group was approximately RMB465.7 million, RMB563.5
million, RMB594.2 million, RMB289.2 million and RMB298.3 million, respectively, while profit
for the year was approximately RMB31.3 million, RMB39.9 million, RMB34.4 million,
RMB15.4 million and RMB15.3 million, respectively.
We serve a wide range of premises including commercial buildings, transportation hub such
as airports, residential premises, shopping malls and commercial complex, streets, parks and
other public space. Our cleaning and maintenance services cover high-end commercial properties
such as Guangzhou International Finance Center (ፄʕː ), Guangzhou Taikoo Hui
(ᄿψ˄̚ි ), Leatop Plaza ( лஷᄿఙ ), Pearl River Tower (ɽข ), Raffles City
Chongqing (ᅅԸ၅ɻᄿఙ ), Raffles City Shenzhen ( ଉέԸ၅ɻᄿఙ ); public transportation
hubs such as Chongqing Jiangbei International Airport (ᅅϪ̏਷ყዚఙ ), Guangzhou Baiyun
International Airport ( ᄿψͣථ਷ყዚఙ ), Zhengzhou Xinzheng International Airport ( ቍψอቍ
਷ყዚఙ ), Hong Kong Zhuhai-Macao Bridge Zhuhai port (֦high-end
residential premises such as One Shenzhen Bay ( ଉέᝄɓ໮ ); and shopping malls such as Y ue
City (۬.)
Our service variety is one of our competitive advantages in providing comprehensive and
one-stop services to our customers. Our service capabilities include the provision of basic
cleaning and maintenance service, garbage collection and transportation service, waste collection
and transportation service, water tank cleaning service and ancillary services. We also offer
specialised cleaning services such as stone cleaning and restoration and high-altitude cleaning
with mobile elevated platforms.
SUMMARY
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The following table sets out a breakdown of our revenue, gross profit and gross profit margin by principal service categories during
the years/periods indicated:
Y ear ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 %
Gross
profit
Gross
profit
margin RMB’000 %
Gross
profit
Gross
profit
margin RMB’000 %
Gross
profit
Gross
profit
margin RMB’000 %
Gross
profit
Gross
profit
margin RMB’000 %
Gross
profit
Gross
profit
margin
(Unaudited) (Unaudited)
Property cleaning
– Commercial building 211,433 45.4 38,637 18.3 249,927 44.3 44,303 17.7 289,624 48.7 51,126 17.7 133,863 46.3 23,546 17.6 159,780 53.6 27,765 17.4
– Residential building 96,078 20.6 12,918 13.4 135,813 24.1 14,761 10.9 143,721 24.2 15,727 10.9 70,255 24.3 7,755 11.0 64,446 21.6 6,798 10.5
– Transportation hub 63,362 13.6 10,338 16.3 61,384 10.9 9,602 15.6 52,029 8.8 8,367 16.1 28,913 10.0 4,573 15.8 16,759 5.6 2,600 15.5
– Shopping mall 52,749 11.3 10,515 19.9 71,171 12.6 12,138 17.1 64,372 10.8 10,985 17.1 34,721 12.0 5,886 17.0 27,228 9.1 4,623 17.0
– Public utilities
Note 1 16,691 3.6 2,787 16.7 12,696 2.3 2,052 16.2 11,981 2.0 1,961 16.4 4,724 1.6 770 16.3 9,122 3.1 1,459 16.0
– Industrial park 6,624 1.4 1,345 20.3 12,981 2.3 2,672 20.6 12,339 2.1 2,536 20.6 6,453 2.2 1,260 19.5 8,276 2.8 1,658 20.0
Public space cleaning Note 2 18,360 3.9 3,367 18.3 19,569 3.5 3,717 19.0 20,138 3.4 3,707 18.4 10,244 3.6 1,950 19.0 12,640 4.2 2,274 18.0
Other cleaning Note 3 3 6 7 0 . 1 1 1 3 . 1––––––––––––––––
465,664 100.0 79,918 17.2 563,541 100.0 89,245 15.8 594,204 100.0 94,409 15.9 289,173 100.0 45,739 15.8 298,251 100.0 47,177 15.8
Notes:
(1) Public utilities cleaning primarily consists of government offices and school cleaning.
(2) Public space cleaning primarily consists of road sweeping and cityscape cleaning.
(3) Other cleaning primarily consists of river cleaning.
Our Guangzhou Headquarters was established in 2000 and is situated at Panyu District, Guangzhou City, Guangdong province. In
May 2017, we established our Haikou Branch with a view to allocate more resources and business focus to the provision of cleaning
services in Hainan Province. Significant projects include general cleaning service for Sanya Phoenix International Airport ( ɧԭჾ਑਷ყዚ
ఙ) and various high-end residential properties in Hainan province managed by an integrated conglomerate specialised in property
development with operations in over 200 cities in Hainan province. In December 2020, following the success in Hainan Province, our
Chongqing Branch was established as the second branch office of the Group. Significant projects in Chongqing include Chongqing
Jiangbei International Airport (ᅅϪ̏਷ყዚఙ ) and Raffles City Chongqing (ᅅԸ၅ɻᄿఙ ), the award-winning commercial complex
which features a 300-metre-long horizontal skybridge. In May 2023, our Zhengzhou Branch was established as the third branch office of
the Group, and was able to secure a project in Zhengzhou Xinzheng International Airport ( ቍψอቍ਷ყዚఙ ), the principal airport serving
Zhengzhou, the central city of Henan province.
SUMMARY
–2–


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Our contracts, tender success rates and our projects
We secure our contracts with customers through the tender process or by direct
engagement. Most of our revenue is derived from contracts awarded through competitive
tendering. For the years ended 31 December 2020, 2021 and 2022 and the six months ended 30
June 2023, our tender success rate was approximately 33.8%, 28.1%, 50.8%, 39.2% and 48.3%,
respectively, for all tenders and approximately 87.0%, 73.5%, 77.3%, 81.0% and 78.7%,
respectively, for tenders involving new contracts for existing projects. Moreover, our Group’s
tender success rate for new customers within the Track Record Period was approximately 28.2%,
25.6%, 41.3% and 43.9% for the years ended 31 December 2020, 2021 and 2022 and the six
months ended 30 June 2023, respectively.
The following table sets forth the breakdown of the number and approximate value offered
by our Group in the tender documents in relation to successful tenders/quotations by business
segments during the Track Record Period. The value of the tenders/quotations refers to the
tender/quotation price offered by our Group in the tender documents (without including the
tenders which only provide the unit prices that are subject to actual staff involved/service area
covered/service hours involved), based on the assumption that our Group will enter into
contracts with the tender offerors for one year for tenders/quotations with monthly/yearly
quotation should the tender/quotation price be accepted:
For the years ended 31 December For the six months ended 30 June
2020 2021 2022 2022 2023
No. tender/
quotations
Approximate
value of
tender/
quotations
No. tender/
quotations
Approximate
value of
tender/
quotations
No. tender/
quotations
Approximate
value of
tender/
quotations
No. tender/
quotations
Approximate
value of
tender/
quotations
No. tender/
quotations
Approximate
value of
tender/
quotations
(RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000)
Property cleaning 107 651,813 108 420,828 121 464,042 39 93,137 79 194,146
Public space cleaning 3 67,725 6 25,032 – –––4 26,899
Total 110 719,538 114 445,860 121 464,042 39 93,137 83 221,045
Our customer retention rates in each year/period during the Track Record Period amounted
to 61.8%, 62.0%, 64.7% and 73.3% for the years ended 31 December 2020, 2021 and 2022 and
the six months ended 30 June 2023, respectively.
For further details of our tender strategy, tender success rate and overall contracts awarded,
please refer to the section headed “Business – Operation flow – Tender strategy, tender success
rate and overall contracts awarded” of this prospectus.
SUMMARY
–3–


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Marketing strategy and pricing policy
During the Track Record Period, we did not conduct any major marketing activities as we
currently rely on publicly available tender information, direct engagements, referrals and our
reputation for obtaining new business opportunities. As we expand to new geographic markets
and enhance our capabilities in the public space cleaning sector, we intend to pursue additional
promotional efforts.
Our pricing policy takes into account the following major factors: (i) scope of services; (ii)
service location(s) and area of coverage; (iii) timetable; (iv) prevailing market rates; (v) labour
costs; (vi) management costs; (vii) tax; and (viii) determination of a reasonable profit margin.
COMPETITIVE LANDSCAPE AND OUR COMPETITIVE STRENGTHS
According to the Industry Report, the environmental cleaning and maintenance service
market is largely dominated by two major sectors, namely the property cleaning and public space
cleaning. The overall market is highly competitive, and the competitive landscapes of those two
sectors are different primarily due to the nature of their services. The top five market
participants in 2022, accounting for an aggregated market share of 15.7%, are all primarily
working in the public space cleaning sector. Our Group had a market share of approximately
0.1% of the environmental cleaning and maintenance industry in the PRC in 2022 in terms of
revenue.
We believe the following competitive strengths contribute to our success and distinguish us
from our competitors:
 We are one of the well-established service providers for property cleaning in
Guangdong province with a strong brand recognition and proven track record
 We are able to provide a variety of cleaning and maintenance services and have strong
capabilities to support our service offering
 We have a diversified customer base and strong relationship with our major customers
 We are committed to the management of risks and adopted stringent quality, safety
and environmental management systems
 We are led by a seasoned and stable management team
Despite the adverse impact of COVID-19 on the PRC’s economy, we continued to receive
new contracts. In fact, the rising public awareness and standard of hygiene during the pandemic
has boosted demand for our cleaning and maintenance services, as reflected in the steady
increase in the number of our projects and increasing revenue during the Track Record Period.
However, adverse impact may arise from the macroeconomic shutdown due to the pandemic or
inefficiency in service delivery, which could contribute to the downturn in property development
and property management industries in the PRC, bringing negative impacts to our Group’s
business.
SUMMARY
–4–


--- page 13 ---
OUR BUSINESS STRATEGIES
Our principal business objectives are to further strengthen the position and overall
competitiveness of our cleaning and maintenance business in the PRC and increase our market
share in the industry. We intend to achieve our business objectives with the following business
strategies: (i) continue to increase our market share by expanding our presence in the PRC in
both existing and new markets; (ii) enhance our capabilities to capture additional opportunities
in the public space cleaning sector; (iii) adopt technological advances in the industry and
upgrade our information technology systems to improve our service quality and efficiency; and
(iv) enhance our brand recognition through strengthening our human resources and promotional
activities.
OUR CUSTOMERS AND SUPPLIERS
Our customers
We have a diversified customer base for our services including government authorities and
institutions, state-owned enterprises, companies (or subsidiaries thereof) listed on the Stock
Exchange or other major stock exchanges and private enterprises. Our five largest customers for
each year during the Track Record Period were (i) property management companies in the PRC;
(ii) airport management and operation companies; (iii) companies (or subsidiaries thereof) listed
on the Stock Exchange, the London Stock Exchange or stock exchanges in the PRC; or (iv)
companies falling within more than one of the above categories. Revenue from our five largest
customers for each year during the Track Record Period amounted to approximately RMB119.9
million, RMB137.6 million, RMB152.0 million, RMB74.5 million and RMB67.7 million,
representing approximately 25.6%, 24.4%, 25.6%, 25.8% and 22.6% of our total revenue for the
years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and
2023, respectively.
Our suppliers
Our five largest suppliers for each year during the Track Record Period were third party
service providers, a substantial portion of which were subcontractors assisting our workforce in
the provision of our services. Other than the above, we also have suppliers of insurance services
and recruitment and administration services given the size and fluctuation in the numbers of our
workforce as well as the cross-provincial and labour-intensive nature of our operations. The
purchases from our five largest suppliers for each year amounted to approximately RMB136.2
million, RMB173.5 million, RMB153.6 million, RMB74.6 million and RMB81.0 million,
representing approximately 35.3%, 36.5%, 30.7%, 30.6% and 32.3% of the cost of services for
the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and
2023, respectively.
SUMMARY
–5–


--- page 14 ---
RISK FACTORS
Our operations involve certain risks, some of which are beyond our control. The major
risks generally associated with our business and industry include the following: (i) there is no
guarantee that our customers will award new contracts to us in the future or that we will be able
to secure contracts on commercially attractive terms;(ii) our projects are subject to risks such as
cost overrun, reduction in service scope and early termination; (iii) there is no guarantee that our
business strategies and future plans will be successfully implemented or bring us the amount of
revenue or other benefits as planned; (iv) our business operations are labour-intensive, labour
shortages and labour strikes may materially and adversely affect our reputation and business
operation; and (v) we may be liable for any sub standard service or misconduct of our
employees and third party service providers and we may incur substantial costs to remedy any
defects caused by them.
Y ou should carefully consider all of the information set forth in this prospectus and, in
particular, should evaluate the specific risks set forth in the section headed “Risk factors” of this
prospectus in deciding whether to invest in our Shares.
OUR CONTROLLING SHAREHOLDERS
Immediately after completion of the Share Offer and the Capitalisation Issue (without
taking into account any Shares that may be allotted and issued pursuant to the exercise of any
options which may be granted under the Share Option Scheme), 36.095% of the issued share
capital of our Company will be owned by Prosperity Cleanness, which is a company
wholly-owned by Mr. Li; and 36.095% of the issued share capital of our Company will be
owned by Sunrise Cleanness, which is a company wholly-owned by Mr. Chen. Mr. Li and Mr.
Chen have confirmed that they are a group of Controlling Shareholders. For further details,
please refer to the section headed “Relationship with our Controlling Shareholders” of this
prospectus.
OUR PRE-IPO INVESTOR
Mr. Tam Y at Kin Ken is the Pre-IPO Investor of our Company. Immediately after
completion of the Share Offer and the Capitalisation Issue (without taking into account any new
Shares which may be allotted and issued upon the exercise of any options which may be granted
under the Share Option Scheme), the Pre-IPO Investor through his nominee company, Dash
Dazzling, will hold 2.31% of our Company’s entire issued share capital. For further details of
the Pre-IPO Investment, please refer to the section headed “History, Reorganisation and Group
structure – Pre-IPO Investment” of this prospectus.
SUMMARY
–6–


--- page 15 ---
SUMMARY HISTORICAL FINANCIAL INFORMATION
The selected financial data from our consolidated financial statements (the details of which
are set out in Appendix I to this prospectus) set forth in the table below should be read in
conjunction with the financial information (including related notes) set out in Appendix I to this
prospectus and the information set out in the section headed “Financial information” of this
prospectus.
Summary of consolidated statements of comprehensive income
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Revenue 465,664 563,541 594,204 289,173 298,251
Cost of services (385,746) (474,296) (499,795) (243,433) (251,074)
Gross profit 79,918 89,245 94,409 45,740 47,177
Operating profit 39,438 45,955 40,290 18,679 17,624
Profit and total
comprehensive income for
the year/period attributable
to owners of our Company 31,312 39,921 34,389 15,392 15,308
Our revenue increased by approximately 21.0% from approximately RMB465.7 million for
the year ended 31 December 2020 to approximately RMB563.5 million for the year ended 31
December 2021, whereas our gross profit increased by approximately 11.6% from approximately
RMB79.9 million for the year ended 31 December 2020 to approximately RMB89.2 million for
the year ended 31 December 2021. Our gross profit margin decreased from approximately 17.2%
for the year ended 31 December 2020 to approximately 15.8% for the year ended 31 December
2021, primarily due to the decrease in gross profit margin of our property cleaning service for
shopping malls and residential buildings during the year ended 31 December 2021. During the
year ended 31 December 2020, there was a decrease in cleaning workforce required in
residential buildings and shopping malls as the PRC government announced and encouraged the
public to reduce outdoor activities in order to control the outbreak of COVID-19, therefore, the
cost of services for the cleaning of residential buildings and shopping malls decreased. With
COVID-19 being effectively controlled, viable treatments became commercially available along
with the relaxation of the restrictions and subsequent normalised economic activities in 2021,
the cleaning workforce required during the year ended 31 December 2021 increased leading to a
decrease in gross profit margin.
SUMMARY
–7–


--- page 16 ---
Our revenue increased by approximately 5.4% from approximately RMB563.5 million for
the year ended 31 December 2021 to approximately RMB594.2 million for the year ended 31
December 2022, whereas our gross profit increased by approximately 5.8% from approximately
RMB89.2 million for the year ended 31 December 2021 to approximately RMB94.4 million for
the year ended 31 December 2022. Our gross profit margin remained relatively stable at 15.8%
and 15.9% for the year ended 31 December 2021 and 2022, respectively.
Our revenue increased by approximately 3.1% from approximately RMB289.2 million for
the six months ended 30 June 2022 to approximately RMB298.3 million for the six months
ended 30 June 2023, whereas our gross profit increased by 3.3% from approximately RMB45.7
million for the six months ended 30 June 2022 to approximately RMB47.2 million for the six
months ended 30 June 2023. Our gross profit margin remained relatively stable at 15.8% and
15.8% for the six months ended 30 June 2022 and 2023, respectively.
Movement in the value of backlog of our projects during the Track Record Period and up
to the Latest Practicable Date
The following table sets out the movement in the value of backlog of the projects during
the Track Record Period and up to the Latest Practicable Date:
Y ear ended 31 December
Six months ended
30 June
From
1 July
2023 up to
the Latest
Practicable
Date2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Opening value of backlog 285,694 417,657 494,949 494,949 537,646 717,975
Total value of new
confirmed contracts 597,627 640,833 636,901 244,614 478,580 129,713
Revenue recognised (465,664) (563,541) (594,204) (289,173) (298,251) (278,385)
Ending value of backlog 417,657 494,949 537,646 450,390 717,975 569,303
SUMMARY
–8–


--- page 17 ---
The following table sets out the ending value of backlog of the projects by business
segments during the Track Record Period and up to the Latest Practicable Date and from 1
January 2023 up to the Latest Practicable Date:
Y ear ended 31 December
Six months ended
30 June
From
1 July
2023 up to
the Latest
Practicable
Date2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Property cleaning
Commercial building 144,163 242,964 267,162 195,144 385,747 290,199
Residential building 105,274 84,955 126,214 96,330 170,550 136,864
Transportation hub 75,496 64,975 27,111 38,567 28,018 15,468
Shopping mall 61,116 57,086 40,633 34,358 44,437 42,631
Public Utilities 7,692 14,384 13,123 8,730 12,790 26,306
Industrial Park 5,870 7,776 5,676 8,793 14,730 9,401
Public space cleaning 18,046 22,809 57,727 68,468 61,703 48,434
Other cleaning ––––––
Total 417,657 494,949 537,646 450,390 717,975 569,303
The following table sets out a breakdown of our revenue generated from the sales by
provincial-level regions in the PRC of the customers for the Track Record Period:
Y ear ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited)
Guangdong 390,973 84.0 459,108 81.5 467,337 78.6 224,353 77.6 234,692 78.7
Hainan 45,382 9.7 43,287 7.7 42,936 7.2 25,303 8.8 15,870 5.3
Chongqing 9,047 1.9 21,200 3.8 24,384 4.1 12,247 4.2 13,036 4.4
Guangxi 8,767 1.9 10,100 1.8 10,545 1.8 5,107 1.7 5,527 1.8
Others
Note 11,495 2.5 29,846 5.2 49.002 8.3 22,163 7.7 29,126 9.8
465,664 100.0 563,541 100.0 594,204 100.0 289,173 100.0 298,251 100.0
Note : Others include Anhui, Fujian, Guizhou, Heilongjiang, Henan, Hubei, Hunan, Jiangxi, Shaanxi and Y unan.
SUMMARY
–9–


--- page 18 ---
During the Track Record Period, we generated majority of our sales from Guangdong which
contributed approximately 84.0%, 81.5%, 78.6%, 77.6% and 78.7% of the total sales for the
years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and
2023, respectively. Following Guangdong, Hainan contributed the second largest sales to our
Group. Approximately 9.7%, 7.7%, 7.2%, 8.8% and 5.3% of the total sales were generated from
Hainan for the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June
2022 and 2023, respectively. During the Track Record Period, our total revenue from Guangxi,
Chongqing, Hainan and provincial-level regions other than Guangdong was approximately
RMB74.7 million, RMB104.4 million, RMB126.9 million, RMB64.8 million and RMB63.6
million, respectively, representing a CAGR of approximately 30.3% from 2020 to 2022 and a
slightly decrease of approximately 1.9% from the six months ended 30 June 2022 to 30 June
2023..
Other income and other gain/(loss), net
Our other income mainly comprised (i) rental income earned from the lease or sub-lease of
our owned or leased properties in the PRC to Independent Third Parties, one of which is
Guangzhou Pengsheng, in which we previously held a majority interest prior to its disposal in
October 2020 to an Independent Third Party; (ii) penalty on late payment of rental income from
the sub-lease of a leased property to Guangzhou Pengsheng; (iii) non-recurring income from the
provision of ancillary services for a road construction project in 2020 and 2021; and (iv) value
added tax refund. Our other gain/(loss), net comprised (i) fair value gain/(loss) on financial
assets at fair value through profit or loss; (ii) loss on disposal of investments in associates; and
(iii) loss on disposal of property, plant and equipment. For details, please refer to the paragraphs
headed “Financial information – Description on selected items of the consolidated statements of
comprehensive income – Other income” and “Financial information – Description on selected
items of the consolidated statements of comprehensive income” of this prospectus.
Net profit
Our net profit increased by approximately RMB8.6 million or 27.5% from approximately
RMB31.3 million for the year ended 31 December 2020 to approximately RMB39.9 million for
the year ended 31 December 2021. The increase is mainly due to (i) the increase in gross profit
by RMB9.3 million; (ii) the decrease in other losses by RMB7.3 million; (iii) the decrease in
impairment losses on financial assets by RMB2.2 million; and partially offset by (iv) the
increase in general and administrative expenses by RMB11.4 million.
Our net profit decreased by approximately RMB5.5 million or 13.8% from approximately
RMB39.9 million for the year ended 31 December 2021 to approximately RMB34.4 million for
the year ended 31 December 2022. The decrease is mainly due to (i) the increase in general and
administrative expenses by approximately RMB6.1 million; (ii) the decrease in other income by
approximately RMB2.0 million; (iii) the increase in net impairment losses on financial assets by
approximately RMB2.1 million; and partially offset by (iv) the increase in gross profit by
approximately RMB5.2 million.
SUMMARY
–1 0–


--- page 19 ---
Our net profit slightly decreased by approximately RMB0.1 million or 0.6% from
approximately RMB15.4 million for the six months ended 30 June 2022 to approximately
RMB15.3 million for the six months ended 30 June 2023. The decrease is mainly due to (i) the
increase in selling and marketing expenses by approximately RMB0.7 million; (ii) the increase
in impairment losses on financial assets by approximately RMB3.1 million; (iii) the decrease in
other income by approximately RMB1.2 million; partially offset by (iv) the decrease in general
and administrative expense by approximately RMB2.6 million and (v) the increase in gross
profit by approximately RMB1.5 million.
Summary of consolidated statements of financial position
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Non-current assets 31,705 30,246 30,749 33,598
Current assets 224,087 247,819 285,425 303,457
Total assets 255,792 278,065 316,174 337,055
Non-current liabilities 6,998 6,771 6,524 6,394
Current liabilities 107,359 128,651 132,618 138,321
Total liabilities 114,357 135,422 139,142 144,715
Total equity and liabilities 255,792 278,065 316,174 337,055
Net current assets 116,728 119,168 152,807 165,136
Net assets 141,435 142,643 177,032 192,340
Our net current assets increased from approximately RMB116.7 million as at 31 December
2020 to approximately RMB119.2 million as at 31 December 2021. The increase was mainly
attributable to (i) the increase in trade and other receivables and prepayments by approximately
RMB33.6 million which was in line with the growth in our revenue in 2021; (ii) the increase in
restricted bank deposits by approximately RMB5.4 million; partially offset by (iii) the decrease
in cash and cash equivalents by approximately RMB15.2 million; (iv) the increase in bank
borrowings by approximately RMB10.0 million; (v) the increase in trade and other payables by
approximately RMB9.3 million mainly due to the increase in amount due to Mr. Li as we had
advances from Mr. Li in order to settle Listing expenses; and (vi) the increase in current income
tax payable by approximately RMB2.0 million due to the V A T tax payable derived from our
increase in revenue.
SUMMARY
–1 1–


--- page 20 ---
Our net current assets increased from approximately RMB119.2 million as at 31 December
2021 to approximately RMB152.8 million as at 31 December 2022. The increase was mainly due
to (i) the increase in trade and other receivables and prepayments by approximately RMB38.7
million due to our increase in trade receivables; (ii) the decrease in bank borrowings by
approximately RMB10.0 million; partially offset by (iii) the increase in trade and other payables
by RMB13.0 million due to the increase in amount due to Mr. Li as we had advances from Mr.
Li in order to settle Listing expenses and the increase in Listing expenses payable and (iv) the
decrease in restricted bank deposits by approximately RMB3.6 million.
Our net current assets increased from approximately RMB152.8 million as at 31 December
2022 to approximately RMB165.1 million as at 30 June 2023. The increase was mainly
attributable to (i) increase in trade receivables and other receivables and prepayments by
approximately RMB23.2 million which was in line with the growth in our revenue; partially
offset by (ii) the decrease in cash and cash equivalents by approximately RMB4.8 million; and
(iii) the increase in trade and other payables by RMB6.2 million due to the increase in amount
due to Mr. Li as we had advances from Mr. Li in order to settle Listing expenses and the
increase in Listing expenses payable.
Our net assets increased from approximately RMB141.4 million as at 31 December 2020 to
approximately RMB142.6 million as at 31 December 2021. The increase was mainly due to (i)
the contribution of the profit for the year of 2021 of approximately RMB39.9 million; (ii) the
issuance of shares of approximately RMB4.0 million; partially offset by (iii) the dividend paid
to controlling shareholders of approximately RMB28.2 million and (iv) the capital reduction of a
subsidiary of approximately RMB12.3 million.
Our net assets increased from approximately RMB142.6 million as at 31 December 2021 to
approximately RMB177.0 million as at 31 December 2022. The increase was mainly due to the
contribution of the profit for the year of 2022 of approximately RMB34.4 million.
Our net assets increased from approximately RMB177.0 million as at 31 December 2022 to
approximately RMB192.3 million as at 30 June 2023. The increase was mainly due to the
contribution of the profit for six months ended 30 June 2023 of approximately RMB15.3 million.
SUMMARY
–1 2–


--- page 21 ---
Summary of consolidated statements of cash flows
As at 31 December As at 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Cash flows from operating
activities
Net cash generated from/(used
in) operating activities 22,027 14,926 5,779 (26,633) (4,563)
Cash flows from investing
activities
Net cash generated from/(used
in) investing activities (5,425) (7,423) 1,823 3,079 (1,854)
Cash flows from financing
activities
Net cash generated from/(used
in) financing activities (5,215) (22,749) (5,071) (6,529) 1,553
Net increase/(decrease) in
cash and cash equivalents
during the year/period 11,387 (15,246) 2,531 (30,083) (4,864)
Cash and cash equivalents at
end of the year/period 67,437 52,191 54,722 22,108 49,858
For the six months ended 30 June 2022 and 30 June 2023, our net cash used in operating
activities was RMB26.6 million and RMB4.6 million, respectively, which was mainly
attributable to the increase in account receivable. The increase was mainly because of the slow
economic resurgence and delays in settlement of account receivable by some of our customers
based in/or operated in provinces severely affected by the COVID-19 pandemic during the
respective periods. Please refer to the section headed “Financial Information – Liquidity and
Capital Resources” in this prospectus for further details.
SUMMARY
–1 3–


--- page 22 ---
SUMMARY OF KEY FINANCIAL RATIOS
The following table sets forth certain financial ratios relating to our Group as at the dates
or for the periods indicated:
As at 31 December
As at
30 June
2020 2021 2022 2023
Gross profit margin (%) 17.2 15.8 15.9 15.8
Net profit margin (%) 6.7 7.1 5.8 5.1
Return on equity (%)
Note 1 22.1 28.0 19.4 N/A
Return on total assets (%) Note 2 12.2 14.4 10.9 N/A
Current ratio (times) Note 3 2.1 1.9 2.2 2.2
Gearing ratio (%) Note 4 5.5 12.2 4.1 3.7
Net debt to equity ratio (%) Note 5 Net Cash Net Cash Net Cash Net Cash
Interest coverage (times) Note 6 30.4 92.8 70.3 65.8
Notes:
1. Return on equity is calculated based on the net profit divided by the total equity as at the end of the
respective year and multiplied by 100.0%.
2. Return on total assets is calculated based on the net profit divided by the total assets as at the end of the
respective year and multiplied by 100.0%.
3. Current ratio is calculated based on the total current assets divided by the total current liabilities as at the
end of the respective year.
4. Gearing ratio is calculated based on the total borrowings and lease liabilities divided by total equity as at
the end of the respective year and multiplied by 100.0%.
5. Net debt to equity ratio is calculated based on the net debts (total debts net of cash and cash equivalents)
divided by total equity as at the end of the respective year and multiplied by 100.0%.
6. Interest coverage is calculated by dividing profit before taxation and interest by the finance cost as at the
end of the respective year.
RECENT DEVELOPMENTS AND NO MATERIAL ADVERSE CHANGE
Subsequent to 30 June 2023 (being the latest date of the consolidated financial information
of our Group as set out in Appendix I to this prospectus) and up to the date of this prospectus,
we continued our focus as a cleaning and maintenance services provider. Our business model,
revenue structure, cost structure, and the industry, market and regulatory environment in which
we operate remained substantially unchanged since 30 June 2023 and up to the date of this
prospectus.
SUMMARY
–1 4–


--- page 23 ---
Our Directors consider that our projected net profit for the year ending 31 December 2023
is expected to record a decrease, compared to the net profit for the year ended 31 December
2022, which is affected by (i) an expected increase in general and administrative expenses and
(ii) an expected increase in net impairment losses on financial assets. The expected increase in
general and administrative expenses is primarily attributable to the expected increase in listing
expenses, including underwriting commission in connection with the Share Offer. The expected
increase in net impairment losses on financial assets is primarily attributable to our Group
measures loss allowance for the trade receivables at an amount equal to lifetime expected credit
loss and in view of the slowing economy in the PRC, for prudence’s sake, our Group expected to
increase the provision of impairment loss on financial assets in FY2023. Our Directors confirm
that save for the estimated non-recurring Listing expenses as disclosed in the paragraph headed
“Listing expenses” in this section, since 30 June 2023 (being the latest date of the consolidated
financial information of our Group as set out in Appendix I to this prospectus) and up to the
date of this prospectus, (i) there was no material adverse change on the market conditions and
the industry and the regulatory environment in which our Group operates that affects our
financial or operating position materially and adversely; (ii) there was no material adverse
change in the business, revenue structure, trading, profitability, cost structure, financial position
and prospects of our Group, and (iii) no event had occurred that would affect the information
shown in our Accountant’s Report in Appendix I to this prospectus materially and adversely.
As at the date of this prospectus, Shenghui Cleanness (Beijing) was established and we
have successfully secured a project for provision of property cleaning service.
Impact of COVID-19
An outbreak of COVID-19 was first reported in December 2019, and the COVID-19
pandemic spread around the world during the Track Record Period. Since the beginning of 2022,
another wave of COVID-19 broke out in the PRC, which caused surging numbers of COVID-19
cases in certain regions, such as Shenzhen, Guangzhou, Shanghai and Beijing. Local
governments have taken certain lockdown measures at particular districts to prevent further
spread of the virus. However, as confirmed by the Directors, such lockdown measures did not
have significant impact on our Group’s business operation, as cleaning services were essential
services especially during the pandemic and our the Group was generally still able to provide
services during the lockdown period. However, adverse impact may arise from the
macroeconomic shutdown due to the pandemic or inefficiency in service delivery, which could
contribute to the downturn in property development and property management industries in the
PRC, bringing negative impacts to our Group’s business.
In December 2022, the PRC government eased the restrictions previously imposed with
respect to the control of the COVID-19 pandemic. In May 2023, the World Health Organisation
ended the global emergency status for COVID-19, declaring that it is now an established and
ongoing health issue which no longer constitutes a public health emergency of international
concern. As a result, regional lockdown, quarantine requirements and inter-region travel
restrictions have been gradually lifted.
SUMMARY
–1 5–


--- page 24 ---
For further details on the impact of COVID-19 on our Group business operation and
financial performance, please refer to the sections headed “Business – Impact of COVID-19”
and “Financial information – Period-to-period comparison of results of operation” of this
prospectus. Our Directors confirm that given the nature of our business, during the Track Record
and up to the Latest Practicable Date, our projects had not been halted, delayed or cancelled due
to the COVID-19 outbreak.
Despite the adverse impact of COVID-19 on the PRC’s economy, we continued to receive
new contracts. In fact, the rising public awareness and standard of hygiene during the pandemic
has boosted demand for our cleaning and maintenance services, as reflected in the steady
increase in the number of our projects and increasing revenue during the Track Record Period.
According to the Industry Report, the growing demand in the environmental cleaning and
maintenance service market in the PRC is anticipated to continue even at the post-pandemic
stage. We cannot guarantee, however, that we will be able to effectively compete and capture
new business opportunities in this highly competitive industry despite the expected growth, and
that before the pandemic is effectively and continuously contained, it will not escalate to an
extent that will disrupt our operations in any way.
For further details of the risk of COVID-19 or other natural disasters, please refer to the
section headed “Risk factors – Market opportunities arising out of the COVID-19 outbreak may
not be sustainable. Any material negative development of COVID-19 and any other
unforeseeable market circumstances such as the occurrence of a natural disaster, economic
changes and any other incidents may affect our business, financial conditions and results of
operations” of this prospectus.
Regulations relating to overseas securities offering and listing by domestic companies
On 17 February 2023, the CSRC released the Trial Administrative Measures of Overseas
Securities Offering and Listing by Domestic Companies ( ྤʫΆุྤ̮೯БᗇՎձɪ̹၍ଣ༊
 ) and the relevant supporting guidelines (collectively, the “ Listing Trial Measures ”)
which came effect on 31 March 2023. The Listing Trial Measures is formulated to regulate
overseas securities offering and listing activities by domestic companies, either in direct or
indirect form (hereinafter referred to as “ overseas offering and listing ”). The Listing Trial
Measures not only list out the circumstances where overseas offering and listing is forbidden,
but also set out the conditions for determining the overseas offering and listing in indirect form.
Domestic companies that seek to offer and list securities in overseas markets shall fulfill the
filing procedures with and report relevant information to the CSRC, and the filing shall be
submitted within three business days after the application for an initial public offering is
submitted. As advised by our PRC Legal Advisers, we have completed the filing procedures with
the CSRC for the Listing and on 20 October 2023, the CSRC issued a notification to us
confirming the completion of the filing procedures for the overseas listing on the Stock
Exchange.
SUMMARY
–1 6–


--- page 25 ---
Material adverse changes
As far as our Directors are aware, there had been no material adverse change in the market
conditions or the industry and environment in which our Group operates that materially and
adversely affect our financial and operation position since 30 June 2023 and up to the date of
this prospectus.
Our Directors confirm that, up to the date of this prospectus, there has been no material
adverse change in our financial or trading position or prospects since 30 June 2023, and there
had been no events since 30 June 2023 which would materially affect the information shown in
our consolidated financial statements included in the accountant’s report set out in Appendix I to
this prospectus.
OFFERING STATISTICS
Based on an
Offer Price
of HK$0.32
per Offer
Share
Based on an
Offer Price
of HK$0.40
per Offer
Share
Market capitalisation of our Shares Note 1 HK$520
million
HK$650
million
Unaudited pro forma adjusted consolidated net tangible
assets per Share Notes 2 and 3
HK$0.19 HK$0.21
Notes:
(1) The calculation of market capitalisation is based on 1,625,000,000 Shares expected to be in issue
immediately following the completion of the Share Offer and the Capitalisation Issue without taking into
account any Shares to be issued pursuant to the exercise of any options to be granted under the Share
Option Scheme.
(2) Please refer to Appendix II to this prospectus for the bases and assumptions in calculating these figures.
(3) No adjustment has been made to the unaudited pro forma adjusted consolidated net tangible assets to
reflect any trading results or other transactions of our Group entered into subsequent to 30 June 2023.
SUMMARY
–1 7–


--- page 26 ---
LISTING EXPENSES
Our Directors estimate that the total amount of expenses in relation to the Listing is
approximately RMB42.1 million (equivalent to approximately HK$47.1 million), which
amounted to 35.0% of gross proceeds of the initial public offering, based on an Offer Price of
HK$0.36 per Offer Share (being the mid-point of the Offer Price range stated in this prospectus),
of which (i) underwriting-related expenses, including underwriting commission and other
expenses are approximately RMB8.4 million (equivalent to approximately HK$9.4 million) and
(ii) non-underwriting-related expenses are approximately RMB33.7 million (equivalent to
approximately HK$37.7 million), comprising (a) fees and expenses of legal advisers and
accountants of approximately RMB18.7 million (equivalent to approximately HK$20.9 million)
and (b) other fees and expenses, including sponsor fee, of approximately RMB15.0 million
(equivalent to approximately HK$16.8 million). Out of the total expenses of approximately
RMB42.1 million, approximately RMB13.9 million is directly attributable to the issue of the
Listing and is expected to be accounted for as a deduction from equity upon Listing. The
remaining amount of approximately RMB28.2 million, which cannot be so deducted, shall be
charged to profit or loss. Of the approximately RMB28.2 million that shall be charged to profit
or loss, approximately RMB20.8 million has been charged during the Track Record Period and
approximately RMB7.4 million is expected to be incurred for after the Track Record Period.
Expenses in relation to the Listing are non-recurring in nature. Our financial performance and
results of operations for the years after Track Record Period will be adversely affected by the
estimated expenses in relation to the Listing.
USE OF PROCEEDS
We estimate that we will receive net proceeds of approximately HK$87.4 million from the
Share Offer, after deducting the underwriting commissions and other estimated expenses payable
by us in connection with the Share Offer, assuming an Offer Price of HK$0.36 per Offer Share,
being the mid-point of the Offer Price range stated in this prospectus. We intend to use such net
proceeds from the Share Offer for the following purposes: (i) approximately 70.3%
(approximately HK$61.4 million), for expanding our geographic presence across the PRC,
particularly establishing new subsidiaries or opening new branches locally and strategic
acquisition(s); (ii) approximately 19.4% (approximately HK$16.9 million) would be used for
enhancing our service capabilities to capture opportunities in the public space cleaning sector;
(iii) approximately 7.6% (approximately HK$6.7 million) would be used for adoption of
technological advances in the industry and upgrading our information technology system; (iv)
approximately 2.5% (approximately HK$2.3 million) would be used to expand our marketing
department and strengthen our brand recognition through promotional activities; and (v)
approximately 0.2% (approximately HK$0.1 million) would be used as our working capital and
for general corporate purposes. We will not receive any of the proceeds from the sale of the Sale
Shares by our Selling Shareholders in the Share Offer. For details, please refer to the section
headed “Future plans and use of proceeds” of this prospectus.
SUMMARY
–1 8–


--- page 27 ---
DIVIDEND AND DIVIDEND POLICY
During the Track Record Period, we declared and paid dividends of approximately
RMB28.2 million in January 2021. The recommendation of the payment of dividend is subject to
the absolute discretion of our Board, and, after Listing, any declaration of final dividend for the
year will be subject to the approval of our Shareholders. Our Directors may recommend a
payment of dividend in the future after taking into account, among others, our results of
operations, cash flows and financial condition, operating and capital requirements and other
relevant factors our Board may deem relevant. Our Company currently does not have any
predetermined dividend payout ratio. After the Track Record Period and up to the date of this
prospectus, no dividend was declared or paid by the Company. For details, please refer to the
section headed “Financial information – Dividend and dividend policy” of this prospectus.
HISTORICAL NON-COMPLIANCE INCIDENTS
During the Track Record Period, (i) we failed to make full contribution to the social
security and housing provident funds for our employees as required by relevant PRC laws and
regulations; (ii) we did not obtain the relevant qualification for a specific project prior to
entering into the contract and (iii) we failed to register our lease agreements. For further details,
please refer to the section headed “Business – Historical non-compliance incidents” of this
prospectus.
SUMMARY
–1 9–


--- page 28 ---
In this prospectus, unless the context otherwise requires, the following expressions shall
have the following meanings:
“Accountant’s Report” the accountant’s report of our Group as set out in
Appendix I to this prospectus
“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 14 November 2023 (as
amended from time to time) and which will become
effective on the Listing Date, a summary of which is set
forth in Appendix IV to this prospectus
“associate(s)” has the meaning ascribed to it under the Listing Rules
“Audit Committee” the audit committee of our Board
“Board of Directors” or “Board” the board of Directors
“Business Day(s)” or “business
day(s)”
any day on which licensed banks in Hong Kong are
generally open for normal banking business to the public
and which is not a Saturday, Sunday or public holiday in
Hong Kong
“BVI” the British Virgin Islands
“Capital Market Intermediaries” the Sole Overall Coordinator, the Joint Global
Coordinators, the Joint Bookrunners, the Joint Lead
Managers, the Underwriters and other Capital Market
Intermediaries (within the meaning ascribed thereto under
the Listing Rules), participating in the Share Offer
“Capitalisation Issue” the issue of 1,251,249,000 Shares (of which 40,625,000
Shares are Sale Shares) to be made upon capitalisation of
certain sums standing to the credit of the share premium
account of our Company as referred to in the section
headed “History, Reorganisation and Group structure” of
this prospectus
“CCASS” the Central Clearing and Settlement System established
and operated by HKSCC
DEFINITIONS
–2 0–


--- page 29 ---
“Chairman” chairman of our Board
“China” or “PRC” the People’s Republic of China, which for the purpose of
this prospectus and for geographical reference only,
excludes Hong Kong, the Macao Special Administrative
Region and Taiwan
“Chongqing Branch” Guangzhou Shenghui Cleanness Service Co., Ltd.
Chongqing Branch* (ᅅʱ
ʮ̡), a branch company of Guangzhou Shenghui
established in Y ubei District, Chongqing municipality on
16 December 2020
“Circular 13” the Circular of the SAFE on Further Simplifying and Improving
Policies for the Foreign Exchange Administration of Direct
Investment* (ટҳ
) promulgated by SAFE on 13
February 2015 and implemented on 1 June 2015
“Circular 37” the Circular of the SAFE on Foreign Exchange
Administration of Overseas Investments and Financing
and Round-Trip Investments by Domestic Residents via
Special Purpose V ehicles* (֢
೻ҳ༟̮ි၍ଣϞᗫ
) promulgated and implemented by SAFE on
4 July 2014
“close associate(s)” has the meaning ascribed to it under the Listing Rules
“Companies Act” or “Cayman
Companies Act”
the Companies Act (2022 Revision), as consolidated and
revised of the Cayman Islands
“Companies (Miscellaneous
Provisions) Ordinance”
Companies (Winding Up and Miscellaneous Provisions)
Ordinance (Chapter 32 of the Laws of Hong Kong), as
amended, supplemented and/or otherwise modified from
time to time
“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of
Hong Kong), as amended, supplemented and/or otherwise
modified from time to time
DEFINITIONS
–2 1–


--- page 30 ---
“Company” or “our Company” Shenghui Cleanness Group Holdings Limited ( ʺሾ૶ᆎණ
ʮ̡ ), an exempted company incorporated in
the Cayman Islands on 4 January 2021 with limited
liability and registered as a non-Hong Kong company
under Part 16 of the Companies Ordinance on 9 February
2021
“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 Shareholder(s)” has the meaning ascribed to it under the Listing Rules and
unless the context requires otherwise, refers to Mr. Chen,
Mr. Li, Prosperity Cleanness and Sunrise Cleanness
“Controlling Shareholders’
Confirmation”
the confirmation dated 16 March 2021 executed by Mr. Li
and Mr. Chen, whereby they confirmed that they are a
group of Controlling Shareholders, particulars of which
are set out in the section headed “Relationship with our
Controlling Shareholders” of this prospectus
“core connected person(s)” has the meaning ascribed to it under the Listing Rules
“Corporate Governance Code” the Corporate Governance Code as set out in Appendix 14
to the Listing Rules, as amended, supplemented and/or
otherwise modified from time to time
“COVID-19” COVID-19 virus, a coronavirus identified as the cause of
an outbreak of respiratory illness that was first detected in
late 2019
“CSRC” the China Securities Regulatory Commission ( ʕ਷ᗇՎ္
ึ ), a regulatory body responsible for the
supervision and regulation of the PRC national securities
markets
“Dash Dazzling” Dash Dazzling Investment Holdings Limited, a company
incorporated in the BVI with limited liability on 12
January 2021 and wholly-owned by our Pre-IPO Investor
DEFINITIONS
–2 2–


--- page 31 ---
“Deed of Indemnity” the deed of indemnity dated 14 November 2023 and
entered into by our Controlling Shareholders in favour of
our Company (for itself and as trustee for each of its
subsidiaries), particulars of which are set out in the
paragraph headed “F. Other information – 1. Tax and other
indemnities” in Appendix V to this prospectus
“Deed of Non-competition” the deed of non-competition dated 14 November 2023 and
entered into by our Controlling Shareholders in favour of
our Company (for itself and as trustee for each of its
subsidiaries), particulars of which are set out in the
paragraph headed “Relationship with our Controlling
Shareholders – Non-competition undertakings” of this
prospectus
“Designated Bank” HKSCC Participant’s Designated Bank under FINI
“Director(s)” or “our Directors” the director(s) of our Company
“Disposed Companies” collectively, Guangzhou Mingyou, Guangzhou Pengsheng,
Guangzhou Pinwaipin, Jinan Shenghui and Shaanxi
Shenghui
“EIT” enterprise income tax
“EIT Law” the PRC Enterprise Income Tax Law of the PRC* ( ʕശɛ
ج)
“electronic application
instruction(s) ”
instruction(s) given by a HKSCC Participant
electronically via HKSCC’s FINI system to HKSCC,
being one of the methods to apply for the Offer Shares
“Extreme Conditions” any extreme conditions or events, the occurrence of which
causes interruption to ordinary course of business
operations in Hong Kong where an announcement may be
made by the government of Hong Kong according to the
revised “Code of Practice in Times of Typhoons and
Rainstorms” issued by the Labour Department of Hong
Kong in July 2021
“financial year” financial year of our Company ended or ending 31
December
DEFINITIONS
–2 3–


--- page 32 ---
“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
processing of specified information on subscription in and
settlement for all new listings
“Frost & Sullivan” Frost & Sullivan (Beijing) Inc., Shanghai Branch Co., a
market research and consulting company, which is an
Independent Third Party
“General Rules of HKSCC” the terms and conditions regulating the use of HKSCC’s
services, as may be amended, supplemented and/or
otherwise modified from time to time and where the
context so permits, including the HKSCC Operational
Procedures
“Greater Bay Area” Guangdong-Hong Kong-Macao Bay Area, comprising
Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou,
Dongguan, Zhongshan, Jiangmen, Zhaoqing, Hong Kong
and Macao
“Group”, “we”, “us” or “our
Group”
our Company and our subsidiaries at the relevant time or,
where the context otherwise requires, in respect of the
period prior to our Company becoming the holding
company of our present subsidiaries, our present
subsidiaries and the businesses operated by such
subsidiaries or their predecessors (as the case may be)
“Guangxi Shenghui” Guangxi Shenghui Cleanness Service Co., Ltd* ( ᄿГʺሾ
ʮ̡ ), a limited liability company
established in the PRC on 7 June 2016, a direct
wholly-owned subsidiary of Guangzhou Shenghui and an
indirect wholly-owned subsidiary of our Company upon
completion of our Reorganisation
“Guangzhou Administration for
Market Regulation”
Administration for Market Regulation of Guangzhou City
of the PRC* ( ʕ਷ᄿψ̹̹ఙ္ຖ၍ଣ҅ )
“Guangzhou Headquarters” the headquarters of Guangzhou Shenghui located at Panyu
District, Guangzhou
DEFINITIONS
–2 4–


--- page 33 ---
“Guangzhou Mingyou” Guangzhou Mingyou Education Technology Co., Ltd.* ( ᄿ
ʮ̡ , currently known as Guangdong
Mingyou Education Technology Co., Ltd.* (С઺ԃ
ʮ̡ )), a limited liability company established in
the PRC on 21 January 2020, which was owned by
Guangzhou Shenghui, Mr. Li and Ms. Kang Yiwen ( ੰᆇ
˖), an Independent Third Party, as to 80%, 10% and 10%
respectively, prior to our Reorganisation. Upon completion
of our Reorganisation, Guangzhou Mingyou became
owned as to 90% and 10% by Mr. Li and Ms. Kang Yiwen
(ੰᆇ˖ ) respectively and Guangzhou Shenghui ceased to
hold any equity interest in Guangzhou Mingyou
“Guangzhou Pengsheng” Guangzhou Pengsheng Sports Development Co., Ltd.* ( ᄿ
ʮ̡ ), a limited liability company
established in the PRC on 19 October 2016, which was
owned by Guangzhou Shenghui as to 68.75% and two
Independent Third Parties, namely Ms. Li Y an ( ኇዲ) and
Mr. Ling Shunsheng ( Ὃන͛ ) as to 15.625% and 15.625%
respectively, prior to our Reorganisation. Upon completion
of our Reorganisation, Guangzhou Pengsheng was owned
as to 68.75%, 15.625% and 15.625% by Mr. Chen
Qingrong (࿲ ), Ms. Li Y an ( ኇዲ) and Mr. Ling
Shunsheng ( Ὃන͛ ) respectively, all of whom are
Independent Third Parties, and Guangzhou Shenghui
ceased to hold any equity interest in Guangzhou
Pengsheng
“Guangzhou Pinwaipin” Guangzhou Pinwaipin Food Trading Co., Ltd.* (̮
ʮ̡ ), a limited liability company
established in the PRC on 10 December 2014, which was
owned by Guangzhou Shenghui, Mr. Li and Ms. Luo
Wanhong (ߎan Independent Third Party, as to
40%, 30% and 30% respectively, prior to our
Reorganisation. Upon completion of our Reorganisation,
Guangzhou Pinwaipin was owned as to 70% and 30% by
Mr. Li and Ms. Luo Wanhong (ߎrespectively, and
Guangzhou Shenghui ceased to hold any equity interest in
Guangzhou Pinwaipin. Guangzhou Pinwaipin was
subsequently deregistered on 23 November 2020
DEFINITIONS
–2 5–


--- page 34 ---
“Guangzhou Shengfeng” Guangzhou Shengfeng Agricultural Technology Co., Ltd.*
(ʮ̡ ), a limited liability
company established in the PRC on 12 July 2017, which
was wholly-owned by Guangzhou Shenghui prior to its
deregistration on 11 November 2020
“Guangzhou Shenghui” Guangzhou Shenghui Cleanness Service Co., Ltd.* ( ᄿψ
ʮ̡ ), a limited liability company
established in the PRC on 4 August 2000, which was
owned as to 50% by each of Mr. Li and Mr. Chen prior to
our Reorganisation, and became an indirect wholly-owned
subsidiary of our Company upon completion of our
Reorganisation
“Guangzhou Xinhui” Guangzhou Xinhui Technology Property Co., Ltd.* ( ᄿψ
ʮ̡ ), a limited liability company
established in the PRC on 14 November 2002, which was
wholly-owned by Guangzhou Shenghui prior to our
Reorganisation, and became an indirect wholly-owned
subsidiary of our Company upon completion of our
Reorganisation
“Guangzhou Y uneng” Guangzhou Y uneng Environmental Technology Co., Ltd.*
(ʮ̡ ), a company established in
the PRC with limited liability on 4 May 2016, which is
owned as to 70% and 30% by Mr. Chen Zhipeng ( ௓қᘄ ),
the son of Mr. Chen, and Mr. Zou Hongjin (ږan
Independent Third Party, respectively
“Haikou Branch” Guangzhou Shenghui Cleanness Service Co., Ltd. Hainan
Branch* (ʱʮ̡ ), a
branch company of Guangzhou Shenghui established in
Haikou, Hainan province on 22 May 2017
“HK eIPO White Form ” the application for Public Offer Shares to be issued in the
applicant’s own name, submitted online through the IPO
App or 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 in the IPO App or on the
designated website at www.hkeipo.hk
“HKFRS” Hong Kong Financial Reporting Standards promulgated by
HKICPA
DEFINITIONS
–2 6–


--- page 35 ---
“HKICPA” The Hong Kong Institute of Certified Public Accountants
“HKSCC” Hong Kong Securities Clearing Company Limited, a
wholly-owned subsidiary of Hong Kong Exchanges and
Clearing Limited
“HKSCC EIPO ” the application for the Public Offer Shares to be issued in
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 Public 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 CCASS, FINI or any other
platform, facility or system established, operated and/or
otherwise provided by or through HKSCC, as from time to
time in force
“HKSCC Participant” a participant admitted to participate in CCASS as a direct
clearing participant, a general clearing participant or a
custodian participant
“Hong Kong” or “HK” the Hong Kong Special Administrative Region of the PRC
“Hong Kong Branch Share
Registrar”
Tricor Investor Services Limited, our Company’s Hong
Kong branch share registrar and transfer office
“Hong Kong dollars”, “HKD” or
“HK$” and “cents”
Hong Kong dollars and cents respectively, the lawful
currency of Hong Kong
“IFRS” International Financial Reporting Standards, as issued
from time to time from the International Accounting
Standards Board
DEFINITIONS
–2 7–


--- page 36 ---
“Independent Third Party(ies)” an individual(s) or a company(ies) who or which, to the
best of our Directors’ knowledge, information and belief,
having made all reasonable enquiries, is/are independent
and not connected with (within the meaning of the Listing
Rules) any of the directors, chief executive, substantial
shareholders of our Company or any of its subsidiaries, or
any of their respective associates
“Industry Report” an independent market research report commissioned by
our Company on the environmental cleaning and
maintenance service market in the PRC and prepared by
Frost & Sullivan
“Investment Committee” the investment committee of our Board
“IPO App ” the mobile application for the HK eIPO
White Form service which can be downloaded
by searching “ IPO App ” in App Store or Google
Play or downloaded at www.hkeipo.hk/IPOApp or
www.tricorglobal.com/IPOApp
“Joint Bookrunners” the joint bookrunners as named in “Directors and Parties
Involved in the Share Offer”
“Joint Global Coordinators” the joint global coordinators as named in “Directors and
Parties Involved in the Share Offer”
“Joint Lead Managers” the joint lead managers as named in “Directors and Parties
Involved in the Share Offer”
“Jinan Shenghui” Jinan Shenghui Cleanness Services Co., Ltd.* (ʺሾ
ʮ̡ ), a limited liability company
established in the PRC on 8 May 2014, which was owned
by Guangzhou Shenghui as to 40% and two Independent
Third Parties, namely, Ms. Zhao Yike (̙ ) and Ms. Li
Yinling (ޛas to 30% and 30%, respectively, prior
to our Reorganisation. Upon completion of our
Reorganisation, Jinan Shenghui became owned as to 40%,
30% and 30% by Mr. Zheng Y ong (ۇMs. Zhao Yike
(̙ ) and Ms. Li Yinling (ޛrespectively, all of
whom are Independent Third Parties, and Guangzhou
Shenghui ceased to hold any equity interest in Jinan
Shenghui
DEFINITIONS
–2 8–


--- page 37 ---
“Latest Practicable Date” 19 November 2023, being the latest practicable date prior
to the printing of this prospectus for the purpose of
ascertaining certain information contained in this
prospectus
“Listing” the listing of our Shares on the Stock Exchange
“Listing Committee” the Listing Committee of the Stock Exchange
“Listing Date” the date, expected to be on or about Tuesday, 5 December
2023, on which dealings in our Shares first commence on
the Stock Exchange
“Listing Rules” the Rules Governing the Listing of Securities on the Stock
Exchange, as amended, supplemented and/or otherwise
modified from time to time
“M&A Rules” the Provisions on the Merger and Acquisition of Domestic
Enterprises by Foreign Investor* (Իᒅ
) promulgated by MOFCOM, the
State-owned Assets Supervision and Administration
Commission of the State Council, the State Administration
of Taxation, SAMR, CSRC and SAFE on 8 August 2006
and amended by MOFCOM on 22 June 2009
“Main Board” the Main Board of the Stock Exchange
“Memorandum” or “Memorandum
of Association”
the amended and restated memorandum of association of
our Company, adopted on 14 November 2023, (as
amended from time to time) a summary of which is set
out in Appendix IV to this prospectus
“MOFCOM” the Ministry of Commerce of the PRC ( ʕശɛ͏΍ձ਷ਠ
ਕ௅)
“Mr. Chen” Mr. Chen Liming (׼an executive Director and one
of our Controlling Shareholders
“Mr. Li” Mr. Li Chenghua (ശ ), an executive Director and one
of our Controlling Shareholders
“Nomination Committee” the nomination committee of our Board
DEFINITIONS
–2 9–


--- page 38 ---
“Offer Price” the final offer price per Offer Share in Hong Kong dollars
(exclusive of brokerage of 1%, SFC transaction levy of
0.0027%, Stock Exchange trading fee of 0.00565% and
AFRC transaction levy of 0.00015%) of not more than
HK$0.40 and expected to be not less than HK$0.32 per
Offer Share, to be agreed between us (for ourselves and
on behalf of our Selling Shareholders) and the Sole
Overall Coordinator and the Joint Global Coordinators
(for themselves and on behalf of the Underwriters) on the
Price Determination Date
“Offer Share(s)” 414,375,000 Shares being offered by our Company for
subscription at the Offer Price under the Share Offer
“Panyu Administration for Market
Regulation”
Administration for Market Regulation of Panyu District of
Guangzhou City of the PRC* (ਜ̹ఙ္
ຖ၍ଣ҅ )
“person” any individual, corporation, partnership, limited
partnership, proprietorship, association, limited liability
company, firm, trust, estate or other enterprise or entity
“Placing” the conditional placing of the Placing Shares by the
Placing Underwriters at the Offer Price in Hong Kong, as
further described in the paragraph headed “Structure and
conditions of the Share Offer – The Placing” of this
prospectus
“Placing Shares” the 372,937,500 Offer Shares comprising 332,312,500 new
Shares and 40,625,000 Sale Shares initially being offered
by our Company and our Selling Shareholders,
respectively, for subscription at the Offer Price under the
Placing
“Placing Underwriter(s)” the underwriter(s) that is/are expected to enter into the
Placing Underwriting Agreement to underwrite the Placing
Shares
DEFINITIONS
–3 0–


--- page 39 ---
“Placing Underwriting Agreement” the underwriting agreement expected to be entered into on
or around the Price Determination Date among our
Company, Mr. Li and Mr. Chen (as executive Directors),
our Controlling Shareholders, our Selling Shareholders,
the Sole Sponsor, the Sole Overall Coordinator, the Joint
Global Coordinators, the Joint Bookrunners, the Joint
Lead Managers and the Placing Underwriter(s) relating to
the Placing
“PRC government” the government of the PRC including all governmental
subdivisions (including provincial, municipal and other
regional or local government entities) and their
instrumentalities thereof or, where the context requires,
any of them
“PRC Legal Advisers” China Commercial Law Firm, a qualified PRC law firm as
the PRC legal advisers of our Company as to the laws of
the PRC for the Listing
“Pre-IPO Investment” investment by our Pre-IPO Investor as further described in
the paragraph headed “History, Reorganisation and Group
structure – Pre-IPO Investment” of this prospectus
“Pre-IPO Investor” or “Mr. Tam” Mr. Tam Y at Kin Ken ( ᗈ˚਄ ), an Independent Third
Party
“Price Determination Agreement” the agreement to be entered into between our Company
(for ourselves and on behalf of our Selling Shareholders)
and the Sole Overall Coordinator and the Joint Global
Coordinators (for themselves and on behalf of the
Underwriters) on or before the Price Determination Date
to record and fix the Offer Price
“Price Determination Date” the date on which the final Offer Price is to be determined
by our Company (for ourselves and on behalf of our
Selling Shareholders) and the Sole Overall Coordinator
and the Joint Global Coordinators (for themselves and on
behalf of the Underwriters), which is expected to be on or
about Friday, 1 December 2023 or such later date as may
be agreed between our Company (for ourselves and on
behalf of our Selling Shareholders) and the Sole Overall
Coordinator and the Joint Global Coordinators (for
themselves and on behalf of the Underwriters)
DEFINITIONS
–3 1–


--- page 40 ---
“Prosperity Cleanness” Prosperity Cleanness Investment Holdings Limited ( ᔮସ
ʮ̡ ), a company incorporated in the
BVI with limited liability on 10 December 2020 and
wholly-owned by Mr. Li, being one of our Controlling
Shareholders
“Public Offer” the offer to the public in Hong Kong for subscription of
the Public Offer Shares at the Offer Price, on and subject
to the terms and conditions stated in this prospectus, as
further described in the section headed “Structure and
conditions of the Share Offer” of this prospectus
“Public Offer Shares” the 41,437,500 Offer Shares being initially offered by us
for subscription at the Offer Price under the Public Offer
(subject to reallocation as described in the section headed
“Structure and conditions of the Share Offer” of this
prospectus)
“Public Offer Underwriter(s)” the underwriter(s) of the Public Offer, whose name(s) are
set out in the paragraph headed “Underwriting – Public
Offer Underwriters” of this prospectus
“Public Offer Underwriting
Agreement”
the underwriting agreement dated 24 November 2023
entered into among our Company, Mr. Li and Mr. Chen
(as executive Directors), our Controlling Shareholders, the
Sole Sponsor, the Sole Overall Coordinator, the Joint
Global Coordinators, the Joint Bookrunners, the Joint
Lead Managers and the Public Offer Underwriters relating
to the Public Offer
“Regulation S” Regulation S under the U.S. Securities Act
“Relevant Person(s)” the Sole Sponsor, the Sole Overall Coordinator, the Joint
Global Coordinators, the Joint Bookrunners, the Joint
Lead Managers, the Underwriters, any of their or the
Company’s respective directors, officers, employees,
partners, agents, advisers and any other parties involved
in the Share Offer
“Remuneration Committee” the remuneration committee of our Board
“Renminbi” or “RMB” Renminbi, the lawful currency of the PRC
DEFINITIONS
–3 2–


--- page 41 ---
“Reorganisation” the corporate reorganisation of our Group in preparation
for the Listing, details of which are set out in the
paragraph headed “History, Reorganisation and Group
structure – Reorganisation” of this prospectus
“SAFE” the State Administration of Foreign Exchange of the PRC
(̮ි၍ଣ҅ )
“SAIC” the State Administration for Industry and Commerce of
the PRC (၍ଣᐼ҅ ), which
was changed to the State Administration for Market
Regulation (̹ఙ္ຖ၍ଣᐼ҅ ) pursuant to the
Circular of the State Council on Establishment of
Institutions* (ٝGuo Fa 2018
No. 6) issued by the State Council on 22 March 2018,
and, if the context requires, includes its successor, the
State Administration for Industry and Commerce of the
PRC
“Sale Shares” the 40,625,000 Shares to be offered by our Selling
Shareholders for sale at the Offer Price under the Placing
“SAMR” the State Administration for Market Regulation of the
PRC (̹ఙ္ຖ၍ଣᐼ҅ ) or its local
branch
“SA T” the State Administration of Taxation of the PRC ( ʕശɛ
೼ਕᐼ҅ )
“Selling Shareholders” Prosperity Cleanness and Sunrise Cleanness, each being a
Controlling Shareholder
“SFC” the Securities and Futures Commission of Hong Kong
“SFO” the Securities and Futures Ordinance (Chapter 571 of the
Laws of Hong Kong), as amended, supplemented and/or
otherwise modified from time to time
DEFINITIONS
–3 3–


--- page 42 ---
“Shaanxi Shenghui” Shaanxi Shenghui Cleanness Services Co., Ltd.* ( ৯Гʺ
ʮ̡ ), a limited liability company
established in the PRC on 6 April 2017, which was owned
by Guangzhou Shenghui as to 25% and three Independent
Third Parties, namely Mr. Zhou Xiang ( մୂ), Mr. Zhang
Jun (ࠏand Mr. Liang Guohui ( ૑਷ฯ )a st o3 5 % ,
20% and 20% respectively, prior to our Reorganisation.
Upon completion of our Reorganisation, Shaanxi Shenghui
was owned as to 45%, 35% and 20% by Mr. Liang Guohui
(૑਷ฯ ), Mr. Zhou Xiang ( մୂ) and Mr. Zhang Jun ( ੵ
ࠏrespectively and Guangzhou Shenghui ceased to hold
any equity interest in Shaanxi Shenghui
“Shandong Shenghui” Shandong Shenghui Cleanness Service Co., Ltd.* (ʺ
ʮ̡ ), a company established in the PRC
with limited liability on 28 September 2016, which is
wholly-owned by Jinan Shenghui. Upon completion of our
Reorganisation, Guangzhou Shenghui ceased to hold any
equity interest in Shandong Shenghui
“Share(s)” ordinary share(s) with a nominal value of HK$0.01 each
in the share capital of our Company, which are to be listed
on the Stock Exchange and traded in Hong Kong dollars
“Share Offer” the Public Offer and the Placing
“Share Option Scheme” the share option scheme conditionally adopted by our
Company on 14 November 2023, a summary of the
principal terms of which is summarised in the paragraph
headed “E. Share Option Scheme” in Appendix V to this
prospectus
“Shareholder(s)” holder(s) of Shares
“Shenghui Cleanness (Beijing)” Shenghui Cleanness (Beijing) Limited* ( ʺሾ૶ᆎ (̏
ԯ)ʮ̡ ), a limited liability company established in
the PRC on 20 July 2023, a direct wholly-owned
subsidiary of Guangzhou Shenghui and an indirect
wholly-owned subsidiary of the Company
“Shenghui Cleanness (BVI)” Shenghui Cleanness (BVI) Limited ( ʺሾ૶ᆎ (᙮ၪဧԯ
ࢥ)ʮ̡ ), a company incorporated in the BVI with
limited liability on 18 January 2021 and a direct
wholly-owned subsidiary of our Company upon
completion of our Reorganisation
DEFINITIONS
–3 4–


--- page 43 ---
“Shenghui Cleanness (HK)” Shenghui Cleanness (HK) Limited ( ʺሾ૶ᆎ (ಥ)ʮ
̡), a company incorporated in Hong Kong with limited
liability on 27 January 2021 and an indirect wholly-owned
subsidiary of our Company upon completion of our
Reorganisation
“Sole Overall Coordinator” Cinda International Capital Limited (ʮ
̡), the sole overall coordinator for the Listing and a
corporation licensed under the SFO to carry out Type 1
(dealing in securities) and Type 6 (advising on corporate
finance) regulated activities
“Sole Sponsor” or “Cinda
International”
Cinda International Capital Limited (ʮ
̡), the sole sponsor for the Listing and a corporation
licensed under the SFO to carry on Type 1 (dealing in
securities) and Type 6 (advising on corporate finance)
regulated activities
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“Subscriber Share” the initial one nil-paid subscriber Share in our Company
subscribed by Conyers Trust Company (Cayman) Limited
“Subscription Agreement” the subscription agreement dated 9 February 2021 and
entered into among Dash Dazzling, Prosperity Cleanness,
Sunrise Cleanness, our Company, Mr. Li and Mr. Chen,
pursuant to which Dash Dazzling agreed to subscribe and
our Company agreed to allot and issue to it 30 Shares at a
consideration of RMB4,000,000 (equivalent to
HK$4,800,000), and each of Prosperity Cleanness and
Sunrise Cleanness agreed to subscribe and our Company
agreed to allot and issue to each of them 484 Shares, and
credited as fully paid the Subscriber Share and the one
nil-paid Share held by Sunrise Cleanness, in consideration
of the payment of HK$5 by each of them
“subsidiary(ies)” has the meaning ascribed to it under the Companies
Ordinance
“Substantial Shareholder(s)” has the meaning ascribed to it under the Listing Rules
and, for the purpose of this prospectus, refers to our
Shareholders disclosed in the section headed “Substantial
Shareholders” of this prospectus or, where the context so
requires, any one of them
DEFINITIONS
–3 5–


--- page 44 ---
“Sunrise Cleanness” Sunrise Cleanness Investment Holdings Limited ( ˚̈૶ᆎ
ʮ̡ ), a company incorporated in the BVI
with limited liability on 10 December 2020 and
wholly-owned by Mr. Chen, and being one of our
Controlling Shareholders
“Takeovers Code” The Codes on Takeovers and Mergers and Share
Buy-backs issued by the SFC, as amended, supplemented
and/or otherwise modified from time to time
“Track Record Period” the period comprising the financial years ended 31
December 2020, 2021, 2022 and the six months ended 30
June 2023
“Underwriters” the Public Offer Underwriters and the Placing
Underwriters
“Underwriting Agreements” the Public Offer Underwriting Agreement and the Placing
Underwriting Agreement
“U.S. dollars”, “USD” or “US$” U.S. dollars, the lawful currency of the United States of
America
“U.S.” or “United States” the United States of America
“Wuhan Chuangsheng” Wuhan Chuangsheng Environmental Technology Co.,
Ltd.* (ʮ̡ ), a company
established in the PRC with limited liability on 5
November 2007, which is owned by Mr. Chen as to 30%,
and three Independent Third Parties, namely Mr. Zhang
Xiaonan (ی“() Mr. Zhang ”), Mr. Sun Dalu (ɽ༩ )
and Ms. Zhou Chunfang (ٹ݆as to 50%, 15% and 5%
respectively during the Track Record Period. Mr. Zhang
and Mr. Chen transferred their entire shareholdings of
50% and 30% respectively to Wuhan Hechang Mechanical
Equipment Manufacture Company Limited* (ዚ
ʮ̡ ) on 21 September 2022
“Xinhui Capital Contribution
Agreement”
the capital contribution agreement ( ᄣ༟՘ᙄ ) dated 28
January 2021 and entered into among Guangzhou Xinhui,
Guangzhou Shenghui and our Pre-IPO Investor, pursuant
to which our Pre-IPO Investor obtained 3% of the
enlarged equity interest of Guangzhou Xinhui at a
consideration of RMB247,423
DEFINITIONS
–3 6–


--- page 45 ---
“Zhengzhou Branch” Guangzhou Shenghui Cleanness Service Co., Ltd.
Zhengzhou Branch* (ʮ̡ቍψ
ʱʮ̡ ), a branch company of Guangzhou Shenghui
established in Jinshui District, Zhengzhou municipality on
31 May 2023
“Zhujiang Sanitation” Guangzhou Panyu Nancun Qikai Construction
Engineering Services Department* (Ӏ
ਕ௅ ) (formerly known as Guangzhou
Panyu Nancun Zhujiang Sanitation Cleaning Services
Department* (ਕ௅ )i s
a sole proprietorship established in the PRC on 28 April
1999 with Mr. Chen as the sole proprietor
“%” per cent
Unless expressly stated or the context requires otherwise:
 all dates and times in this prospectus refer to Hong Kong time unless otherwise stated.
 all data in this prospectus is as at the Latest Practicable Date.
 all references to any shareholdings in our Company assume no exercise of the options
to be granted under the Share Option Scheme unless otherwise specified.
 For ease of reference, the names of the PRC established companies, entities, laws and
regulations have been included in this prospectus in both Chinese and English. The
name in Chinese is the official name of each such company, entity, law or regulation
(as the case may be), while that in English is only an unofficial translation, and in the
event of any inconsistency, the Chinese name shall prevail.
* For identification purpose only
DEFINITIONS
–3 7–


--- page 46 ---
This glossary contains definitions of certain terms used in this prospectus in connection
with our Company and our business. Some of these may not correspond to standard industry
definitions or usage of these terms.
“CAGR” Compound Annual Growth Rate
“ISO” an acronym for a series of quality management and
quality assurance standards published by International
Organisation for Standardisation, a non-government
organisation based in Geneva, Switzerland, for assessing
the quality systems of business organisations
“ISO9001” ISO 9001 is an internationally recognised standard for a
quality management system. It aims at the effectiveness of
the quality management system in meeting customer
requirements. It prescribes requirements for ongoing
improvement of quality assurance in design, development,
production, installation and servicing
“ISO14001” ISO 14001 is an internationally recognised standard for
the environmental management of businesses. It aims at
recognising the desirable behaviour of businesses
concerning the environment. It prescribes controls for an
encompassing range of corporate activities which include
the use of natural resources, handling and treatment of
waste and energy consumption
“ISO45001” ISO45001 is an internationally recognised standard for the
occupational health and safety management systems. It
specifies requirements for an occupational health and
safety management system to enable an organisation to
develop and implement a policy and objectives which take
into account legal requirements and information about
occupational risks and to improve their occupational
safety and health performance
“provincial-level regions” provincial-level regions include provinces, municipalities
and autonomous regions of the PRC
“public spaces” any urban and rural public areas (other than properties)
that are accessible by the public
“sq.m.” square metre
GLOSSARY OF TECHNICAL TERMS
–3 8–


--- page 47 ---
This prospectus contains forward-looking statements that are, by their nature, subject to
significant risks and uncertainties. The forward-looking statements are contained principally in
the sections headed “Summary”, “Risk factors”, “Industry overview”, “Business”, “Financial
information” and “Future plans and use of proceeds” of this prospectus. These statements relate
to events that involve known and unknown risks, uncertainties and other factors, including those
listed under the section headed “Risk factors” of this prospectus, which may cause our actual
results, performance or achievements to be materially different from performance or
achievements expressed or implied by the forward-looking statements. These forward-looking
statements include, without limitation, statements relating to:
 our business strategies and operating plans to achieve these strategies;
 our future business development, financial condition and results of operation;
 our capital expenditure and expansion plans;
 our dividend policy;
 our ability to retain senior management team members and recruit qualified and
experienced new team members;
 our ability to maintain good relationships with business partners;
 our ability to identify and successfully take advantage of new business development
opportunities;
 general economic, political and business conditions in the industry and markets in
which we operate;
 the regulatory environment and industry outlook for the industry and markets in which
our Group operates;
 the actions and development of our competitors; and
 our views with respect to future events, operations or performance.
FORW ARD-LOOKING STATEMENTS
–3 9–


--- page 48 ---
The words “aim”, “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “going
forward”, “intend”, “may”, “might”, “ought to”, “plan”, “potential”, “predict”, “seek”, “should”,
“will”, “would” and the negative of these words and other similar expressions, as they relate to
us, are intended to identify a number of these forward-looking statements. These
forward-looking statements reflect our current views with respect to future events and are not a
guarantee of future performance. Actual results may differ materially from information contained
in the forward-looking statements as a result of a number of uncertainties and factors, including
but not limited to:
 any changes in the laws, rules and regulations of the central and local governments in
the PRC relating to any aspect of our business or operations;
 general economic, market and business conditions in China;
 macroeconomic policies of the PRC government;
 inflationary pressures or changes or volatility in interest rates, foreign exchange rates
or other rates or prices;
 various business opportunities that we may pursue; and
 the risk factors discussed in this prospectus as well as other factors beyond our
control.
Subject to the requirements of applicable laws, rules and regulations, we do not have any
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 information. All forward-looking statements
contained in this prospectus are qualified by reference to the cautionary statements set forth in
this section as well as the risks and uncertainties discussed in the section headed “Risk factors”
of this prospectus.
FORW ARD-LOOKING STATEMENTS
–4 0–


--- page 49 ---
You should carefully consider all of the information in this prospectus, including the
risks and uncertainties described below, before making an investment in the Offer Shares. Our
business, financial condition, results of operations and prospects could be materially and
adversely affected by any of the following risks. Any of the risks and uncertainties described
below could have a material adverse effect on our business, results of operations, financial
condition or the trading price of the Shares, and could cause you to lose all or part of your
investment. Additional risks and uncertainties that are not presently known to us or that we
currently deem immaterial may arise or become material in the future and may have a
material adverse effect on our Group.
Our operations involve certain risks and uncertainties, some of which are beyond our
control. These risks can be broadly categorised into: (i) risks relating to our business and
industry; (ii) risks relating to doing business in the PRC; (iii) risks relating to the Share Offer
and our Shares, and (iv) risks relating to statements in the prospectus. Y ou should consider the
performance and prospects of our business in the light of these risks and uncertainties.
RISKS RELATING TO OUR BUSINESS AND INDUSTRY
We generally secure our major contracts with customers through a competitive process and
there is no guarantee that our customers will award new contracts to us in the future or
that we will be able to secure contracts on commercially attractive terms.
Given that our customers typically award contracts with a higher contract sum through a
competitive process, we generally secure our major contracts with customers through the tender
process. Most of our revenue is derived from contracts awarded through competitive tendering
and for the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June
2023, the percentage of our revenue derived from projects from tendering was approximately
93.2%, 91.7%, 92.8%, 92.5% and 95.2%, respectively. In the event of direct engagement by our
customers, we may still need to submit quotation proposals attractive enough to our customers in
the event they are seeking quotes from multiple service providers. In both tender and direct
engagement cases, the relevant customer contract may require certain qualifications to be held
by the service providers. Therefore, in order to maintain or expand our business, we have to be
qualified for such tenders and quotation submissions as well as submit competitive bids. There is
no guarantee that we can successfully obtain contracts in the future as it is subject to our ability
to meet the requirements imposed by our customers and offer competitive bids. If we are unable
to fully satisfy customers’ requirements and submit tenders and quotations on terms that are
commercially attractive enough, we may be unable to secure new contracts and our business
operations, financial results and profitability may be materially and adversely affected.
RISK FACTORS
–4 1–


--- page 50 ---
For the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June
2022 and 2023, our tender success rate was approximately 33.8%, 28.1%, 50.8%, 39.2% and
48.3%, respectively, for all tenders and approximately 87.0%, 73.5%, 77.3%, 81.0% and 78.7%,
respectively, for tenders involving new contracts for existing projects. Our past tender success
rates were affected by our tender strategy to prioritise bidding for contracts involving our
existing projects as well as contracts offered by existing customers, but, subject to available
resources, we also bid for a relatively large number of contracts we find attractive each year (for
further details of our tender strategy, please refer to the section headed “Business – Operation
flow – Tender strategy, tender success rate and overall contracts awarded” of this prospectus).
There is no guarantee that our tender strategy will not change or that we will be able to maintain
the above tender success rates. Even if we succeed in maintaining or increasing our tender
success rates, there is no assurance that the terms and conditions of the new service contracts
will be comparable to our previous contracts and on commercially attractive terms. If we are
unable to identify and secure sufficient new contracts on commercially attractive terms, our
financial results and prospects may be materially and adversely affected and as such, our
historical performance may not be indicative of our future performance.
Our projects are subject to risks such as cost overrun, reduction in service scope and early
termination.
Our projects are subject to risks such as cost overrun, reduction in service scope and early
termination. Cost overrun may occur from (i) inaccurate estimation of costs; (ii) change in local
government regulations and policies; (iii) change in economic conditions; (iv) change in industry
trends; and (v) other unforeseen circumstances. When we submit tenders or quotations to our
customers, we generally determine our price after considering various factors including the
timetable and our overall expected costs to complete the contract, such as costs for procuring
consumables, equipment and services from suppliers. Each service contract usually sets out a
fixed contract period but the contract sum may be a fixed amount, a variable amount or a
combination of both. We generally do not have any price adjustment mechanisms in our service
contracts and if we fail to estimate the costs accurately and ensure an appropriate profit margin,
we may suffer cost overrun or even losses on the service contracts.
Other risks for our projects include early termination and reduction in service scope of
individual service contracts. According to the terms and conditions of service contracts, our
customers might terminate our service contracts by serving written notice to us if, for example,
we are in breach of the terms and conditions of the service contracts or in some cases through a
specific period of prior notice. During the course of our projects and subject to the specific
terms of the relevant contracts, certain customers may also request to reduce their scope of our
services than previously discussed due to unforeseen circumstances. We cannot assure that our
customers will not terminate our service contracts prior to the end of the contract period or
reduce our service scope during the course of the service period. In the event of the occurrence
of the above risks, our business operations, financial results and profitability may be materially
and adversely affected.
RISK FACTORS
–4 2–


--- page 51 ---
Market opportunities arising out of the COVID-19 outbreak may not be sustainable. Any
material negative development of COVID-19 and any other unforeseeable market
circumstances such as the occurrence of a natural disaster, economic changes and any other
incidents may affect our business, financial conditions and results of operations.
The rising public awareness and standard of hygiene during the COVID-19 pandemic has
boosted demand for our cleaning and maintenance services, as reflected in the steady increase in
the number of our projects and increasing revenue during the Track Record Period. According to
the Industry Report, even at the post-pandemic stage, the growing demand in the cleaning and
maintenance service market in the PRC is anticipated to continue. However, there is no
guarantee that we can effectively compete and capture the emerging business opportunities in the
market given the highly competitive nature of the industry and that such expected growth will
sustain.
Apart from an epidemic or outbreak of communicable diseases such as COVID-19, any
occurrence of other unforeseeable circumstances, such as natural disasters, economic changes
and any other incidents may adversely affect our business, prospects, financial conditions and
results of operations. For further details of the effects of COVID-19 on our business and
operations up to the Latest Practicable Date, please refer to the section headed “Business –
Impact of COVID-19” of this prospectus. Our revenue and profitability may be materially
affected if any health epidemic or virus outbreak affects the overall economic and market
conditions.
There is no guarantee that our business strategies and future plans will be successfully
implemented or bring us the amount of revenue or other benefits as planned.
In the past, we have adopted business strategies in pursuit of new business opportunities
such as through establishment of branch offices. Going forward, our business strategies include
expansion of our geographic presence in the PRC through establishment of new branch offices
and strategic acquisitions, strengthening of our capabilities to capture opportunities in the public
space cleaning sector and adoption of new technological advances in our industry including the
purchase of cleaning robots, as detailed in the section headed “Business – Business strategies”
of this prospectus. Our business strategies or other future plans from time to time and the
implementation thereof will involve additional investments and involvement of our staff and use
of our time and other resources. However, they are formulated based on certain assumptions, and
the successful implementation thereof may be affected by a number of factors including the
availability of sufficient funds, government policies relevant to and affecting our industry,
micro- and macro-economic conditions, our ability to maintain our existing competitive
strengths and our business relationships with customers, and the threat of established
competitors and/or new market entrants. There is no assurance that our business strategies and
future plans can be successfully implemented or bring us the amount of revenue or other benefits
as planned. If they do not succeed as anticipated, our business, financial performance and
prospects may be materially and adversely affected.
RISK FACTORS
–4 3–


--- page 52 ---
We recorded negative operating cash flows for the six months ended 30 June 2023 which
may materially and adversely affect our business, financial condition, results of operations
and growth prospects.
For the six months ended 30 June 2023, we recorded net cash outflow in operating
activities of approximately RMB4.7 million, primarily due to the increase in account
receivables. For details, please refer to the section headed “Financial Information – Working
capital sufficiency” in this prospectus. We cannot assure that we will not experience periods of
net cash outflow from operating activities in the future. If we continue to record net operating
cash outflow in the future, our working capital may be constrained, which may materially and
adversely affect our business, financial condition, results of operations and growth prospects.
Our depreciation expenses may increase as a result of the capital expenditure in connection
with our business strategies and expansion plans which may materially and adversely affect
our business, financial position and prospects.
During the years ended 31 December 2020, 2021 and 2022 and the six months ended 30
June 2022 and 2023, our depreciation expenses were approximately RMB3.4 million, RMB3.8
million, RMB3.7 million, RMB1.8 million and RMB1.9 million, respectively. Our depreciation
expenses may increase as a result of the capital expenditure in connection with our business
strategies and expansion plans such as intended purchase of additional machinery, equipment and
specialised vehicles (including for garbage collection and for waste suction with vehicle
treatment capabilities) which will be funded wholly or partly by the net proceeds from the Share
Offer (for further detail, please refer to the section headed “Future plans and use of proceeds” of
this prospectus).
There is no assurance that we will be able to obtain new projects due to our business
strategies and expansion plans or that there will be a satisfactory increase in our operational and
financial performance as a result from the above. If we are unable to successfully increase our
profitability after such planned capital expenditures, our business, financial position and
prospects may be materially and adversely affected.
Our business operations are labour-intensive, and labour shortages and labour strikes may
materially and adversely affect our reputation and business operation.
As our business operation is labour-intensive, it is important to retain and attract suitable
employees for our business operation and otherwise maintain a good relationship with them. As
at 30 June 2023, we had 7,121 employees, 7,078 of whom were involved in operations.
According to the Industry Report, one of the major challenges facing the environmental cleaning
and maintenance industry is labour shortage. We cannot assure you that we will not face labour
shortages in the future. In addition, we may encounter material disputes with our employees
resulting in labour strikes or our relationships with them may otherwise deteriorate. If we
experience labour shortage, labour strikes or our relationships with our employees deteriorate,
we may be unable to deliver quality services or otherwise meet our contractual obligations. In
such events, our reputation and business operation may be materially and adversely affected.
RISK FACTORS
–4 4–


--- page 53 ---
We may be liable for any substandard service or misconduct of our employees and third
party service providers and we may incur substantial costs to remedy any defects caused by
them.
In the performance of our services, we rely on our employees, such as operations staff, and
our third party service providers, such as subcontractors, to carry out our services (for further
details, please refer to the section headed “Business – Our suppliers” of this prospectus). Our
project management centre and procurement department are responsible for monitoring and
liaising with our employees and our third party service providers, respectively, and monitoring
the service quality in our projects. However, we may not be effective in monitoring and
managing our employees’ and third party service providers’ actions at all times and there is a
risk that the services rendered by them will not be completed in a timely manner or of
satisfactory quality or that they will commit misconduct. If the services rendered by them are
not timely delivered or of acceptable quality or they commit any misconduct, we cannot assure
you that we will be able to remedy such situations such as providing suitable alternative
arrangements to undertake the remedial work on commercially acceptable terms or at all. As a
result, we may incur substantial costs to remedy the circumstances. Furthermore, if any of our
third party service providers experience financial or other difficulties, including labour disputes
with their respective workers, they may be unable to arrange their workers to carry out work
required on time or at all. This may lead to legal proceedings against us, resulting in negative
impact on our reputation and in additional costs incurred. The occurrence of any of these events
may materially and adversely affect our business, results of operations and reputation.
Our profitability depends on our ability to control our operating costs, in particular,
employee benefit expenses and subcontracting labour costs, and there is no assurance that
such costs will not increase in the future.
Given that our business operation is labour-intensive, a significant portion of our operating
costs comprises employee benefit expenses and subcontracting labour costs. For the years ended
31 December 2020, 2021 and 2022 and the six months ended 30 June 2023, our employee
benefit expenses recorded in our cost of services were approximately RMB208.8 million,
RMB254.5 million, RMB291.9 million, RMB142.4 million and RMB151.1 million, representing
approximately 54.1%, 53.7%, 58.4%, 58.5% and 60.2% of our cost of services, respectively.
Employee benefit expenses recorded in our administrative expenses amounted to approximately
RMB23.3 million, RMB30.3 million, RMB32.1 million, RMB14.6 million and RMB14.8 million,
representing approximately 69.2%, 67.3%, 62.9%, 54.8% and 61.8% of our administrative
expenses, respectively. We have also outsourced certain general cleaning, high-altitude cleaning,
water cleaning services and waste collection and transportation services which require the usage
of waste suction vehicles to third party service providers. For the years ended 31 December
2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023, we incurred
subcontracting labour costs of approximately RMB149.9 million, RMB188.9 million, RMB172.9
million, RMB84.4 million and RMB85.9 million, representing approximately 38.9%, 39.8%,
34.6%, 34.7% and 34.3% of our cost of services, respectively. For relevant sensitivity analysis,
please refer to the section headed “Financial information – Key factors affecting our results of
operations and financial condition – Our ability to mitigate the impact of employee benefit
RISK FACTORS
–4 5–


--- page 54 ---
expenses and subcontracting labour costs” of this prospectus. Our employee benefit expenses is
impacted by our strategy to offer attractive remuneration packages and bonuses to our workers.
In the future, our employee benefit expenses and subcontracting labour costs may be affected by
further increases in the size of our workforce, the costs charged by our third party service
providers and the prescribed minimum wage and employee benefits in the provinces or regions
which we operate. Our profitability is largely affected by our ability to control our operating
costs, in particular, employee benefit expenses and subcontracting labour costs. We expect our
employee benefit expenses to increase as we intend to hire additional staff in connection with
our business strategies and expansion plans and there is no assurance that our other operating
costs will not further increase in the future. If we are unable to control our operating costs or
successfully pass on the cost impact to our customers, we may be unable to maintain our
profitability and our business, financial condition and results of operation may be materially and
adversely affected.
We had certain historical non-compliance incidents which may result in the relevant
regulatory authorities imposing fines or other penalties on us or other negative
consequences.
During the Track Record Period, we were not in full compliance with certain PRC laws and
regulations leading to certain historical non-compliance incidents. Under the relevant PRC laws
and regulations, we are required to make social insurance and housing provident fund
contributions for our employees participating in social insurance and housing provident and who
are eligible for the benefits under such schemes. During the Track Record Period, we did not
make full social insurance and housing provident fund contributions for all eligible employees.
As advised by our PRC Legal Advisers, in respect of outstanding social insurance contributions,
the relevant PRC authorities may demand that we pay the outstanding social insurance within a
stipulated deadline and we may be liable to a late payment fee equal to 0.05% of the outstanding
amount for each day of delays; if we fail to make such payments, we may be liable to a fine of
one to three times the amount of the outstanding contributions. In respect of the outstanding
housing provident fund contributions, we may be required by the relevant PRC authorities to pay
the outstanding amount to the housing provident funds within a prescribed time frame. If the
payment is not made within such time limit, an application may be made to the PRC courts for
compulsory enforcement. We made provisions in the total amount of approximately RMB2.9
million, nil, nil and nil for the years ended 31 December 2020, 2021 and 2022 and the six
months ended 30 June 2023, respectively, in respect of our failure to make adequate social
insurance and housing provident fund contributions. In addition, during the Track Record Period,
we did not obtain the relevant qualification for a specific project in a timely manner prior to
entering into the contract in accordance with the relevant PRC laws and regulations. As advised
by the PRC Legal Advisers, the relevant authority may order cessation of the illegal activity,
impose a fine of 2% to 4% of the contract sum, and confiscate the illegal income, if any.
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For further details, please refer to the section headed “Business – Historical
non-compliance incidents” of this prospectus. We cannot assure you that we will not be subject
to any order in the future to rectify the above or other non-compliance incidents or that we will
not be fined, or be subject to other penalties or negative consequences in connection thereto. If
the above were to occur, it may materially and adversely affect our reputation, business,
financial condition and results of operation.
We may experience delays or defaults in payments from our customers which may
materially and adversely affected our business, results of operations and financial position.
We are subject to the credit risks of our customers. Typical credit period granted by us to
our customers during the Track Record Period generally ranged from 30 days to 110 days and
for the years ended 31 December 2020, 2021 and 2022 and six months ended 30 June 2023, our
average trade receivables turnover days were 99.8 days, 103.0 days, 121.7 days and 143.4 days,
respectively. As at 31 December 2020, 2021 and 2022 and 30 June 2023, our trade receivables
amounted to approximately RMB142.4 million, RMB175.6 million, RMB220.8 million and
RMB252.0 million, respectively. Approximately 8.0%, 6.2%, 3.3% and 0.5% of such trade
receivables are owed by Customer A, one of our five largest customers for the year ended 31
December 2020 during the Track Record Period (for further details of this customer, please refer
to the section paragraph “Business – Our customers” of this prospectus). There is no guarantee
that all of our customers will settle payment as it falls due in a timely manner or at all. Delays
or defaults in settling payments of our service fees by our customers may affect our cash flows
and increase pressure on our working capital. As at 31 December 2020, 2021 and 2022 and 30
June 2023, allowance for impairment of trade receivables amounted to approximately RMB6.7
million, RMB9.1 million, RMB13.3 million and RMB18.2 million, respectively. We measure the
loss allowances for trade receivables using the simplified approach in HKFRS 9, which applies a
lifetime expected credit loss model and assesses trade receivables for impairment on a collective
group basis based on their historical default rates, past collection information and ageing
profiles by using a provision matrix. If any of our customers becomes insolvent or delays or
defaults on its payment of our service fees, our business, results of operations and financial
position may be materially and adversely affected.
Our frontline workers are exposed to certain risks and there is no guarantee that our
occupational health and safety management system and safety measures will successfully
prevent accidents from occurring or that our frontline workers will fully comply with such
system and measures.
Our frontline workers, who includes our employees and our third party service providers,
may be required to perform certain tasks such as working at high altitudes or on slippery floor,
being exposed to electrical equipment and moving vehicles, working in environments containing
dust, viruses or bacteria and working with cleaning chemicals such as bleach and detergents and
corrosive or inflammable chemicals. As such, our frontline workers are exposed during the
course of operation to certain risks of injury, contracting disease or in extreme cases, even death.
Due to the workers’ age or individual health conditions, they might also be more susceptible to
death or injuries such as heart attack or even be the cause of accidents.
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There is no guarantee that our occupational health and safety management system and
safety measures will successfully prevent accidents from occurring or that our workers will fully
comply with such system or measures. During the Track Record Period, we had one fatal
accident involving an employee falling from the ninth floor of a building and which resulted in
the relevant regulatory authority imposing a fine of RMB230,000 on us (for further details,
please refer to the section headed “Business – Environmental, occupational health and safety –
Occupational health and safety” of this prospectus). If we cannot protect our workers from
injuries or death as a result of accidents or contracting occupational diseases arising out of and
in the course of their performance of work, we may be subject to claims from our frontline
workers or their families or be fined or penalised by relevant regulatory authorities. In addition,
if our frontline workers fail to comply with our occupational health and safety management
system and safety measures and a third party gets injured due to their misconduct, we may be
held vicariously liable for and face legal proceedings in connection with the conduct of such
frontline workers. If the above were to occur, it may materially and adversely affect our
business, financial condition, results of operations and reputation.
We may be involved in legal and other disputes from time to time arising out of our
operations and they may materially and adversely affect our business, financial condition
and results of operations.
We may from time to time be involved in legal or other disputes with various parties in our
operations, including our subcontractors, suppliers, employees or other third parties. These
disputes may arise from circumstances including accidents which occur on our project sites,
treatment of workers, allegations by us or third parties against us for breaches of contracts or
intellectual property rights such as in connection with the use of certain software. Disputes may
lead to protests, claims and legal or other proceedings, which in turn may result in damage to
our reputation, substantial costs to our operations, and diversion of our management’s attention.
During the Track Record Period and up to the Latest Practicable Date, we have not been
involved in any litigation or arbitration of material importance that would have a material
adverse effect on our business, financial position or results of operations. However, we cannot
assure you that we will not be involved in any major legal or other proceedings in the future.
Any involvement on these disputes may materially and adversely affect our reputation, business,
financial condition and results of operations.
There is no guarantee that our insurance coverage will adequately cover the risks related to
our business and operations and that our insurance expenses will not rise.
We maintain insurance policies that are required under the PRC laws and regulations
including pension insurance, work-related injury insurance, medical insurance, unemployment
insurance and maternity insurance. We also maintain public liability insurance to cover liabilities
for damages suffered by third parties arising out of our business operations such as in car
accidents which may result in personal injury and/or property damage. We do not have insurance
coverage for certain matters such as losses arising from acts of war or terrorism due to lack of
availability or due to the reasonableness of the costs of such coverage. There is no guarantee
that our insurance coverage will adequately cover the risks related to our business or operations.
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In addition, we may not be able to renew these insurance policies on similar terms, if at all.
Furthermore, given our large and growing workforce, our insurance expenses approximately
RMB4.6 million, RMB2.3 million, RMB3.7 million, RMB2.0 million and RMB1.0 million, for
the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and
2023, respectively. If we suffer any losses, damages or liabilities in the course of our business
operations arising from events for which we do not have any or adequate insurance cover, we
have to bear such losses, damages or liabilities. If our insurance expenses rise, we may need to
increase our prices or otherwise manage such costs which may negatively impact our
competitiveness. If such events were to occur, our business operations and financial results may
be materially and adversely affected.
During the Track Record Period, we relied on certain major suppliers (including our
subcontractors) to assist us and major changes to our relationship could result in a
material and adverse impact on our business, profitability and results of operations.
The purchases from our five largest suppliers for each year/period during the Track Record
Period (including our subcontractors) amounted to approximately RMB136.2 million, RMB173.5
million, RMB153.6 million, RMB74.7 million and RMB81.0 million, representing approximately
74.9%, 71.0%, 67.3%, 67.4% and 72.3% of the total purchases for the years ended 31 December
2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023, respectively. The
purchases from our five largest subcontractors amounted to approximately RMB124.8 million,
RMB163.4 million, RMB153.6 million, RMB74.7 million and RMB79.7 million, representing
approximately 68.7%, 66.8%, 67.3%, 67.4% and 44.6% of the total purchases for the years
ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023,
respectively.
We did not enter into any long-term agreement with our major suppliers (including our
subcontractors) during the Track Record Period and neither do we intend to enter into such
arrangement with our major suppliers (including our subcontractors) in the future. There is no
assurance that our relationship may not change in the future or that we are or will be able to
secure alternative service providers with comparable skills and resources in a timely and
cost-effective manner if our business relationship with one or more suppliers (including our
subcontractors) are terminated such as due to their winding-up or dissolution or due to changes
in our strategy such as our decision to rely more on our own workforce instead of labour
dispatch services providers since December 2018. Even if our relationship continues, if our
major suppliers (including our subcontractors) fail to provide services to us as required by our
projects, in a timely manner, or on favourable terms due to reasons beyond our control, our
business operations may be significantly interrupted and our business, financial condition,
results of operations and prospects may be materially and adversely affected.
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There is no guarantee that we can obtain, maintain or renew the licences and qualifications
for our business and such failure may materially and adversely affect our business
operations, financial condition and prospects.
We are required to obtain and maintain certain requisite licences and qualifications to
conduct our business including Guangzhou Sanitation Industry Operating Service Company
Industry Grade Certificate – A Grade (ࣣand
Operational Cleaning, Collection and Transportation Services of Municipal Solid Waste Licence
(ਕ஢̙ᗇ ) (for further details of our material licences
and qualifications and certain applicable regulatory requirements to our operations, please refer
to the sections headed “Business – Licences, certificates and qualifications” and “Regulatory
overview – PRC laws and regulations – Laws and regulations on environmental cleaning and
maintenance” of this prospectus). We must comply with the conditions imposed by the relevant
authorities to maintain our licences and qualifications. There is no guarantee that we can obtain,
maintain or renew the licences, and qualifications for our current business or future expansion in
a timely manner, or at all. If we fail to identify the required licences and qualifications in a
timely manner, experience delays in obtaining or renewing them, or are unable to obtain,
maintain and renew them, our business operations, financial condition and prospects may be
materially and adversely affected. We may also not be able to expand our service offering or
commence new business segments if we fail to obtain the requisite licences, certificates and
qualifications. Further, any change in the qualification requirements or conditions may require us
to incur additional compliance costs or result in costly and time-consuming changes to our
operations in order to fulfil the new requirements or conditions.
Loss of senior management team and other qualified employees may materially affect our
business, financial condition and prospects.
Our success to date is largely attributable to the leadership and contributions of our senior
management team as described in the section headed “Directors and senior management” of this
prospectus. In particular, Mr. Li, our chairman, chief executive officer and executive Director, is
one of our founders and has been serving our Group for more than 20 years and most members
of our senior management team have over 12 years of experience in the environmental cleaning
and maintenance industry. They play an important role in the daily operation of our Group,
including overseeing the daily operation of our Group, formulating the overall strategies and
planning business strategies of our Group and driving our business growth. Our continued
success has therefore depended to a large extent on retaining our senior management team and
being able to find suitable replacements where necessary. Any unanticipated departure of
members of the management team without appropriate replacement in timely manner may have a
material and adverse affect on our business, financial condition and prospects.
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Our continued success and the implementation of our expansion plans also depend on our
ability to attract and retain other qualified employees who have the necessary experience and
expertise to provide our services to our customers, including those qualified to conduct
high-altitude cleaning, stone cleaning and maintenance and water tank cleaning and pest control.
There may be a limited local supply of adequately skilled workers to provide our specific
cleaning and maintenance services. If we are unable to attract and retain a sufficient number of
such qualified employees, our business, financial condition and prospects may be materially and
adversely affected.
Damage to our brand name or failure to protect our brand name and intellectual property
rights may adversely and materially affect our business, financial condition, reputation and
prospects.
We operate under the brand of “ ᄿψʺሾ ” and our Directors believe that we have
established our business goodwill and reputation by our high quality of service. As at the Latest
Practicable Date, we registered 36 patents, 10 registered copyrights, two trademarks in the PRC
and two trademarks in Hong Kong. However, our efforts to maintain and protect our intellectual
property may be insufficient. If there is any misuse by third parties of our brand and we are
unable to detect, deter and prevent misbehaviour and misconduct by our employees or fail to
effectively protect our brand and trademarks, our reputation could be damaged. We may be
unable to attract new and retain existing customers and our business and financial condition may
be materially and adversely affected.
From time to time, we may get involved in litigation to protect and enforce our patents,
registered copyrights, trademarks and other intellectual property rights, and to protect our brand
and trade secrets. Such litigation could require us to incur substantial costs and divert our
resources, which may adversely and materially affect our business operations, financial condition
and profitability. Moreover, even if any of such litigation is resolved in our favour, there is no
guarantee that any remedies granted may be adequate to compensate us for our actual or
anticipated losses. Further, we may fail to enforce the judgement and remedies awarded by the
court. In such an event, our reputation, business and prospects may be materially and adversely
affected.
We may be materially and adversely affected if we are unable to detect and prevent
misconduct committed by our employees or third parties in a timely manner such as in
relation to misuse of customer data stored or collected by us and other confidential
information.
We are exposed to the risk of misconduct committed by our employees and third parties
that could subject us to litigation, penalties, financial losses as well as seriously harm our
reputation. In particular, although we have established certain measures to manage our sensitive
data such as details of our customers, our IT systems may be breached by hackers or due to
misconduct by employees. Any accidental or wilful security breaches or other unauthorised
access to our IT systems could cause confidential customer information to be stolen and used for
unlawful purposes. Security breaches or unauthorised access to confidential information could
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also expose us to legal liability and damage our reputation. There is no guarantee that the
internal control procedures adopted by us to oversee our operations and overall compliance will
be able to detect and prevent misconduct conducted in a timely manner or at all. If we are
unable to detect and prevent such misconduct, our business, financial condition, results of
operations and reputation may suffer as a result.
The environmental cleaning and maintenance industry is highly competitive and if we
cannot compete effectively, our business, financial condition, results of operations and
prospects may be materially and adversely affected.
According to the Industry Report, the environmental cleaning and maintenance industry is
highly competitive with competitors distinguishing themselves through effective operation
management, professional and comprehensive service solutions offered and application of
advanced technologies in addition to their reputation and track record. In addition, depending on
the relevant sector in the industry, we may need to adjust our strategies to compete effectively
against larger market players and smaller market players. According to the Industry Report, in
relation to the public space cleaning sector, it is an industry norm that the local governments,
which are the main clients in this sector, prefer large-scale service providers with good industry
recognition. Consequentially, large-scale cleaning service providers could dominate this sector
and obtain high value contracts. On the other hand, the property cleaning sector is much more
labour-intensive and newcomers are not required to invest heavily in fixed assets, thus reducing
the entry barriers of this sector. Thus, small and medium-scale businesses are still able to
acquire the contracts with relatively lower rates and higher flexibility compare to large-scale
service providers. Given the above, we may need to invest more heavily in building industry
recognition for our bids in relation to larger projects in the public space cleaning sector and
make more competitive bids by adjusting our prices for smaller projects in the property cleaning
sector. If we do not adjust our tender strategies and business strategies effectively, we may lose
business opportunities. Even if we are successful, our investments to secure our projects and our
offer of competitive bids may reduce our profit margins and expose us to losses if our cost of
services increases beyond expectation. Accordingly, if we cannot compete effectively, our
business, financial condition, results of operations and prospects may be materially and
adversely affected.
There are certain defects with some of our owned and leased properties.
As at the Latest Practicable Date, we owned 11 properties with an aggregate GFA of
approximately 812 sq.m. and leased seven properties from Independent Third Parties with an
aggregate GFA of approximately 7,597.7 sq.m., which are mostly for self-use. In relation to our
leased premises, we had not registered twelve of the lease agreements with the relevant
administrative authorities. According to the Administrative Measures for Commercial Housing
Leases (), failure to complete the relevant lease registration may
subject the parties to the lease agreements to fines of no more than RMB10,000 for each case.
As a result, if we fail to complete such lease registration in a timely manner upon the
authorities’ request, we may face a fine in relation to the unregistered lease agreements. In
relation to one of the seven leased properties, there are certain legal irregularities concerning the
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lack of ownership evidence on part of the property and the non-compliance of the approved land
use. For further details of our properties and the above defects, please refer to the section
headed “Business – Properties” of this prospectus. We cannot assure you that our rights will not
be materially and adversely affected in respect of affected properties for which we are unable to
obtain the relevant ownership certificates or subject to fines or penalties in relation to the
defects in relation to the non-registration of the above-mentioned lease agreements. Furthermore,
if we were forced to relocate any of the operations we conduct on the affected properties, we
may incur additional costs as a result of such relocation and our operations may be disrupted.
We are exposed to fair value changes for financial assets at fair value through profit or loss
and valuation uncertainty due to the use of unobservable inputs that require judgement
and assumptions which are inherently uncertain.
During the Track Record Period, we had investments in funds, wealth management products
issued by a PRC bank and listed securities, all of which were disposed of in 2020. As at 31
December 2020, 2021 and 2022 and 30 June 2023, our financial assets at fair value through
profit or loss was approximately nil, nil, nil and nil, respectively. We experienced a fair value
loss on financial assets at fair value through profit or loss of approximately RMB7.1 million for
the year ended 31 December 2020 (for details of our selection process and investments, please
refer to the section headed “Financial information – Discussion on selected items from the
consolidated statements of financial position – Financial assets at fair value through profit or
loss” and note 22 to the Accountant’s Report in Appendix I to this prospectus).
Our future investments are subject to uncertainties and risks. For instance, reports with
estimation of the fair values are prepared by the banks. Changes in the basis and assumptions
used in the estimation could materially affect the fair value of these funds and wealth
management products. Factors beyond our control can significantly influence and cause adverse
changes to the estimates and thereby affect the fair value. These factors include, but not limited
to, general economic conditions, changes in market interest rates and stability of the capital
markets. The valuation may involve a significant degree of judgement and assumptions which
are inherently uncertain, and may result in material adjustment, which in turn may materially
and adversely affect our results of operations.
While we have adopted an investment management policy (for further details of the policy,
please refer to the section headed “Business – Investment management policy” of this
prospectus), there is no guarantee that we will not suffer losses from future investments.
Additionally, we may have limited monitoring or control over our investments. In such event
that we fail to address any and all uncertainties and risks, we may have limited or no recourse
and the value in our investments may decrease. As a result of any of the above, we may
experience certain negative consequences which may in turn materially and adversely affect our
business operations, financial condition and results of operation.
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Our deferred income tax assets may not be recovered.
As at 31 December 2020, 2021 and 2022 and 30 June 2023, our deferred income tax assets
amounted to RMB3.8 million, RMB4.3 million, RMB5.0 million and RMB5.7 million,
respectively. We periodically assess the probability of the realisation of deferred tax assets,
using accounting judgments and estimates with respect to, among other things, historical
operating results, expectations of future earnings and tax planning strategies. In particular, these
deferred tax assets can only be recognised to the extent that it is probable that taxable profit will
be available against which the deductible temporary differences, the carry forward of unused tax
credits and unused tax losses can be utilised. However, we cannot assure you that our
expectation of future earnings will materialise, due to factors beyond our control such as general
economic conditions or, negative development of a regulatory environment, in which case we
may not be able to recover our deferred tax assets, our business, financial position and prospects
be may materially and adversely affected.
Discontinuation or termination of preferential tax treatments we currently enjoy may
materially and adversely affect our results of operations and financial condition.
According to the EIT Law and its implementation rules, foreign-invested enterprises and
domestic enterprises are subject to a unified EIT rate of 25% and an enterprise which qualifies
as a High and New Technology Enterprise ( ৷อҦஔΆุ ) is entitled to a reduced EIT rate of
15%, subject to various recognition criteria, including but not limited to ownership of
intellectual property rights applicable to operations and a certain level of spending involved in
research and development.
In December 2020, Guangzhou Shenghui received recognition as a High and New
Technology Enterprise ( ৷อҦஔΆุ ) by the relevant PRC governmental authority and hence, it
enjoys a preferential EIT rate of 15% (for further details, please refer to the section headed
“Financial information – Description on selected items of the consolidated statements of
comprehensive income – Income tax expenses” of this prospectus). This qualification is
re-assessed by the relevant authorities every three years. If Guangzhou Shenghui fails to
maintain or renew its qualifications under the relevant PRC laws and regulations or this
preferential tax treatment is otherwise discontinued or terminated, its applicable EIT rates will
increase and the increase in our tax charge or any other related tax liabilities may materially and
adversely affect our results of operations and financial condition.
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Our business, financial condition, results of operations and prospects may be adversely
affected as a result of negative media coverage relating to us or the locations which we
provide our services.
We may be subject to or associated with negative publicity, including those on the internet,
with respect to our corporate affairs and conduct related to us, our personnel, or the locations
which we provide our services. Given our large workforce and our use of third party service
providers, we may also be subject to the risk of negative reports or criticisms by various media
relating to any incidents involving them. Any negative coverage, whether or not related to us or
our related parties and regardless of its truth or merit, may have an impact on our brand and
reputation and, consequently, may undermine the confidence of our customers and investors in
us, which may in turn materially and adversely affect our business, financial condition, results of
operations and prospects.
RISKS RELATING TO DOING BUSINESS IN THE PRINCIPAL PLACE OF BUSINESS
Our business is concentrated in the PRC, particularly Guangdong province, and we are
therefore susceptible to any material adverse changes in that province or in the PRC
generally.
Our business is concentrated in the PRC with all of our revenue derived from our
operations in the PRC during the Track Record Period. We are particularly concentrated in
Guangdong province where our headquarters is located at, given that most of our revenue was
derived from projects in this province. Given such concentration, any material adverse changes,
or any natural disaster or epidemic affecting the PRC, in particular the Guangdong province,
may materially and adversely affect us. There can be no assurance that the PRC economy will be
able to sustain past growth rates. If the above or other adverse changes were to occur in
Guangdong province or in the PRC, it may lead to disruptions in our operations, decrease in the
demand for our services or significantly increase the cost of operations, and our business, results
of operations, expansion plan and prospects would be materially and adversely affected.
Changes in the PRC legal system could have a material adverse effect on our business and
operations.
Our business and operations are conducted in the PRC and are subject to applicable PRC
laws, rules and regulations. Laws, regulations and policies may be updated from time to time in
the PRC. Furthermore, any litigation or regulatory enforcement action in the PRC may result in
additional costs and the diversion of resources and management attention. The materialisation of
all or any of these uncertainties could have a material and adverse effect on our business and
operations.
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In addition, the PRC government may from time to time publish notices to regulate and
address issues in the property management industry. For example, on 13 July 2021, eight
governmental departments, including the Ministry of Housing and Urban-Rural Development of
the PRC (ண௅ ), published the Notice on Continuous Improvement
and Standardisation of the Order of the Real Estate Market (ήପ̹ఙॣҏ
ٝwhich focuses on the rectification of illegal real estate development and construction
and illegal charges for property management services. Given that 71.3%, 71.2%, 70.8%, 70.9%
and 70.0% of our projects involve property management companies as customers during the
years ended 31 December 2020, 2021 and 2022 and six months ended 30 June 2022 and 2023,
respectively, we cannot guarantee that the government regulations in the PRC on matters
concerning the property management industry will not have an adverse effect on our business,
financial condition and results of operations, which may be material.
We are a holding company and rely primarily on dividends paid by our subsidiaries to fund
any cash and financing requirements we have, and our ability to pay dividends depends on
the earnings and distributions of our subsidiaries.
We are a holding company and we conduct our business operations primarily through our
subsidiaries in the PRC. Our ability to make dividend payments and other distributions in cash,
pay expenses, service indebtedness incurred and finance the needs of other subsidiaries depends
upon the receipt of dividends, distributions or advances from our subsidiaries. The ability of our
subsidiaries to pay dividends or other distributions may be subject to their earnings, financial
position, cash requirements and restrictive covenants on making payments to us contained in the
financing or other agreements. If any of our subsidiaries incurs indebtedness in its own name,
the instruments governing the indebtedness may restrict dividends or other distributions on its
equity interest to us. These restrictions could reduce the amount of dividends or other
distributions that we may receive from our subsidiaries, which could in turn restrict our ability
to fund our business operations and to pay dividends to our Shareholders. In addition, the
declaration of dividends will be at the absolute discretion of the boards of our subsidiaries.
Failure to comply with the PRC regulations relating to the registration of any granted
shares that belong to our employees who are PRC citizens may subject such employees or
us to legal or administrative sanctions.
In January 2007, the SAFE issued the Implementing Rules for the Administrative Measures
of Foreign Exchange Matters for Individuals ( ), which, among
other things, specified approval requirements for certain capital account transactions such as a
PRC citizen’s participation in the employee stock ownership plans or stock option plans of an
overseas publicly-listed company.
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In addition, the Notice on Relevant Issues Concerning the Administration of Foreign
Exchange in respect of Domestic Individuals’ Participating in the Share Incentive Schemes of
Overseas-Listed Companies (ྌ̮
), or SAFE Circular 7, was promulgated by the SAFE on 15 February
2012. In accordance with SAFE Circular 7, PRC residents who are granted shares or share
options by an overseas publicly listed company under a share incentive scheme are required,
through the PRC subsidiary of the overseas publicly listed company, to entrust a PRC agent to
register with the SAFE or its local counterpart and complete certain procedures relating to the
share incentive schemes. We and our PRC employees who receive Shares or share options will
be subject to these regulations when we are listed on the Stock Exchange, and we will require
our PRC employees to obtain approval from the SAFE or its local branches when joining the
share incentive scheme in order to comply with relevant rules. If we or our PRC employees fail
to comply with these regulations, we or our PRC employees may be subject to a maximum fine
of RMB300,000 and other legal or administrative sanctions.
The heightened scrutiny over acquisition transactions by the PRC tax authorities may have
an impact on our business operation, our acquisition or restructuring strategy or the value
of your investment in us.
On 3 February 2015, the SA T issued (ה
ʮѓ)( “ SAT Circular 7 ”), which provided comprehensive guidelines relating
to, and also heightened the PRC tax authorities’ scrutiny over, indirect transfers by a
non-resident enterprise of PRC taxable assets. Under SA T Circular 7, the PRC tax authorities are
entitled to reclassify the nature of an indirect transfer of PRC taxable assets, when a
non-resident enterprise transfers PRC taxable assets indirectly by disposing of equity interests in
an overseas holding company directly or indirectly holding such PRC taxable assets, by
disregarding the existence of such overseas holding company and considering the transaction to
be a direct transfer of PRC enterprise income taxes and without any other reasonable commercial
purpose. However, SA T Circular 7 contains certain exemptions, including (i) where a
non-resident enterprise derives income from the indirect transfer of PRC taxable assets by
acquiring and selling shares of an overseas listed holding company which holds such PRC
taxable assets on a public market; and (ii) where there is an indirect transfer of PRC taxable
assets, but if the non-resident enterprise had directly held and disposed of such PRC taxable
assets, the income from the transfer would have been exempted from enterprise income tax in
the PRC under an applicable tax treaty or arrangement.
We may conduct acquisitions involving changes in corporate structure. We cannot assure
you that the PRC tax authorities will not, at their discretion, adjust any capital gains and impose
tax return filing obligations on us or require us to provide assistance for the investigation of
PRC tax authorities with respect thereto. Any PRC tax imposed on a transfer of our Shares or
any adjustment of such gains would cause us to incur additional costs and may have an impact
on the value of your investment in us.
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RISKS RELATING TO THE SHARE OFFER AND OUR SHARES
There is no existing public market for our Shares and their liquidity and market price may
fluctuate.
Prior to the Share Offer, there has been no public market for our Shares. We cannot assure
that an active trading market for our Shares will develop and be sustained following the Share
Offer. In addition, the initial issue price range for our Shares was the result of negotiations
among our Company, our Selling Shareholders, the Sole Sponsor, the Sole Overall Coordinator,
the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers and the
Underwriters, and the Offer Price may differ significantly from the market price of our Shares
following the completion of the Share Offer. We have applied for the listing of and permission
to deal in our Shares on the Stock Exchange. The Listing on the Stock Exchange, however, does
not guarantee that an active trading market for our Shares will develop, or if it does develop,
that it will be sustainable following the Share Offer or that the market price of our Shares will
not decline after the Share Offer.
Furthermore, the price and trading volume of our Shares may be volatile. The following
factors, among others, may cause the market price of our Shares after the Share Offer to vary
significantly from the Offer Price, some of which are beyond our control:
 variations in our revenue, earnings and cash flow;
 unexpected business interruptions resulting from, among others, epidemics or natural
disasters;
 major changes in our key personnel or senior management;
 changes in laws and regulations;
 our inability to obtain or maintain regulatory approval for our operations;
 our inability to compete effectively in the market;
 political, economic, financial and social developments in the PRC and Hong Kong and
in the global economy;
 fluctuations in stock market prices and volume;
 changes in analysts’ estimates of our financial performance, regardless of the accuracy
of information on which they are based; and
 involvement in material litigation.
RISK FACTORS
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Our Controlling Shareholders have substantial control over our Company and their
interests may not be aligned with the interests of the other Shareholders.
Prior to and immediately following the completion of the Share Offer, our Controlling
Shareholders will retain substantial control over our Company. Subject to the Articles, the
Companies Ordinance and the Cayman Companies Act, our Controlling Shareholders will be able
to exercise significant control and exert significant influence over our business or otherwise on
matters of significance to us and other Shareholders by voting at the general meeting of the
Shareholders and at Board meetings. The interests of our Controlling Shareholders may differ
from the interests of other Shareholders and our Controlling Shareholders are free to exercise
their voting rights according to their respective interests. To the extent that the interests of our
Controlling Shareholders conflict with those of other Shareholders, the interests of other
Shareholders can be disadvantaged and harmed.
Future issuances or sales, or perceived issuances or sales, of substantial amounts of our
Shares in the public market could materially and adversely affect the prevailing market
price of our Shares and our ability to raise capital in the future.
The market price of our Shares could decline as a result of future sales of substantial
amounts of our Shares or other securities relating to our Shares in the public market, including
by our Controlling Shareholders, or the issuance of new Shares by us, or the perception that
such sales or issuances may occur. The Shares held by our Controlling Shareholders are subject
to certain lock-up arrangements. Please see the section headed “Underwriting – Underwriting
arrangements and expenses – Undertakings to the Stock Exchange pursuant to the Listing Rules
– Undertaking by our Controlling Shareholders” of this prospectus for more information. After
the restrictions under the lock-up arrangements expire, our Controlling Shareholders may
dispose of our Shares. Future sales, or perceived sales, of substantial amounts of our Shares
could also materially and adversely affect our ability to raise capital in the future at a time and
at a price favourable to us, and our Shareholders may experience dilution in their holdings upon
the issuance or sale of additional securities by us in the future.
There will be a time gap of several business days between pricing and trading of our Shares
offered under the Share Offer. The market price of our Shares when trading begins could
be lower than the Offer Price.
The Offer Price of our Shares will be determined on the Price Determination Date.
However, our Shares will not commence trading on the Stock Exchange until they are delivered,
which is expected to be two Business Days after the Price Determination Date. As a result,
investors may be unable to sell or otherwise deal in our Shares during that period. Accordingly,
Shareholders are subject to the risk that the price of the Shares when trading begins could be
lower than the Offer Price as a result of adverse market conditions or other adverse
developments that may occur between the time of sale and the time trading begins.
RISK FACTORS
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Past dividend distributions are not indicative of our future dividend policy and we cannot
guarantee whether and when we will pay dividends on our Shares.
During the Track Record Period, Guangzhou Shenghui declared and paid dividends of
RMB28.2 million to its then shareholders in January 2021. We cannot guarantee when, if or in
what form and amount dividends will be declared or paid on our Shares following the Share
Offer.
Past dividend distributions are not indicative of our future dividend policy and we cannot
guarantee whether and when we will pay dividends on our Shares. Subject to the Companies Act
and the Articles, our Company in general meeting may declare dividends in any currency but no
dividends shall exceed the amount recommended by our Board. Our Board may also from time
to time pay to our Shareholders such interim dividends as appear to our Board to be justified by
the financial conditions and the profits of our Company, and may in addition from time to time
declare and pay special dividends of such amounts and on such dates and out of such
distributable funds of our Company as it thinks fit. A decision to declare or pay dividend and the
amount of such dividend will depend on our business performance, financial condition, operating
and capital expenditure requirements, distributable profits as determined under the applicable
accounting standards, the Articles, applicable laws and regulations of the PRC and Hong Kong,
market conditions, our strategic plans and prospects of business development, contractual limits
and obligations, payment of dividend to us by our operating subsidiaries, taxation, and other
factors determined by our Board from time to time to be relevant to the declaration or
suspension of dividend payments. As a result, there is no assurance whether, when and in what
manner we will pay dividend in the future.
Future financing may cause a dilution in your shareholding or place restrictions on our
operations.
We may raise additional funds in the future to finance the expansion of our capacity, the
development of our operations, acquisitions or strategic partnerships and the enhancement of our
research and development capabilities. If additional funds are raised through the issuance of our
new equity or equity-linked securities other than on a pro rata basis to existing Shareholders, the
percentage ownership of such Shareholders in us may be reduced, and such new securities may
confer rights and privileges that may take priority over those conferred by our Shares.
Alternatively, if we meet such funding requirements by way of additional debt financing, we
may have restrictions placed on us through such debt financing arrangements which may:
 limit our ability to pay dividends or require us to seek consent for the payment of
dividends;
 increase our vulnerability to general adverse economic and industry conditions;
RISK FACTORS
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 require us to dedicate a substantial portion of our cash flows from operations to
service our debt, thereby reducing the availability of our cash flow to fund capital
expenditure, working capital requirements and other general corporate needs; and
 limit our flexibility in planning for, or reacting to, changes in our business and our
industry.
Potential investors will experience immediate and substantial dilution as a result of the
Share Offer.
Potential investors will pay a price per Share in the Share Offer that substantially exceeds
the per Share value of our net tangible assets immediately prior to the Share Offer. Therefore,
purchasers of our Shares in the Share Offer will experience immediate dilution based on our pro
forma net tangible assets per Share. For further details, please refer to the section headed
“Unaudited pro forma financial information” in Appendix II of this prospectus.
We cannot guarantee the accuracy of facts, forecasts and other statistics obtained from
official governmental sources or other sources contained in this prospectus.
Certain facts, statistics and data contained in this prospectus relating to the PRC, its
economic conditions and the environmental cleaning and maintenance industry have been
derived from various government publications or other third party reports we generally believe
to be reliable. We have taken reasonable care in the reproduction or extraction of the
government publications or other third party reports for the purpose of disclosure in this
prospectus and have no reason to believe that such information is false or misleading or that any
fact has been omitted that would render such information false or misleading. However, we
cannot guarantee the quality or reliability of such source materials. They have not been prepared
or independently verified by us, our Selling Shareholders, the Sole Sponsor, the Sole Overall
Coordinator, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers and
the Underwriters or any of its affiliates or advisors and, therefore, we make no representation as
to the accuracy of such statistics, which may not be consistent with other information compiled
within or outside the PRC and Hong Kong. Due to possibly flawed or ineffective collection
methods or discrepancies between published information and market practice, such statistics in
this prospectus may be inaccurate or may not be comparable to statistics produced with respect
to other economies. Furthermore, we cannot assure you that they are stated or compiled on the
same basis or with the same degree of accuracy as the case may be in other jurisdictions. In all
cases, you should give due consideration as to how much weight or importance you should
attach to or place on such facts, forecasts and statistics.
RISK FACTORS
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The ability of Shareholders to bring actions or enforce judgments against us or our
Directors may be limited.
We are organised under the laws of the Cayman Islands. As a result, a Shareholder may not
be able to enforce a judgement against us or some or all of our Directors and executive officers
outside the Cayman Islands. It may not be possible for a Shareholder to affect service of process
upon our Directors and executive officers within the Shareholder’s country of residence or to
enforce against our Directors and executive officers judgments of courts of the Shareholder’s
country of residence. There can be no assurance that a Shareholder will be able to enforce any
judgments in civil and commercial matters against our Directors or executive officers who are
residents of countries other than those in which judgement is made.
Termination of the Underwriting Agreements
Prospective investors should note that the Underwriters are entitled to terminate their
obligations under the Underwriting Agreements by the Sole Overall Coordinator and the Joint
Global Coordinators (for themselves and on behalf of the Underwriters) by giving written notice
to our Company (for ourselves and on behalf of our Selling Shareholders) upon the occurrence
of any of the events stated in the section headed “Underwriting – Underwriting arrangement and
expenses – Grounds for termination” of this prospectus at any time prior to 8:00 a.m. (Hong
Kong time) on the Listing Date. Such events include, without limitation, any act of God, war,
riot, public disorder, civil commotion, fire, flood, explosion, epidemic, diseases or act of
terrorism. Should the Sole Overall Coordinator and the Joint Global Coordinators (for
themselves and on behalf of the Underwriters) exercise their rights and terminate the
Underwriting Agreements, the Share Offer will not proceed and will lapse.
Y ou may face difficulties in protecting your interests because we were incorporated under
Cayman Islands laws, and the laws of the Cayman Islands for minority shareholders’
protection may be different from those under the laws of Hong Kong or other jurisdictions.
We are a Cayman Islands company and our corporate affairs are governed by the Cayman
Companies Act and other laws of the Cayman Islands. The laws of Cayman Islands relating to
the protection of the interest of minority shareholders may differ from those under statutes and
judicial precedent in existence in Hong Kong and other jurisdictions. Therefore, remedies
available to the minority shareholders of our Company may be less effective than those they
would have under the laws of Hong Kong or other jurisdictions. For further details, please refer
to the section headed “Summary of the constitution of the Company and Cayman Islands
company law – 3. Cayman Islands company law – (f) Protection of minorities and shareholders’
suits” in Appendix IV to this prospectus.
RISK FACTORS
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Y ou should only place reliance on information released by us including this prospectus and
other formal announcements made with respect to the Share Offer, and not place any
reliance on any information contained in press articles or other media when making your
investment decision.
We have not authorised anyone to provide you with information that is not contained in this
prospectus. Any financial information, financial projections, valuations, and other information
purportedly about us contained in any press articles or other media have not been authorised by
us and we make no representation as to the appropriateness, accuracy, completeness, or
reliability of any such information or publication, and accordingly do not accept any
responsibility for any such press or media coverage or the inaccuracy or incompleteness of any
such information. In making your decision as to whether to purchase our Offer Shares, you
should rely only on the information in this prospectus and other formal announcements made
with respect to the Share Offer.
Forward-looking statements contained in this prospectus are subject to risks and
uncertainties.
This prospectus contains certain statements and information that are “forward-looking” and
uses forward-looking terminology such as “aim”, “anticipate”, “believe”, “continue”, “could”,
“estimate”, “expect”, “going forward”, “intend”, “may”, “might”, “ought to”, “plan”, “potential”,
“predict”, “seek”, “should”, “will”, “would” and the negative of these words and other similar
expressions. Those statements include, among other things, the discussion of our Group’s growth
strategy and expectations concerning our future operations, liquidity and capital resources.
Investors of the Shares are cautioned that reliance on any forward-looking statements involves
risks and uncertainties and that any or all of those assumptions could prove to be inaccurate and
as a result, the forward-looking statements based on those assumptions could also be incorrect.
The uncertainties in this regard include, but are not limited to, those identified in this
section, many of which are not within our Group’s control. In light of these and other
uncertainties, the inclusion of forward-looking statements in this prospectus should not be
regarded as representations by our Company that our plans or objectives will be achieved and
investors should not place undue reliance on such forward-looking statements. Our Company
does not undertake any obligation to update publicly or release any revisions of any
forward-looking statements, whether as a result of new information, future events or otherwise.
Please refer to the section headed “Forward-looking statements” of this prospectus for further
details.
RISK FACTORS
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In preparation for the Listing, our Company has obtained the following waiver from strict
compliance with the relevant provisions of the Listing Rules:
MANAGEMENT PRESENCE IN HONG KONG
Rule 8.12 of the Listing Rules provides that a new applicant applying for a primary listing
on the Stock Exchange must have a sufficient management presence in Hong Kong, which
normally means that at least two of its executive directors must be ordinarily resident in Hong
Kong. The core business and operations of our Group are primarily located, managed and
conducted in the PRC. We are headquartered and all of our assets are located in Guangdong
province of the PRC. All of our executive Directors are ordinarily based in the PRC and our
Company does not and, in the foreseeable future, will not have any management presence in
Hong Kong for the purpose of satisfying the requirements under Rule 8.12 of the Listing Rules.
Accordingly, we have applied to the Stock Exchange for, and the Stock Exchange has
granted, a waiver from strict compliance with Rule 8.12 of the Listing Rules on the following
conditions:
(i) we have appointed two authorised representatives, namely Mr. Li (our executive
Director) and Ms. Law Kwok Wing (our company secretary who is ordinary resident
in Hong Kong) pursuant to Rule 3.05 of the Listing Rules, who will act as our
principal channel of communication with the Stock Exchange and ensure that our
Group complies with the Listing Rules at all times. Although Mr. Li does not
ordinarily reside in Hong Kong, he possesses or is eligible to apply for valid travel
documents to visit Hong Kong and he has never been rejected for application for such
travel documents. Each of our authorised representatives will be available to meet
with the Stock Exchange in Hong Kong within a reasonable time frame upon the
request of the Stock Exchange and will be readily contactable by telephone, facsimile
and email. Each of our authorised representatives is authorised to communicate on
behalf of our Company with the Stock Exchange. We will inform the Stock Exchange
promptly in respect of any change in our authorised representatives or any of their
contact details. Our Company has also been registered as a non-Hong Kong company
under Part 16 of the Companies Ordinance with our authorised representatives to
accept service of legal process and notices in Hong Kong on behalf of our Company;
W AIVER FROM STRICT COMPLIANCE WITH THE LISTING RULES
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(ii) each of our authorised representatives has the means to contact all members of our
Board (including our independent non-executive Directors) and our senior
management team promptly at all times as and when the Stock Exchange wishes to
contact them or any of them for any matter. To enhance the communication between
the Stock Exchange, our authorised representatives and our Directors, we will
implement a policy whereby (a) each Director will provide his/her respective office
phone number(s), mobile phone number(s), fax number(s) and email address(es) (if
applicable) to our authorised representatives; and (b) in the event that our Director
expects to travel and be out of office, he/she will endeavour to provide the phone
number of the place of his/her accommodation to our authorised representatives or
maintain an open line of communication via his/her telephone;
(iii) all Directors will provide their mobile phone numbers, office phone numbers, fax
numbers and email addresses (if applicable) to the Stock Exchange to ensure that they
will be readily contactable when necessary to deal promptly with enquiries from the
Stock Exchange. Each of our Directors is authorised to communicate on our
Company’s behalf with the Stock Exchange;
(iv) all Directors (except for the independent non-executive Directors who are all
ordinarily resident in Hong Kong) have confirmed that they possess or are eligible to
apply for valid travel documents to visit Hong Kong for business purposes and they
have never been rejected for application for such travel documents, and they would be
able to come to Hong Kong and meet with the Stock Exchange in Hong Kong upon
reasonable notice, when required;
(v) we have appointed Cinda International to act as our compliance adviser pursuant to
Rule 3A.19 of the Listing Rules for the period commencing on the Listing Date and
ending on the date on which our Company complies with Rule 13.46 of the Listing
Rules in respect of our financial results for the first full financial year commencing
after the Listing Date. Cinda International will provide professional advice on matters
relating to the compliance with the Listing Rules and other obligations for companies
listed in Hong Kong. Cinda International, in addition to our authorised representatives,
will act as an additional channel of communication with the Stock Exchange; and
(vi) meetings between the Stock Exchange and our Directors can be arranged through our
authorised representatives or the compliance adviser, or directly with our Directors
within a reasonable time frame. We will inform the Stock Exchange as soon as
practicable in respect of any change in our authorised representatives and/or our
compliance adviser in accordance with the Listing Rules.
W AIVER FROM STRICT COMPLIANCE WITH THE LISTING RULES
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DIRECTORS’ RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS
This prospectus, for which our Directors (including any proposed director who is named as
such in this Prospectus) collectively and individually accept full responsibility, includes
particulars given in compliance with the Companies (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 with regard to our Company. Our
Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and
belief, the information contained in this prospectus is accurate and complete in all material
respects and not misleading or deceptive and there are no other matters the omission of which
would make any statement in this prospectus misleading. All opinions expressed in this
prospectus have been arrived at after due and careful consideration and are founded on bases and
assumptions that are fair and reasonable.
CSRC FILING REQUIREMENT
We have completed the filing procedures with the CSRC for the Listing and on 20 October
2023, the CSRC issued a notification to us confirming the completion of the filing procedures
for the overseas listing on the Stock Exchange.
INFORMATION ON THE SHARE OFFER
The Offer Shares are offered solely on the basis of the information contained and
representations made in this prospectus and on the terms and subject to the conditions set out
herein and therein. No person is authorised to give any information in connection with the Share
Offer or to make any representation not contained in this prospectus, and any information or
representation not contained herein and therein must not be relied upon as having been
authorised by our Company, our Selling Shareholders, the Sole Sponsor, the Sole Overall
Coordinator, the Joint Global Coordinators, the Capital Market Intermediaries, the Joint
Bookrunners, the Joint Lead Managers, the Underwriters, any of our or their respective directors,
advisers, officers, employees, agents or representatives or any other person or party involved in
the Share Offer. Neither the delivery of this prospectus nor any offering or delivery made in
connection with the Offer Shares should, 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 contained in this
prospectus is correct as at any date subsequent to the date of this prospectus. Details of the
structure of the Share Offer, including its conditions, are set out in the section headed “Structure
and conditions of the Share Offer” of this prospectus, and the procedures for applying for the
Public Offer Shares are set out in the section headed “How to apply for the Public Offer Shares”
of this prospectus.
UNDERWRITING
This prospectus is published solely in connection with the Share Offer, comprising the
Placing and the Public Offer. Details of the structure of the Share Offer, including conditions of
the Share Offer, are set out in the section headed “Structure and conditions of the Share Offer”
of this prospectus. The Listing is sponsored by the Sole Sponsor and managed by the Sole
Overall Coordinator. The Public Offer will be fully underwritten by the Public Offer
INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER
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Underwriters under the terms of the Public Offer Underwriting Agreement and is subject to the
agreement to the Offer Price between our Company (for ourselves and on behalf of our Selling
Shareholders) and the Sole Overall Coordinator and the Joint Global Coordinators (for
themselves and on behalf of the Underwriters). The Share Offer will be fully underwritten by the
Underwriters under the terms of the Underwriting Agreements. For further details about the
Underwriters and the Underwriting Agreements, please refer to the section headed “Underwriting
– Underwriting arrangements and expenses” of this prospectus.
DETERMINATION OF THE OFFER PRICE
The Offer Shares are being offered at the Offer Price which will be determined by the Sole
Overall Coordinator and the Joint Global Coordinators (for themselves and on behalf of the
Underwriters) and our Company (for ourselves and on behalf of our Selling Shareholders) on the
Price Determination Date, or such later date or time as may be agreed by our Company (for
ourselves and on behalf of our Selling Shareholders) and the Sole Overall Coordinator and the
Joint Global Coordinators (for themselves and on behalf of the Underwriters). The Offer Price is
currently expected to be not more than HK$0.40 per Offer Share and not less than HK$0.32 per
Offer Share. The Sole Overall Coordinator and the Joint Global Coordinators (for themselves
and on behalf of the Underwriters) may, with the consent of our Company (for ourselves and on
behalf of our Selling Shareholders), reduce the indicative Offer Price range stated in this
prospectus at any time prior to the Price Determination Date. In such case, a notice of the
reduction of the indicative Offer Price range will be published on the Stock Exchange’s website
at www.hkexnews.hk and our Company’s website at www.gzshqj.com .
If the Sole Overall Coordinator and the Joint Global Coordinators (for themselves and on
behalf of the Underwriters) and our Company (for ourselves and on behalf of our Selling
Shareholders) are unable to reach an agreement on the Offer Price on the Price Determination
Date, or such later date or time as may be agreed between the Sole Overall Coordinator and the
Joint Global Coordinators (for themselves and on behalf of the Underwriters) and our Company
(for ourselves and on behalf of our Selling Shareholders), the Share Offer will not proceed and
will lapse.
RESTRICTIONS ON SHARE OFFER AND SALE OF OFFER SHARES
Save as mentioned above, no action has been taken in any jurisdiction other than Hong
Kong to permit a Share Offer or the general distribution of this prospectus. Accordingly, this
prospectus may not be used for the purpose of, and does not constitute, an offer or invitation in
relation to the Share Offer in any jurisdiction or, in any circumstance 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 any
applicable laws, rules and regulations of such jurisdictions pursuant to registration with or
authorisation by the relevant regulatory authorities as an exemption therefrom.
INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER
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Prospective investors for the Offer Shares should consult their financial advisers and take
legal advice as appropriate, to inform themselves of, and to observe the applicable laws, rules
and regulations of any relevant jurisdictions.
The Offer Shares are offered for subscription solely on the basis of the information
contained and the representations made in this prospectus. No person is authorised in connection
with the Share Offer to give any information, or to make any representation, not contained in
this prospectus. Any information or representation not contained herein shall not be relied upon
as having been authorised by our Company, our Selling Shareholders, the Sole Sponsor, the Sole
Overall Coordinator, the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead
Managers, the Underwriters, any of their respective directors, officers, employees, agents,
representatives or any other person or party involved in the Share Offer.
Each person acquiring the Offer Shares will be required to confirm, or be deemed by
his/her/its acquisition of the Offer Shares to have confirmed, that he/she/it is aware of the
restrictions on offer and sale of the Offer Shares described in this prospectus and that he/she/it
is not acquiring, and has not been offered, any Offer Shares in circumstances that contravene
any such restrictions.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
Further details of the structure and conditions of the Share Offer are set out in the section
headed “Structure and conditions of the Share Offer” of this prospectus.
SALE OF THE SALE SHARES BY OUR SELLING SHAREHOLDERS
The Share Offer consists of 40,625,000 Sale Shares being sold by our Selling Shareholders.
We estimate that the net proceeds to our Selling Shareholders from the sale of the Sale Shares
(after deduction of proportional underwriting fees and estimated expenses payable by our Selling
Shareholders in relation to the Share Offer) and assuming an Offer Price of HK$0.36 (being the
mid-point of the Offer Price range of HK$0.32 to HK$0.40 per Offer Share) will be
approximately HK$13.6 million. We will not receive any of the proceeds from the sale of the
Sale Shares by our Selling Shareholders.
Details of our Selling Shareholders are set out in the section headed “Statutory and general
information – 11. Particulars of our Selling Shareholders” in Appendix V to this prospectus.
APPLICATION FOR LISTING ON THE STOCK EXCHANGE
Application has been made to the Listing Committee for the listing of, and permission to
deal in, the Shares in issue and to be issued as mentioned in this prospectus on the Stock
Exchange.
INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER
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Under section 44B(1) of the Companies (Miscellaneous Provisions) Ordinance, if the
permission for the Shares offered under this prospectus to be listed on the Stock Exchange has
been refused before the expiration of three weeks from the date of the closing of the Offer or
such longer period not exceeding six weeks as may, within the said three weeks, be notified to
our Company for permission by or on behalf of the Listing Committee, then any allotment made
on an application in pursuance of this prospectus shall, whenever made, be void.
No part of the Shares or the loan capital of our Company is listed, traded or dealt in on any
other stock exchange. At present, our Company is not seeking or proposing to seek listing of, or
permission to deal in, any part of the Shares or loan capital on any other stock exchange. Only
securities registered on the branch register of members of our Company kept in Hong Kong may
be traded on the Stock Exchange unless the Stock Exchange otherwise agrees.
HONG KONG BRANCH SHARE REGISTER AND THE STAMP DUTY
All Shares issued by us pursuant to applications made in the Public Offer will be registered
on our branch register of members to be maintained by our Hong Kong Branch Share Registrar,
Tricor Investor Services Limited, in Hong Kong. Our principal register of members will be
maintained by Conyers Trust Company (Cayman) Limited in the Cayman Islands.
No stamp duty is payable by applicants in the Share Offer.
Dealings in the Offer Shares registered on our Hong Kong branch register will be subject to
Hong Kong stamp duty.
PROFESSIONAL TAX ADVICE RECOMMENDED
Potential investors in the Share Offer 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 Offer Shares. None
of our Company, our Selling Shareholders, the Sole Sponsor, the Sole Overall Coordinator, the
Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Underwriters,
any of their respective directors or any other person or party involved in the Share Offer 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
Offer Shares.
SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS
Subject to the granting of the listing of, and permission to deal in, the Shares on the Stock
Exchange and compliance 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 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 trading day. All activities under CCASS are subject to the
General Rules of HKSCC and HKSCC Operational Procedures in effect from time to time.
INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER
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All necessary arrangements have been made for the Shares to be admitted into CCASS.
Investors should seek the advice of their stockbroker or other professional advisor for details of
those settlement arrangements and how such arrangements will affect their rights and interests.
PROCEDURES FOR APPLICATION FOR PUBLIC OFFER SHARES
The application procedure for the Public Offer Shares is set out in the section headed “How
to apply for the Public Offer Shares” of this prospectus.
EXCHANGE RATE CONVERSION
Solely for your convenience, this prospectus contains translations of certain Renminbi
amounts into Hong Kong dollars or US dollars at specified rates. Y ou should not construe these
translations as representations that the Renminbi amounts could actually be, or have been,
converted into Hong Kong dollar amounts and US dollars amounts (as applicable) at the rates
indicated or at all. Unless we indicate otherwise, the translations of Renminbi amounts into
Hong Kong dollars have been made at the rate of RMB0.8933 to HK$1.00.
ROUNDINGS
Amounts and percentage figures, including share ownership and operating data in this
prospectus, may have been subject to rounding adjustments. In this prospectus, where
information is presented in thousands or millions, amounts of less than one thousand or one
million, as the case may be, have been rounded to the nearest hundred or hundred thousand,
respectively, 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, totals of rows or columns of numbers in tables may
not be equal to the apparent total of the individual items.
LANGUAGE
If there is any inconsistency between the English version of this prospectus and its Chinese
translation, the English version of this prospectus shall prevail. If there is any inconsistency
between the Chinese names of the PRC nationals, entities, departments, facilities, certificates,
titles, laws, regulations and the like mentioned in this prospectus and their English translations,
the Chinese names shall prevail.
WEBSITE
The contents of any website mentioned in this prospectus do not form a part of this
prospectus.
INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER
–7 0–


--- page 79 ---
DIRECTORS
Name Address Nationality
Executive Directors
Mr. Li Chenghua (ശ ) Room 1102, Block 9
Agile Garden Sunday
Nancun Town
Panyu District
Guangzhou
PRC
Chinese
Mr. Chen Liming (׼Room 601
2 Junlan First Street
Xingnan Avenue
Nancun Town
Panyu District
Guangzhou
PRC
Chinese
Independent non-executive Directors
Ms. Chong Sze Pui Joanne, MH
(ੵ་੃ )
Flat A, 10/F, Tower 9
Marinella
9 Welfare Road
Wong Chuk Hang
Hong Kong
Chinese
Ms. Cheung Bo Man ( ੵᘒ˖ ) Flat 05, 18/F
Block 6, Heng Fa Chuen
Hong Kong
Chinese
Ms. Y au Yin Hung (ࠀFlat D, 11/F
Pak Tak Court
Bedford Gardens, North Point
Hong Kong
Chinese
Please refer to the section headed “Directors and senior management” of this prospectus for
further information on our Directors.
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
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--- page 80 ---
PARTIES INVOLVED
Sole Sponsor and
Sole Overall Coordinator
Cinda International Capital Limited
A corporation licensed under the SFO to carry
on Type 1 (dealing in securities) and Type 6
(advising on corporate finance) regulated
activities
45/F., COSCO Tower
183 Queen’s Road Central
Hong Kong
Joint Global Coordinators Cinda International Capital Limited
A corporation licensed under the SFO to carry
on Type 1 (dealing in securities) and Type 6
(advising on corporate finance) regulated
activities
45/F, COSCO Tower
183 Queen’s Road Central
Hong Kong
ICBC International Securities Limited
A corporation licensed under SFO to carry on
Type 1 (dealing in securities) and Type 4
(advising on securities) regulated activities
37/F., ICBC Tower
3 Garden Road
Hong Kong
CCB International Capital Limited
A corporation licensed under SFO to carry on
Type 1 (dealing in securities), Type 4 (advising on
securities) and Type 6 (advising on corporate
finance) regulated activities
12/F, CCB Tower
3 Connaught Road Central
Central, Hong Kong
Yuen Meta (International) Securities Limited
A corporation licensed under SFO to carry on
Type 1 (dealing in securities) regulated activity
Room 1101–1104, 11/F
Harcourt House, 39 Gloucester Road
Wan Chai, Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
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China Sunrise Securities (International)
Limited
A corporation licensed under SFO to carry on
Type 1 (dealing in securities) and Type 4
(advising on securities) regulated activities
Unit 4502, 45/F, The Center
99 Queen’s Road Central
Hong Kong
Joint Bookrunners and
Joint Lead Managers
Cinda International Capital Limited
A corporation licensed under the SFO to carry
on Type 1 (dealing in securities) and Type 6
(advising on corporate finance)
regulated activities
45/F, COSCO Tower
183 Queen’s Road Central
Hong Kong
ICBC International Securities Limited
A corporation licensed under SFO to carry on
Type 1 (dealing in securities) and Type 4
(advising on securities) regulated activities
37/F., ICBC Tower
3 Garden Road
Hong Kong
CCB International Capital Limited
A corporation licensed under SFO to carry on
Type 1 (dealing in securities), Type 4 (advising on
securities) and Type 6 (advising on corporate
finance) regulated activities
12/F, CCB Tower
3 Connaught Road Central
Central, Hong Kong
Yuen Meta (International) Securities Limited
A corporation licensed under SFO to carry on
Type 1 (dealing in securities) regulated activity
Room 1101–1104, 11/F
Harcourt House, 39 Gloucester Road
Wan Chai, Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
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China Sunrise Securities (International)
Limited
A corporation licensed under SFO to carry on
Type 1 (dealing in securities) and Type 4
(advising on securities) regulated activities
Unit 4502, 45/F, The Center
99 Queen’s Road Central
Hong Kong
ABCI Capital Limited (only as a Joint
Bookrunner)
A corporation licensed under the SFO to carry
on Type 1 (dealing in securities) and Type 6
(advising on corporate finance) regulated
activities
11/F., Agricultural Bank of China Tower
50 Connaught Road Central
Hong Kong
ABCI Securities Company Limited (only as a
Joint Lead Manager)
A corporation licensed under SFO to carry on
Type 1 (dealing in securities) and Type 4
(advising on securities) regulated activities
10/F., Agricultural Bank of China Tower
50 Connaught Road Central
Hong Kong
CEB International Capital Corporation Limited
A corporation licensed under SFO to carry on
Type 1 (dealing in securities), Type 4 (advising on
securities) and Type 6 (advising on corporate
finance) regulated activities
22/F, AIA Central
1 Connaught Road Central
Central, Hong Kong
China Everbright Securities (HK) Limited
A corporation licensed under SFO to carry on
Type 1 (dealing in securities), Type 4 (advising on
securities), Type 6 (advising on corporate
finance) and Type 9 (asset management) regulated
activities
33/F, Everbright Centre
108 Gloucester Road
Wan Chai, Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
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China Industrial Securities International
Capital Limited
A corporation licensed under the SFO to carry
on Type 1 (dealing in securities) and Type 6
(advising on corporate finance) regulated
activities
32/F, Infinitus Plaza
199 Des V oeux Road Central
Sheung Wan, Hong Kong
CMB International Capital Limited
A corporation licensed under the SFO to carry
on Type 1 (dealing in securities) and Type 6
(advising on corporate finance) regulated
activities
45th Floor, Champion Tower
3 Garden Road, Central
Hong Kong
CMBC Securities Company Limited
A corporation licensed under SFO to carry on
Type 1 (dealing in securities) and Type 4
(advising on securities) regulated activities
45/F, One Exchange Square
8 Connaught Place
Central, Hong Kong
Eddid Securities and Futures Limited
A corporation licensed under SFO to carry on
Type 1 (dealing in securities), Type 2 (dealing in
future contracts), Type 3 (leveraged foreign
exchange trading), Type 4 (advising on
securities), Type 5 (advising on future contracts)
and Type 9 (asset management) regulated
activities
21/F, CITIC Tower
1 Tim Mei Avenue
Central, Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
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Gear Securities Investment Limited
A corporation licensed under SFO to carry on
Type 1 (dealing in securities) and Type 4
(advising on securities) regulated activities
7/F, China Paint Building
1163 Canton Road, Mongkok
Kowloon, Hong Kong
Grand Moore Capital Limited
A corporation licensed under the SFO to carry
on Type 1 (dealing in securities) and Type 6
(advising on corporate finance) regulated
activities
Unit 1401, 14/F., Lippo Sun Plaza
28 Canton Road, Tsim Sha Tsui
Kowloon, Hong Kong
Livermore Holdings Limited
A corporation licensed under SFO to carry on
Type 1 (dealing in securities) and Type 4
(advising on securities) regulated activities
Unit 1214A 12/F Tower II
Cheung Sha Wan Plaza
833 Cheung Sha Wan Road
Kowloon, Hong Kong
Realord Asia Pacific Securities Limited
A corporation licensed under SFO to carry on
Type 1 (dealing in securities) regulated activity
Suite 2402, 24/F, Jardine House
1 Connaught Place
Central, HK
SBI China Capital Financial Services Limited
A corporation licensed under SFO to carry on
Type 1 (dealing in securities), Type 4 (advising on
securities) and Type 9 (asset management)
regulated activities
4/F, Henley Building
No. 5 Queen’s Road Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
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--- page 85 ---
Soochow Securities International Brokerage
Limited
A corporation licensed under SFO to carry on
Type 1 (dealing in securities) and Type 4
(advising on securities) regulated activities
Level 17, Three Pacific Place
1 Queen’s Road East
Hong Kong
SPDB International Capital Limited
A corporation licensed under SFO to carry on
Type 1 (dealing in securities) and Type 6
(advising on corporate finance) regulated
activities
33/F, SPD Bank Tower
1 Hennessy Road
Hong Kong
Zheshang International Financial Holdings Co.,
Limited
A corporation licensed under SFO to carry on
Type 1 (dealing in securities), Type 2 (dealing in
future contracts), Type 4 (advising on securities),
Type 5 (advising on future contracts) and Type 9
(asset management) regulated activities
Room 1703–06, 17th floor
Infinitus Plaza
199 Des V oeux Road Central
Sheung Wan, Hong Kong
Zhongtai International Securities Limited
A corporation licensed under SFO to carry on
Type 1 (dealing in securities) and Type 4
(advising on securities) regulated activities
19/F Li Po Chun Chambers
189 Des V oeux Road Central
Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
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--- page 86 ---
Legal advisers to our Company As to the laws of Hong Kong
Hastings & Co.
5th Floor, Gloucester Tower
The Landmark
11 Pedder Street
Central
Hong Kong
As to the laws of the PRC
China Commercial Law Firm
21–25/F
HKCTS Tower
4011 Shennan Road
Futian District
Shenzhen
PRC
As to the laws of the Cayman Islands
Conyers Dill & Pearman
29th Floor
One Exchange Square
8 Connaught Place
Central
Hong Kong
Legal advisers to the Sole Sponsor
and the Underwriters
As to the laws of Hong Kong
Khoo & Co.
In Association with Beijing Kangda (H.K.) Law
Firm
In association with Michael Ngai & Co.
Suite 2105
21/F, Central Plaza
18 Harbour Road, Wanchai
Hong Kong
As to the laws of the PRC
Jingtian & Gongcheng
34/F, Tower 3
China Central Place
77 Jianguo Road
Beijing, 100025
PRC
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
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--- page 87 ---
Auditor and reporting accountant PricewaterhouseCoopers
Certified Public Accountants
Registered Public Interest Entity Auditor
22/F, Prince’s Building
Central
Hong Kong
Industry consultant Frost & Sullivan (Beijing) Inc., Shanghai
Branch Co.
2504 Wheelock Square
1717 Nanjing West Road
Shanghai 200040
China
Property Valuer Roma Appraisals Limited
22/F., China Overseas Building
139 Hennessy Road
Wan Chai
Hong Kong
Compliance adviser Cinda International Capital Limited
45/F., COSCO Tower
183 Queen’s Road Central
Hong Kong
Receiving bank Hong Kong Industrial and Commercial Bank of
China (Asia) Limited
33/F., ICBC Tower
3 Garden Road, Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
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Registered office Cricket Square
Hutchins Drive
PO Box 2681
Grand Cayman, KY1- 1111
Cayman Islands
Headquarters and principal place of
business in the PRC
3/F, Office Block
36 Xinguang Road
Xinzao Town
Panyu District
Guangzhou
PRC
Principal place of business in
Hong Kong
5th Floor Gloucester Tower
The Landmark
11 Pedder Street
Central
Hong Kong
Company’s website www.gzshqj.com
(information on this website does not form part of
this prospectus)
Company secretary Ms. Law Kwok Wing ( ᖯ࿈൘ ), HKICP A
Unit B, 17/F
United Centre
95 Queensway
Hong Kong
Authorised representatives
(for the purpose of
the Listing Rules)
Mr. Li Chenghua
Room 1102, Block 9
Agile Garden Sunday
Nancun Town
Panyu District
Guangzhou
PRC
Ms. Law Kwok Wing, HKICP A
Unit B, 17/F
United Centre
95 Queensway
Hong Kong
CORPORATE INFORMATION
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--- page 89 ---
Audit Committee Ms. Chong Sze Pui Joanne, MH (Chairperson)
Ms. Cheung Bo Man
Ms. Y au Yin Hung
Remuneration Committee Ms. Cheung Bo Man (Chairperson)
Ms. Chong Sze Pui Joanne, MH
Ms. Y au Yin Hung
Nomination Committee Ms. Y au Yin Hung (Chairperson)
Ms. Chong Sze Pui Joanne, MH
Ms. Cheung Bo Man
Investment Committee Ms. Chong Sze Pui Joanne, MH (Chairperson)
Ms. Cheung Bo Man
Ms. Y au Yin Hung
Principal share registrar and transfer
office in the Cayman Islands
Conyers Trust Company (Cayman) Limited
Crickets Square
Hutchins Drive
P .O. Box 2681
Grand Cayman KY1- 1111
Cayman Islands
Hong Kong branch share registrar
and transfer office
Tricor Investor Services Limited
17/F, Far East Finance Centre
16 Harcourt Road
Hong Kong
Principal banker Industrial and Commercial Bank of China
Limited, Guangzhou Huanan Sub-branch
Wanbo Centre
Yingbin Road
Nancun Town
Panyu District
Guangzhou
PRC
CORPORATE INFORMATION
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--- page 90 ---
The information and statistics set out in this section and other sections of this
prospectus were extracted from the report prepared by Frost & Sullivan, which was
commissioned by us, and from various official government publications and other publicly
available publications. We engaged Frost & Sullivan to prepare the Frost & Sullivan Report,
an independent industry report, in connection with the Share Offer . The information from
official government sources has not been independently verified by us, the Sole Sponsor , the
Sole Overall Coordinator , the Joint Global Coordinators, Joint Bookrunners, Joint Lead
Managers, Underwriters, any of their respective directors and advisers, or any other persons
or parties involved in the Share Offer , and no representation is given as to its accuracy.
ENVIRONMENTAL CLEANING AND MAINTENANCE SERVICE MARKET ANALYSIS
IN THE PRC
Definition and classification
Environmental cleaning and maintenance service is a type of service that encompasses
effective cleaning, sanitation, and maintenance through the use of water, detergent, equipment,
and any other resources to improve the overall hygiene level of the environment. In the Industry
Report, environmental cleaning and maintenance service represents cleaning and maintenance in
various commercial, domestic, and environmental contexts, and it can be categorised into three
major types, namely property cleaning, public space cleaning and other cleaning. The public
space cleaning category mainly includes public hygienic cleaning service, which is also referred
as “environmental hygiene service”. Each major type contains three sub-types or fields of
service, which are general cleaning, waste management, and other services. General cleaning is
referred to cleaning and maintenance of area or surface; waste management represents waste
collection, disposal and transportation; other service represents any extended service that is
exclusive from the previous two types.
Types of services
Property cleaning is cleaning service generally performed in areas belonging to the
facilities, such as buildings, parking lots, garden and public area. Property refers to residential,
commercial, public, industrial, government-related property, shopping malls, schools, hospitals,
airports, and others. Public space cleaning represents cleaning of any urban and rural public
areas except for property that is accessible by the public, such as street, public squares, parks
and beaches. Other cleaning includes cleaning services provided in area that does not belong to
property or public space, waste collection and transportation as well as value-added service
including road construction and maintenance and properties’ cistern cleaning.
Market size of property and public space cleaning sectors in the PRC
The environmental cleaning and maintenance market in the PRC mainly comprise and is
largely dominated by property cleaning and public space cleaning sectors. The market size of
these two sectors combined is expected to increase from RMB270.7 billion in 2018 to
RMB622.8 billion by 2027. The market size of property cleaning is expected to increase
significantly from RMB71.3 billion from 2018 to RMB165.4 billion in 2027. The CAGR of the
market size of property cleaning from 2018 to 2022 is 10.3%, indicating an overall stable
growth, and the growth is expected to sustain with a CAGR from 2023 to 2027 to be 8.8%. The
CAGR of the combined market size from 2018 to 2022 is 10.3%, with a CAGR from 2023 to
2027 of 8.9% in the predicted period.
INDUSTRY OVERVIEW
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Market size of property and public space cleaning sectors (2018 – 2027E)
0
100
200
300
400
500
600
700
2018 2019 2020 2021 2022 2023E 2024E 2025E 2027E 2026E
71.3 79.6 89.0 93.6 105.1 116.7 129.4 141.4 153.0
Market size of public space cleaning
Market size of property cleaning
199.4 219.9 240.4 264.7 295.1 326.1
358.1 389.3 422.7
270.7 299.5 329.4 358.3 400.2 442.8 487.5 530.7
575.7
165.4
457.4
622.8
CAGR 2018–2022 2023E–2027E
Total market size 10.3% 8.9%
Public Space Cleaning 10.2% 9.1%
Property Cleaning 10.3% 8.8%
Market Size
(RMB Billion)
Note: The market size of the other cleaning sector, including services such as river and water surface cleaning,
animal corpse disposal, pest control and fumigation, one-off post construction cleaning, and etc., is
excluded for being relatively small in size.
Source: National Bureau of Statistics of the PRC, Frost & Sullivan Analysis
The market demand for public space cleaning services in the PRC is mainly driven by the
need of public services and increasing consciousness toward public health. Thus, the
procurement of public services is widely encouraged, and public-private partnership models have
been primarily promoted in more aspects of public product and public service fields, which
includes the public space cleaning services. In general, projects in public cleaning sector are
usually resulted with a higher level of profit margin than that of the property cleaning sector.
The size of the public space cleaning sector recorded an increase with a CAGR of 10.2% from
RMB199.4 billion in 2018 to RMB295.1 billion in 2022. Meanwhile, COVID-19 outbreak has
also presented the PRC government with challenges in public health, consequently leading to the
need to enhance the current suppliers’ capabilities to ensure public health and safety. Further,
adverse impact may arise from the macroeconomic shutdown due to the pandemic or inefficiency
in service delivery upon related policy of quarantine or COVID test required for workers,
although the growing awareness towards public health and hygiene conditions has been leading
to higher market demand for property and public space cleaning services. The market size of
public cleaning sector in the PRC is forecasted to reach RMB457.4 billion in 2027, representing
a CAGR of 9.1% from 2023 to 2027.
Due to the increasingly complicated cleaning requirements, property management groups,
tenants, and owners will outsource the cleaning service to the professional cleaning services
providers in order to reduce their overall operation costs. Although there were mild fluctuations
in the real estate market over the last five years, the volume of floor space completed per annual
construction of property building in the PRC remains robust. This serves as a strong market
drive for the development and growth of property cleaning sector, and the market size of
property cleaning sector soared from RMB71.3 billion in 2018 to RMB105.1 billion in 2022, at a
CAGR of 10.3%. In the future, although there will be less capital investment in new property
constructions, the increasing industrial standard toward property cleaning service quality driven
by growing public health awareness will continuously contribute to the growth in property
cleaning sector. The size of the property cleaning sector services market in the PRC is projected
to grow at a CAGR of 8.8% from 2023 to 2027, reaching RMB165.4 billion by 2027.
Market size of property and public space cleaning sectors in Guangdong province
The market size of property and public space cleaning sectors in Guangdong province
increased from RMB32.2 billion in 2018 to RMB53.5 billion in 2022, representing a CAGR of
13.6%. The surge in the property cleaning sector was primarily caused by the robust growth in
real estate market in Guangdong province, which was driven by the fast-growing local economy,
generating enormous demand for related cleaning services.
Growth of the combined market size is expected to keep its momentum in the future,
arising from RMB60.1 billion in 2023 to RMB95.6 billion in 2027 with a CAGR of 12.3%. The
market size of public space cleaning sector will still take the majority of the market share, as the
expenditure on the public service procurement by Guangdong’s government stays high. In
comparison, the property cleaning sector in Guangdong province has experienced a more
INDUSTRY OVERVIEW
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significant growth from 2018 to 2022 with a CAGR of 10.7%, which is anticipated to sustain its
growth momentum at a CAGR of 12.8% from 2023 to 2027.
Market size of property and public space cleaning sectors in
Guangdong province (2018 – 2027E)
0
10
20
30
40
50
60
70
80
90
100
2027E2026E2018 2019 2020 2021 2022 2023E 2024E 2025E
5.3 8.1 7.4 7.5 7.9 8.6 9.5 10.7 12.2
Market size of public space cleaning
Market size of property cleaning
26.9 30.0 31.7 38.6 45.6 51.5 57.6 64.5 72.6
32.2 38.1 39.1 46.1 53.5 60.1 67.1
75.2
84.8
14.0
81.6
95.6
Market Size
(RMB Billion)
CAGR 2018–2022 2023E–2027E
Total market  size 13.6% 12.3%
Public Space Cleaning 14.2% 12.2%
Property Cleaning 10.7% 12.8%
Source: National Bureau of Statistics of the PRC, Frost & Sullivan Analysis
Market size of property cleaning sector in Guangdong province
Being one of the most prosperous areas in the PRC, Guangdong province has cemented its
position as the country’s largest provincial economy. The positive economic atmosphere in
Guangdong is helping the fast development of the real estate market, hence continuously
boosting the market size of property cleaning sector. The market size experienced an increase
from RMB5.3 billion to RMB7.9 billion from 2018 to 2022, representing a CAGR of 10.7%.
The growth of the real estate markets in major cities in Guangdong is expected to be stable
in the future due to the PRC government’s financial regulation. As the PRC’s banking and
insurance regulators started restricting the bank loans that flow into the property market, the
growth rate was immediately regulated and stabilized. The overall steady growth in real estate
market continuously creates demand for property cleaning services. The market size of property
cleaning sector in Guangdong province is expected to rise from RMB8.6 billion to RMB14.0
billion with a CAGR of 12.8% from 2023 to 2027, due to the rapid growth of floor space of
commercial buildings sold in Guangdong province. The market size of commercial property
cleaning is predicted to increase from RMB4.0 billion in 2023 to RMB6.9 billion in 2027, with a
CAGR of 14.1%.
Market Size of property cleaning in Guangdong province (2018 – 2027E)
0
2
4
6
8
10
12
14
16
18
20

2.9 4.3 3.4 3.3 3.6 4.0 4.5 5.1 5.9
Market size of non-commercial property cleaning
Market size of commercial property cleaning
2.4 3.8
4.0 4.2 4.3 4.6 5.0 5.6 6.3
5.3 8.1
7.4 7.5 7.9 8.6 9.5 10.7 12.2
6.9
7.1
14.0
Market Size
(RMB Billion)
CAGR 2018–2022 2023E–2027E
Total market size 10.7% 12.8%
Commercial Property Cleaning 5.7% 14.1%
Non-commercial Property Cleaning 16.0% 11.5%
2018 2019 2020 2021 2022 2023E 2024E 2025E 2027E 2026E
Note: Estimation includes primary service categories such as general cleaning of residential, commercial, and
industrial properties
Source: National Bureau of Statistics of the PRC, Frost & Sullivan Analysis
Average annual salary in environmental cleaning and maintenance industry in the PRC and
Guangdong
Since the environmental cleaning and maintenance services in the PRC are characterised by
low-technology and labour-intensive in nature, the labour cost constitutes the major portion of
the overall cost. The average annual salary stays at a consistent level for labours working in
various environmental cleaning and maintenance scenarios. As a result of steady economic
growth and increasing standards of living, the average annual salary for workers in the PRC’s
environment cleaning and maintenance service market increased from RMB56,670 in 2018 to
RMB69,130 in 2022 at a CAGR of 5.1% from 2018 to 2022. The identical reduction in average
INDUSTRY OVERVIEW
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salary in 2019 is mainly caused by the declining demand of the downstream market, which is
greatly affected by the performance of real estate market.
The growth rate of the PRC’s economy has shown quick recovery after the COVID-19
pandemic. As economy rebounds, the average annual salary is expected to reach RMB89,568 in
2027 at a CAGR of 5.6%.
Average annual salary in environmental cleaning and
maintenance industry (2018 – 2027E)
40000
50000
60000
70000
80000
90000
100000
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
 Average annual salary
Growth rate
56,670 66,471 69,130 71,895 75,634 79,415 84,418 89,568
61,158 63,914
Average annual salary
(RMB)
Growth rate (%)
CAGR 2018–2022 2023E–2027E
Average salary 5.1% 5.6%
7.9%
4.5% 4.0% 4.0% 4.0%
5.2% 5.0%
6.3% 6.1%
2018 2019 2020 2021 2022 2023E 2024E 2025E 2027E 2026E
Note: Data is acquired under “Water conservancy, environment and public facilities management industry”
category, which includes the workers from the environmental cleaning and maintenance industry
Source: National Bureau of Statistics of the PRC, Frost & Sullivan Analysis
Compared to other areas, the cost structure for environmental cleaning and maintenance
industry stays the same as the labour cost still being the major part of the overall operation cost
in Guangdong province. Along with the Guangdong’s rapidly growing economy, the average
annual salary has recorded an increase from RMB53,118 to RMB55,706 with a CAGR of 1.2%
from 2018 to 2022. It is noteworthy that the average annual salary in Guangdong province
experienced a huge increase in 2017 since Guangdong government deepened the supply-side
structural reform and boosted the performance of service industry significantly.
Market drivers
Urbanisation enabling market growth
With the gradual improvement of national urbanisation level, the corresponding area of
urban development is increasing rapidly in recent years. As a result, urbanisation construction
has released a greater amount of residential and commercial property cleaning, city street
cleaning, waste transportation and management, public facility and utility cleaning, as well as
other urban area demanding for environmental cleaning and maintenance service. A majority of
property owners and government agencies choose to outsource cleaning services to companies
with a well-established industrial chain and worker expertise, which further lead to the demand
for growth of environmental cleaning and maintenance service providers. In particular,
Guangdong province, as one of the most rapidly growing regions in the PRC and where the
Greater Bay Area is situated, its urbanisation level and urban population has went through
noticeable improvement in the past five years. Along with increasing amount of city streets,
facilities and property buildings in the urban area, this will further boost the demand for
environmental cleaning and maintenance services in Guangdong province. This will continuously
serves as an effective driver for the overall market growth in the near future as well.
Growing demand for environmental cleaning and maintenance services in the society
Environmental cleaning and maintenance service serves an essential part of public health
and cleaning and maintenance condition. As the number of residential, commercial and all other
types of properties have been growing in recent years, service receivers including large property
management groups and government agencies in the PRC have released numerous environmental
cleaning and maintenance projects. As those projects usually hold a high standard in working
expertise and service quality, large property management groups and the PRC government
agencies will choose to outsource service to third party companies, who are capable of
completing those projects with greater efficiency at a more economical cost.
INDUSTRY OVERVIEW
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Rising complexity and requirements for cleaning service
With the increasing standard of living, rising awareness toward hygiene level, and growing
property market, people increasingly have higher expectations for environmental cleaning and
maintenance. Environmental cleaning and maintenance service providers continue to expand
their service coverage and quality in order to provide clients with wider service offering to meet
customers’ needs and requirements. Moreover, the ability in offering a comprehensive range of
environmental cleaning and maintenance services could save customers’ time and cost from
engaging different services providers.
Market trend
Increasing awareness toward environmental cleaning and maintenance
Along with the increasing per capita annual disposable income nationwide, many people
have experienced a higher standard of living. As people are seeking for a healthier lifestyle due
to the rising affordability, they obtain greater awareness toward the overall level of
environmental cleaning and maintenance in cities, towns, communities, and households. As it is
an industry norm for the PRC’s society to outsource service to third party service provider for
general cleaning, waste management and other types of service, the demand for these services
will increase along with the rising awareness and affordability. Meanwhile, criteria such as
service providers’ branding, reputation and tracking record will become more essential for
clients to choose environmental cleaning and maintenance service providers.
Gradual mechanisations and digitalisation of environmental cleaning and maintenance service
market
Majority of environmental cleaning and maintenance service tasks are performed by human
labour. Cleaning robots can be used as a supplement of human workers to complete numerous
cleaning works that are simple, highly repetitive or associated with high risk, such as interior
wall and window cleaning of residential and commercial buildings. Furthermore, information
system is developed and implemented to obtain real-time data of machine and vehicle to
improve operational efficiency and service quality. Those technological advanced applications
mentioned above are adopted as critical methods to improve on efficiency and quality of service
delivery, which enable companies to gain advantages. Nevertheless, Guangdong province is one
of the mature and fast-growing regions for the initial development of environmental cleaning
and maintenance service industry. As such, the overall trend of mechanical and digital
transformation will bring a new growing potential to the industry in the next five years, which
will lead to a foreseeable increase in market size of environmental cleaning and maintenance
service market in Guangdong province, along with that of the PRC.
Higher quality of service delivery and wider range of service solution being offered
It is common application in the environmental cleaning and maintenance service industry
for customers to outsource service to a third-party service provider. This has led to rising
standard as well as intensive market competition among service-providing companies. In order to
gain competitive advantage, a growing number of companies are developing and working to
provide a wider range of environmental cleaning and maintenance service solution. Furthermore,
some value-added services are additionally provided and help service providers to spread out
their power of influence in the current supply chain.
Opportunities
Trend in technological advancement
As the overall level of technological advancement is improving in modern society,
numerous applications of information system are applied to improve efficiency and achieve
business process automation across industries. This trend provides an opportunity for the
informatisation and intelligence of the environmental cleaning and maintenance service.
Informatisation and intelligence of environmental cleaning and maintenance will be used to
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manage daily operation, such as tracking attendance and working hours of staff, along with fleet
management system to monitor activities of cleaning vehicles.
Rising standard of environmental cleaning and maintenance service
The increase in overall standard of living in recent years has contributed to greater public
awareness toward hygienic environment. The rising standard for community’s environmental
cleaning and maintenance level has further led to growing amount of cleaning and maintenance
projects. This is mainly due to the lack of professional experience, expertise and capability for
individual property management companies and government agencies to meet the rising hygienic
standard. Further, it also serves as an opportunity for large companies primarily providing
property cleaning services to capture the increasing demand in public space cleaning, through
purchasing cleaning vehicles to initially meet the standardized tendering requirements released
by government agencies.
Challenges
Labour shortage
Environmental cleaning and maintenance service industry in the PRC is highly labour
intensive, and labour costs account for a greater proportion of expenses apart from the cost of
equipment and machinery. Meanwhile, environmental cleaning and maintenance workers are
ageing rapidly with an average age of more than 40 years old. However, the employee turnover
rate is relatively high in the industry due to long working hours and low hourly wages. Due to
factors such as repetitive and heavy workload, long working hours and lower pay associated
with environmental cleaning and maintenance tasks, it is difficult for the industry to attract new
entrants. Given the labour shortage, it is common practice to outsource the hiring process to
human resource management agencies and to hire retired workers with working experience and
expertise, which will reduce cost at the same time.
Increasing operating costs
Given the fact that projects undertaken by large scale market players are typically sizeable
which involves substantial labour force and physical cleaning work, occurrence of accidents
resulting in bodily injury and property damages are not uncommon in the industry. Costs may
continue to increase due to pressures faced by services providers to implement safety,
environmental and health enhancements to maintain a safe work environment, to keep accident
rate low, and to improve welfare requirements of workers.
Impact of COVID-19
The outbreak of COVID-19 in 2020 has a gradual and continuous positive impact on the
environmental cleaning and maintenance service market. Due to the outbreak of COVID-19, the
PRC government has established related national policies to reinforce and standardised
large-scale cleaning and sanitising activities to improve cleaning and maintenance condition at
community level. As such, providing a clean and hygienic living environment has become an
essential part in pandemic control. Therefore, despite the adverse impact of COVID-19 pandemic
on the PRC’s economy, the environmental cleaning and maintenance service providers are able
to benefit from these unprecedented times. The increasing demand for service from the
downstream market will serve as an opportunity for the environmental cleaning and maintenance
service industry. The growing demand is anticipated to sustain at the post-pandemic stage as
well.
Market overview of the property cleaning and public space cleaning sectors in Guangdong
province
The market size of property and public space cleaning sectors in Guangdong province
increased from RMB32.2 billion in 2018 to RMB53.5 billion in 2022, representing a CAGR of
13.6%. The surge in the property cleaning sector was primarily caused by the robust growth in
real estate market in Guangdong province, which was driven by the fast-growing local economy,
generating enormous demand for related cleaning services. Growth of the aggregate market size
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of the two sectors is expected to keep its momentum in the future, rising from RMB60.1 billion
in 2023 to RMB95.6 billion in 2027 with a CAGR of 12.3%, with the public space cleaning
sector continuing to take up the majority of the market size.
Competition overview for property cleaning sector in Guangdong province
The property cleaning sector in the Guangdong province undergoes a stable development
phrase, along with intense market competitions. Comparing to the nationwide environmental
cleaning and maintenance service market, Guangdong province is considered as an essential
geographical region for industrial development, with a predominantly rapid growth in the
property cleaning sector. There are numeral key players in market specialising in property
cleaning, though aiming to provide national wide services as independent third party service
providers.
Top 5 industry participants accounted for 15.7% of the total market size in this sector.
Among the top 5 market participants, our Group achieved first place ranking with a market share
of 5.7%. The participants can be classified into two types: large-scale businesses as well as
small and medium-scale businesses. The large-scale businesses are able to secure contracts with
high-end properties as they have a well-known industry reputation and related professional
experiences. The small and medium-scale businesses, which have more flexibility, are able to
acquire smaller contracts with typically cheaper pricing and closer relationships with local
clients. Comparing to the public cleaning sector, the market of property cleaning sector is much
more labour intensive, thus the newcomers are not required to invest heavily on fixed assets,
reducing the entry barrier of this market. Therefore, this market sector has more competition
compare to the public cleaning sector.
Ranking and market share of leading companies by revenue in property cleaning sector in
Guangdong province (2022)
Ranking Company Company profile Market share
1 Our Group 5.7%2 Dijian Y angguang
Development (Shenzhen)
Co., Ltd.
based in Shenzhen and focusing on property cleaning services for
large-scale high-end landmark buildings in cities
4.4%
3 SYS Group founded in Shenzhen, it is a comprehensive cleaning company
integrating specialisation and diversification
2.2%
4 EIT Environmental
Development Group CO.,
Ltd
a listed company and offers solid wastes disposal and utilisation,
environment ecological rehabilitation, renewable resource
recycling, and other related services
1.8%
5 Shenzhen Y uhuang Cleaning
Service Co., Ltd.
founded in Shenzhen and mainly providing environmental cleaning
and maintenance with a strong focus in property cleaning sector
1.6%
Top five market participants 15.7%Others 84.3%
Source: Expert Interviews, Annual Reports of Companies, Frost & Sullivan Analysis
Competition overview for commercial property cleaning subsector in Guangdong province
The commercial property cleaning sector in the Guangdong province is a highly fragmented
market with intense competition, similar to that of Guangdong province’s property cleaning
market. Most market participants operate in the property cleaning sector with a critical focus on
providing commercial property service to clients, aligning with the visible growth potential of
commercial property segment. Commercial property cleaning serves as a rapidly growing and
predominant sector of property cleaning market in Guangdong province. When it comes to the
performance of key players in the sector, their overall ranking in terms of sales revenue
breakdown in commercial property cleaning sector stays consistent with that of the property
cleaning sector.
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The market concentration rate is relatively lower as top 5 industry participants accounted
for only 19.3% of the total market size in this sector. Among the top 5 market participants, our
Group achieved first place ranking with an estimated revenue of RMB291.3 million, representing
a market share of 7.3%. In contrast to the property cleaning sector in Guangdong province,
commercial property cleaning service providers in Guangdong province has witnessed significant
growth along with development of the overall regional market. However, they have experienced
lower concentration rate with other local service providers.
Ranking and market share of leading companies by revenue in commercial property
cleaning subsector in Guangdong province (2022)
Ranking Company Company profile Market share
1 our Group 7.3%2 Dijian Y angguang
Development (Shenzhen)
Co., Ltd.
based in Shenzhen and focusing on property cleaning services for
large-scale high-end landmark buildings in cities
5.3%
3 SYS Group founded in Shenzhen, it is a comprehensive cleaning company
integrating specialisation and diversification
2.6%
4 EIT Environmental
Development Group CO.,
Ltd
a listed company and offers solid wastes disposal and utilisation,
environment ecological rehabilitation, renewable resource
recycling, and other related services
2.3%
5 Shenzhen Y uhuang Cleaning
Service Co., Ltd.
founded in Shenzhen and mainly providing environmental cleaning
and maintenance with a strong focus in property cleaning sector
1.8%
Top five market participants 19.3%Others 80.7%
Source: Expert Interviews, Annual Reports of Companies, Industry Report
Entry barriers
Human resource management
Labour, tools, equipment and public space cleaning vehicles are major resources that are
necessary for companies to carry out environmental cleaning and maintenance service. Prior to
performing demanded service, substantial cash outlays at this initial stage for inquiring
resources, such as labour recruitment and training, wage payment, raw material and equipment
procurement. Sufficient fund and cash flow is required to cover those upfront expenses,
regardless of the variation in company size. As a result, capital capacity serves as a critical
requirement and potentially a barrier for new companies to enter into environmental cleaning
and maintenance service market. For instance, sufficient amount of machinery, equipment and
vehicles, such as garbage collection vehicles and waste suction vehicles, are necessary for
delivering services.
Moreover, it is essential to implement management strategies to achieve effective labour
allocation, increase the overall operational productivity, and eventually to deliver high-quality
service efficiently.
Client relationship and reputation
In environmental service industry, existing companies have well-established, stable and
long-term relationship with major clients in the PRC, mainly property management companies
and the PRC government bodies. Additionally, they have already earned outstanding reputation
and track record with strong expertise in providing high quality service. Thus, clients are likely
to have greater intention to inquire service from these companies, which has become an entry
barrier for new entrants. It is generally the industry norm or the requirement of the customer for
cleaning service providers to set up local project company or office for effective management
and deployment of labour.
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Market size of property and public space cleaning sectors in Beijing
The environmental cleaning and maintenance market in Beijing is similar to that of the
PRC, which is largely dominated by property cleaning and public space cleaning sectors. The
market size of these two sectors combined is expected to reach RMB26.7 billion by 2027. The
market size of property cleaning is expected to increase significantly from RMB4.1 billion from
2018 to RMB11.3 billion in 2027.
The CAGR of the market size of property cleaning from 2018 to 2022 is 13.8%, indicating
an overall stable growth, and the growth is expected to sustain with a CAGR from 2023 to 2027
to be 11.1%. The CAGR of the combined market size from 2018 to 2022 is 10.2%, with a CAGR
from 2023 to 2027 of 9.9%. In the next five years, the environmental cleaning and maintenance
service market will release substantial market demand.
Market size of property and public space cleaning sectors in Beijing (2018 – 2027E)
0
5
10
15
20
25
30
35
40

4.1 4.3 5.8 6.3 6.9 7.4 8.2 9.0 10.0
Market size of public space cleaning
Market size of property cleaning
7.4 8.2 8.8 9.4 10.1 10.9 11.8 12.9 14.111.5 12.5 14.6 15.7 17.0 18.3 20.0 21.9 24.1
11.3
15.4
26.7
Market Size
(RMB Billion)
CAGR 2018–2022E 2023E–2027E
Total market size 10.2% 9.9%
Public Space Cleaning 8.1% 9.1%
Property Cleaning 13.8% 11.1%
2018 2019 2020 2021 2022 2023E 2024E 2025E 2027E 2026E
Source: Industry report
Market size of property and public space cleaning sectors in Shanghai
The market size of property and public space cleaning sectors in Shanghai increased from
RMB13.9 billion in 2018 to RMB20.5 billion in 2022, representing a CAGR of 10.2%. The
market share of the property cleaning sector increased from 41.7% in 2018 to 42.4% in 2022,
and the proportion is anticipated to further grow to 44.3% in 2027. The overall development of
the property cleaning sector is primarily affected by the growth in real estate market in Shanghai
in the past five years, which is expected to sustain from 2023 to 2027. As such, the overall
growth will generate enormous market demand for environmental cleaning and maintenance
market.
In the next five years, growth of the combined market size is anticipated to keep its
momentum, arising from RMB22.1 billion in 2023 to RMB28.9 billion with a CAGR of 10.4%
in 2027. The market size of public space cleaning sector will continuously account for a
majority of the market share, with a higher level of expenditure on the public service
procurement from Shanghai government.
Market size of property and public space cleaning sectors in Shanghai (2018 – 2027E)
0
5
10
15
20
25
30
35
40

5.8 5.9 7.2 7.9 8.7 9.3 11.3 11.5
Market size of public space cleaning
Market size of property cleaning
8.1 8.8 9.5 10.5 11.8 12.8 15.3 14.813.9 14.7 16.7 18.4 20.5 22.1
10.1
13.9
14.0 26.6 26.3
12.8
16.1
28.9
Market Size
(RMB Billion)
CAGR 2018–2022E 2023E–2027E
Total market size 10.2% 10.4%
Public Space Cleaning 9.9% 10.1%
Property Cleaning 10.7% 10.9%
2018 2019 2020 2021 2022 2023E 2024E 2025E 2027E 2026E
Source: Industry report
Market size of property and public space cleaning sectors in Zhejiang Province
The market size of property and public space cleaning sectors in Zhejiang increased from
RMB51.7 billion in 2018 to RMB62.9 billion in 2022, representing a CAGR of 5.0%. The
overall development and growth of the property cleaning sector is primarily affected by the
increasing demand of property cleaning based upon the growth in real estate market in Zhejiang
in the past five years, which is expected to sustain from 2023 to 2027.
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The market size of the property cleaning sector will increase by a CAGR of 4.7% from
2023 to 2027. In the next five years, growth of the combined market size is anticipated to keep
its momentum, arising from RMB66.1 billion in 2023 to RMB83.9 billion in 2027 with a CAGR
of 6.1%. In comparison to the market of Beijing and Shanghai, the property and public space
cleaning market in Zhejiang will witness a greater growth potential.
Hangzhou, as the capital city of Zhejiang province, contributes greatly to the economic
growth of Zhejiang province. It is also the city which experience rapid growth in recent years
with its noticeable process of urbanisation. As a result, the demand for property and public space
cleaning combined in Hangzhou is continuously increasing.
Market size of property and public space cleaning sectors in Zhejiang Province
(2018 – 2027E)
0
10
20
30
40
50
60
70
80
90
100

38.6 29.7 35.3 40.2 43.5 46.0 53.0 54.3 54.6
Market size of public space cleaning
Market size of property cleaning
13.1
13.9 15.2 17.1 19.4 20.1
21.8 23.9 26.3
51.7
43.6 50.5 57.3 62.9 66.1
74.8 78.2 80.9
55.2
28.7
83.9
Market Size
(RMB Billion)
CAGR 2018–2022 2023E–2027E
Total market size 5.0% 6.1%
Public Space Cleaning 10.3% 9.3%
Property Cleaning 3.0% 4.7%
2018 2019 2020 2021 2022 2023E 2024E 2025E 2027E 2026E
Source: Industry report
Referring to the “2022 National Civil Transport Airport Production Statical Bulletin”
released by China’s Civil Aviation Administration, Chongqing Jiangbei International Airport,
Guangzhou Baiyun International Airport and Sanya Phoenix International Airport ranked 2nd,
1st, and 21st out of 254 airports in the PRC in terms of annual passenger throughput in 2022.
SOURCE OF INFORMATION
In connection with the Share Offer, we have engaged Frost & Sullivan to conduct a detailed
analysis and to prepare an industry report on the environmental cleaning and maintenance
service market. Frost & Sullivan is an independent global market research and consulting
company founded in 1961 and is based in the United States. Services provided by Frost &
Sullivan include market assessments, competitive benchmarking, and strategic and market
planning for a variety of industries.
We have included certain information from the industry report in this prospectus because
we believe such information facilitates an understanding of the environmental cleaning and
maintenance service market for potential investors. Frost & Sullivan prepared its report based on
its in-house database, independent third party reports and publicly available data from reputable
industry organisations. Where necessary, Frost & Sullivan contacts companies operating in the
industry to gather and synthesise information in relation to the market, prices and other relevant
information. Frost & Sullivan believes that the basic assumptions used in preparing the industry
report, including those used to make future projections, are factual, correct and not misleading.
Frost & Sullivan has independently analysed the information, but the accuracy of the
conclusions of its review largely relies on the accuracy of the information collected. Frost &
Sullivan research may be affected by the accuracy of these assumptions and the choice of these
primary and secondary sources.
We have agreed to pay Frost & Sullivan a fee of RMB210,000 for the preparation of the
industry report. The payment of such amount was not contingent upon our successful listing or
on the content of the industry report. Except for this industry report prepared by Frost &
Sullivan, we did not commission any other industry report in connection with the Share Offer.
We confirm that after taking reasonable care, there has been no adverse change in the market
information since the date of the report prepared by Frost & Sullivan, which may qualify,
contradict or have an impact on the information set forth in this section in any material respect.
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PRC LA WS AND REGULATIONS
Our Group’s subsidiaries in the PRC are required to comply with a number of PRC laws
and regulations to carry out our operating activities. The major relevant laws and regulations
applicable to the operations and business of our Group’s subsidiaries in the PRC during the
Track Record Period are set out below:
Laws and regulations on foreign investment
The establishment, operation and management of corporate entities in the PRC are
governed by the PRC Company Law (), which was promulgated
on 29 December 1993, became effective on 1 July 1994 and was last amended on 26
October 2018, and the Regulation of the PRC on the Administration of the Registration of
Market Entities ( ʕശɛ͏΍ձ਷̹ఙ˴᜗೮া၍ଣૢԷ ), which was promulgated on 27
July 2021 and became effective on 1 March 2022. According to the aforesaid laws and
regulations, companies are generally classified into two categories: limited liability
companies and companies limited by shares. Foreign invested limited liability companies
are also governed by the aforesaid laws and regulations unless otherwise specified in the
relevant laws regarding foreign investment. These include but are not limited to the Foreign
Investment Law of the PRC ( ) (the “ Foreign Investment
Law ”) which was promulgated on 15 March 2019 and became effective on 1 January 2020,
Regulation for Implementing the Foreign Investment Law of the PRC ( ʕശɛ͏΍ձ਷̮
ૢԷ) which was promulgated on 26 December 2019 and became effective
on 1 January 2020 and the Measures for the Reporting of Foreign Investment Information
() (the “ Reporting Measures ”), which was promulgated on 30
December 2019 and became effective on 1 January 2020. According to the Foreign
Investment Law, the treatment accorded to foreign investors and their investments shall be
no less favourable than that accorded to domestic investors and their investments at the
stage of investment access. According to the Reporting Measures, a foreign investor or a
foreign-invested enterprise shall report investment information by submitting initial report,
changing report, deregistration report, annual report, etc.
Any investments conducted by the foreign investors and enterprises in the PRC shall
be subject to the Provisions on Guiding the Orientation of Foreign Investment (ኬ̮ਠ
), which was promulgated on 11 February 2002 and became effective on 1
April 2002, and Special Management Measures (Negative List) for the Access of Foreign
Investment (݄( ૶ఊ )) (the “ Negative List ”), which was
promulgated on 27 December 2021 and became effective on 1 January 2022. The said
regulations enumerate prohibited, restricted and encouraged industries in relation to foreign
investment. Restrictions on foreign investment have been further loosened under the
Negative List, and our current business is not prohibited or restricted by or subject to any
administrative measures stipulated in the Negative List.
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Laws and regulations on overseas listing
On 17 February 2023, the CSRC released the Trial Administrative Measures of
Overseas Securities Offering and Listing by Domestic Companies ( ྤʫΆุྤ̮೯Бᗇ
 ) and the relevant supporting guidelines (collectively, the “ Listing
Trial Measures ”) which took effect on 31 March 2023. The Listing Trial Measures is
formulated to regulate overseas securities offering and listing activities by domestic
companies, either in direct or indirect form (hereinafter referred to as “ overseas offering
and listing ”). The Listing Trial Measures not only list out the circumstances where
overseas offering and listing is forbidden, but also set out the conditions for determining
the overseas offering and listing in indirect form. Any domestic company that is deemed to
conduct overseas offering and listing activities shall file with the CSRC in accordance with
the Listing Trial Measures.
Pursuant to Listing Trial Measures, any overseas offering and listing conducted by an
issuer that meets both of the following conditions shall be determined as indirect overseas
offering by PRC domestic companies: (i) 50% or more of any of the issuer’s operating
revenue, total profit, total assets or net assets as documented in its audited consolidated
financial statements for the most recent fiscal year is accounted for by the domestic
companies; and (ii) the main parts of the issuer’s business activities are conducted in the
PRC, or its main places of operations are within the PRC, or the senior managers in charge
of its operation and management are mostly PRC citizens or domiciled in the PRC. The
determination as to whether or not an overseas offering and listing by domestic companies
is indirect, shall be made on a substance over form basis. Domestic companies that seek to
offer and list securities in overseas markets shall fulfill the filing procedures with and
report relevant information to the CSRC, and the filing shall be submitted within three
business days after the application for an initial public offering is submitted.
Laws and regulations on taxation
Enterprise Income Tax
Pursuant to the PRC Enterprise Income Tax Law ( )
(the “ EIT Law ”) promulgated on 16 March 2007, last amended and became effective on 29
December 2018, the income tax rate for both domestic and foreign-invested enterprises is
25%, and the existing tax exemptions, reductions and preferential treatments which had
been enjoyed by foreign-invested enterprises were abolished unless otherwise specified.
Enterprises established outside the PRC whose “ de facto management bodies” are located in
the PRC are considered as “resident enterprises” and are subject to the uniform 25%
enterprise income tax rate for their global income.
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Pursuant to the EIT Law, enterprise income tax shall be levied at the reduced rate of
15% for certain high-tech enterprises. Pursuant to the Measures for the Administration of
the Certification of High-tech Enterprises ( ) which became
effective on 1 January 2016, the qualification of a high-tech enterprise that has been
accredited shall be valid for a period of three years from the date of issuance of the
certificate and an eligible high-tech enterprise is entitled to the tax preferences from the
year when the high-tech enterprise certificate is issued. As our subsidiary, Guangzhou
Shenghui, obtained the high-tech enterprise certificate issued in December 2020, it is
entitled to the preferential enterprise income tax rate of 15% from 2020 to 2022. Our
subsidiaries, Guangxi Shenghui and Guangzhou Xinhui, which without the high-tech
enterprise certificate, shall pay enterprise income tax at the rate of 25%.
V alue-added Tax
Pursuant to the Provisional Regulations on V alue-added Tax of the PRC ( ʕശɛ͏΍
೼ᅲБૢԷ) (the “ Provisional Regulations on V AT ”), which was promulgated
on 13 December 1993, became effective on 1 January 1994 and was last amended on 19
November 2017, and its implementation rules, all entities and individuals engaged in the
sales of goods, provision of processing, repairs and replacement services, sales of services,
intangible properties or real estates, and the importation of goods within the territory of the
PRC shall pay value-added tax (“ VAT”). V A T payable is calculated as “output V A T” minus
“input V A T”. The rate of V A T is 6% for taxpayers selling services or intangible assets
unless otherwise specified, and the rate of V A T on small-scale taxpayers shall be 3% unless
otherwise specified by the State Council.
Withholding tax on dividends
Pursuant to the PRC Enterprise Income Tax Law and the Implementation Rules of
PRC Enterprise Income Tax Law (ૢԷ ) promulgated
on 6 December 2007, effective on 1 January 2008 and amended on 23 April 2019,
non-resident enterprises which have not set up institutions or premises in the PRC, or
where the institutions or premises are set up but the income has no actual relationship with
such institutions or premises shall be subject to the withholding tax rate of 10% on its
income derived from the after-taxed profit of its subsidiary.
Pursuant to the Arrangement between the Mainland of China and Hong Kong Special
Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal
Evasion With Respect To Taxes On Income (ࠠ
τર) signed on 21 August 2006 and implemented from 1 January
2007, if the beneficial owner of the dividends is a foreign investor residing in Hong Kong
and owns at least 25% of the capital of a PRC enterprise, our profit derived by the foreign
investor residing in Hong Kong from its PRC enterprise is subject to the tax rate of 5%.
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Pursuant to the Circular of the SA T on Relevant Issues relating to the Implementation
of Dividend Clauses in the Tax Agreements (ૢಛϞ
), which was promulgated and became effective on 20 February 2009, all of
the following requirements shall be satisfied where a fiscal resident of the other party to a
tax agreement needs to be entitled to such tax agreement treatment as being taxed at a tax
rate specified in the tax agreement for the dividends paid to it by a PRC resident company:
(a) such a fiscal resident who receives the dividends should be a company as provided in
the tax agreements; (b) owner’s equity interests and voting shares of the PRC resident
company directly owned by such a fiscal resident reaches a specified percentage; and (c)
the equity interests of the PRC resident company directly owned by such a fiscal resident,
at any time during the twelve months prior to receiving of the dividends, reach a
percentage specified in the tax agreements.
Pursuant to the Announcement of the SA T on Issuing the Measures for Non-resident
Taxpayers’ Enjoyment of Treaty Benefits (͏ॶ೼ɛԮա՘
ʮѓ), which was promulgated on 14 October 2019 and became
effective on 1 January 2020, if the non-resident taxpayers are qualified for enjoying treaty
benefits through self-assessment, they may enjoy such benefits when they or their
withholding agent file tax returns. Meanwhile, they shall collect and retain relevant
materials for review and accept the follow-up management of tax authorities.
Laws and regulations on labour and insurance
Labour
Enterprises in the PRC are subject to the PRC Labour Law ( ʕശɛ͏΍ձ਷௶ਗ
) (the “ PRC Labour Law ”), the PRC Labour Contract Law ( ʕശɛ͏΍ձ਷௶ਗΥΝ
) (the “ PRC Labour Contract Law ”), the Implementations Regulations of the PRC
Labour Contract Law (ૢԷ ) and the Interim Provisions
on Labour Dispatch (), as well as other related regulations, rules and
provisions issued by the relevant governmental authorities from time to time for such
enterprises’ operations in the PRC. The PRC Labour Contract Law, which was promulgated
on 29 June 2007, became effective on 1 January 2008 and was amended on 28 December
2012, provides stricter requirements in human resources management in terms of signing
labour contracts with employees, stipulating probation and violation penalties, dissolving
labour contracts, paying remuneration and economic compensation, use of labour dispatch,
as well as social security premiums.
Pursuant to the PRC Labour Law and the PRC Labour Contract Law, enterprises shall
enter into labour contracts if they are to establish labour relationships with the employees.
Enterprises shall fully perform their respective obligations according to the stipulations of
the labour contract with the employees, and shall provide wages, which shall not be lower
than the local minimum wage standards, to such employees and are required to establish
labour safety and sanitation systems, strictly abide by the PRC rules and standards and
provide the relevant training to the employees. Pursuant to the Interim Provisions on
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Labour Dispatch, employers may employ dispatched workers in temporary, auxiliary or
substitutable positions only and shall strictly control the number of dispatched workers
employed which shall not exceed 10% of the total number of its workers.
Pursuant to Provisions on Minimum Wages () which was promulgated
on 20 January 2004 and became effective on 1 March 2004, the minimum wage standards
shall apply to the employees who have established labor relationships with the employers.
The standards appear in two forms, namely, the standard of monthly minimum wage, which
applies to full-time employees, and the standard of hourly minimum wage, which applies to
non-fulltime employees. Different administrative areas within a province, autonomous
region or municipality directly under the Central Government may adopt different standards
of minimum wages.
Social insurance and housing provident fund
The requirements on PRC enterprises relating to social insurance shall mainly be
governed by the PRC Social Insurance Law ( ) promulgated
on 28 October 2010, effective on 1 July 2011 and amended on 29 December 2018, the
Provisional Regulations on the Collection of Social Insurance Fees (ᎈ൬ᅄᖮᅲБ
ૢԷ) promulgated and effective on 22 January 1999 and amended on 24 March 2019, the
Regulations on Work-Related Injury Insurance (ᎈૢԷ) promulgated on 27 April
2003, effective on 1 January 2004 and amended on 20 December 2010, the Regulations on
Unemployment Insurance (ᎈૢԷ) promulgated and effective on 22 January 1999
and the Provisional Measures on Insurance for Maternity of Employees (ڭ
) promulgated on 14 December 1994 and effective on 1 January 1995.
Pursuant to aforesaid laws and regulations, employers in the PRC shall conduct registration
of social insurance with the competent authorities and make contributions to the basic
pension insurance, basic medical insurance, work-related injury insurance, unemployment
insurance and maternity insurance for their employees.
Pursuant to the Administrative Regulations on Housing Provident Funds (ږ
၍ଣૢԷ), which was promulgated by State Council and became effective on 3 April
1999 and was last amended on 24 March 2019, a unit (including a foreign-invested
enterprise) shall undertake the registration with the administrative centre of housing
provident funds and pay the funds for their staff. The unit shall contribute to the fund at a
rate of not less than 5% of the employee’s average monthly salary in the previous year.
Pursuant to Notice on Temporary Reduction and Exemption of Social Insurance
Premiums Payable by Enterprises ( ) promulgated
and effective on 20 February 2020 and Notice on Extending the Implementation Period of
the Temporary Reduction and Exemption of Social insurance Premiums Payable by
Enterprises and Other Issues (ഃਪᕚ
) promulgated and effective on 22 June 2020, as of February 2020, relative
authorities outside Hubei province may, based on how they are affected by COVID-19 and
the affordability of funds, exempt micro, small and medium-sized enterprises from
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employers’ contributions to the premiums of three social insurances until the end of
December 2020, and may reduce by half the employers’ contributions made by large
enterprises and other entities participating in the social insurance other than government
organs and public institutions, to the premiums of three social insurances until the end of
June 2020.
Laws and regulations on environmental cleaning and maintenance
Enterprises engaging in environmental cleaning and maintenance in the PRC are
mainly governed by Regulations on the Administration of City Appearance and
Environmental Sanitation (ձᐑྤሊ͛၍ଣૢԷ ), which was promulgated by
the State Council on 28 June 1992, became effective on 1 August 1992 and was last
amended on 1 March 2017, and Administrative Measures for Urban Living Garbage (̹
), which was promulgated on 28 April 2007, became effective on 1 July
2007 and was amended on 4 May 2015. Pursuant to Administrative Measures for Urban
Living Garbage, an enterprise engaging in commercial clearing, collection and
transportation of urban living garbage shall obtain a licence for such activities. Those who
engage in such business activities without approval shall be ordered by the competent
department to stop the illegal acts and impose a fine. Provisions of Guangzhou for the
Administration of City Appearance and Environmental Sanitation (ᐑྤሊ͛၍
) promulgated and effective on 18 May 2020 also provides that enterprises
engaging in such business activities without permission shall be ordered to rectify within a
time limit and be imposed a fine of not less than RMB5,000 but not more than RMB20,000.
Laws and regulations on Road Transport
Pursuant to the Regulations of the PRC on Road Transport ( ʕശɛ͏΍ձ਷༸༩༶
፩ૢԷ) (the “ Road Transport Regulations ”) last amended on 20 July 2023, any
individuals and institutions that apply for the operation of freight transportation (OFT)
shall (i) have vehicles that are relevant to and qualified for their operations; (ii) engage in
drivers who meet the requirements as described in the Road Transport Regulations; and (iii)
establish improved management systems for safe operations. Anyone who intends to engage
in the OFT other than the transport of dangerous cargoes shall file an application to the
county-level road transport authority. If approved, the said authority shall issue the road
transport operation license to the applicant and issue vehicle operation licenses to the
applicant for vehicles that are used for transport. Anyone who engages in the operation of
general freight transportation without the road transport operation license will be ordered to
cease the operation, and illegal gains exceeding RMB10,000 shall be confiscated and a fine
shall be imposed.
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Laws and regulations on production safety and environmental protection
Production safety
Pursuant to the Production Safety Law of the PRC ( ),
which was promulgated on 29 June 2002, last amended on 10 June 2021 and became
effective on 1 September 2021, entities shall meet the relevant requirements such as
providing their employees with education and training programmes on work safety to
ensure that the employees are familiar with the relevant rules and systems for work safety
and safe operating procedures. Besides, entities shall make sure that the employees acquire
the necessary knowledge about work safety, have mastered the skills of safe operating for
their own posts, understand the emergency handling measures for accidents, and are aware
of their own work safety. In addition, special operation workers of an entity must receive
special training on safe operation as required by the state and may take their posts only
after obtaining a corresponding qualification.
Environmental protection
Pursuant to the Environmental Protection Law of the PRC (ᚐ
) promulgated on 26 December 1989, amended on 24 April 2014 and became effective
on 1 January 2015, all entities and individuals shall have the obligation to protect
environment; and enterprises shall prevent and reduce environmental pollution and
ecological disruption and assume liabilities for damage caused by them. An enterprise
which causes environmental pollution and discharges materials which endanger the public
shall implement environmental protection methods and procedures for their business
operations. Besides, an enterprise will be ordered to make corrections or be fined if it
discharges pollutants illegally. If the enterprise refuses to do so, it shall be subject to
consecutive penalties on a daily basis based on the original punishment amount, starting
from the day following the date when it is ordered to make corrections.
Laws and regulations on construction labour service
Pursuant to Provisions on the Administration of Qualifications of Construction
Enterprises ( ) promulgated on 26 June 2007, amended on 13
September 2016 and became effective on 20 October 2016, an enterprise shall meet the
conditions to apply for the qualification of construction enterprise and shall engage in
construction activities within the scope permitted by its qualification. The qualification of
the construction labour service, which shall be licensed by the competent housing and
urban-rural construction department of the PRC government where the enterprise is
registered, is one of the qualifications of construction enterprise and it does not include
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several types or grades. Pursuant to Circular on Printing and Distributing the Reform
Programme of the Qualification Management System for Construction Enterprises (Ι
 ) promulgated by Ministry of Housing and
Urban-Rural Development of the PRC and effective on 30 November 2020, the
qualification of the construction labour service shall be changed into professional operation
qualification and enterprises engaging in construction labour service shall go through the
formalities for record-filing instead of examination and approval.
Laws and regulations on mergers and acquisitions and overseas listings
The Regulations on Merger and Acquisition of Domestic Enterprises by Foreign
Investors ( ) (the “ M&A Rules ”) were promulgated
by six PRC governmental and regulatory agencies including MOFCOM and the CSRC on 8
August 2006, became effective on 8 September 2006 and were amended on 22 June 2009.
Pursuant to the M&A Rules, a foreign investor is required to obtain necessary approvals
when it (a) acquires the equity of a domestic enterprise so as to convert the domestic
enterprise into a foreign-invested enterprise; (b) subscribes for the increased capital of a
domestic enterprise so as to convert the domestic enterprise into a foreign-invested
enterprise; (c) establishes a foreign-invested enterprise through which it purchases the
assets of a domestic enterprise and operates these assets; or (d) purchases the assets of a
domestic enterprise, and then invests such assets to establish a foreign-invested enterprise.
A special purpose vehicle (the “ SPV ”), formed for listing purposes and controlled directly
or indirectly by PRC companies or individuals, shall obtain the approval of the CSRC prior
to the listing and trading of such SPV’s securities on an overseas stock exchange,
especially in the event that the SPV acquires shares of or equity interests in the PRC
companies in exchange for the shares of offshore companies.
Laws and regulations on foreign exchange
The Foreign Exchange Administration Rules of the PRC ( ʕശɛ͏΍ձ਷̮ි၍ଣ
ૢԷ) (the “ Rules ”) were promulgated by the State Council on 29 January 1996, became
effective on 1 April 1996 and were amended respectively on 14 January 1997 and 5 August
2008. Pursuant to the Rules, RMB is freely convertible for payments of current account
transactions in general, such as trade and service-related foreign exchange transactions and
dividend payments, but is not freely convertible for capital account transactions, such as
capital transfer, direct investment, investment in securities, derivative products or loans,
unless prior approval by the competent authorities for the administration of foreign
exchange is obtained.
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Pursuant to the Notice of the SAFE on Reforming the Management Mode of Foreign
Exchange Capital Settlement of Foreign Investment Enterprises (ҷ
 ) (Hui Fa No.19 [2015]) promulgated on
30 March 2015, effective on 1 June 2015 and partially repealed on 30 December 2019,
foreign-invested enterprises shall be allowed to settle their foreign exchange capitals on a
discretionary basis. The proportion of voluntary settlement of foreign exchange capital of
foreign invested enterprises is currently determined as 100% and foreign invested
enterprises can also use their foreign exchange capital according to the system of foreign
exchange settlement upon payment.
Pursuant to the Circular on Relevant Issues Concerning the Reform and Regulation of
the Administrative Policies of the Conversion under Capital Items (׵
 ) (Hui Fa No.16 [2016]) (the “ Circular No.16 ”)
promulgated by the SAFE and effective on 9 June 2016, all enterprises including foreign
invested enterprises are allowed to convert 100% (subject to future adjustment at the
discretion of SAFE) of the foreign currency capital in their capital accounts into RMB at
their own discretion without providing various supporting documents. However, to use the
converted RMB, an enterprise still needs to provide supporting documents and go through
the review process with the banks for each withdrawal. A negative list with respect to the
usage of the capital and the RMB proceeds through the aforementioned settlement
procedure is set forth under Circular No.16.
Pursuant to Circular 37 and Circular 13, domestic residents (including domestic
institutions and resident individuals) are required to register with the competent local
branch of SAFE before they make contribution to any offshore SPVs with legitimate
holdings of domestic or overseas assets or interests. The foreign exchange registration
procedure for direct investment is delegated to local banks which, after reviewing the
documents submitted by a foreign-invested enterprise, will complete the registration
through the online Capital Account Information System managed by SAFE.
Laws and regulations on property
Pursuant to the Civil Code of the PRC (Պ), which was
promulgated on 28 May 2020 and became effective on 1 January 2021, the owner of a real
property or movable property has the rights to possess, use, seek profits from and dispose
of the real property or movable property according to law.
Pursuant to the Administrative Measures for Commodity House Leasing (ॡ
) which was promulgated on 1 December 2010 and became effective on 1
February 2011, the lessor and the lessee shall enter into a lease contract in accordance with
law. Within 30 days after signing the lease contract, parties of the contract shall carry out
the registration with the competent real estate administration authority where the leased
property is located. Those who fail to register may be ordered to rectify the failure within
the specified time or are otherwise fined by the relevant authorities.
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Laws and regulations on intellectual property
Trademark
Pursuant to the Trademark Law of the PRC (), which was
promulgated on 23 August 1982, became effective on 1 March 1983 and was last amended
on 23 April 2019, and Regulation on the Implementation of the Trademark Law of the PRC
(ૢԷ ), which was promulgated on 3 August 2002, became
effective on 15 September 2002 and was last amended on 29 April 2014, a trademark
registrant shall be entitled to the exclusive right to use the registered trademark and such
right is limited to the trademark registered and the goods approved to be covered by the
trademark. A registered trademark shall be valid for 10 years starting from the date of
registration and is renewable if a trademark registrant intends to continue using the
registered trademark upon expiry of its validity period. Any of the following acts shall
constitute an infringement upon the right to the exclusive use of a registered trademark: (a)
using a trademark which is identical with the registered trademark on the same kind of
commodities without a licence from the registrant of that trademark; (b) using a trademark
which is similar to the registered trademark on the same kind of commodities or using a
trademark which is identical with or similar to the registered trademark on the similar
commodities without a licence from the registrant of that trademark, which easily leads to
confusion; (c) selling commodities that infringe upon the right to the exclusive use of a
registered trademark; (d) forging, manufacturing without authorisation the marks of a
registered trademark of others, or selling the marks of a registered trademark forged or
manufactured without authorisation; (e) altering a registered trademark and putting the
commodities covered with the altered trademark into the market without the consent of the
registrant of that trademark; (f) providing convenience for the infringement of the right to
the exclusive use of a registered trademark deliberately, or assisting others to carry out
such infringement; and (g) causing other damages to the right to the exclusive use of a
registered trademark of another person.
Patent
Pursuant to the Patent Law of the PRC (), which was
promulgated on 12 March 1984, last amended on 17 October 2020 and became effective on
1 June 2021, and the Implementation Rules of the Patent Law of the PRC ( ʕശɛ͏΍ձ
) promulgated on 15 June 2001 and last amended on 9 January 2010, to
be granted a patent, the invention or the utility model shall be novel, inventive and
practically applicable. Generally, only one patent right will be granted for each invention
and utility model. The patent right for inventions shall be valid for 20 years from the date
of application, while the patent right for utility models shall be valid for 10 years from the
date of application. A patentee shall pay an annual fee beginning with the year in which the
patent is granted. Any exploitation of the patent without the authorisation of the patentee
constitutes an infringing act.
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Copyright
Pursuant to the Copyright Law of the PRC ( ), which was
promulgated on 7 September 1990, last amended on 11 November 2020 and became
effective on 1 June 2021, copyrights include personal rights such as the right of publication
and the right of attribution as well as property rights such as the right of production and the
right of distribution. Reproducing, distributing, performing, projecting, broadcasting or
compiling a work or communicating the same to the public via an information network
without permission from the owner of the copyright thereof, unless otherwise specified,
shall constitute infringements of copyrights. The infringer shall, according to the
circumstances of the case, undertake to cease the infringement, take remedial action, and
offer an apology, pay damages, etc. to the copyright owner.
Domain names
Measures for the Administration of Internet Domain Names (),
which was promulgated on 24 August 2017 and became effective on 1 November 2017, and
the Implementing Rules on Registration of China Country Code Top-level Domain Names
( ), which was promulgated and became effective on 18 June
2019, regulated Internet domain name services and its operation and maintenance,
supervision and administration and other related activities within the territory of the PRC.
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HISTORY AND DEVELOPMENT OF OUR GROUP
Our history can be traced back to August 2000 when Guangzhou Shenghui was established
in Guangzhou city, Guangdong province, the PRC by our founders, Mr. Li and Mr. Chen, with
their own resources. For further details on the background of Mr. Li and Mr. Chen, please refer
to the section headed “Directors and senior management” of this prospectus. Since establishment
of our Group, we have provided cleaning and maintenance services for various commercial
properties and other service locations.
Over our 20 years of operations and development, our business operations have expanded
from Guangzhou to across the PRC. Our wide range of cleaning and maintenance services
include basic cleaning and maintenance service, garbage collection and transportation service,
waste collection and transportation service, water tank cleaning service and ancillary services.
We also offer specialised cleaning services such as stone cleaning and restoration and
high-attitude cleaning with mobile elevated platforms. For details, please refer to the section
headed “Business” of this prospectus.
Key milestones of our Group
The following table sets forth the major milestones of our development:
Y ear Milestones
2000  Guangzhou Shenghui was established in Guangzhou city,
Guangdong province.
2002  We were first engaged for the cleaning and maintenance of the
public area of a shopping mall in Guangzhou city.
 We were first engaged for the cleaning and maintenance of a
residential premise in Guangzhou city.
 We were first appointed as the cleaning service provider of the
external walls and external marble walls of governmental
buildings operated as a command centre.
2003  We were first engaged for the cleaning and maintenance of
office buildings in Guangzhou city.
2009  We obtained ISO9001 (ࣣand ISO14001
(ࣣcertifications for the first time.
2010  We were appointed as the cleaning service provider for
Guangzhou International Finance Center (ፄʕː ).
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Y ear Milestones
 We obtained a Guangzhou Sanitation Industry Operating
Service Company Certificate – A Grade* (؂
ࣣA ॴ) from the Guangzhou Industry
Association of Sanitation ( ᄿψᐑ㠛Бุ՘ึ ) for the first
time.
2013  We obtained GB/T 28001 certification ( ᔖุ਄ੰτΌ၍ଣ᜗ӻ
ࣣnow replaced by ISO45001 certification ( ᔖุ਄ੰ
ࣣfor the first time.
2015  We obtained a grade A honorary certificate for tax credit ( ॶ೼
͜Aࣣfor the preceding year from the Guangzhou
State Municipal Tax Bureau Taxation Administration (೼ਕ
ᐼ҅ᄿψ̹೼ਕ҅ ).
2016  Guangxi Shenghui was established in Nanning city, Guangxi
region.
2017  We were appointed as the cleaning service provider for
Guangzhou Baiyun International Airport ( ᄿψͣථ਷ყዚఙ )
and Guangzhou Taikoo Hui ( ᄿψ˄̚ි ).
 Haikou Branch was established in Haikou city, Hainan province
2019  We obtained a Stone & Floor Conserve Application Enterprise
Qualification Certificate – AAAAA Grade* ( ͩҿήջᏐ͜ᚐଣ
ࣣAAAAA ॴ) issued by the Professional Stone
Care Committee of the Guangdong Stone Materials
Association* (currently known as the Stone Application
Conservation Specialty Committee of the Guangdong Stone
Materials Association*) (ͩҿᏐ͜ᚐଣ
ึ ).
 We were recognised as an Advanced Cleaning Service Provider
in Guangdong province* (ਕ΋ආఊЗ ) by China
Quality Credit Evaluation Committee, China Quality Brands
Promotion Committee, Beijing Bid Evaluation Centre* ( ʕ਷ሯ
ආપᄿଡ଼։ึd
͜൙ᄆʕː ).
HISTORY, REORGANISATION AND GROUP STRUCTURE
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Y ear Milestones
2020  We were appointed as the cleaning service provider for
Chongqing Jiangbei International Airport (ᅅϪ̏਷ყዚఙ ).
 Our brand “ ʺሾ૶ᆎ ” ranked 6th in the Top 500 Property
Services Enterprises – Cleaning Services* (2020ਕΆุ
500 ੶ –ਕ ) by China Property Management Institution
and China Real Estate Appraisal Center of Shanghai E-House
Real Estate Research Institute* (ุ၍ଣ՘ึ ,֢׸
Ӻ৫ ).
 Chongqing Branch was established in Chongqing municipality.
2021  We were recognised as a Contract Honouring and Credit
Keeping Enterprise in Guangdong* (͜Άุ )
(2011–2020).
 We were recognized as an Advanced enterprise in anti-epidemic
work* (ʈЪ΋ආΆุ ) by Guangzhou Industry Association
of Sanitation ( ᄿψᐑሊБุ՘ึ ).
2022  We obtained Enterprise Qualification of China Cleaning
Industry (БุΆุ༟ሯ ) issued by China
Professional Commission of Cleaning Service Contractor ( ʕ਷
ึ ).
 We obtained Credit Evaluation Certificate – AAA Grade* (͜
Ñ AAA ॴ) issued by Zhongan Zhihuan
Certification Center Co., Ltd (ʮ
̡).
2023  Zhengzhou Branch was established in Zhengzhou municipality.
 Shenghui Cleanness (Beijing) was established in Beijing city.
HISTORY, REORGANISATION AND GROUP STRUCTURE
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Y ear Milestones
2023  We obtained Qualification Certificate for Secondary Water
Supply Cleaning Service Enterprise – Grade 1* ( ɚϣԶ˥૶ᆎ
Ñɓॴ ) issued by China Evaluation Beacon
(Beijing) Certificate Center, Enterprise service capability
evaluation and Certification Center, National tendering and
bidding qualification query platform* (ᅺ (̏ԯ )Ⴉᗇʕ
༔̨̻ ).
 We obtained Qualification Certificate for Cleaning and
Maintenance of Hard Materials (Stone and Floor) – National
Grade 1* ( ೷ҿ(ͩҿeήջ )ɓॴ )
issued by China Evaluation Beacon (Beijing) Certificate
Center, Enterprise service capability evaluation and
Certification Center, National tendering and bidding
qualification query platform* (ᅺ (̏ԯ)ႩᗇʕːeΆุ
༔̨̻ ).
OUR CORPORATE HISTORY
Our Company was incorporated in the Cayman Islands under the Companies Act as an
exempted company with limited liability on 4 January 2021, and became the holding company
and listing vehicle of our Group upon completion of our Reorganisation. For details of such
transfers, please refer to the paragraph headed “Reorganisation” in this section below.
During the Track Record Period and up to the Latest Practicable Date, our business
operations had been carried out by our operating subsidiaries in the PRC. Set out below are the
major corporate development including major changes in equity interest in our operating
subsidiaries in the PRC.
Guangzhou Shenghui
Guangzhou Shenghui is principally engaged in the provision of environmental cleaning and
maintenance services. It was established in the PRC with limited liability and commenced its
operations on 4 August 2000 with an initial registered capital of RMB500,000, fully paid up by
cash, and had been owned as to 50% by each of Mr. Li and Mr. Chen since its establishment and
up until the commencement of our Reorganisation.
Subsequent to a series of capital injection by Mr. Li and Mr. Chen in equal proportion
between October 2005 and July 2016, the registered capital of Guangzhou Shenghui increased to
RMB20.02 million.
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As part of our Reorganisation, the registered capital of Guangzhou Shenghui was reduced
to RMB500,000 on 24 February 2021 and subsequently increased to RMB25.0 million on 2
March 2021. In connection with the capital reduction, Guangzhou Shenghui’s then shareholders
received a total amount of approximately RMB12.3 million. As at the Latest Practicable Date,
the remaining RMB24.5 million of the registered capital of Guangzhou Shenghui had not been
paid up and will be fully paid up in accordance with its articles of association. Following our
Reorganisation, Guangzhou Shenghui became wholly-owned by Guangzhou Xinhui and became
an indirect wholly-owned subsidiary of our Company. For details of our Reorganisation, please
refer to the paragraph headed “Reorganisation” in this section below.
Guangxi Shenghui
Guangxi Shenghui is principally engaged in the provision of environmental cleaning and
maintenance services. It was established in the PRC with limited liability and commenced its
operations on 7 June 2016 with an initial registered capital of RMB2.0 million, which remained
unpaid as at the Latest Practicable Date, and will be fully paid up in accordance with its articles
of association. Guangxi Shenghui has been wholly-owned by Guangzhou Shenghui since its
establishment.
Following our Reorganisation, Guangxi Shenghui became an indirect wholly-owned
subsidiary of our Company. For details of our Reorganisation, please refer to the paragraph
headed “Reorganisation” in this section below.
Shenghui Cleanness (Beijing)
Shenghui Cleanness (Beijing) is principally engaged in the provision of environmental
cleaning and maintenance services. It was established in the PRC with limited liability and
commenced its operations on 20 July 2023 with an initial registered capital of RMB5.0 million,
of which RMB100,000 had been fully paid up by cash as at the Latest Practicable Date, and the
remaining unpaid registered capital will be fully paid up in accordance with its articles of
association. Shenghui Cleanness (Beijing) has been wholly owned by Guangzhou Shenghui since
its establishment.
Shenghui Cleanness (Beijing) became an indirect wholly-owned subsidiary of our
Company. For details of our Reorganisation, please refer to the paragraph headed
“Reorganisation” in this section below.
Guangzhou Xinhui
Guangzhou Xinhui is principally engaged in the provision of environmental cleaning and
maintenance services. It was established in the PRC with limited liability and commenced its
operations on 14 November 2002 with an initial registered capital of RMB500,000, fully paid up
by cash, and was owned as to 50% by each of Mr. Li and Mr. Chen as at the date of its
establishment.
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As part of an internal restructuring, on 10 August 2020, Mr. Li and Mr. Chen transferred
their respective 50% equity interest in Guangzhou Xinhui to Guangzhou Shenghui at nil
consideration. Upon completion of the above transfer, Guangzhou Xinhui was wholly-owned by
Guangzhou Shenghui. On the same day, the registered capital of Guangzhou Xinhui increased to
RMB8.0 million. As part of our Reorganisation, our Pre-IPO Investor and Guangzhou Shenghui
entered into the Xinhui Capital Contribution Agreement, pursuant to which, our Pre-IPO Investor
obtained 3% of the enlarged equity interest of Guangzhou Xinhui at a cash consideration of
RMB247,423. Immediately thereafter, Guangzhou Xinhui was owned by Guangzhou Shenghui
and our Pre-IPO Investor as to 97% and 3% respectively, and the registered capital of
Guangzhou Xinhui increased to RMB8,247,423, of which RMB747,423 had been fully paid up
by cash as at the Latest Practicable Date, with the remaining unpaid registered capital to be fully
paid up in accordance with its articles of association.
Following our Reorganisation, Guangzhou Xinhui became wholly-owned by Shenghui
Cleanness (HK) and became an indirect wholly-owned subsidiary of our Company. The
acquisition of Guangzhou Xinhui was considered as a business combination under common
control as our Group and Guangzhou Xinhui were both ultimately controlled by Mr. Li and Mr.
Chen. The acquisition thereof was accounted for using merger accounting in accordance with
Hong Kong Accounting Guideline 5 (Revised) “Merger Accounting for Common Control
Combination” (“ AG5 ”) issued by the HKICPA. Accordingly, the assets and liabilities of
Guangzhou Xinhui were stated at predecessor value, and were included in the Group’s
consolidated financial statements from the beginning of the earliest period presented as if the
business and underlying assets and liabilities acquired had always been operated and held by the
Group. Pursuant to the Controlling Shareholders’ Confirmation entered into between Mr. Li and
Mr. Chen, they have reaffirmed that they have been a group of Controlling Shareholders since
the establishment of the companies now comprising the Group. They are acting in concert with
each other and manage the business, which is principally engaged in the provision of
environmental cleaning and maintenance services in the PRC, collectively throughout the Track
Record Period and will continue to act as such upon Listing. For further details of our
Reorganisation and the Pre-IPO Investment, please refer to the paragraphs headed
“Reorganisation” and “Pre-IPO Investment” in this section.
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REORGANISATION
In preparation for the Listing, our Group has undergone our Reorganisation whereupon our
Company became the holding company and the listing vehicle of our Group and our operating
subsidiaries were transferred to our Company. The following chart sets forth our shareholding
structure immediately before our Reorganisation:
Mr. Chen
50%
100% 100% 100%
100%
80%10% 68.75% 40% 40% 30% 25%
50%
Mr. Li
Guangzhou
Shenghui
(PRC)
Guangzhou
Shengfeng
(PRC)
Guangxi
Shenghui
(PRC)
Guangzhou
Xinhui
(PRC)
Guangzhou
Mingyou
(Note 1)
(PRC)
Guangzhou
Pengsheng
(Note 2)
(PRC)
Jinan
Shenghui
(Note 3)
(PRC)
Shandong
Shenghui
(PRC)
Guangzhou
Pinwaipin
(Note 4)
(PRC)
Shaanxi
Shenghui
(Note 5)
(PRC)
Notes:
1. The remaining 10% equity interest in Guangzhou Mingyou was owned by Ms. Kang Yiwen ( ੰᆇ˖ ) (an
Independent Third Party).
2. The remaining 31.25% equity interest in Guangzhou Pengsheng was owned as to 15.625% by each of Ms.
Li Y an ( ኇዲ) and Mr. Ling Shunsheng ( Ὃන͛ ) (both being Independent Third Parties) respectively.
3. The remaining 60% equity interest in Jinan Shenghui was owned as to 30% by each of Ms. Zhao Yike ( Ⴛ
̙) and Ms. Li Yinling (ޛboth being Independent Third Parties) respectively.
4. The remaining 30% equity interest in Guangzhou Pinwaipin was owned by Ms. Luo Wanhong (ߎan
Independent Third Party).
5. The remaining 75% equity interest in Shaanxi Shenghui was owned as to 35%, 20% and 20% by Mr. Zhou
Xiang ( մୂ), Mr. Zhang Jun (ࠏand Mr. Liang Guohui ( ૑਷ฯ ) (all being Independent Third Parties)
respectively.
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The principal steps of our Reorganisation are as follows:
Step (1): Disposal of the Disposed Companies and deregistration of Guangzhou Shengfeng
To streamline our corporate structure, the following companies were disposed of or
deregistered as part of our Reorganisation:
(i) Disposal of Jinan Shenghui
Jinan Shenghui, a limited company with registered capital of RMB5.0 million,
was an associate principally engaged in the provision of cleaning service in Jinan and
other cities of Shandong province of the PRC, which had customers that are property
management companies prior to the disposal. Before disposal, the revenue of Jinan
Shenghui was RMB5.3 million, RMB7.2 million and RMB8.4 million for the years
ended 31 December 2018, 2019 and 2020. A net profit of RMB7,537, RMB1,673 and
RMB1,099 was recorded for the years ended 31 December 2018, 2019 and 2020. In
light of the insignificant return and operation and to have a streamlined group
structure, on 13 September 2020, Guangzhou Shenghui entered into an equity transfer
agreement with Mr. Zheng Y ong (ۇan Independent Third Party, to dispose of its
entire equity interest in Jinan Shenghui to Mr. Zheng Y ong (ۇat the consideration
of RMB880,000, which was determined with reference to the paid-up capital
contributed by Guangzhou Shenghui in Jinan Shenghui at the time of such transfer.
Such consideration was settled on 31 March 2021 and the legal procedure for the said
transfer was completed on 18 September 2020. Upon completion of such transfer, our
Group ceased to hold any equity interest in Jinan Shenghui.
Our Directors confirmed that there was no overlapping customers between Jinan
Shenghui and our Group and there was no information in relation to the scale of
operations, customer profile and financial performance of Jinan Shenghui subsequent
to the disposal. Our Directors further confirmed that the disposal of Jinan Shenghui
does not have any significant impact on the Group’s operations or financial
performance.
(ii) Disposal of Guangzhou Mingyou
Guangzhou Mingyou, a limited liability company with registered capital of
RMB10.0 million, was inactive and had not commenced any business since its
establishment in 2020 and immediately prior to the disposal. Thus, Guangzhou
Mingyou did not have any employee and customer prior to the disposal. In order to
streamline our corporate structure, on 15 September 2020, Guangzhou Shenghui
entered into an equity transfer agreement with Mr. Li (who was then a minority
shareholder of Guangzhou Mingyou) to dispose of its entire equity interest in
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Guangzhou Mingyou to Mr. Li at the consideration of RMB1, as the registered capital
of Guangzhou Mingyou was yet to be paid up at the time of such transfer. Such
consideration was settled on 30 December 2020 and the legal procedure for the said
transfer was completed on 29 September 2020. Upon completion of such transfer, our
Group ceased to hold any equity interest in Guangzhou Mingyou.
Subsequent to disposal, the revenue of Guangzhou Mingyou was nil, nil, RMB0.4
million and RMB60,000 for the years ended 31 December 2020, 2021, 2022 and the
six months ended 30 June 2023. A net loss of RMB3,565, RMB0.2 million, RMB0.6
million and RMB0.1 million were recorded for the years ended 31 December 2020,
2021, 2022 and the six months ended 30 June 2023.
In order to expand its business, Guangzhou Mingyou changed its name to
Guangdong Mingyou Education and Technology Investment Limited*(߅
ʮ̡ ) and its business scope changed from technology marketing and
application services to business service on 14 September 2021.
Our Directors confirmed that there was no information on its scale of operation
and customer profile subsequent to the Group’s disposal.
(iii) Disposal of Guangzhou Pinwaipin
Guangzhou Pinwaipin, a limited liability company with registered capital of
RMB2.0 million, was established with an aim to principally engage in the food import
business immediately prior to the disposal. As Guangzhou Pinwaipin only had minimal
business operation since its establishment, it did not have any employee and customer
prior to the disposal. In 2020, Mr. Li intended to expand his business to food import
industry. On 19 September 2020, Guangzhou Shenghui entered into an equity transfer
agreement with Mr. Li to dispose of its entire equity interest in Guangzhou Pinwaipin
to Mr. Li at the consideration of RMB500,000, which was determined with reference
to the paid-up capital contributed by Guangzhou Shenghui in Guangzhou Pinwaipin at
the time of such transfer. Such consideration was settled on 18 November 2020 and
the legal procedure for the said transfer was completed on 23 September 2020. Before
disposal, the revenue was nil and nil for the year ended 31 December 2019 and the
nine months ended 30 September 2020. A net loss of RMB2,128 and RMB412 was
recorded for the year ended 31 December 2019 and the nine months ended 30
September 2020. Upon completion of such transfer, our Group ceased to hold any
equity interest in Guangzhou Pinwaipin. Mr. Li decided not to continue to engage in
food import business in light of the COVID-19 control in the PRC. Guangzhou
Pinwaipin was subsequently deregistered on 23 November 2020.
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Our Directors confirmed that the other ultimate beneficial owners, director and
senior management of Guangzhou Pinwaipin (except Mr. Li) do not have any past or
present relationships (business, employment, family, trust, financing or otherwise)
with the Group, its directors, shareholders, senior management or any of their
respective associates. Our Directors further confirmed that there was no information
on the scale of operations, customer profile and financial performance of Guangzhou
Pinwaipin subsequent to the Group’s disposal as Guangzhou Pinwaipin was
deregistered shortly after such disposal.
(iv) Disposal of Shaanxi Shenghui
Shaanxi Shenghui was an associate of our Group principally engaged in the
provision of cleaning service in Xi’an of Shaanxi province of the PRC which had
customers that are property management companies prior to the disposal. Before
disposal, the revenue of Shaanxi Shenghui was RMB1.8 million, RMB2.9 million and
RMB1.1 million for the years ended 31 December 2018 and 2019 and the six months
ended 30 June 2020. A net profit of RMB0.1 million and RMB0.3 million was
recorded for the years ended 31 December 2018 and 2019 and a net loss of RMB8,969
was recorded for the six months ended 30 June 2020. In light of the insignificant
return and operation and to have a streamlined group structure, on 20 September 2020,
Guangzhou Shenghui entered into an equity transfer agreement with Mr. Liang Guohui
(૑਷ฯ ), an Independent Third Party, to dispose of its entire equity interest in
Shaanxi Shenghui to Mr. Liang Guohui ( ૑਷ฯ ) at the consideration of RMB125,000,
which was determined with reference to the paid-up capital contributed by Guangzhou
Shenghui in Shaanxi Shenghui at the time of such transfer. Such consideration was
settled on 17 December 2020 and the legal procedure for the said transfer was
completed on 29 September 2020. Upon completion of such transfer, our Group ceased
to hold any equity interest in Shaanxi Shenghui.
Our Directors confirmed that there was no overlapping customers between
Shaanxi Shenghui and our Group and there was no information in relation to the scale
of operations, customer profile and financial performance of Shaanxi Shenghui
subsequent to the disposal. Our Directors further confirmed that the disposal of
Shaanxi Shenghui does not have any significant impact on the Group’s operations or
financial performance.
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(v) Disposal of Guangzhou Pengsheng
Guangzhou Pengsheng, a limited liability company with registered capital of
RMB20.0 million, was a subsidiary of our Group principally engaged in the provision
of sports facilities which had individual customers prior to the disposal. Before
disposal, the revenue of Guangzhou Pengsheng was nil, RMB0.3 million and
RMB30,000 for the years ended 31 December 2018, 2019 and 2020. A net loss of
RMB0.2 million, RMB0.1 million and RMB30,000 was recorded for the years ended
31 December 2018, 2019 and 2020. In order to focus our resources for the
development of our core business, on 29 September 2020, Guangzhou Shenghui
entered into an equity transfer agreement with Mr. Chen Qingrong (࿲ ), an
Independent Third Party, to dispose of its entire equity interest in Guangzhou
Pengsheng to Mr. Chen Qingrong (࿲ ), at the consideration of RMB2.1 million,
which was determined with reference to the paid-up capital contributed by Guangzhou
Shenghui in Guangzhou Pengsheng at the time of such transfer and the rental
receivables penalty waived according to the commercial settlement reached between
our Group and Guangzhou Pengsheng. Such consideration was settled on 29 December
2020 and the legal procedure for the said transfer was completed on 27 October 2020.
Upon completion of such transfer, our Group ceased to hold any equity interest in
Guangzhou Pengsheng. Our Directors confirmed that there was no information in
relation to the scale of operation, customer profile and financial performance
subsequent to the disposal of Guangzhou Pengsheng.
(vi) Deregistration of Guangzhou Shengfeng
Guangzhou Shengfeng was inactive and had not commenced any business since
its establishment. On 11 November 2020, Guangzhou Shengfeng was deregistered.
Confirmations from our Directors and/or our PRC Legal Advisers in respect of the
disposal of the Disposed Companies and the deregistration of Guangzhou Shengfeng
Our Directors confirmed that upon disposal of the Disposed Companies, there was no
transaction between the Disposed Companies and our Group.
As confirmed by our Directors and our PRC Legal Advisers after conducting relevant
public searches and having obtained relevant compliance certificates issued by competent
PRC government authorities, each of the Disposed Companies and Guangzhou Shengfeng
had not been subject to any material administrative penalty with respect to the applicable
PRC laws and regulations from 1 January 2020, being the commencement date of the Track
Record Period, to the completion date of their respective disposal or deregistration.
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Our Directors and our PRC Legal Advisers further confirmed that none of the
Disposed Companies and Guangzhou Shengfeng was subject to any material
non-compliance with any applicable laws and regulations of the PRC, nor was any of them
subject to any material claims, litigations or legal proceedings that could have a material
adverse effect on our business operations from 1 January 2020, being the commencement
date of the Track Record Period, to the completion date of their respective disposal or
deregistration.
Step (2): Reduction of registered capital of Guangzhou Shenghui
On 18 December 2020, as part of our Reorganisation, all of the then shareholders of
Guangzhou Shenghui resolved to reduce the registered capital of Guangzhou Shenghui. On 24
February 2021, the registered capital of Guangzhou Shenghui was reduced from RMB20.02
million to RMB500,000 by way of capital reduction. Immediately after the reduction of the
registered capital, Guangzhou Shenghui remained to be owned as to 50% by each of Mr. Li and
Mr. Chen.
Step (3): Incorporation of offshore corporate Shareholders
(i) Prosperity Cleanness
On 10 December 2020, Prosperity Cleanness was incorporated in the BVI with limited
liability and was authorised to issue up to a maximum of 50,000 ordinary shares. On the
same day, Mr. Li subscribed for, and Prosperity Cleanness allotted and issued to Mr. Li,
one nil-paid share in Prosperity Cleanness, which was credited as fully paid on 9 February
2021.
(ii) Sunrise Cleanness
On 10 December 2020, Sunrise Cleanness was incorporated in the BVI with limited
liability and was authorised to issue up to a maximum of 50,000 ordinary shares. On the
same day, Mr. Chen subscribed for, and Sunrise Cleanness allotted and issued to Mr. Chen,
one nil-paid share in Sunrise Cleanness, which was credited as fully paid on 9 February
2021.
Step (4): Incorporation of our Company
(i) On 4 January 2021, our Company was incorporated in the Cayman Islands under the
Companies Act as an exempted company with limited liability with an authorised
share capital of HK$380,000 divided into 38,000,000 Shares. Upon our incorporation,
one nil-paid initial Subscriber Share was allotted and issued which was on the same
day transferred to Prosperity Cleanness and one nil-paid Share was allotted and issued
to Sunrise Cleanness one nil-paid Share. Upon completion of the above transfer and
allotment, our Company became owned as to 50% by each of Prosperity Cleanness
and Sunrise Cleanness.
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(ii) Our Company was registered as a non-Hong Kong company under Part 16 of the
Companies Ordinance on 9 February 2021 and has maintained a valid business
registration certificate under the Business Registration Ordinance (Chapter 310 of the
Laws of Hong Kong) since 25 January 2021.
Step (5): Incorporation of Shenghui Cleanness (BVI)
On 18 January 2021, Shenghui Cleanness (BVI) was incorporated in the BVI with limited
liability. Shenghui Cleanness (BVI) was authorised to issue up to a maximum of 50,000 ordinary
shares. On the same day, our Company subscribed for, and Shenghui Cleanness (BVI) allotted
and issued to our Company, one fully-paid share in Shenghui Cleanness (BVI) at a consideration
of US$1. As a result, Shenghui Cleanness (BVI) became a wholly-owned subsidiary of our
Company.
Step (6): Incorporation of Shenghui Cleanness (HK)
On 27 January 2021, Shenghui Cleanness (HK) was incorporated in Hong Kong with
limited liability. On the same day, Shenghui Cleanness (BVI) subscribed for, and Shenghui
Cleanness (HK) allotted and issued to Shenghui Cleanness (BVI), one fully-paid share in
Shenghui Cleanness (HK) at a consideration of HK$1. As a result, Shenghui Cleanness (HK)
became a wholly-owned subsidiary of Shenghui Cleanness (BVI).
Step (7): Capital injection into Guangzhou Xinhui by our Pre-IPO Investor
(i) Guangzhou Xinhui was established in the PRC with limited liability on 14 November
2002. Immediately prior to our Reorganisation, Guangzhou Xinhui had a registered
capital of RMB8 million, which was wholly-owned by Guangzhou Shenghui.
(ii) On 28 January 2021, our Pre-IPO Investor and Guangzhou Shenghui entered into the
Xinhui Capital Contribution Agreement, pursuant to which our Pre-IPO Investor
obtained 3% of the enlarged equity interest of Guangzhou Xinhui by way of capital
contribution in cash of RMB247,423, the entire amount of which was credited to the
registered capital of Guangzhou Xinhui. The said capital contribution by our Pre-IPO
Investor was determined after arm’s length negotiation between the parties with
reference to the net asset value of Guangzhou Xinhui as at 31 December 2020
according to an independent valuation report, as well as the registered capital of
Guangzhou Xinhui. The capital contribution was settled in cash on 22 February 2021
and the registered capital of Guangzhou Xinhui increased from RMB8.0 million to
RMB8,247,423. Upon completion of the above capital contribution, Guangzhou Xinhui
became a sino-foreign equity joint venture owned as to 97% and 3% by Guangzhou
Shenghui and our Pre-IPO Investor respectively.
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(iii) The capital increase and change of shareholders of Guangzhou Xinhui were registered
with the Panyu Administration for Market Regulation on 2 February 2021; and a
foreign investment information report on the same was subsequently filed with the
Enterprise Registration System of the Guangzhou Administration for Market
Regulation.
Step (8): Subscription of Shares by Prosperity Cleanness, Sunrise Cleanness and Dash
Dazzling in our Company
On 9 February 2021, pursuant to the Subscription Agreement, in consideration of HK$5,
HK$5 and RMB4,000,000 (equivalent to approximately HK$4,800,000) paid by Prosperity
Cleanness, Sunrise Cleanness and Dash Dazzling, respectively, our Company (i) allotted and
issued 484 Shares, 484 Shares and 30 Shares to Prosperity Cleanness, Sunrise Cleanness and
Dash Dazzling respectively; and (ii) credited as fully paid the Subscriber Share held by
Prosperity Cleanness and the one nil-paid Share held by Sunrise Cleanness. The consideration of
such allotment and issue of Shares to (a) Prosperity Cleanness and Sunrise Cleanness was
determined with reference to the par value of our Shares; and (b) Dash Dazzling was determined
after arm’s length negotiation between the parties with reference to the unaudited consolidated
net asset value of Guangzhou Shenghui, Guangzhou Xinhui and Guangxi Shenghui as at 31
December 2020 (taking into account the capital contribution made by our Pre-IPO Investor to
Guangzhou Xinhui pursuant to the Xinhui Capital Contribution Agreement), and was fully
settled in cash by the respective subscribers as at 10 February 2021.
Upon completion of the above allotments of Shares, our Company was owned as to 48.5%
by Prosperity Cleanness, 48.5% by Sunrise Cleanness and 3% by Dash Dazzling.
Step (9): Acquisition of Guangzhou Xinhui by Shenghui Cleanness (HK)
(i) On 9 February 2021, each of Guangzhou Shenghui and our Pre-IPO Investor entered
into an equity transfer agreement with Shenghui Cleanness (HK), pursuant to which
each of Guangzhou Shenghui and our Pre-IPO Investor transferred its/his entire equity
interest in Guangzhou Xinhui to Shenghui Cleanness (HK) at a respective nominal
consideration of RMB1 as the ultimate beneficial owners and their respective equity
interest in Guangzhou Xinhui and Shenghui Cleanness (HK) are essentially the same.
Upon completion of the aforesaid transfers, Guangzhou Xinhui became a wholly
foreign-owned enterprise, which was wholly-owned by Shenghui Cleanness (HK).
(ii) The change of shareholder of Guangzhou Xinhui was registered with the Panyu
Administration for Market Regulation regarding the shareholding changes on 19
February 2021; and a foreign investment information report on the same was
subsequently filed with the Enterprise Registration System of the Guangzhou
Administration for Market Regulation.
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Step (10): Increase in the registered capital of Guangzhou Shenghui
On 26 February 2021, all of the then shareholders of Guangzhou Shenghui resolved to
increase the registered capital of Guangzhou Shenghui from RMB500,000 to RMB25 million.
Such increase was conducted by way of capital contribution by Guangzhou Xinhui in the amount
of RMB24.5 million on 2 March 2021. Upon completion of the said increase in registered
capital, Guangzhou Shenghui was owned by Mr. Li, Mr. Chen and Guangzhou Xinhui as to 1%,
1% and 98%, respectively. As at the Latest Practicable Date, the remaining RMB24.5 million of
the registered capital of Guangzhou Shenghui had not been paid up and will be fully paid up on
or before 31 December 2026, in accordance with its articles of association. On 2 March 2021,
Guangzhou Shenghui registered with the Panyu Administration for Market Regulation regarding
its increase in registered capital and obtained the updated business licence reflecting such
change.
Step (11): Acquisition of Guangzhou Shenghui by Guangzhou Xinhui
On 12 March 2021, each of Mr. Li, Mr. Chen and Guangzhou Xinhui entered into an equity
transfer agreement, pursuant to which each of Mr. Li and Mr. Chen transferred his entire equity
interest in Guangzhou Shenghui to Guangzhou Xinhui at a respective consideration of RMB1.23
million. Such consideration was determined with reference to the unaudited net asset value of
Guangzhou Shenghui as at 28 February 2021 and will be settled in full in accordance with the
equity transfer agreements and prior to the Listing. Registration of the aforesaid transfers of
equity interests in Guangzhou Shenghui was completed on 12 March 2021. Upon completion of
the aforesaid transfers, Guangzhou Shenghui became wholly-owned by Guangzhou Xinhui. On
12 March 2021, Guangzhou Shenghui obtained the updated business licence from the Panyu
Administration for Market Regulation.
PRE-IPO INVESTMENT
Overview of the Pre-IPO Investment
Our Pre-IPO Investor’s investment in our Group was made in two tranches. First, by way of
Mr. Tam’s capital injection to Guangzhou Xinhui (details of which are set out in step (7) under
the paragraph headed “Reorganisation” in this section above). Second, by way of the
subscription of Shares through Mr. Tam’s nominee, Dash Dazzling (details of which are set out
in step (8) under the paragraph headed “Reorganisation” in this section above).
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Details of the Pre-IPO Investment Agreements
Pre-IPO Investor Mr. Tam Y at Kin Ken ( ᗈ˚਄ )
Name and date of the investment
agreements
Xinhui Capital Contribution Agreement dated 28 January
2021; and Subscription Agreement dated 9 February 2021
Amount of the cash consideration
paid (Note)
RMB4,247,423 (equivalent to HK$5,099,877)
Basis of determination of the
consideration
by arm’s length negotiation between the parties with
reference to, among others, the unaudited consolidated net
asset value of Guangzhou Shenghui, Guangzhou Xinhui
and Guangxi Shenghui as at 31 December 2020
Date of completion/payment date
of the consideration
10 February 2021 and 22 February 2021
Approximate cost of investment
per Share
HK$0.14
Approximate discount to mid-point
of the Offer Price range
61.1%
Use of proceeds and whether the
proceeds have been fully utilised
substantially all of the proceeds from the Pre-IPO
Investment have been utilised for settlement of costs and
expenses incurred in connection with the Listing
Percentage of the shareholding of
our Pre-IPO Investor in our
Company immediately after
completion of the Pre-IPO
Investment
(Note)
3%
Shareholding of our Pre-IPO
Investor in our Company
immediately after the Share
Offer (without taking into
account any Shares that may be
allotted and issued pursuant to
the exercise of any options
which may be granted under the
Share Option
Scheme)
(Note)
2.31%
Note: The cash consideration was paid by Mr. Tam’s personal saving.
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Strategic benefit to our Company widening of our Shareholder base; provision of general
working capital and strategic advice in relation to our
business development; as well as introduction of business
opportunities
Special rights our Pre-IPO Investor is not entitled to any special rights
under the Pre-IPO Investment
Note: Our Pre-IPO Investor’s interests in our Shares are held through his nominee company Dash Dazzling.
Lock-up and public float
Shares held by Dash Dazzling will not be subject to lock-up. As Dash Dazzling is not a
core connected person of our Company, Shares held by Dash Dazzling will be counted towards
the public float after Listing.
Background of our Pre-IPO Investor
Mr. Tam has over 10 years’ experience in managing business development, developing
corporate strategy and executing corporate transformations. Mr. Tam joined Fincentric
Corporation in January 2001. Fincentric Corporation is a company based in Canada providing
banking technology to global financial services industry and was acquired by Open Solutions
Inc. in 2007. Mr. Tam was then promoted as a director of leadbuilder and customer value
maximisation solutions of Fincentric Corporation in January 2006 until he left the company in
May 2007. Mr. Tam also served as a managing director of Green Impact Solution Limited, an
energy efficient solutions provider in Hong Kong, from May 2009 to March 2011, as well as a
Chief Operating Officer of DT International Holdings Limited from April 2011 to June 2015. Mr.
Tam is currently the managing director of KS Enterprises Hong Kong Limited, a company
engaged in fine wine investment and management in Hong Kong, where Mr. Tam from time to
time sources investments and projects for his property developer clients in the PRC. Mr. Tam
has been responsible for the general management of this company since June 2015. He is also an
independent non-executive director of Guan Chao Holdings Limited, a company listed on the
Main Board of the Stock Exchange (stock code: 1872). He is a full member of the Hong Kong
Computer Society. Mr. Tam holds a Master of Business Administration degree from the
University of Cambridge in the United Kingdom, a Bachelor of Applied Science degree from the
University of British Columbia in Canada and completed the Stanford Executive Program
offered by the Graduate School of Business of Stanford University in the United States.
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Mr. Tam is also an experienced private investor and his investment experience includes
investing in listed companies in Hong Kong and overseas as well as in precious metals and
commodities. In relation to the equity investment, he generally does not restrict to investments
in specific sectors and instead his investments involved listed companies in various sectors
including the financial, industrial, energy and materials sectors.
Mr. Tam was introduced to our Group through Mr. Li. In around the first half of 2018, Mr.
Li and Mr. Tam met through a social wine gathering in the PRC, during which they discussed
the possible business opportunities between Mr. Tam’s property developer clients in the PRC and
our Group as regards the provision of cleaning services for their future property developments.
In follow-on discussions with Mr. Tam in around late 2019, Mr. Li became aware that Mr. Tam
had been appointed as an independent non-executive director of a company listed in Hong Kong
and had also been investing in securities listed in Hong Kong with a modest-sized portfolio.
Knowing that Mr. Tam has knowledge in the Hong Kong capital market, when Mr. Li
contemplated a potential listing in Hong Kong, he approached Mr. Tam for his thoughts on the
Hong Kong securities market as he had experience in investing in securities, as well as his
interest in investing in our Group. At that time, Mr. Tam did not provide a firm commitment to
invest. With the backdrop of the COVID-19 pandemic and its worldwide implications starting in
around early 2020, Mr. Tam considered the increased demand in the cleaning industry and the
potential of our business in light of the COVID-19 pandemic and therefore gave serious
consideration on such investments. As such, in around the third quarter of 2020 when Mr. Li
discussed with Mr. Tam a possible listing in Hong Kong, Mr. Tam indicated that he would be
interested to invest a small percentage in our Group.
Although the cost per Share paid by our Pre-IPO Investor upon Listing represented a
discount to the Offer Price (being HK$0.36 per Share, the mid-point of the Offer Price range) of
approximately 61.1%, our Directors consider that the basis of determination of the consideration
was fair and reasonable taking into account the following principal factors: (i) the business
synergy which Mr. Tam could bring to our Group by virtue of Mr. Tam’s possible introduction of
potential clients to our Group and other strategic benefits of the Pre-IPO Investment as
mentioned above; (ii) the equity risk assumed by Mr. Tam in investing in an unlisted company
given the Listing being conditional and may or may not go forward and thus Mr. Tam has
essentially agreed to continue to invest long term in the private Group; and (iii) the economic
uncertainty worldwide in light of the COVID-19 pandemic.
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Despite Mr. Tam’s business experience not pertaining directly to the environmental
cleaning and maintenance services industry, our Directors believe that our Group could take
advantage from (i) his over 10 years investment experience and corporate management
experience in managing business development, developing corporate strategy and executing
corporate transformations in different industries; (ii) his experience in working in relatively
senior positions in various types of companies in different industries; and (iii) the client base
and personal connections in the property industry which he will have developed over such time
and for such various businesses, Mr. Tam possesses adequate experience and networks and can
provide us with strategic advice in relation to our business development as well as introduction
of business opportunities to our Group which are two strategic benefits to our Company from the
Pre-IPO Investment. To the best of the knowledge, information and belief of our Directors and
having made all reasonable enquiries, Mr. Tam invested in our Group because he appreciates the
prospects and potential growth of our Group in the cleaning industry, especially in light of the
ongoing COVID-19 pandemic as well as his own analysis. As at the Latest Practicable Date,
save for his investment in our Group, Mr. Tam was an Independent Third Party and he had
introduced two clients (the “ New Clients ”), both are from the property management industry, to
our Group subsequent to his investment in 2021. The total revenue generated from the two
clients to our Group was approximately nil, RMB3.1 million, RMB4.3 million and RMB2.2
million for the years ended 31 December 2020, 2021, 2022 and the six months ended 30 June
2023, respectively. The total profit contributed by the two clients to our Group was
approximately nil, RMB0.5 million, RMB0.7 million and RMB0.2 million for the years ended 31
December 2020, 2021, 2022 and the six months ended 30 June 2023, respectively. The New
Clients are independent of Mr. Tam as well as our Group as at the Latest Practicable Date.
Compliance with the Guidance Letters issued by the Stock Exchange
On the basis that (i) the consideration for the Pre-IPO Investment was irrevocably settled
more than 28 clear days before the date of our first submission of the Listing application to the
Stock Exchange; and (ii) our Directors confirmed that the terms of the Pre-IPO Investment
(including the consideration) were determined on arm’s length basis, the Sole Sponsor has
confirmed that the terms of the Pre-IPO Investment are in compliance with (i) the Guidance
Letter HKEx-GL-29-12 issued by the Stock Exchange in January 2012 and as updated in March
2017; (ii) the Guidance Letter HKEx-GL43-12 issued by the Stock Exchange in October 2012
and as updated in July 2013 and March 2017; and (iii) the Guidance Letter HKEx-GL-44-12
issued by the Stock Exchange in October 2012 and as updated in March 2017.
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CORPORATE STRUCTURE IMMEDIATELY AFTER OUR REORGANISATION
The shareholding structure of our Group immediately after our Reorganisation but before
the Share Offer and the Capitalisation Issue (without taking into account of any Shares that may
be allotted and issued pursuant to the exercise of any options which may be granted under the
Share Option Scheme) is set out below:
Mr. Li
(Note)
100%
100%
100%
100%
100%
100%100%
48.5% 3%48.5%
Pre-IPO InvestorMr. Chen
(Note)
Prosperity Cleanness
(BVI)
Sunrise Cleanness
(BVI)
Our Company
(Cayman Islands)
Shenghui Cleanness (BVI)
(BVI)
Shenghui Cleanness (HK)
(Hong Kong)
Guangzhou Xinhui
(PRC)
Guangzhou Shenghui
(PRC)
Dash Dazzling
(BVI)
100% 100%
Guangxi Shenghui
(PRC)
Shenghui Cleanness (Beijing)
(PRC)
Note: Mr. Li and Mr. Chen are a group of Controlling Shareholders. Please refer to the section headed
“Relationship with our Controlling Shareholders” of this prospectus for further details.
HISTORY, REORGANISATION AND GROUP STRUCTURE
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THE SHARE OFFER AND THE CAPITALISATION ISSUE
(i) Our Company will offer 373,750,000 new Shares under the Share Offer to the general
public, representing 23% of the enlarged issued share capital of our Company upon
Listing (without taking into account of any Shares that may be allotted and issued
pursuant to the exercise of any options which may be granted under the Share Option
Scheme). Meanwhile, our Selling Shareholders will offer in aggregate 40,625,000 Sale
Shares for purchase under the placing tranche of the Share Offer, representing 2.5% of
the enlarged issued share capital of our Company upon Listing (without taking into
account of any Shares that may be allotted and issued pursuant to the exercise of any
options that may be granted under the Share Option Scheme).
(ii) Conditional upon the grant of the listing approval by the Stock Exchange for the
Listing and permission to deal in our Shares on the Main Board and the share
premium account of the Company being credited as a result of the Share Offer,
HK$12,512,490 will be capitalised and applied in paying up in full at par
1,251,249,000 new Shares (including 40,625,000 Sale Shares) to be allotted and issued
to our then existing Shareholders whose names appeared on the register of members of
our Company as at the close of business on 14 November 2023 in proportion (as near
as possible without involving fractions so that no fraction of a Share shall be allotted
and issued) to their then respective existing shareholding in our Company as at a
specified date, to enable them to maintain their shareholding in the Company. Upon
completion of the Share Offer and the Capitalisation Issue and upon Listing,
Prosperity Cleanness, Sunrise Cleanness and Dash Dazzling will in aggregate own
70% of the shareholding of our Company.
HISTORY, REORGANISATION AND GROUP STRUCTURE
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Corporate structure immediately after the Share Offer and the Capitalisation Issue
The shareholding structure of our Group immediately following completion of the Share
Offer and the Capitalisation Issue (without taking into account of any Shares that may be
allotted and issued pursuant to the exercise of any options which may be granted under the
Share Option Scheme) is set out below:
Mr. Li
(Note 1)
100% 100%
100%
100%
100%
100%
100%
100%
25.5%36.095% 2.31% 36.095%
Pre-IPO InvestorMr. Chen
(Note 1)
Prosperity Cleanness
(BVI)
Sunrise Cleanness
(BVI)
Our Company
(Cayman Islands)
Shenghui Cleanness (BVI)
(BVI)
Shenghui Cleanness (HK)
(Hong Kong)
Guangzhou Xinhui
(PRC)
Guangzhou Shenghui
(PRC)
Dash Dazzling
(Note 2)
(BVI)
100% 100%
Guangxi Shenghui
(PRC)
Shenghui Cleanness (Beijing)
(PRC)
Other public Shareholders
Public float
Notes:
1. Mr. Li and Mr. Chen are a group of Controlling Shareholders. Please refer to the section headed
“Relationship with our Controlling Shareholders” of this prospectus for further details.
2. Our Pre-IPO Investor and Dash Dazzling will be considered as part of the public float for the purpose of
Rules 8.08(1) and 8.24 of the Listing Rules.
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PRC REGULATORY REQUIREMENTS
Our PRC Legal Advisers advised that the acquisition of the 3% equity interest in
Guangzhou Xinhui by our Pre-IPO Investor (the “ First Acquisition ”) was subject to the M&A
Rules, which required the consideration of the First Acquisition to be determined with reference
to the net asset value of Guangzhou Xinhui according to an independent valuation report. Such
requirement was satisfied (please refer to the paragraph headed “Pre-IPO Investment” in this
section above for details) and Guangzhou Xinhui had obtained a new business licence required
for the First Acquisition. After the First Acquisition, Guangzhou Xinhui became a Sino-foreign
joint venture enterprise. For the acquisition of the entire equity interest in Guangzhou Xinhui by
Shenghui Cleanness (HK) from Guangzhou Shenghui and our Pre-IPO Investor (the “ Second
Acquisition ”), our PRC Legal Advisers advised that since the Second Acquisition took place
after Guangzhou Xinhui had been converted into a sino-foreign joint venture enterprise, the
Second Acquisition was an equity transfer in a foreign invested enterprise and thus the M&A
Rules were not applicable to the Second Acquisition. Guangzhou Xinhui had obtained a new
business licence for the Second Acquisition. Please refer to the paragraph headed “Regulatory
overview – PRC laws and regulations – Laws and regulations on mergers and acquisitions and
overseas listings” of this prospectus for detailed provisions of the M&A Rules.
Our PRC Legal Advisers also confirmed that Mr. Li and Mr. Chen completed the
registrations required by Circular 37 and Circular 13 on 8 January 2021. Please refer to the
paragraph headed “Regulatory overview – PRC laws and regulations – Laws and regulations on
foreign exchange” of this prospectus for a description of the requirements under Circular 37 and
Circular 13.
Our PRC Legal Advisers further confirmed that the relevant approvals and permits in
relation to our Reorganisation steps that involved the PRC subsidiaries of our Group have been
obtained in accordance with the applicable PRC laws and regulations, and each of such
Reorganisation steps has been properly and legally completed, and duly registered with the
relevant local registration authorities of the PRC.
HISTORY, REORGANISATION AND GROUP STRUCTURE
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OVERVIEW
We are a cleaning and maintenance services provider in the PRC and one of the
well-established property cleaning service providers in Guangdong province. With industry
experience of over 20 years and foothold in Guangdong province, we have steadily developed
our business since our establishment in 2000 to offer a wide range of services to over 700
customers and extend the coverage of our operations to 14 provincial-level regions in the PRC.
For the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022
and 2023, the total revenue of the Group was approximately RMB465.7 million, RMB563.5
million, RMB594.2 million, RMB289.2 million and RMB298.3 million, respectively, while profit
for the year/period was approximately RMB31.3 million, RMB39.9 million, RMB34.4 million,
RMB15.4 million and RMB15.3 million, respectively.
Our major customers during the Track Record Period include Fortune Global 500 property
developers in the PRC, Fortune Global 500 real estate advisory firm, major property developers
and property management companies in Asia and in the PRC, government department and border
control points in Guangdong province and major airport management companies in the PRC.
Certain of them are companies listed on the Stock Exchange, the London Stock Exchange or the
stock exchanges in the PRC. Our business relationship with these sizeable and internationally or
domestically renowned enterprises offers us the benefit of daily and direct contact with the key
players and stakeholders in the industry as well as a better understanding on the customer
preferences and requirements, which in turn enable us to receive tender invitations from sizeable
customers, secure tenders and execute projects in a consistent and stable manner.
We serve a wide range of premises including commercial buildings, transportation hub such
as airports, residential premises, shopping malls and commercial complex, streets, parks and
other public space. Our cleaning and maintenance services cover high-end commercial properties
such as Guangzhou International Finance Center (ፄʕː ), Guangzhou Taikoo Hui
(ᄿψ˄̚ි ), Leatop Plaza ( лஷᄿఙ ), Pearl River Tower (ɽข ), Raffles City
Chongqing (ᅅԸ၅ɻᄿఙ ), Raffles City Shenzhen ( ଉέԸ၅ɻᄿఙ ); public transportation
hubs such as Chongqing Jiangbei International Airport (ᅅϪ̏਷ყዚఙ ), Guangzhou Baiyun
International Airport ( ᄿψͣථ਷ყዚఙ ), Zhengzhou Xinzheng International Airport ( ቍψอቍ
਷ყዚఙ ), Hong Kong Zhuhai-Macao Bridge Zhuhai port (֦high-end
residential premises such as One Shenzhen Bay ( ଉέᝄɓ໮ ); and shopping malls such as Y ue
City (۬.)
Our service variety is one of our competitive advantages in providing comprehensive and
one-stop cleaning services to our customers. Our service capabilities include the provision of
basic cleaning and maintenance service, garbage collection and transportation service, waste
collection and transportation service, water tank cleaning service and ancillary services. We also
offer specialised cleaning services such as stone cleaning and restoration and high-altitude
cleaning with mobile elevated platforms.
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The diagram below illustrates our role and the width of our service offering:
Our services
Property
owners
Property
management
companies
and airport
management and
operation companies
Public
Waste collection
and transportation
Garbage collection
and transportation
Ancillary cleaning
services
Other cleaning
Basic cleaning
and maintenance
Stone cleaning
and maintenance
High-altitude
cleaning
Property cleaning
Public space cleaning
Water
tank cleaning
Demand for
cleaning services
The following table sets out a breakdown of our revenue by principal service categories
during the years/periods indicated:
Y ear ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited)
Property cleaning
– Commercial building 211,433 45.4 249,927 44.3 289,624 48.7 133,863 46.3 159,780 53.6
– Residential building 96,078 20.6 135,813 24.1 143,721 24.2 70,255 24.3 64,446 21.6
– Transportation hub 63,362 13.6 61,384 10.9 52,029 8.8 28,913 10.0 16,759 5.6
– Shopping mall 52,749 11.3 71,171 12.6 64,372 10.8 34,721 12.0 27,228 9.1
– Public utilities
Note 1 16,691 3.6 12,696 2.3 11,981 2.0 4,724 1.6 9,122 3.1
– Industrial park 6,624 1.4 12,981 2.3 12,339 2.1 6,453 2.2 8,276 2.8
Public space cleaning Note 2 18,360 3.9 19,569 3.5 20,138 3.4 10,244 3.6 12,640 4.2
Other cleaning Note 3 3 6 7 0 . 1– 0 . 0––––––
465,664 100.0 563,541 100.0 594,204 100.0 289,173 100.0 298,251 100.0
Notes:
(1) Public utilities cleaning primarily consists of government offices and school cleaning.
(2) Public space cleaning primarily consists of road sweeping and cityscape cleaning.
(3) Other cleaning primarily consists of river cleaning.
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Our Guangzhou Headquarters was established in 2000 and is situated at Panyu District,
Guangzhou City, Guangdong province. In May 2017, we established our Haikou Branch with a
view to allocate more resources and business focus to the provision of cleaning services in
Hainan province. Significant projects include general cleaning service for Sanya Phoenix
International Airport ( ɧԭჾ਑਷ყዚఙ ) and various high-end residential properties managed
by an integrated conglomerate specialised in property development with operations in over 200
cities in Hainan province. In December 2020, following the success in Hainan province, our
Chongqing Branch was established as the second branch office of the Group. Significant projects
in Chongqing include Chongqing Jiangbei International Airport (ᅅϪ̏਷ყዚఙ ) and Raffles
City Chongqing (ᅅԸ၅ɻᄿఙ ), the award-winning commercial complex which features a
300-metre-long horizontal skybridge. For the years ended 31 December 2020, 2021 and 2022
and the six months ended 30 June 2022 and 2023, the Group’s revenue generated in Hainan
province and Chongqing, in aggregate, amounted to approximately RMB54.4 million, RMB64.5
million, RMB67.3 million, RMB37.5 million and RMB28.9 million,, respectively, representing
approximately 11.6%, 11.5%, 11.3%, 13.0% and 9.7% of the total revenue in the relevant period.
Over the years, we have grown to become one of the well-established service providers for
property cleaning in Guangdong province with a strong brand recognition and proven track
record as demonstrated by our numerous awards and recognitions issued by industry bodies
and our customers. In 2019, we were recognised as an Advanced Cleaning Service
Provider in Guangdong province* (ਕ΋ආఊЗ ) by China Quality Credit
Evaluation Committee, China Quality Brands Promotion Committee, Beijing Bid Evaluation
Centre* (͜൙
ᄆʕː ). In 2020, our brand “ ʺሾ૶ᆎ ” ranked 6th in the Top 500 Property Services Enterprises
– Cleaning Services* (ਕΆุ 500 ੶ –ਕ ) by China Property Management
Institution and China Real Estate Appraisal Center of Shanghai E-House Real Estate Research
Institute* (Ӻ৫ ). In 2021, we were recognised as an
Advanced enterprise in anti-epidemic work* (ʈЪ΋ආΆุ ) by Guangzhou Industry
Association of Sanitation* ( ᄿψᐑሊБุ՘ึ ).
We implement procedures for maintaining a high standard of occupational health and
safety, environment and quality control. Our quality management system, environmental
management system and occupational health and safety management system have obtained
ISO9001, ISO14001 and ISO45001 (formerly GB/T 28001) certifications, respectively.
To ensure quality and reliability of our cleaning and maintenance services, we have
allocated substantial resources in staffing and upgrading our staff’s specialised services
qualification. As at 31 December 2022, we had a stable labour force of more than 6,000
employees, including a number of licensed technicians that hold licences and certificates to
perform specialised cleaning services, including (i) Special Industry Operation Certificate –
Providing installation, maintenance and demolition services at high altitudes* ( त၇Ъุ዁Ъ൛
–ৰЪุ ); (ii) Stone Conservation & Floor Professional Qualification* ( ͩ
ࣸiii) Employment Certificate of Cleaning of Secondary Water
Supply Facilities in Guangzhou* (ᆎɪ੪൛ ); and (iv) Guangzhou
Rodents Control Officer Employment Certificate* (ࡰ.)
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As at the Latest Practicable Date, we completed research for improvements of our
machinery and equipment which can be used in our operation, including but not limited to (i)
safe and intelligent cleaning technology for exterior wall glass of high-rise buildings; (ii) fine
stone maintenance technology; and (iii) remote garbage collection maintenance and management
technology. In recognition of our excellent performance in providing specialised cleaning
services in stone cleaning and restoration, we were named as one of the Ten Units of
Professional Technology in Stone and Floor Conserve Application Industry* ( ͩҿήջᏐ͜ᚐଣ
Бุਖ਼ุҦஔɤԳఊЗ ) in 2018 by the Stone Application Conservation Specialty Committee of
Guangdong Stone Materials Association* (formerly known as the Professional Stone Care
Committee of Guangdong Stone Materials Association*) (ͩҿᏐ͜ᚐଣ
ึ ), and were awarded the Stone & Floor Application Conservation Specialty
Qualification Certificate – AAAAA Grade* (ࣣAAAAA ॴ)b y
the same committee in 2021.
Given our well-established position in the cleaning and maintenance services industry in
the PRC, we are committed to creating and maintaining a clean and green environment for the
society, and valuing our corporate social responsibility. As a recognition to our staff contribution
in the cleaning industry, six of our staff were named as the Outstanding City Beautician in
Guangzhou* (ࢪ࢙ߕfrom the People’s Government of Guangzhou Municipality.
As a socially responsible company, we make donations and also pursue other poverty alleviation
measures such as offering job opportunities to the disabled and retired. Furthermore, we received
an Honorary Certificate of Accurate Poverty Alleviation* (ࣣin 2017 from the
Guangzhou City Management Bureau* (ึ ).
According to the Industry Report, the environmental cleaning and maintenance industry in
the PRC mainly comprises and is largely dominated by two sectors, namely the property
cleaning and public space cleaning sectors. These two sectors have been growing steadily and
their total market size is expected to reach approximately RMB622.8 billion in 2027,
representing a CAGR of approximately 8.9% from 2023 to 2027. In addition, due to the outbreak
of COVID-19, having a clean and hygienic living environment has become an essential part in
pandemic control, and despite the adverse impact of COVID-19 pandemic on the PRC’s
economy, cleaning and maintenance service providers are able to benefit from these
unprecedented times. The increasing demand for cleaning services from the downstream market
will serve as an opportunity for the industry and such demand is anticipated to continue in the
post-pandemic period according to the Industry Report. We believe that due to our competitive
strengths, we are well-positioned to continue capturing new business opportunities in this
growing industry.
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COMPETITIVE STRENGTHS
We believe the following competitive strengths contribute to our success and distinguish us
from our competitors:
We are one of the well-established service providers for property cleaning in Guangdong
province with a strong brand recognition and proven track record
Since our founding in 2000, we have been providing cleaning and maintenance services in
the PRC. Leveraging on our experience of over 20 years and in-depth knowledge of the demands
of customers across the PRC by providing a wide range of services while maintaining consistent
service quality, we have grown to become one of the well-established service providers for
property cleaning in Guangdong province with a strong brand recognition and proven track
record.
We have a strong position in Guangdong province where we were founded and where our
headquarters is located. According to the Industry Report, we ranked (i) first in terms of revenue
for property cleaning; and (ii) first in terms of revenue for commercial property cleaning in
2022, among environmental cleaning and maintenance services providers in Guangdong province
for property cleaning. Our market share amounts to 5.7% and 7.3% in 2022 in property cleaning
and commercial property cleaning subsector in Guangdong province, respectively. During the
Track Record Period, we provided our property cleaning services to a number of reputable
customers for high-end commercial properties in Guangdong province, including Guangzhou
International Finance Center (ፄʕː ), Guangzhou Taikoo Hui ( ᄿψ˄̚ි ), Leatop
Plaza ( лஷᄿఙ ), Pearl River Tower (ɽข ) and Raffles City Shenzhen ( ଉέԸ၅ɻᄿ
ఙ). Leveraging on our extensive experience in cleaning and maintenance services, we have
replicated our model to other regions in the PRC with a strong demand for property cleaning
services, and during the Track Record Period we had undertaken projects across 14
provincial-level regions in the PRC including, among others, Chongqing, Fujian, Guangdong,
Guangxi, Hainan and Hubei.
Over the years, we have developed a strong brand recognition and proven track record as
demonstrated by our numerous awards and recognitions issued by industry bodies and our
customers. We were recognised in 2019 as an Advanced Cleaning Service Provider in
Guangdong province (ਕ΋ආఊЗ ) and subsequently, in 2020, a Contract
Honouring and Credit Keeping Enterprise in Guangdong* (͜Άุ )
(2011–2019). Our brand “ ʺሾ૶ᆎ ” ranked 6th in the Top 500 Property Services Enterprises –
Cleaning Services* in 2020 (ਕΆุ 500 ੶ –ਕ ) by China Property Management
Institution and China Real Estate Appraisal Center of Shanghai E-House Real Estate Research
Institute* (Ӻ৫ ). In 2021, we were recognised as an
Advanced enterprise in anti-epidemic work* (ʈЪ΋ආΆุ ) by Guangzhou Industry
Association of Sanitation* ( ᄿψᐑሊБุ՘ึ ) (for further details of the above and other major
awards and recognitions, please refer to the paragraph headed “Awards and recognitions” in this
section). Six of our staff have also received recognition for the quality of their work such as the
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Outstanding City Beautician in Guangzhou* (ࢪ࢙ߕfrom the People’s
Government of Guangzhou Municipality.
We believe that our established position, strong brand recognition and proven track record
will help us continue to solidify our market position and allow us to capture the growing
demand for cleaning and maintenance services in the PRC.
We are able to provide a variety of cleaning and maintenance services and have strong
capabilities to support our service offering
We are dedicated to serving our customers’ unique needs. Our mission and vision is to be a
full spectrum cleaning and maintenance service solutions provider for the creation of a clean and
hygienic environment for all users, owners, operators and public in our service locations. For
this purpose, we provide a wide range of services in the PRC including the provision of basic
cleaning and maintenance service, garbage collection and transportation service, waste collection
and transportation service, water tank cleaning service and ancillary services. We also offer
specialised cleaning services such as stone cleaning and restoration and high-altitude cleaning
with mobile elevated platforms.
We have strong capabilities to support our service offering including the holding of a
number of qualifications, maintenance of a large and well-qualified workforce and the adoption
of various quality control measures, which enable us to respond to the service requests and
feedback of our customers in an efficient manner. Currently we hold, among others, the
Guangzhou Sanitation Industry Operating Service Company Industry Grade Certificate – A
Grade* (ਕ –ࣣthe Operational Cleaning, Collection and
Transportation Services of Municipal Solid Waste Licence* (૶ધeϗණe
ਕ஢̙ᗇ ), the Stone & Floor Application Conservation Specialty Qualification
Certificate – AAAAA Grade* (ࣣAAAAA ॴ), Sewage, Septic
Tank, Pipeline Unclogging Treatment Cleaning Service Enterprise Qualification Certificate –
National Level 1* (ࣣ– ɓॴ ) and
Secondary Water Supply Cleaning Service Enterprise Qualification Certificate* (؂
ࣣfor further details of these and other qualifications, please refer to the
paragraphs headed “Licences, certificates and qualifications” and “Awards and recognitions” in
this section). We have a large number of employees, some of whom specialise in providing
certain types of specialised cleaning services to meet our customers’ needs. As at 30 June 2023,
we had 7,121 employees involved in operations of which 52 employees had qualifications
related to high-altitude cleaning, 11 employees had qualifications related to stone conservation,
38 employees had qualifications related to cleaning of water supply facilities and 43 employees
had qualifications related to pest control. With our large and well-qualified workforce, we are
able to undertake sizeable projects such as those involving the cleaning of multi-purpose
commercial complexes and airports and also satisfy our customers’ requests for increase in
service scope or additional service locations during the course of our projects. In addition, we
adopted various quality control measures, to help us maintain the service quality in our projects,
monitor and address major issues as they develop, keep our customers promptly informed of the
status and address their complaints and feedback where necessary. According to the Industry
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Report, our wide range of professional expertise and capability in providing comprehensive
cleaning and maintenance services form part of our main competitive strengths.
Our Directors believe that in addition to our significant industry experience and strong
reputation as discussed above, our ability to provide a variety of cleaning and maintenance
services and our strong capabilities are important competitive edges for us to undertake larger
and more lucrative projects as well as attract potential customers and maintain strong
relationships with our existing customers.
We have a diversified customer base and strong relationship with our major customers
Leveraging on our competitive strengths including our strong capabilities to support our
service offering, we had built up a diversified customer base and maintain a strong relationship
with our major customers. During the Track Record Period, we had a diversified customer base
of over 700 customers including Fortune Global 500 property developers in the PRC, Fortune
Global 500 real estate advisory firm, major property developers and property management
companies in Asia and in the PRC, government departments in Guangdong province and major
airport management companies and airlines in the PRC. Our five largest customers for each year
during the Track Record Period were (i) property management companies in the PRC; (ii) airport
management and operation companies; (iii) companies (or subsidiaries thereof) listed on the
Stock Exchange, the London Stock Exchange or stock exchanges in the PRC; or (iv) companies
falling within more than one of the above categories. Among our five largest customers for each
year during the Track Record Period, we had been providing services to almost all of them for
over three years with the longest being over 10 years. In addition, we had also won a number of
awards and recognitions from various major customers, being property management companies,
during the Track Record Period relating to our high service quality. Owing to our diversified
customer base and strong relationships with the above types of customers, we believe we are
able to further develop future business opportunities from our existing customers and through
their referrals and our strong reputation.
We are committed to the management of risks and adopted stringent quality, safety and
environmental management systems
We are committed to the management of risks. We have adopted stringent quality, safety
and environmental management systems and been accredited with ISO 9001 (quality
management), GB/T 28001 (replaced with ISO 45001 since December 2020) (occupational health
and safety) and ISO 14001 (environmental management) since 2009, 2013 and 2009,
respectively. We monitor our operations from time to time and adopt additional risk management
measures in response to new risks such as our measures in response to COVID-19. For further
details of our quality, safety and environmental management systems, please refer to the
paragraphs headed “Quality controls” and “Environmental, occupational health and safety” in
this section.
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Our Directors believe that our safety, quality and environmental management systems form
a key part of our success as being accredited in accordance with international standards, enhance
our credibility and elevate our customers, suppliers and staff’s confidence in us, thus upholding
our competitiveness.
We are led by a seasoned and stable management team
We are led by a seasoned and stable management team under the direction of Mr. Li, our
executive Director, chairman, chief executive officer and one of our Controlling Shareholders.
Our senior management team is well experienced in the environmental cleaning and maintenance
industry in the PRC with most of our senior management team members having over 12 years of
experience in the environmental cleaning and maintenance industry and having been with our
Group for over 10 years. Mr. Li is responsible for the overall strategic planning, management,
operation and business development of our Group. Mr. Chen, our executive Director, is
responsible for providing industrial advice to our Group, as well as strategic management of and
formulating business strategies for our Group. Mr. Xing, the managing director of our Group, is
responsible for the overall management and operation of our Group and has over 19 years of
experience in the environmental cleaning and maintenance industry in the PRC. For details of
the qualification and experience of our Directors and senior management, please refer to the
section headed “Directors and senior management” of this prospectus. Besides the above senior
management members, a majority of our mid-level managers have been with our Group for over
eight years. Being led by an experienced and stable management team has greatly contributed to
our ability to build strong relationships with customers and secure new business opportunities,
and which our Directors believe has contributed to our Group’s success.
BUSINESS STRATEGIES
Our principal business objectives are to further strengthen the position and overall
competitiveness of our cleaning and maintenance business in the PRC and increase our market
share in the industry. We intend to achieve our business objectives with the following business
strategies:
Continue to increase our market share by expanding our presence in the PRC in both
existing and new markets
We plan to increase our market share by continuing our past strategy of expanding our
presence in both existing and new markets in the Greater Bay Area and beyond. In our
expansion strategy, we will, where possible, grow along-side our major customers, such as
property management customers with country-wide presence, to build upon our existing
relationship and provide support for our mutual benefit. Our market share by revenue in property
cleaning in Guangdong province increased from 5.0% in 2020 to 5.1% in 2021 and in
commercial property cleaning subsector in Guangdong province increased from 8.6% in 2020 to
9.1% in 2021.
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Expand market coverage by establishment of new branch offices
Our historical success in establishing Haikou Branch and Chongqing Branch
For the past 20 years, it has been our business strategy to cultivate and develop the client
network and reputation in Guangdong province, especially in the Greater Bay Area. Our
management’s efforts have proven to be successful as demonstrated in our significant growth
with over 80% of our total revenue generated in Guangdong province during the Track Record
Period. Since our establishment, we have established two branch offices for the purpose of our
business expansion in two different geographical locations, i.e. Haikou Branch and Chongqing
Branch. There were other project companies established by the Group during the Track Record
Period for the purpose of submitting tenders and/or carrying out awarded project work. However,
most of these project companies would be deregistered once the relevant projects concluded or if
we failed to secure the tender. Set out below is the list of our project companies subsisting
during the Track Record Period:
Place of establishment
Period of
establishment Purpose
Whether it
has been deregistered
and reason
Dongguan city,
Guangdong province
22 September
2008
Execution of a
Changping town
(੬̻ᕄ ) project
Deregistered after
conclusion of
project
Wuhan city, Hubei
province
10 August
2017
Tender submission
for a Y uexiu
group project in
Wuhan
Deregistered after
unsuccessful tender
According to the Industry Report, it is generally the industry norm or the requirement of
the customer for cleaning service providers to set up local project company or office for
effective management and deployment of labour. While the tender requirements of the customers
in relation to management and deployment of labour varies, some customers would require the
tender offeree to set up a simple labour structure within the staff team, with the deployment of a
manager to communicate with the customer and monitor the workers sent from the Company.
Another advantage of setting up local project company is that contribution of social insurance
and housing provident funds can be arranged for staff employed locally. However, these project
companies are mainly for one-off projects and/or with less sizeable contract sums, and the social
insurance and housing provident funds accounts of the local employees will be closed along with
the deregistration of the companies.
On the other hand, branch companies/offices are established with strategic reasons for
market expansion and penetration. In May 2017, we established Haikou Branch with a view to
allocate more resources and business focus to the provision of cleaning services in Hainan
province. During the Track Record Period, the Group had over 20 projects in Hainan province
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with total contract sum of not less than RMB209.0 million. Significant projects include general
cleaning service for Sanya Phoenix International Airport ( ɧԭჾ਑਷ყዚఙ ) and various
high-end residential properties in Hainan province managed by an integrated conglomerate
specialised in property development based in the PRC. For the years ended 31 December 2020,
2021, 2022 and the six months ended 30 June 2023, the aggregate contract sum of the Sanya
Phoenix International Airport ( ɧԭჾ਑਷ყዚఙ ) project is RMB46.8 million. To the best
knowledge, information and belief of our Directors, the major reasons that we were able to
secure large-scale projects in Hainan province were due to our vast experience in residential and
public utilities cleaning projects, and the fact that we have been simultaneously undertaking
other projects in Hainan province. With labour force of over 700 operation staff stationed in the
vicinity of our Haikou Branch, customers are satisfied that we are able to provide a stable staff
flow, thus flexibly allocate additional staff from other projects to deal with contingencies.
Leveraging on our experience in providing high-quality cleaning and maintenance service
to Guangzhou Baiyun International Airport ( ᄿψͣථ਷ყዚఙ ) and Sanya Phoenix International
Airport ( ɧԭჾ਑਷ყዚఙ ), we secured the project in the Chongqing Jiangbei International
Airport (ᅅϪ̏਷ყዚఙ ) which involves the provision of basic cleaning and maintenance
services, as well as garbage collection and transportation services in one of the airport terminals
and transportation hub in 2020. According to the Industry Report, Chongqing Jiangbei
International Airport, Guangzhou Baiyun International Airport and Sanya Phoenix International
Airport ranked 2nd, 1st, and 21st out of 254 airports in the PRC in terms of annual passenger
throughput in 2022. In December 2020, following the success in Hainan province, our
Chongqing Branch was established as the second branch offices of the Group. In 2021, we
successfully secured a 3-year Raffles City Chongqing (ᅅԸ၅ɻᄿఙ ) project, which involves
the provision of basic cleaning and maintenance services, as well as stone cleaning and
maintenance services in several offices and carparks in the commercial complex with total
contract sum of over RMB30,000,000. According to Frost & Sullivan, Raffles City is a flagship
brand of integrated complex by one of Asia’s largest real estate groups listed in Singapore.
There are in total 10 Raffles City complex in Asia comprising various skyscrapers including
Raffles City Chongqing, the award-winning complex which features a 300-metre-long horizontal
skybridge. Our Directors believe that the Group’s presence in (i) one of the busiest international
airports in the PRC; and (ii) one of the most famous skyscrapers and landmarks in the PRC, will
continue to bring forth reputation and attract more tender invitations from sizeable potential
customers in Chongqing.
Our established Zhengzhou Branch
In light of the aforementioned success in establishing Haikou Branch and Chongqing
Branch, we have established our Zhengzhou Branch in May 2023. As we continued to leverage
on our relevant experience on provision of cleaning and maintenance service in airports, we
were able to secure a project in Zhengzhou Xinzheng International Airport ( ቍψอቍ਷ყዚఙ ).
As confirmed by Frost & Sullivan, Zhengzhou Xinzheng International Airport contains
Zhengzhou Airport Economy Zone, which is the first and currently the only national-level
aerotropolis economic development pioneer area approved by the PRC State Council, with an
approved area of 747 square kilometers. As the continuous development of the Zhengzhou
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Xinzheng Economy Zone is a national strategy, with the basis of an international air logistics
hub in the Zhengzhou Xinzheng International Airport, our Directors believe that it will draw
attention to the Group’s reputation for provision of high standard of cleaning and maintenance
services in such high-profile airport, thereby increase the likelihood of attracting more tender
invitations from potential customers for other reputable airports such as those in Beijing,
Shanghai and Hangzhou.
Local presence is an essential factor for securing sizeable projects and achieving market
expansion
Going forward, we intend to establish new branch offices in Beijing, Shanghai and
Hangzhou. Based on our experience for over 20 years in the industry, we believe that one of the
main factors in securing sizeable projects in a particular region is to establish a strong local
presence.
According to Frost & Sullivan, it is generally the market practice for environmental
cleaning and maintenance services providers to set up a local office before or shortly after being
awarded a service contract. Moreover, as the environmental cleaning and maintenance service
industry is labour-intensive in nature, service providers tend to hire the cleaning labour from the
vicinity of the project location. These employees are generally subject to the local social
insurance and housing provident fund regulations. Local office or branch office is therefore
required for effective management purpose if the Group undertakes large-scale cleaning projects
or the Group’s business strategy is to penetrate and expand its market share in that area. These
management advantages include the cost-saving effect in accordance with increasing scale of
operation, compliance with regional restrictions on opening of social insurance and housing
provident fund accounts, increasing staff loyalty and efficiency of recruitment of local staff etc.
Further, taking our well-established presence in Guangdong province as an example, our
local presence offers us the benefit of daily and direct contact with the key players and
stakeholders in the industry as well as relevant local government authorities and respond to their
comments and requirements in a timely and efficient manner. This direct contact also offers us
with a better understanding on the customer preferences and requirements, which in turn enable
them to receive tender invitations from sizeable customers, secure tenders and execute projects
in a more effective way. The Group also has developed close business relationships with major
customers due to its familiarity with local needs and updated information about local
requirements. Such established network of reputable customers enabled us to be involved in the
cleaning and maintenance of high-end commercial properties in Guangdong province including
Guangzhou International Finance Center (ፄʕː ), Guangzhou Taikoo Hui ( ᄿψ˄̚
ි), Leatop Plaza ( лஷᄿఙ ), Pearl River Tower (ɽข ) and Raffles City Shenzhen ( ଉέ
Ը၅ɻᄿఙ ) etc.
Due to the COVID-19 pandemic, the PRC cities such as Shanghai are subject to lockdown
from time to time, which led to the decrease in staff mobility to provide services across different
provinces. As confirmed by Frost & Sullivan, there is an increasing demand for local presence of
workers from tender offerors since the outbreak of COVID-19. In order to increase our Group’s
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competitiveness in securing future tenders, our Directors consider that it is essential for our
Group to set up local offices and have local staff present in different provinces. For further
details on the purported benefits of setting up local offices in different provinces, please refer to
the section headed “Future plans and use of proceeds – Use of proceeds”.
Potentials in Beijing, Shanghai and Hangzhou and our ability to replicate our success in
Guangdong province
Beijing, Shanghai, Guangzhou and Shenzhen are generally recognised as the four tier-one
cities in the PRC. Our Directors are confident the Group’s business model and success in
Guangzhou and Shenzhen set a solid foundation for us to expand our business coverage and
further enroot in other major cities in the PRC. According to the Industry Report, there are
46,427, 10,212 and 10,242 registered property cleaning companies in Beijing, Shanghai and
Zhejiang in 2022, respectively with the property cleaning markets in Beijing, Shanghai and
Zhejiang. In terms of operational scale, it is estimated that 70-85% of market participants in
Beijing and Shanghai are similar to or smaller than the Group, whereas there are approximately
80-90% of market participants in Hangzhou of similar or smaller operations scale comparing to
the Group, with a slightly lower level of market concentration in Hangzhou’s regional market.
On the other hand, there are abundant business opportunities in the three cities for the
Group to expand and compete with those local service providers. According to the Industry
Report, the property cleaning market size in Beijing is expected to increase significantly from
approximately RMB7.4 billion in 2023 to approximately RMB11.3 billion in 2027 with a CAGR
of approximately 11.1% and the market size of the property cleaning sector in Shanghai is
expected to grow at a higher CAGR of approximately 10.9% from approximately RMB9.3 billion
in 2023 to approximately RMB12.8 billion in 2027. According to the Industry Report, in the
property cleaning market in Beijing, Shanghai, and Zhejiang province, it is common industry
practice for large property management companies to outsource property cleaning service from
third-party service providers and third-party property cleaning providers who have
well-established cooperation and long-term relationship with property management companies or
have worked with each other in other regions could gain more competitive advantage in gaining
new projects.
Major commercial properties management companies in Beijing, Shanghai and Hangzhou
include various renowned property developers and property management companies in the PRC.
Most of them are existing customers of the Group or other subsidiaries of the holding company
of such existing customers. Furthermore, approximately 60% of the Group’s current customer
base have other subsidiaries of the holding companies in Chongqing, Beijing and Shanghai.
Throughout the years of operation, the Group was able to secure contracts from recurring clients
including renowned property management companies, airport management and operation
companies and listed companies or their respective subsidiaries. Some of the projects may be
awarded by different customers. However, the subject premises may be developed by the same
developer(s). For instance, the Raffles City Chongqing (ᅅԸ၅ɻᄿఙ ) project and the Raffles
City Shenzhen ( ଉέԸ၅ɻᄿఙ ) project were awarded by different customers while both
projects were owned, developed or managed by the same developer. More examples such as our
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consecutive success in securing the cleaning and maintenance project for Chongqing Jiangbei
International Airport, Guangzhou Baiyun International Airport and Sanya Phoenix International
Airport also demonstrate our resilience in securing similar large-scale projects in different cities
in the PRC.
Our Directors are confident that we will be able to replicate our successful business model
to Beijing, Shanghai and Hangzhou. Our established business relationship with renowned
property developers and property management companies served as a solid foundation for us to
compete in first-tier cities where these property developers and property management companies
have established a profound presence. With our expertise and experience in altitude cleaning, we
also intend to submit tenders for the provision of cleaning and maintenance service at various
skyscrapers, high-end commercial complex and airports in Beijing, Shanghai and Hangzhou such
as Beijing Capital International Airport (ே਷ყዚఙ ) and Raffles City Beijing ( ̏ԯԸ၅
ɻᄿఙ ) in Beijing; HKRI Taikoo Hui ( ɪऎጳุ˄̚ි ), Raffles City Changning (ྐྵԸ၅
ɻᄿఙ ), Raffles City Shanghai ( ɪऎԸ၅ɻᄿఙ ), Shanghai Hongqiao International Airport ( ɪ
዗਷ყዚఙ ) and Shanghai Pudong International Airport (਷ყዚఙ ) in Shanghai;
and Hangzhou Xiaoshan International Airport (ψጽʆ਷ყዚఙ ) and Raffles City Hangzhou
(ψԸ၅ɻᄿఙ ) in Hangzhou. The Directors believe that our well-established position, strong
brand recognition and proven track record will help continue to solidify our market position and
allow us to capture the growing demand for cleaning and maintenance service in the PRC, in
particular, in Beijing, Shanghai and Hangzhou.
Consolidate our well-established position in Guangdong province, in particular, the Greater
Bay Area
While continuing to grow our business organically through establishment of branch offices
in other provinces, we also plan to strategically acquire the entire or invest in a majority interest
in one or two cleaning and maintenance services provider(s) in the Greater Bay Area with
complementary strengths and with targeted operation scale given that we can immediately take
advantage of their existing operations, customer base, resources and local reputation and the
expected synergies from the combined operations such as expanded service offering or
geographic reach. During the Track Record Period, the majority of the projects undertaken by
the Group are based in Guangzhou, while projects in Foshan, Huizhou, Shenzhen, Zhongshan
and Zhuhai, in aggregate, only contributed approximately 13.7%, 16.3% and 16.0% of the
revenue in the Guangdong province during the three years ended 31 December 2022,
respectively.
The Greater Bay Area covers 2 special administrative regions and 9 municipalities, with a
total area of 56,000 square kilometres and combined population of approximately 70 million at
the end of 2021. The Directors are of the view that, with the rapid increase in its economic
strength and regional competitiveness, the Greater Bay Area shall possess the fundamental
conditions for developing into an international first-class bay area and a world-class city cluster
that boosts the needs for cleaning and maintenance services.
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Through the acquisition of well-established cleaning and maintenance service provider with
existing customer base within the Greater Bay Area, particularly in developing cities not within
the Group’s business network, the Group shall be able to expand its geographic reach and tender
for cleaning services provision in major infrastructures to be completed in the near future.
According to the National Bureau of Statistics of China, the Greater Bay Area economy, as
measured by growth in nominal GDP , registered a CAGR of 4.6% from 2018 to 2022. The
economy of the Greater Bay Area is expected to grow at a CAGR of 5.2% between 2023 and
2027. The stable growth in the Greater Bay Area will provide a strong base for urban
development, including major infrastructures, which will further trigger the market demand from
the downstream market of environmental cleaning and maintenance market. Although
competition between cleaning and maintenance services providers in the same service region is
inevitable, the Directors are of the view that the Group will be able to unify and strengthen our
brand recognition attain growth and gain a competitive edge in the Greater Bay Area through the
proposed acquisition.
In the target identification process, we will take into account the potential acquisition
target’s financial condition, competitive strengths and resources such as its service offerings, its
geographic coverage in economically developed or fast growing areas, its licences and
qualifications, its existing projects, its number of staff and their experience and qualifications as
well as whether the target has a clear shareholding structure. Our key selection criteria in
evaluating potential acquisition target(s) include (a) the acquisition target(s) should be small to
medium size businesses which operate in the cleaning and maintenance services industry in the
PRC and operate in regions where there is strong demand for cleaning and maintenance services
for commercial properties such as the Greater Bay Area including Guangzhou and other cities in
Guangdong province; (b) the acquisition target(s) should have a strong track record with over 15
years in the environmental cleaning and maintenance industry; (c) the service offerings and/or
geographical coverage of the acquisition target(s) should not completely overlap with that of our
Group to minimise the risk of cannibalisation with our existing business; and (d) the acquisition
target(s) should demonstrate potential growth and be in a stable financial condition with not less
than RMB20 million of annual revenue and not less than 10% of gross profit margin. We will
target acquisition target(s) which will align with and complement our Group’s existing business
and we have no intention to acquire any acquisition target(s) which would lead to a material
change of the business focus of our Group. As at the Latest Practicable Date, we had neither
identified any particular acquisition target(s) nor entered into any formal agreements for
acquisition.
Taking into account the large size of the environmental cleaning and maintenance market
and that the difference in the service offerings and geographical coverage of the acquisition
target(s) as compared to our Group’s is one of the selection criteria, we expect to benefit from
the synergies brought by the combined operations after the acquisition(s) which our Directors
believe will bolster our competitive strength and market position in our existing business, and
also our ability to capture new business opportunities through capitalising the existing customer
base, projects, resources, local reputation and business strategies of the acquisition target(s). For
further details on the synergies brought by the combined operations after the acquisitions, please
refer to the section headed “Future plans and use of proceeds – Use of proceeds”.
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Our Directors believe that by establishing new branch offices and acquiring potential
targets, our Group will be able to maximise our geographical reach and optimise our business
growth in an efficient and effective manner.
Enhance our capabilities to capture additional opportunities in the public space cleaning
sector
With the large population in the PRC, the trend towards urbanisation and rising public
awareness particularly in light of COVID-19, our Directors believe that there will be a rising
demand from the local government authorities responsible for public spaces for services relating
to cleaning and the collection and transportation of garbage and waste. Although we have
provided such services in connection with public space cleaning services during the Track
Record Period such as basic cleaning and maintenance involving disinfection of public spaces,
garbage collection and transportation and waste collection and transportation, the expansion of
our fleet and workforce will enable us to offer more attractive bids in our tenders for large
public projects which give significant consideration to the service providers’ resources including
their vehicles. During the year ended 31 December 2022, the utilisation rate of the Group’s
specialised vehicles used for performing public space cleaning was generally over 100%. During
the Track Record Period, we did not own any waste suction vehicles. It is our current intention
to continue providing garbage and waste collection and transportation services but not waste
management services. Thus, by enhancing our capabilities in this area, we will be able to grasp
future opportunities in the public space cleaning sector projects in the Greater Bay Area and
beyond, thus growing our market share in the public space cleaning sector. As at the Latest
Practicable Date, we have obtained, among others, Sewage, Septic Tank, Pipeline Unclogging
Treatment Cleaning Service Enterprise Qualification Certificate – National Level 1* ( Ϯ˥eʷ
ࣣ– ɓॴ ) and Secondary Water Supply Cleaning
Service Enterprise Qualification Certificate* (ࣣfor operation of
public cleaning (for further details of these and other qualifications, please refer to the
paragraph headed “Awards and recognitions” in this section).
Adopt technological advances in the industry and upgrade our information technology
systems to improve our service quality and efficiency
One of the major market trends in our industry is the mechanisation of labour and adoption
of technologically advanced equipment to supplement human workers such as cleaning robots to
address tasks that are simple, repetitive or with higher risk. Mechanisation will help alleviate
labour shortage problem in the industry and potentially increase operational efficiency at a lower
cost according to the Industry Report. In addition, workplace injuries are not uncommon in our
industry and if we continue to rely solely on a large human workforce, we face greater risk of
personal injuries and potential litigation and related increase in insurance costs from accidents
relating to our employees. In line with the industry trend and taking into account the benefits
from mitigating the above risks to our employees and to ourselves and distinguishing ourselves
from more traditional competitors, we encourage our staff to conduct in-house research in this
and other areas which were mainly for self-use in our operations and also keep ourselves
informed of technological advances in our industry.
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We obtained a patent for an automated cleaning robot in 2019, but given the robot design
was considered relatively small in scale and simple for large scale property cleaning, we rented
a cleaning robot from an independent third party supplier for testing purposes. As at the Latest
Practicable Date, we have used such cleaning robot for one of our projects on a trial basis.
Given the positive experience in such usage, we intend to strategically purchase additional
cleaning robots in a gradual manner for future projects, including basic cleaning and sanitation
robots, carpet cleaning robots and robots with interactive media designs. With such number and
variety of cleaning robots, we will be able to offer various choices to our customers and select
the number and types of cleaning robots to supplement our human workforce as appropriate for
our projects.
We intend to prudently manage our robots, allocate them efficiently in our projects and
begin marketing to our customers which embrace new technologies such as property
management companies and property developers with smart properties and technology-driven
properties. We also intend to hire additional maintenance professionals and technical staff to
maintain such robots, develop intelligent operation and control platform which we can
implement our projects to incorporate artificial intelligence equipment and assist us in on-site
environmental management and control as well as help us keep pace with technological advances
in our industry.
In addition, as an important part of maintaining our competitiveness, we intend to upgrade
our current information technology systems relating to project management and performance
tracking given the large coverage size and the complexity of our projects. Our Directors believe
that this upgrade will help us overall to maintain service quality, ensure adequate supervision of
project performance, increase management efficiency and help us to promptly bring urgent issues
relating to our projects to the attention of our management.
Enhance our brand recognition through strengthening of our human resources and
promotional activities
As our workforce is our most valuable resource, we will further enhance our brand
recognition by the strengthening of our human resources in (i) continued recruitment of top
talent through attractive remuneration package and constructive career development
opportunities; (ii) additional and regular training relating to specific skills training and best
industry practices education; (iii) optimise employee training programme and refine our
remuneration plans; and (iv) social activities and events to reinforce in both new and existing
employees our corporate values, compliance culture and commitment to social responsibility. We
believe that by building a highly skilled and professional team which is committed to our values,
we can support our growth strategies and ensure greater sustainability of our long-term business.
In addition, we will also conduct promotional activities to strengthen our brand recognition as
well as hire additional marketing staff to support our growing business, expand into new markets
where we may need to compete against more established local competitors and support our other
business strategies.
Implementation of strategies
For further details on the implementation of the above strategies, please refer to the section
headed “Future plans and use of proceeds” of this prospectus.
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OUR SERVICES
The following table sets out a breakdown of our revenue, gross profit and gross profit margin by categories of services during the
years/periods indicated:
Y ear ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
Revenue
Gross
profit
Gross
profit
margin Revenue
Gross
profit
Gross
profit
margin Revenue
Gross
profit
Gross
profit
margin Revenue
Gross
profit
Gross
profit
margin Revenue
Gross
profit
Gross
profit
margin
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited) (Unaudited)
Property cleaning
– Commercial building 211,433 45.4 38,637 18.3 249,927 44.3 44,303 17.7 289,624 48.7 51,126 17.7 133,863 46.3 23,546 17.6 159,780 53.6 27,765 17.4
– Residential building 96,078 20.6 12,918 13.4 135,813 24.1 14,761 10.9 143,721 24.2 15,727 10.9 70,255 24.3 7,755 11.0 64,446 21.6 6,798 10.5
– Transportation hub 63,362 13.6 10,338 16.3 61,384 10.9 9,602 15.6 52,029 8.8 8,367 16.1 28,913 10.0 4,573 15.8 16,759 5.6 2,600 15.5
– Shopping mall 52,749 11.3 10,515 19.9 71,171 12.6 12,138 17.1 64,372 10.8 10,985 17.1 34,721 12.0 5,886 17.0 27,228 9.1 4,623 17.0
– Public utilities
Note 1 16,691 3.6 2,787 16.7 12,696 2.3 2,052 16.2 11,981 2.0 1,961 16.4 4,724 1.6 770 16.3 9,122 3.1 1,459 16.0
– Industrial park 6,624 1.4 1,345 20.3 12,981 2.3 2,672 20.6 12,339 2.1 2,536 20.6 6,453 2.2 1,260 19.5 8,276 2.8 1,658 20.0
Public space cleaning Note 2 18,360 3.9 3,367 18.3 19,569 3.5 3,717 19.0 20,138 3.4 3,707 18.4 10,244 3.6 1,950 19.0 12,640 4.2 2,274 18.0
Other cleaning Note 3 3 6 7 0 . 1 1 1 3 . 1––––––––––––––––
465,664 100.0 79,918 17.2 563,541 100.0 89,245 15.8 594,204 100.0 94,409 15.9 289,173 100.0 45,739 15.8 298,251 100.0 47,177 15.8
Notes:
(1) Public utilities cleaning primarily consists of government offices and school cleaning.
(2) Public space cleaning consists of road sweeping and cityscape cleaning.
(3) Other cleaning primarily consists of river cleaning.
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Scope of services
We cater our service scope to the particular requirements of the service location. For
example, our scope of service may include stone cleaning and maintenance services for floors
made from particular building materials like stone and marble, and high-altitude cleaning
services for exterior windows and walls of tall buildings. The service scope for our larger
projects typically involves a wide variety of services given the large area of the service location,
the mix of property types and the complexity of such projects. Set out below are specific
examples of the cleaning and maintenance services provided by us:
Examples
Basic cleaning and
maintenance
We provide regular property cleaning services involving dust
removal, disinfecting and polishing of floors, ceilings and
walls and other tasks for sanitation purposes. For buildings,
we conduct such services for individual rooms, escalators,
roofs, staircases, and other common areas of buildings as
well as ancillary areas such as fountains, pools, gardens and
carparks in the buildings’ vicinity. We will also provide
maintenance services involving restocking of toiletries in
washrooms and basic repairs. For public spaces such as
streets and public squares, we sweep and clean, remove
graffiti and unauthorised posters and deep clean with high
pressure washers. For rivers and other natural bodies of
water, we help conduct water cleaning which mainly consists
of removal of floating debris.
Garbage collection and
transportation
We assist in emptying and cleansing garbage bins and collect
garbage from properties and public spaces. After collection,
we help load such garbage into collection vehicles for
transport.
Waste collection and
transportation
We remove the sludge and other waste from septic tanks and
grease traps mainly for commercial and residential properties
and help transport it.
Water tank cleaning Water tanks may accumulate dirt, rust and other impurities
which may result in pipe blockage or unsanitary conditions.
We provide specialised cleaning and disinfection services as
well as conduct water quality inspection services for various
types of water tanks such as fresh water tanks, flushing
water tanks and fire hydrant tanks.
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Examples
Stone cleaning and
maintenance
Over time, objects or surfaces made from stone, such as
natural stone, marble and granite, may receive stains,
scratches and lose their colour and lustre. We have qualified
staff and special equipment to help polish, hone and restore
such parts of the property with stone-like materials.
High-altitude cleaning For cleaning of windows and walls on the exterior of tall
buildings or otherwise involving high-altitudes, we have
dedicated workers with equipment to reach such areas and
perform such cleaning.
Ancillary services We offer ancillary services such as greening services involving
watering and fertilising plants, cutting grass and pruning
trees, and pest control involving the extermination of
common vectors such as cockroaches, mosquitoes, rodents
and flies.
High-altitude cleaning Ancillary servicesBasic cleaning
and maintenance
(outdoors)
Basic cleaning
and maintenance
(indoors)
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Services by provincial-level regions
The following table sets out a breakdown of our revenue generated from the sales by
provincial-level regions in the PRC of the customers for the Track Record Period:
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Guangdong 390,973 459,108 467,337 224,353 234,692
Hainan 45,382 43,287 42,936 25,303 15,870
Chongqing 9,047 21,200 24,384 12,247 13,036
Guangxi 8,767 10,100 10,545 5,107 5,527
Others
Note 11,495 29,846 49,002 22,163 29,126
465,664 563,541 594,204 289,173 298,251
Note : Others primarily include Anhui, Fujian, Guizhou, Heilongjiang, Henan, Hubei, Hunan, Jiangxi, Shaanxi
and Y unan.
GEOGRAPHIC COVERAGE
Headquartered in Guangzhou city, Guangdong province, we undertake projects across the
PRC with a focus in the Greater Bay Area. During the Track Record Period, we undertook
projects across 14 provincial-level regions in the PRC, namely Anhui, Chongqing, Fujian,
Guangdong, Guangxi, Guizhou, Hainan, Heilongjiang, Henan, Hubei, Hunan, Jiangxi, Shaanxi
and Y unnan, with most of our revenue being derived from projects in Guangdong province. From
time to time, we may expand into other regions in the PRC if attractive opportunities arise or in
order to strengthen our relationship with existing customers by offering to undertake their
projects in different regions.
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OUR PROJECTS
Basis of determination for individual projects
The major terms of our service arrangements with customers are set out in service contracts
with a service period generally ranging from one year to three years each. However, there may
be instances where two or more contracts are obtained under or otherwise involve related
circumstances such as:
 during the course of performing one service contract, we may enter into an additional
supplemental contract(s) or undertake one-off service requests with a limited scope
and duration for service locations in the vicinity of the ones set out in the main
service contracts.
 upon the expiry of the service period under the service contracts, we may successfully
obtain new contracts for a new service period, leading us to provide services on the
same service locations over consecutive service periods.
 in the case of larger properties, such as commercial buildings involving different
individual tenants for units in such properties, we may enter into one or more service
contracts with the relevant property management company or property owner for the
cleaning of a significant part of the relevant properties and, subsequently, we may also
enter into separate individual service contracts with individual tenants for the cleaning
of their respective units on the properties.
 for larger customers, such as property management companies with a national
presence, we may enter into preliminary discussions to provide services for multiple
properties owned, managed or otherwise controlled by them or their affiliates at the
same time and thus such discussions may lead to our obtaining multiple service
contracts of varying terms and service locations.
Taking into account that different service contracts may be related due to, among others, (i)
our continuous provision of services to specific service locations and areas in their vicinity; or
(ii) the shared circumstances leading to us obtaining such service contracts, we generally treat
various contracts with the above or other circumstances as all forming part of one project.
Accordingly, our projects may involve one or more service contracts, principal service categories
and customers. When determining an individual project according to our classification and which
relevant contracts pertain to each project, we take into account the relationship between the
customers in such contracts, the proximity of the service locations in such contracts, the service
period in such contracts, the background in obtaining such contracts and other relevant factors.
BUSINESS
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--- page 155 ---
Movement in number of projects
The following table sets out the movement of our projects during the years/periods
indicated Note :
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
Number of projects continued
from the previous
year/period
Note 165 204 205 205 217
Number of new projects
started during the
year/period
Note 78 55 91 51 75
Number of projects during
the year 243 259 296 256 292
(Number of projects ended
during the year/period) (39) (54) (81) (31) (27)
Number of projects to be
continued to the next
year/period 204 205 217 225 265
Note: The above table excludes projects involving relatively low contract sum or otherwise considered
insignificant.
BUSINESS
– 147 –


--- page 156 ---
The following tables set out the movement of our projects during the years/periods
indicated by the major categories of our services:
Property cleaning Note 1
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
Number of projects continued
from the previous
year/period
Note 2 162 200 201 201 212
Number of new projects
started during the
year/period
Note 2 76 52 90 50 73
Number of projects during
the year 238 252 291 251 285
(Number of projects ended
during the year/period) (38) (51) (79) (31) (27)
Number of projects to be
continued
to the next year/period 200 201 212 220 258
Notes:
(1) Property cleaning includes the cleaning of commercial building, residential building, transportation hub,
shopping mall, public utilities, and industrial park.
(2) The above table excludes projects involving relatively low contract sum or otherwise considered
insignificant.
BUSINESS
– 148 –


--- page 157 ---
Public space cleaning Note 1
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
Number of projects continued
from the previous
year/period
Note 2 34445
Number of new projects
started during the
year/period
Note 2 13112
Number of projects during
the year 47557
(Number of projects ended
during the year/period) – (3) – – –
Number of projects to be
continued to the next
year/period 44557
Notes:
(1) Public space cleaning consists of road sweeping and school cleaning.
(2) The above table excludes projects involving relatively low contract sum or otherwise considered
insignificant.
BUSINESS
– 149 –


--- page 158 ---
Other cleaning Note 1
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
Number of projects continued
from the previous
year/period
Note 2 –––––
Number of new projects
started during the
year/period
Note 2 1––––
Number of projects during
the year 1––––
(Number of projects ended
during the year/period) (1) ––––
Number of projects to be
continued to the next
year/period –––––
Notes:
(1) Other cleaning primarily consists of river cleaning
(2) The above table excludes projects involving relatively low contract sum or otherwise considered
insignificant.
BUSINESS
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--- page 159 ---
Five major projects in progress (by contract sum) as at the Latest Practicable Date
The following are the details of our five major projects, in terms of total contract sum, of which the project is still in progress as at
the Latest Practicable Date:
Project
name
Name of
Customer Location
Type of service
provided
Type of service
location
Start date of
service
Note
End date of
service Note
Total
Contract
sum
Revenue
recognised
prior to
the Track
Record
Period
Revenue recognised during the
Track Record Period
Revenue
to be
recognised
Y ear ended 31 December
Six
months
ended
30 June
20232020 2021 2022
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Project HC Project Customer
Group A
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance
service, garbage
collection and
transportation, and
ancillary service
Public space
cleaning
1 January 2017 28 February
2027
116,374 28,922 11,539 11,225 10,282 4,927 49,479
Project YJL Project Customer
Group B
Haikou, Hainan
province
Basic cleaning and
maintenance, and
garbage collection
and transportation
Property cleaning
– Residential
building
1 July 2016 31 October
2024
113,719 38,553 14,157 14,650 15,746 7,528 23,085
BUSINESS
– 151 –


--- page 160 ---
Project
name
Name of
Customer Location
Type of service
provided
Type of service
location
Start date of
service Note
End date of
service Note
Total
Contract
sum
Revenue
recognised
prior to
the Track
Record
Period
Revenue recognised during the
Track Record Period
Revenue
to be
recognised
Y ear ended 31 December
Six
months
ended
30 June
20232020 2021 2022
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Guangzhou
Baiyun
International
Airport
(ᄿψͣථ
਷ყዚఙ )
Project Customer
Group C (one of
the customers is
also Customer
B, who is our
five largest
customers for
the year ended
31 December
2020 during the
Track Record
Period)
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance, and
high-altitude
cleaning and
ancillary service
Property cleaning
– Transportation
hub
1 December 2017 31 January
2024
90,363 35,217 16,959 16,746 15,803 311 5,327
Taikoo Hui
(˄̚ි )
Project Customer
Group D
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance, and
garbage collection
and transportation
Property cleaning
– Commercial
building and
Shopping mall
18 March 2016 31 December
2024
84,271 26,992 12,130 12,838 12,938 6,706 12,667
BUSINESS
– 152 –


--- page 161 ---
Project
name
Name of
Customer Location
Type of service
provided
Type of service
location
Start date of
service Note
End date of
service Note
Total
Contract
sum
Revenue
recognised
prior to
the Track
Record
Period
Revenue recognised during the
Track Record Period
Revenue
to be
recognised
Y ear ended 31 December
Six
months
ended
30 June
20232020 2021 2022
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Project HGY Project Customer
Group E
Guiyang, Guizhou
province
Basic cleaning and
maintenance and
garbage collection
and transportation
Property cleaning
– Residential
building
1 July 2018 15 April 2024 73,116 6,224 3,117 5,368 20,183 9,889 28,335
Note: Each project consists of different contracts with different start date and end date of service, and are signed by our Group with different customers wi thin each project
customer group. The service location takes into account the primary service location type for the main service contracts during the Track Record Peri od for this
project. The start date of service is based on the start date of service of the first main service contract for the project, and the end date of service is b ased on the end
date of service of the latest main service contract for the project and may be subject to further extensions or renewals based on award of new contracts f or this
project.
BUSINESS
– 153 –


--- page 162 ---
Five major completed projects (by contract sum) during the Track Record Period
The following are the details of our five major projects, in terms of contract sum, of which the project was completed during the
Track Record Period:
Project name
Name of
Customer Location
Type of service
provided
Type of service
location
Start date of
service Note
End date of
service Note
Total
contract
sum
Revenue
recognised
prior to
the Track
Record
Period
Revenue recognised during
the Track Record Period
Y ear ended 31 December
Six
months
ended
30 June
20232020 2021 2022
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Project HH Project Customer
Group E
Sanya and
Haikou,
Hainan
province
Basic cleaning and
maintenance
Property
cleaning –
Transportation
hub
1 June 2017 31 March 2023 74,688 28,732 16,831 12,422 8,712 411,615
Project FH Project Customer
Group F
Haikou, Hainan
province
Basic cleaning and
maintenance
Property
cleaning –
Transportation
hub
10 July 2017 31 July 2022 46,804 33,110 8,152 3,869 1,672 –
China Fabrics
& Accessories
Center
(۬)
Project Customer
Group G
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance, stone
cleaning and restoration
Property
cleaning –
Shopping mall
1 October 2017 30 September
2022
30,937 14,770 5,700 6,059 4,408 –
BUSINESS
– 154 –


--- page 163 ---
Project name
Name of
Customer Location
Type of service
provided
Type of service
location
Start date of
service Note
End date of
service Note
Total
contract
sum
Revenue
recognised
prior to
the Track
Record
Period
Revenue recognised during
the Track Record Period
Y ear ended 31 December
Six
months
ended
30 June
20232020 2021 2022
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
China South City
(۬ی)
Project Customer
Group H
Shenzhen
municipality
Basic cleaning and
maintenance
Property
cleaning –
Shopping mall
1 January 2020 31 December
2022
21,329 1,827 7,273 6,632 5,597 –
Project XZ Project Customer
Group I
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance, garbage
collection and
transportation, waste
collection and
transportation, and
ancillary service
Public space
cleaning
1 July 2015 30 April 2021 19,652 13,974 2,737 2,941 – –
Note: Each project consists of different contracts signed by our Group with different customers within each project customer group. The service location t akes into
account the primary service location type for the main service contracts during the Track Record Period for this project. The start date of service is b ased on
the start date of service of the first main service contract for the project, and the end date of service is based on the actual term of service under the la test
main service contract for the project and may be subject to further extensions or renewals based on award of new contracts for this project.
BUSINESS
– 155 –


--- page 164 ---
Five major projects (by revenue recognition) for each year during the Track Record Period
The following are the details of our five major projects in each business segment, in terms of revenue recognition, for each year
during the Track Record Period:
For the year ended 31 December 2020
Property cleaning
Project name Name of Customer Location Type of service provided
Type of service
location
Start date of
service Note
End date of
service Note
Total
contract sum
Revenue
recognised
prior to the
Track
Record
Period
Revenue
recognised
for the year
ended
31 December
2020
Revenue to
be recognised
since
1 January
2021
RMB’000 RMB’000 RMB’000 RMB’000
Guangdong Baiyun
International Airport
(ͣථ਷ყዚఙ )
Project Customer Group
C (one of the
customers is also
Customer B, who is
one of our five largest
customers for the year
ended 31 December
2020 during the Track
Record Period)
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance, and
high-altitude cleaning and
ancillary service
Property cleaning
– Transportation
hub
1 December 2017 31 January 2024 90,158 35,217 16,959 37,982
Project HH Project Customer
Group E
Sanya and Haikou,
Hainan province
Basic cleaning and
maintenance
Property cleaning
– Transportation
hub
1 June 2017 31 March 2023 74,688 28,732 16,831 29,124
BUSINESS
– 156 –


--- page 165 ---
Project name Name of Customer Location Type of service provided
Type of service
location
Start date of
service Note
End date of
service Note
Total
contract sum
Revenue
recognised
prior to the
Track
Record
Period
Revenue
recognised
for the year
ended
31 December
2020
Revenue to
be recognised
since
1 January
2021
RMB’000 RMB’000 RMB’000 RMB’000
Project YJL Project Customer
Group B
Haikou, Hainan
province
Basic cleaning and
maintenance, and garbage
collection and
transportation
Property cleaning
– Residential
building
1 July 2016 31 October 2024 99,743 38,553 14,157 47,033
Taikoo Hui ( ˄̚ි ) Project Customer
Group D
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance, and garbage
collection and
transportation
Property cleaning
– Commercial
building and
Shopping mall
18 March 2016 31 December 2024 82,755 26,992 12,130 43,634
Guangzhou
International
Finance Centre
(ፄʕː )
Project Customer
Group K
Guangzhou,
Guangdong
province
basic cleaning and
maintenance, water tank
cleaning, garbage
collection and
transportation,
high-altitude cleaning,
waste collection and
transportation, and stone
cleaning and maintenance
Property cleaning
– shopping mall
and public
utilities
1 January 2017 31 December 2024 56,401 15,927 10,632 29,842
BUSINESS
– 157 –


--- page 166 ---
Public space cleaning
Project name Name of Customer Location Type of service provided
Type of service
location
Start date of
service Note
End date of
service Note
Total
contract sum
Revenue
recognised
prior to the
Track
Record
Period
Revenue
recognised
for the year
ended
31 December
2020
Revenue to
be recognised
since
1 January
2021
RMB’000 RMB’000 RMB’000 RMB’000
Project HC Project Customer
Group A
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance service,
garbage collection and
transportation, and
ancillary service
Public space
cleaning
1 January 2017 28 February 2027 116,375 28,922 11,539 75,913
Project XZ Project Customer
Group I
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance, garbage
collection and
transportation, waste
collection and
transportation, and
ancillary service
Public space
cleaning
1 July 2015 30 April 2021 19,652 13,974 2,737 2,941
Project WB Project Customer
Group L
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance and garbage
collection and
transportation
Public space
cleaning
1 June 2015 5 January 2021 10,446 8,401 2,045 –
BUSINESS
– 158 –


--- page 167 ---
Project name Name of Customer Location Type of service provided
Type of service
location
Start date of
service Note
End date of
service Note
Total
contract sum
Revenue
recognised
prior to the
Track
Record
Period
Revenue
recognised
for the year
ended
31 December
2020
Revenue to
be recognised
since
1 January
2021
RMB’000 RMB’000 RMB’000 RMB’000
Project KTC Project Customer
Group M
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance, garbage
collection and
transportation and waste
collection and
transportation
Public space
cleaning
1 January 2020 31 December 2025 18,179 – 2,038 16,142
Other cleaning
Project name Name of Customer Location Type of service provided
Type of service
location
Start date of
service Note
End date of
service Note
Total
contract sum
Revenue
recognised
prior to the
Track
Record
Period
Revenue
recognised
for the year
ended
31 December
2020
Revenue to
be recognised
since
1 January
2021
RMB’000 RMB’000 RMB’000 RMB’000
Project ZLS Project Customer N Guangzhou,
Guangdong
province
Water tank cleaning Other cleaning 15 May 2020 30 June 2020 370 – 370 –
BUSINESS
– 159 –


--- page 168 ---
For the year ended 31 December 2021
Property cleaning
Project name Name of Customer Location Type of service provided
Type of service
location
Start date of
service Note
End date of
service Note
Total
contract sum
Revenue
recognised
prior to the
Track
Record
Period
Revenue
recognised
for the year
ended
31 December
2021
Revenue to
be recognised
since
1 January
2022
RMB’000 RMB’000 RMB’000 RMB’000
Chongqing Jiangbei
International Airport
(ᅅϪ̏਷ყዚఙ )
Project Customer
Group O
Chongqing
municipality
Basic cleaning and
maintenance, and garbage
collection and
transportation
Property cleaning
– Transportation
hub
15 July 2020 14 July 2023 62,116 9,047 19,674 33,395
Project YX Project Customer
Group P
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance, water tank
cleaning, garbage
collection and
transportation,
high-altitude cleaning,
waste collection and
transportation, stone
cleaning and maintenance,
and ancillary services
Property cleaning
– shopping mall
and public
utilities
1 July 2018 31 August 2023 59,631 3,508 18,393 28,770
BUSINESS
– 160 –


--- page 169 ---
Project name Name of Customer Location Type of service provided
Type of service
location
Start date of
service Note
End date of
service Note
Total
contract sum
Revenue
recognised
prior to the
Track
Record
Period
Revenue
recognised
for the year
ended
31 December
2021
Revenue to
be recognised
since
1 January
2022
RMB’000 RMB’000 RMB’000 RMB’000
Guangdong Baiyun
International Airport
(ͣථ਷ყዚఙ )
Project Customer Group
C (one of the
customers is also
Customer B, who is
one of our five largest
customers for the year
ended 31 December
2020 during the Track
Record Period)
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance, and
high-altitude cleaning and
ancillary service
Property cleaning
– Transportation
hub
1 December 2017 31 January 2024 90,158 35,217 16,746 21,236
Project YJL Project Customer
Group B
Haikou, Hainan
province
Basic cleaning and
maintenance, and garbage
collection and
transportation
Property cleaning
– Residential
building
1 July 2016 31 October 2024 99,743 38,553 14,650 32,383
Taikoo Hui
(˄̚ි )
Project Customer
Group D
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance, and garbage
collection and
transportation
Property cleaning
– Commercial
building and
Shopping mall
18 March 2016 31 December 2024 82,755 26,992 12,838 30,796
BUSINESS
– 161 –


--- page 170 ---
Public space cleaning
Project name Name of Customer Location Type of service provided
Type of service
location
Start date of
service Note
End date of
service Note
Total
contract sum
Revenue
recognised
prior to the
Track
Record
Period
Revenue
recognised
for the year
ended
31 December
2021
Revenue to
be recognised
since
1 January
2022
RMB’000 RMB’000 RMB’000 RMB’000
Project HC Project Customer
Group A
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance service,
garbage collection and
transportation, and
ancillary service
Public space
cleaning
1 January 2017 28 February 2027 116,375 28,922 11,225 64,688
Project XZ Project Customer
Group I
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance, garbage
collection and
transportation, waste
collection and
transportation, and
ancillary service
Public space
cleaning
1 July 2015 30 April 2021 19,652 13,974 2,941 –
Project SQJ Project Customer
Group Q
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance and garbage
collection and
transportation
Public space
cleaning
1 May 2021 30 April 2024 12,845 – 2,689 10,156
BUSINESS
– 162 –


--- page 171 ---
Project name Name of Customer Location Type of service provided
Type of service
location
Start date of
service Note
End date of
service Note
Total
contract sum
Revenue
recognised
prior to the
Track
Record
Period
Revenue
recognised
for the year
ended
31 December
2021
Revenue to
be recognised
since
1 January
2022
RMB’000 RMB’000 RMB’000 RMB’000
Project KTC Project Customer
Group M
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance, garbage
collection and
transportation and waste
collection and
transportation
Public space
cleaning
1 January 2020 31 December 2025 18,179 – 2,490 13,651
Project LHZ Project Customer
Group R
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance and
high-altitude cleaning
Public space
cleaning
9 July 2021 31 December 2021 113 – 113 –
Other cleaning
No revenue of other cleaning projects was recognised in the year.
BUSINESS
– 163 –


--- page 172 ---
For the year ended 31 December 2022
Property cleaning
Project name Name of Customer Location Type of service provided
Type of service
location
Start date of
service Note
End date of
service Note
Total
contract sum
Revenue
recognised
prior to the
Track
Record
Period
Revenue
recognised
for the year
ended
31 December
2022
Revenue to
be recognised
since
1 January
2023
RMB’000 RMB’000 RMB’000 RMB’000
Project YX Project Customer
Group P
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance, water tank
cleaning, garbage
collection and
transportation,
high-altitude cleaning,
waste collection and
transportation, stone
cleaning and maintenance,
and ancillary services
Property cleaning
– shopping mall
and public
utilities
1 July 2018 31 August 2023 59,631 3,508 20,579 8,191
Project HGY Project Customer
Group E
Guiyang, Guizhou
province
Basic cleaning and
maintenance and garbage
collection and
transportation
Property cleaning
– Residential
building
1 July 2018 15 April 2024 73,116 6,224 20,183 38,224
BUSINESS
– 164 –


--- page 173 ---
Project name Name of Customer Location Type of service provided
Type of service
location
Start date of
service Note
End date of
service Note
Total
contract sum
Revenue
recognised
prior to the
Track
Record
Period
Revenue
recognised
for the year
ended
31 December
2022
Revenue to
be recognised
since
1 January
2023
RMB’000 RMB’000 RMB’000 RMB’000
Chongqing Jiangbei
International Airport
(ᅅϪ̏਷ყዚఙ )
Project Customer
Group O
Chongqing
municipality
Basic cleaning and
maintenance, and garbage
collection and
transportation
Property cleaning
– Transportation
hub
15 July 2020 14 July 2023 62,116 – 19,639 13,757
Guangdong Baiyun
International Airport
(ͣථ਷ყዚఙ )
Project Customer
Group C (one of
the customers is
also Customer B,
who is one of our
five largest
customers for the
year ended 31
December 2020
during the Track
Record Period)
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance, and
high-altitude cleaning and
ancillary service
Property cleaning
– Transportation
hub
1 December 2017 31 January 2024 90,158 35,217 15,803 5,433
Project YJL Project Customer
Group B
Haikou, Hainan
province
Basic cleaning and
maintenance, and garbage
collection and
transportation
Property cleaning
– Residential
building
1 July 2016 31 October 2024 99,743 38,553 15,746 16,637
BUSINESS
– 165 –


--- page 174 ---
Public space cleaning
Project name Name of Customer Location Type of service provided
Type of service
location
Start date of
service Note
End date of
service Note
Total
contract sum
Revenue
recognised
prior to the
Track
Record
Period
Revenue
recognised
for the year
ended
31 December
2022
Revenue to
be recognised
since
1 January
2023
RMB’000 RMB’000 RMB’000 RMB’000
Project HC Project Customer
Group A
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance service,
garbage collection and
transportation, and
ancillary service
Public space
cleaning
1 January 2017 28 February 2027 116,375 28,922 10,282 54,406
Project SQJ Project Customer
Group Q
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance and garbage
collection and
transportation
Public space
cleaning
1 May 2021 1 May 2024 12,863 – 4,042 6,114
Project KTC Project Customer
Group M
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance, garbage
collection and
transportation and waste
collection and
transportation
Public space
cleaning
1 January 2020 31 December 2025 18,179 – 2,717 10,935
BUSINESS
– 166 –


--- page 175 ---
Project name Name of Customer Location Type of service provided
Type of service
location
Start date of
service Note
End date of
service Note
Total
contract sum
Revenue
recognised
prior to the
Track
Record
Period
Revenue
recognised
for the year
ended
31 December
2022
Revenue to
be recognised
since
1 January
2023
RMB’000 RMB’000 RMB’000 RMB’000
Project XTC Project Customer
Group S
Foshan,
Guangdong
province
Basic cleaning and
maintenance and garbage
collection and
transportation
Public space
cleaning
1 January 2022 31 December 2024 7,884 – 2,513 5,370
Project DHP Project Customer
Group T
Zhongshan,
Guangdong
province
Basic cleaning and
maintenance and garbage
collection and
transportation
Public space
cleaning
1 November 2021 31 December 2024 2,102 – 584 1,408
Other cleaning
No revenue of other cleaning projects was recognised in the year.
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For the six months ended 30 June 2023
Property cleaning
Project name Name of Customer Location Type of service provided
Type of service
location
Start date of
service
End date of
service
Total
contract sum
Revenue
recognised
prior to the
Track
Record
Period
Revenue
recognised
for the
six months
ended
30 June 2023
Revenue to
be recognised
since
1 July 2023
RMB’000 RMB’000 RMB’000 RMB’000
Chongqing Jiangbei
International Airport
(ᅅϪ̏਷ყዚఙ )
Project Customer
Group O
Chongqing
municipality
Basic cleaning and
maintenance, and garbage
collection and
transportation
Property cleaning
– Transportation
hub
15 July 2020 31 July 2023 62,979 – 9,994 4,625
Project HGY Project Customer
Group E
Guiyang, Guizhou
province
Basic cleaning and
maintenance and garbage
collection and
transportation
Property cleaning
– Residential
building
1 July 2018 15 April 2024 73,116 6,224 9,889 28,335
Project YJL Project Customer
Group B
Haikou, Hainan
province
Basic cleaning and
maintenance, and garbage
collection and
transportation
Property cleaning
– Residential
building
1 July 2016 31 October 2024 113,599 38,553 7,528 22,965
Taikoo Hui
(˄̚ි )
Project Customer
Group D
Guangzhou,
Guangdong
province”
Basic cleaning and
maintenance, and garbage
collection and
transportation
Property cleaning
– Commercial
building and
Shopping mall
18 March 2016 28 February 2025 83,837 26,992 6,706 12,233
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Project name Name of Customer Location Type of service provided
Type of service
location
Start date of
service
End date of
service
Total
contract sum
Revenue
recognised
prior to the
Track
Record
Period
Revenue
recognised
for the
six months
ended
30 June 2023
Revenue to
be recognised
since
1 July 2023
RMB’000 RMB’000 RMB’000 RMB’000
Project YHC Project Customer
Group U
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance
Property cleaning
– Shopping mall
and public
utilities
20 August 2020 25 September
2024
56,723 – 5,440 28,175
Public space cleaning
Project name Name of Customer Location Type of service provided
Type of service
location
Start date of
service Note
End date of
service Note
Total
contract sum
Revenue
recognised
prior o the
Track
Record
Period
Revenue
recognised
for the
six months
ended 30
June 2023
Revenue to
be recognised
since 1 July
2023
RMB’000 RMB’000 RMB’000 RMB’000
Project HC Project Customer
Group A
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance service,
garbage collection and
transportation, and
ancillary service
Public space
cleaning
1 January 2017 28 February 2027 116,375 28,922 4,927 49,479
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Project name Name of Customer Location Type of service provided
Type of service
location
Start date of
service Note
End date of
service Note
Total
contract sum
Revenue
recognised
prior o the
Track
Record
Period
Revenue
recognised
for the
six months
ended 30
June 2023
Revenue to
be recognised
since 1 July
2023
RMB’000 RMB’000 RMB’000 RMB’000
Project SQJ Project Customer
Group Q
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance and garbage
collection and
transportation
Public space
cleaning
1 May 2021 1 May 2024 12,863 – 2,076 4,056
Project BLPZ Project Customer
Group V
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance, garbage
collection and
transportation
Public space
cleaning
1 January 2023 31 December 2024 6,305 – 1,486 4,819
Project KTC Project Customer
Group M
Guangzhou,
Guangdong
province
Basic cleaning and
maintenance, garbage
collection and
transportation and waste
collection and
transportation
Public space
cleaning
1 January 2020 31 December 2025 18,179 – 1,476 9,458
Project XTC Project Customer
Group S
Foshan,
Guangdong
province
Basic cleaning and
maintenance and garbage
collection and
transportation
Public space
cleaning
1 January 2022 31 December 2024 7,884 – 1,264 4,107
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Other cleaning
No revenue of other cleaning projects was recognised in the period.
Notes:
(1) Project Customer Group A includes a company engaged in the provision of consultation and marketing services
for planning of constructions and real estate projects.
(2) Project Customer Group B includes property management companies such as Customer D, one of our five largest
customers for the year ended 31 December 2020 during the Track Record Period.
(3) Project Customer Group C includes airport operation and property management companies such as Customer B,
one of our five largest customers for the year ended 31 December 2020 during the Track Record Period.
(4) Project Customer Group D includes property management companies, restaurants, shops and retailing companies.
(5) Project Customer Group E includes companies engaged in property management companies and companies
engaged in the provision of real estate-related services.
(6) Project Customer Group F includes property management companies.
(7) Project Customer Group G includes property management companies, companies engaged in marketing activities
and companies engaged in real estate-related services.
(8) Project Customer Group H includes a company engaged in property management, provision of housekeeping
services, greening services and pest-control services.
(9) Project Customer Group I includes a company engaged in real estate-related services and the People’s
Government of a town in the PRC.
(10) Project Customer Group J includes a company engaged in property management and provision of housekeeping
services, greening services, pest-control services, real estate-related services, cleaning and disinfection services,
and property cleaning services.
(11) Project Customer Group K includes companies engaged in hotel management, companies engaged in property
management and companies engaged in the provision of real estate-related services.
(12) Project Customer Group L includes the People’s Government of a town and an office of a local committee in the
PRC.
(13) Project Customer Group M includes a village committee in the PRC.
(14) Project Customer Group N includes a company engaged in water pipeline engineering construction services,
water quality testing services, tap water supply and production.
(15) Project Customer Group O includes a company engaged in airport management.
(16) Project Customer Group P includes companies engaged in asset management and investment consultation, and
companies engaged in property management.
(17) Project Customer Group Q includes a sub-district office of the People’s Government of a district in the PRC, and
a kindergarten.
(18) Project Customer Group R includes a People’s Government of a town in the PRC.
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(19) Project Customer Group S includes a village committee in the PRC and a company engaged in real estate agency
services.
(20) Project Customer Group T includes a village committee in the PRC.
(21) Project Customer Group U includes companies engaged in property management and provision of real
estate-related services.
(22) Project Customer Group V includes companies engaged in property management and provision of real
estate-related services.
Movement in the value of backlog of our projects during the Track Record Period and up
to the Latest Practicable Date
The following table sets out the movement in the value of backlog of the projects during
the Track Record Period and from 1 July 2023 up to the Latest Practicable Date:
Y ear ended 31 December
Six months ended
30 June
From
1 July
2023 up to
the Latest
Practicable
Date2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Opening value of backlog 285,694 417,657 494,949 494,949 537,646 717,975
Total value of new confirmed
contracts 597,627 640,833 636,901 244,614 478,580 129,713
Revenue recognised (465,664) (563,541) (594,204) (289,173) (298,251) (278,385)
Ending value of backlog 417,657 494,949 537,646 450,390 717,975 569,303
Fluctuations in the ending value of backlog per project
The ending value of backlog per project was calculated by dividing the ending value of
backlog by the number of projects to be continued in the next year. For the years ended 31
December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023, the ending
value of backlog per project amounted to approximately RMB2.0 million, RMB2.4 million,
RMB2.5 million, RMB2.0 million and RMB2.7 million, respectively. The increase in the amount
for the year ended 31 December 2021 as compared to the year ended 31 December 2020 was
mainly attributable to the Group’s effort in securing projects in Guizhou province, leading to an
increase in the number of contracts with relatively high contract sum for Project HGY at the end
of 2021. For details regarding Project HGY , please refer to the section headed “Business – Our
projects – Five major projects (by revenue recognition) for each year during the Track Record
Period”. The ending value of backlog per project remained relatively stable for the years ended
31 December 2021 and 2022. The increase in the amount for the six months ended 30 June 2022
BUSINESS
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as compared to the six months ended 30 June 2023 was mainly attributable to an increase in the
number of new contracts secured in the first half of 2023 with relatively high contract sum, such
as a project in Xiamen, Fujian province engaged by a customer in Project Customer group V .
The following table sets out the ending value of backlog of the projects by business
segments during the Track Record Period and up to the Latest Practicable Date and from 1 July
2023 up to the Latest Practicable Date:
Y ear ended 31 December
Six months ended
30 June
From
1 July
2023 up to
the Latest
Practicable
Date2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Property cleaning
Commercial building 144,163 242,964 267,162 195,144 385,747 290,199
Residential building 105,274 84,955 126,214 96,330 170,550 136,864
Transportation hub 75,496 64,975 27,111 38,567 28,018 15,468
Shopping mall 61,116 57,086 40,633 34,358 44,437 42,631
Public Utilities 7,692 14,384 13,123 8,730 12,790 26,306
Industrial Park 5,870 7,776 5,676 8,793 14,730 9,401
Public space cleaning 18,046 22,809 57,727 68,468 61,703 48,434
Other cleaning ––––––
Total 417,657 494,949 537,646 450,390 717,975 569,303
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Project Backlog by business segments as at the Latest Practicable Date and the revenue to
be recognised since the Latest Practicable Date
The following table sets out the number and value of backlog of our projects by business
segments up to the Latest Practicable Date and the revenue to be recognised in 2023 since the
Latest Practicable Date:
Number of
Value of
backlog
Revenue to be
recognised in
2023 since
the Latest
Practicable
Date
RMB’000 RMB’000
Property cleaning
– Commercial building 177 290,199 31,393
– Residential building 62 136,864 10,887
– Transportation hub 5 15,468 2,187
– Shopping mall 17 42,631 3,737
– Public Utilities 21 26,306 2,150
– Industrial Park 7 9,401 1,042
Public space cleaning 6 48,434 1,955
Other cleaning –––
Total 295 569,303 53,351
For the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June
2023, the total number of loss-making projects of our Group amounted to 19, 7, 1, and nil,
recording an aggregate loss of approximately RMB1.8 million, RMB0.4 million, RMB34 and nil,
respectively.
As confirmed by our Directors, there was no material-loss making projects during the Track
Record Period.
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OPERATION FLOW
The following diagram summarises our typical operation flow Note including the principal
steps and approximate time for the major steps:
Identification of business
opportunities
Request for invitation to
tender/quote
Analysis of tender
documents or quote and
on-site visit Within
one month
One year to
three years
Preparation for the
tender process
(if applicable)
Submission of tender
proposal/quotation
Analysis of the reasons
for unsuccessful tender
Negotiation and signing
of formal service
contracts
Preparation of work plan
Commencement of
contract
Resources allocation
and preparation
Unsuccessful Successful
Project management
Quality, safety and
environmental management
Customer relationship
managementSite managementProcurement and
subcontracting
Completion
Monitoring of
the performance status of
the successful tenderer of
the project
Consider bidding for
new contract
upon expiry
Consider bidding for
new contract
upon completion
Within
one month
Note: The above time-frame is for reference only and individual cases may vary significantly based on the nature of
the customer, the number of rounds of tender, the level of competition, the customers’ internal approval process
and the terms of the service contract.
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Identifying new business opportunities
We identify new projects or new contracts for existing projects from customers through
open tenders published on websites or other public channels, direct invitations and referrals.
Once we identify such opportunities, our marketing department will gather available information
on (i) the projects’ specifications including service locations, types of services required and
timetable; (ii) our customers’ background; and (iii) prerequisites and qualification of tenderers.
Our marketing department, engineering and technical department and finance department will
jointly review gathered information and make preliminary feasibility studies on the
attractiveness of the opportunities after taking into account the initial information mentioned
above as well as our available capacity and resources, the need for engaging suppliers and the
information gathered from our site inspections. If the potential opportunities are considered
attractive and consistent with our tender strategy, we will undergo any relevant tender process
and relevant customers’ approval process to secure such opportunities. We will also monitor
contracts near completion and enquire with our customers on whether they intend to renew the
project for an extended period.
Initial preparation, proposal submission and award
During the initial preparation stage, our marketing department, engineering and technical
department and finance department are responsible for preparing tender proposals, and our
marketing staff are also responsible for communicating with our customers. In certain cases, our
customers may provide site inspection and question-and-answer sessions in order for us to
understand more about the requirement of the tender. In preparing our tender proposals or
quotations, we take into account the requirements in relevant tender documents and as
determined from site inspections, the estimated costs to procure necessary consumables,
equipment and services from suppliers and our estimated internal costs.
Subject to the complexity of the project, we normally complete our tender or quotation
proposal within one month with quotations requiring one week to two weeks and tender
proposals requiring 20 days to 30 days. Tender periods vary widely based on the nature of the
customer and the customers’ internal approval process. If we are unsuccessful in our bid, we
will analyse the reasons based on information collected so that we can improve our proposals for
the future. We will also continue monitoring the project performance status in relation to these
unsuccessful bids so that upon the expiry of the relevant service period, we can attempt to bid
for such projects.
Tender strategy, tender success rate and overall contracts awarded
During the Track Record Period, we secured our contracts with customers through the
tender process or by direct engagement. Taking into account the new contracts awarded to us
overall, including both contracts secured through tender and direct engagement, we secured over
668, 732, 773 and 447 contracts for the years ended 31 December 2020, 2021 and 2022 and the
six months ended 30 June 2023, respectively.
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For the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June
2022 and 2023, we have submitted 325, 405, 238, 98 and 172 tenders/quotations, respectively,
and the value of the tenders/quotations amounts to approximately RMB1,771.4 million,
RMB1,928.2 million, RMB1,893.0 million, RMB454.9 million and RMB1,016.8 million,
respectively. The value of the tenders/quotations refers to the tender/quotation price offered by
our Group in the tender documents (without including the tenders which only provide the unit
prices that are subject to actual staff involved/service area covered/service hours involved),
based on the assumption that our Group will enter into contracts with the tender offerors for one
year for tenders/quotations with monthly/yearly quotation should the tender/quotation price be
accepted (the “ Assumptions ”).
Based on the Assumptions, the following table sets forth the breakdown of the number and
approximate value offered by our Group in the tender documents in relation to
tenders/quotations submitted by business segments during the Track Record Period:
For the years ended 31 December For the six months ended 30 June
2020 2021 2022 2022 2023
No. tender/
quotations
submitted
Approximate
value of
tender/
quotations
submitted
No. tender/
quotations
submitted
Approximate
value of
tender/
quotations
submitted
No. tender/
quotations
submitted
Approximate
value of
tender/
quotations
submitted
No. tender/
quotations
submitted
Approximate
value of
tender/
quotations
submitted
No. tender/
quotations
submitted
Approximate
value of
tender/
quotations
submitted
(RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000)
Property cleaning 305 1,505,132 374 1,198,595 222 1,346,241 88 347,745 157 826,928
Public space cleaning 20 266,283 31 729,629 16 546,790 10 107,144 15 189,824
Total 325 1,771,415 405 1,928,224 238 1,893,031 98 454,899 172 1,016,752
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Based on the Assumptions, the following table sets forth the breakdown of the number and
approximate value offered by our Group in the tender documents in relation to successful
tenders/quotations by business segments during the Track Record Period
Note :
For the years ended 31 December For the six months ended 30 June
2020 2021 2022 2022 2023
No. tender/
quotations
Approximate
value of
tender/
quotations
No. tender/
quotations
Approximate
value of
tender/
quotations
No. tender/
quotations
Approximate
value of
tender/
quotations
No. tender/
quotations
Approximate
value of
tender/
quotations
No. tender/
quotations
Approximate
value of
tender/
quotations
(RMB’000) (RMB’000) (RMB’000) (RMB’000) (RMB’000)
Property cleaning 107 651,813 108 420,828 121 464,042 39 93,137 79 194,146
Public space cleaning 3 67,725 6 25,032 – –––4 26,899
Total 110 719,538 114 445,860 121 464,042 39 93,137 83 221,045
Note: The actual contract sum of the projects shall be determined by the terms indicated in the actual service
agreement between our Group and our customers.
For the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June
2022 and 2023, our tender success rate was approximately 33.8%, 28.1%, 50.8%, 39.2% and
48.3%, respectively, for all tenders and approximately 87.0%, 73.5%, 77.3%, 81.0% and 78.7%,
respectively, for tenders involving new contracts for existing projects. Our Group’s tender
success rate for new customers within the Track Record Period was approximately 28.2%,
25.6%, 41.3% and 43.9% for the years ended 31 December 2020, 2021 and 2022 and the six
months ended 30 June 2023, respectively.
Our Customer retention rates in each year/ period during the Track Record Period amounted
to 61.8%, 62.0%, 64.7% and 73.3% for the years ended 31 December 2020, 2021 and 2022 and
the six months ended 30 June 2023, respectively. Our tender strategy is to prioritise bidding for
contracts involving our existing projects as well as contracts offered by existing customers given
the benefits of maintaining a long relationship with our customers and the benefits of having
experience and resources in place for a past service location. However, subject to available
resources, we will also bid for contracts we find attractive each year as we will be able to build
relationships with potential new customers and so we can keep up to date with market trends,
prices and increase our chances of securing contracts with favourable terms.
BUSINESS
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As confirmed by our Directors, the slightly decrease in the tender success rate for the years
ended 31 December 2021 as compared to the year ended 31 December 2020 was due to our
efforts in tendering for more projects to further expand our business. Since the increase in
number of tenders submitted is higher than the increase in tenders secured, the tender success
rate has decreased. For the year ended 31 December 2022, the increase in our tender success rate
as compared to the year ended 31 December 2021 was mainly attributable to our focus in 2022
on submitting tenders for projects in which our Directors believe have a higher chance of
securing, thus lowering the number of total tenders submitted.
Contract negotiation
The period after we are awarded the contract and up to the contract performance stage is
normally less than one month. During this period and other than initial preparation work, we
will negotiate the final details for execution of the formal service contracts. As the contract sum
payable under our formal service contracts is generally for a package of services to be provided,
it is variable in nature which is subject to amendments based on the actual scope of service, the
actual number of workers provided and days of service or the size of the area to be serviced in
accordance with the terms of our formal service contracts (for further details of major terms of
the service contracts with our customers, please refer to the paragraph headed “Our customers –
Major terms of contracts with customers” in this section). The number of contracts subject to
early termination amounted to 2, 1, 25 and 18, which recorded an aggregate negative variance of
the contract sum payable of approximately RMB1.2 million, RMB10,000, RMB7.6 million and
RMB5.7 million for the years ended 31 December 2020, 2021 and 2022 and the six months
ended 30 June 2023, respectively. The formal service contracts may be in the form of main
agreements which sets out the general terms of our services including the scope and prices of
our services. Unless the prices are previously agreed in the main agreements, we will negotiate
with our customers on the price before entering into further supplemental agreements to expand
our service scope or add service locations. The duration of individual contracts with our
customers typically ranges from one to three years.
Contract performance
Our engineering and technical department, procurement department and project
management centre work together in our contract performance including recruiting, managing,
and training front line workers, developing work plans, making necessary arrangements relating
to the procurement of consumables, equipment, machineries and other resources. Based on the
timetable and our available resources, we may engage service providers in carrying out part of
our services. For further details of the reasons for subcontracting and the arrangements with
such suppliers, please refer to the paragraph headed “Our suppliers” in this section.
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Our inspection officers are responsible for maintaining inspection reports for our projects.
Our customers generally conduct a monthly site inspection and we provide our inspection report
for their acceptance. At the end of the service period under a contract, we provide a final
inspection report for their acceptance. We also gather information on whether there will be an
opportunity for tender or direct engagement for the new service period.
PRICING POLICY AND CREDIT MANAGEMENT
Pricing policy
Our pricing policy takes into account the following major factors: (i) scope of services; (ii)
service location(s) and area of coverage; (iii) timetable; (iv) prevailing market rates; (v) labour
costs; (vi) management costs; (vii) tax; and (viii) determination of a reasonable profit margin.
Depending on the requirements of our contracts, certain above factors may be given greater
weight as part of our pricing policy and such factors are typically reflected in the pricing
formula specified in our contracts. For example, contracts involving significant manpower or
which allow for additional manpower upon customers’ requests may specify a price per worker
required. In other cases involving a large area of coverage or possible change to such area upon
customers’ requests, the contracts may specify a unit price per sq.m. In general, we adopt a
bundle pricing strategy for the mix of services offered by us, which is in line with market
practice and determined with cost-based approach, for easier and more effective operational
management and fair and transparent pricing.
Payment terms and credit management
We decide the credit period granted to our customers on a case-by-case basis by taking into
account various factors such as the term of service, customer’s background, credit-worthiness
and our business relationship. Typical credit period granted by us to our customers during the
Track Record Period generally ranged from 30 days to 110 days. We normally send monthly
invoices to our customers and they settle by way of bank remittance or by cheque in RMB.
Our finance department is responsible for monitoring overdue balances and our receivable
balances on an ongoing basis. For further details of our trade receivables and trade receivable
turnover days during the Track Record Period, please refer to the section headed “Financial
information – Discussion on selected items from the consolidated statements of financial
position” of this prospectus. Our finance department is also responsible for monitoring the
budget of each project and identifying cost-overrun above our original estimates. In the event of
potential overrun, our finance department will investigate and propose ways to prevent or
minimise such overrun.
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QUALITY CONTROLS
We prioritise quality in our services given the importance of our reputation in attracting
new business opportunities. Accordingly, we have established a quality management system
which was accredited with ISO 9001 certification since 2009. To ensure the quality of our
services, we have also adopted the following major quality control measures:
 Overall quality management: Our management department is responsible for the
overall quality management of our operations implementation of our quality
management system. Internal audit on our quality management system is conducted
annually to review and evaluate our compliance with ISO 9001 requirements.
 Project-specific quality management: Our regional deputy general managers are
responsible for the quality management of specific projects. This includes
implementation of the project’s tailor-made work plan, particularly compliance with
any standards required by our customers and monitoring the service quality in our
projects.
 Regular inspection: Our inspection officers are responsible for conducting regular
inspections and making inspection reports detailing their findings for follow-up.
 Procurement of consumables and services: We are careful in the selection of our
suppliers and generally select our suppliers of consumables and services based on
various factors including their background, quality and prices of the consumables and
services, capacity of supply, delivery period, reputation and their past performance. In
relation to quality of consumables procured, we will check upon delivery whether they
match our specifications as well as if there are any defects and thus should be
returned.
 Customer relationship and complaint management process: We maintain on-going
communications with our customers or their agents to keep them informed of the
status of project and address complaints and feedback.
MARKETING ACTIVITIES
Our marketing department is responsible for planning and implementing any marketing
activities for our Group. To promote our brand, we also require our front line workers to wear
uniforms and/or nameplates with “ ᄿψʺሾ ” or our logo to create brand recognition for our
services. During the Track Record Period, we incurred certain marketing expenses mainly in
connection with the attendance of industry events and exhibitions but did not conduct any major
marketing activities as we currently rely on publicly available tender information, direct
engagements, referrals and our reputation for obtaining new business opportunities. As we
expand to new geographic markets and enhance our capabilities in the public space cleaning
sector, we intend to pursue additional promotional efforts (for further details, please refer to the
paragraph headed “Business strategies” in this section).
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SEASONALITY
We have not experienced significant seasonal fluctuations in our revenue given the
relatively consistent demand for cleaning and maintenance services throughout the year. To the
best knowledge, information and belief of our Directors, our project tendering is not subject to
any significant seasonality.
The majority of the projects conducted by our Group during the Track Record Period were
projects carried forward from the previous year. For details of the movement in the number of
projects during the Track Record Period, please refer to the section headed “Business – Our
projects – Movement in number of projects” in this prospectus. The tender success rate for new
contracts from existing projects ranges between approximately 73.5% to 87.0% during the Track
Record Period. With such high renewal rate, our Directors believe that the downturn in the
property development and property management industries in the PRC recently will not have
immediate or significant impact on our Group’s business.
In addition, despite the recent downturn in the property development and property
management industries in the PRC, our Group still managed to secure 90 new projects for the
property cleaning sector for the six months ended 30 June 2023. Meanwhile, for the six months
ended 30 June 2023, 14 of the projects of the property cleaning sector are newly established
buildings (buildings built within 3 years), which only amounted to 25.8% of the total number of
projects of the property cleaning sector of our Group for the six months ended 30 June 2023.
This proves our Group’s ability in securing new projects despite the unfavourable business
environment generally faced by enterprises, and that the recent downturn in the property
development sector in the PRC does not have a significant impact of our Group’s operations.
OUR CUSTOMERS
Characteristics of customers
Generally, our customers are owners, developers, operators, property managers and tenants
of commercial and residential properties in the PRC and public entities responsible for public
spaces and other service locations in the PRC which engage us to provide cleaning and
maintenance services for such locations.
We have a diversified customer base for our services including government authorities and
institutions, state-owned enterprises, companies (or subsidiaries thereof) listed on the Stock
Exchange or other major stock exchanges and private enterprises. Our major customers include
Fortune Global 500 property developers in the PRC, Fortune Global 500 real estate advisory
firm, major property developers and property management companies in Asia and in the PRC,
government departments and border control points in Guangdong province and major airport
management companies in the PRC. When deciding which contracts to bid for, we take into
consideration the customers’ background including their reputation and their owned or managed
properties in the PRC, as we believe that through the selection of financially strong and
reputable partners, we can obtain a stable flow of business opportunities in the near and long
BUSINESS
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term and also maintain our reputation for servicing notable properties. Accordingly, our five
largest customers for each year/period during the Track Record Period were (i) property
management companies in the PRC; (ii) airport management and operation companies; (iii)
companies (or subsidiaries thereof) listed on the Stock Exchange, the London Stock Exchange or
stock exchanges in the PRC; or (iv) companies falling within more than one of the above
categories. Property management companies were a significant category of customers in terms of
revenue contribution during the Track Record Period and our customers within this category
included a number of property management groups with a national presence in the PRC and
managing high-end commercial properties.
We have encountered circumstances where customers may terminate our Group’s projects
before the agreed end date of service, or reduce/modify the service scope in relation to the
projects. Our number of projects which was subject to early termination during the Track Record
Period was 2, 1, 7 and nil, respectively, amounting to a loss of revenue of approximately
RMB1,174,000, RMB10,000, RMB2,038,000 and nil, respectively. As confirmed by our
Directors, these circumstances was mainly due to the fact that (i) our customers ended their
agreements (for example, lease agreements) with related parties (for example, landlords or
property management companies); and (ii) the service scope for renewed projects granted by the
tender offerors have been reduced/modified.
Five largest customers for each year/period during the Track Record Period
Set out below are certain details of our relationship with and the respective background
information of our five largest customers for each year/period during the Track Record Period:
For the year ended 31 December 2020
Customer
Business
relationship
since Type of services provided Credit term
Payment
method Revenue
% of total
revenue
RMB’000 %
Customer F 2016 Property cleaning – industrial park,
commercial building, residential
building
20 days Bank remittance
or by cheque
28,437 6.1
Customer A 2017 Property cleaning – transportation hub,
commercial building
30–110 days Bank remittance 25,730 5.5
Customer D 2013 Property cleaning – commercial
building, residential building, public
utilities
30 days Bank remittance 23,907 5.1
Customer E 2013 Property cleaning – commercial
building, transportation hub,
residential building
8–60 days Bank remittance 22,049 4.7
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Customer
Business
relationship
since Type of services provided Credit term
Payment
method Revenue
% of total
revenue
RMB’000 %
Customer B 2017 Property cleaning – transportation hub 15–30 days Bank remittance 19,736 4.2
Total 119,859 25.6
For the year ended 31 December 2021
Customer
Business
relationship
since Type of services provided Credit term
Payment
method Revenue
% of total
revenue
RMB’000 %
Customer F 2016 Property cleaning – industrial park,
commercial building, residential
building
20 days Bank remittance
or by cheque
39,945 7.1
Customer D 2013 Property cleaning – commercial
building, residential building, public
utilities
30 days Bank remittance 29,068 5.2
Customer G 2020 Property cleaning – commercial
building, residential building,
shopping mall
25–45 days Bank remittance 25,072 4.4
Customer E 2013 Property cleaning – commercial
building, transportation hub,
residential building
8–60 days Bank remittance 22,627 4.0
Customer H 2016 Property cleaning – shopping mall,
commercial building, residential
building, transportation hub
20–30 days Bank remittance 20,917 3.7
Total 137,629 24.4
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For the year ended 31 December 2022
Customer
Business
relationship
since Type of goods or services provided Credit term
Payment
method Revenue
% of total
revenue
RMB’000 %
Customer F 2016 Property cleaning – industrial park,
commercial building, residential
building
20 days Bank remittance
or by cheque
43,363 7.3
Customer H 2016 Property cleaning – shopping mall,
commercial building, residential
building, transportation hub
20–30 days Bank remittance 35,793 6.0
Customer D 2013 Property cleaning – commercial
building, residential building, public
utilities
30 days Bank remittance 24,698 4.2
Customer E 2013 Property cleaning – commercial
building, transportation hub,
residential building
8–60 days Bank remittance 24,225 4.1
Customer I 2019 Property cleaning – commercial
building, residential building
10–90 days Bank remittance
or by cheque
23,940 4.0
Total 152,019 25.6
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For the six months ended 30 June 2023
Customer
Business
relationship
since Type of goods or services provided Credit term
Payment
method Revenue
% of total
revenue
RMB’000 %
Customer H 2016 Property cleaning – shopping mall,
commercial building, residential
building, transportation hub
20–30 days Bank remittance 21,536 7.2
Customer D 2013 Property cleaning – commercial
building, residential building, public
utilities
30 days Bank remittance 15,317 5.1
Customer E 2013 Property cleaning – commercial
building, transportation hub,
residential building
8–60 days Bank remittance 10,427 3.5
Customer J 2020 Property cleaning – commercial
building, residential building
30–40 days Bank remittance
or by cheque
10,252 3.4
Customer F 2016 Property cleaning – industrial park,
commercial building, residential
building
20 days Bank remittance
or by cheque
10,212 3.4
Total 67,744 22.6
Notes:
(1) Customer A is a PRC established company, with registered share capital of RMB143.5 million, principally
engaged in the provision of property management and related services, and is a subsidiary of a company
group engaged in the provision of real estate-related services and consultation, airport operation, with
paid-up share capital of approximately RMB11,425 million, whose shares are listed on the Shanghai Stock
Exchange.
(2) Customer B is a group of companies established in the PRC principally engaged in the management and
operation of an airport, and subsidiaries of a company engaged in airport operation, with paid-up share
capital of approximately RMB2,366 million, whose shares are listed on the Shanghai Stock Exchange.
(3) Customer D is a group of companies established in the PRC principally engaged in the provision of
property management services, and subsidiaries of a company engaged in real estate-related services, with
paid-up share capital of approximately RMB1,420 million and over 87,000 employees, whose shares are
listed on the Main Board.
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(4) Customer E is a group of companies established in the PRC principally engaged in the provision of
property management services and real estate agency services, and subsidiaries of a company engaged in
real estate-related services, with paid-up share capital of approximately GBP3.6 million and over 40,000
employees, whose shares are listed on the London Stock Exchange.
(5) Customer F is a group of companies established in the PRC principally engaged in the provision of
property management services, and subsidiaries of a company engaged in property management, with
paid-up share capital of approximately RMB2,543 million and over 11,000 employees, whose shares are
listed on the Main Board.
(6) Customer G is a group of companies established in the PRC principally engaged in the provision of
property management services. The registered share capital of the group company is RMB50 million and
wholly owned by a state-owned company engaged in development, urban planning and provision of real
estate-related services.
(7) Customer H is a group of companies established in the PRC principally engaged in the provision of
property management services, one of which is a company, with paid-up share capital of approximately
RMB533 million and over 42,000 employees, whose shares are listed on the Main Board.
(8) Customers I is a group of companies established in the PRC principally engaged in the provision of
property management services and real estate agency services, subsidiaries of a company engaged in
property management and services, with paid-up share capital of approximately RMB1,050 million and
over 106,000 employees, whose shares are listed on the Main Board.
(9) Customer J is a company established in the PRC principally engaged in the provision of property
management services and real estate agency services and is a subsidiary of a company group engaged in
property management, with paid-up share capital of approximately RMB17 million, whose shares are listed
on the Main Board.
For the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June
2023, our single largest customer accounted for approximately 6.1%, 7.1%, 7.3% and 7.2% of
our total revenue, respectively, while our five largest customers for each year/period combined
accounted for approximately 25.6%, 24.4%, 25.6% and 22.6% of our total revenue, respectively.
All of our five largest customers for each year/period during the Track Record Period are
Independent Third Parties and none of our Directors, their close associates, or any Shareholders
who or which, to the knowledge of our Directors, owned more than 5% of the issued Shares of
our Company as at the Latest Practicable Date, had any interest in any of the five largest
customers of our Group for each year/period during the Track Record Period.
Number of customers during the Track Record Period
During the Track Record Period, we had over 700 customers. For our tender projects, we
need to bid for new tenders again upon the completion of the service period for individual
contracts as we normally do not have the right of first refusal for the service contracts of the
next period. Accordingly, the number of customers served each year fluctuated depending on our
success in attracting new customers and obtaining projects from existing customers. Despite the
above, our Directors believe that due to our reputation, quality of services, and strong
relationship with customers, we were able to obtain contracts each year from both existing and
new customers during the Track Record Period.
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Major terms of contracts with customers
As most of our projects were obtained by tender, the terms of contracts with our customers
may vary according to the terms of the tender and further negotiations with our customers.
Generally, the major terms of the contracts with customers are as follows:
Scope of services The contract will specify the types of cleaning and
maintenance services which we must provide as well as the
frequency of our services and the relevant service location.
Period of contract and
termination
The period of each contract typically ranges from one year
to three years during the Track Record Period. In certain
cases, our customers are given an option to renew the
contracts (the renewal period typically being one to two
years after expiry of the original term).
Our contracts normally entitle the customer or us to
terminate the agreement when there is a breach of contract
by the other party as well as allow for termination by mutual
agreement. In certain cases, our customers may be entitled to
terminate the contract through prior written notice.
Payment terms and contract
sum payable by our
customers to us
The contract sum may be a fixed amount, a variable amount
or a combination of both. In line with our bundle pricing
strategy, the contract sum payable by our customers is
generally for a package of services to be provided. The
variable amount typically is in the form of a schedule of
fixed unit prices of various service items subject to the
actual scope of service, the actual number of workers
provided and days of service or the size of the area to be
serviced. Generally, the schedule of rates in our contracts is
fixed and they do not contain any price adjustment clause.
Payment terms will be specified in contract but final
payment is subject to the customers’ verification and
approval on the final sum.
Security deposit payable by
us to our customers and
performance guarantees
We may be required for some contracts to pay our customers
refundable deposits or provide them with a performance
guarantee in the form of an irrevocable bank guarantee.
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OUR SUPPLIERS
Characteristics of suppliers
Our five largest suppliers (including our subcontractors) for each year/period during the
Track Record Period were third party service providers, a substantial portion of which were
subcontractors assisting our workforce in the provision of our services. Other than the above, we
also have suppliers of insurance services and recruitment and administration services given the
size and fluctuation in the numbers of our workforce as well as the cross-provincial and
labour-intensive nature of our operations. Outside of our five largest suppliers (including our
subcontractors) for each year/period during the Track Record Period, our other major category of
suppliers include suppliers of consumables such as cleaning products, toiletries and garbage
bags.
Selection of suppliers and general payment terms
We normally engage our suppliers (including our subcontractors) on a project-by-project
basis or for period of one year to three years. We select our suppliers (including subcontractors)
after taking into account their background, quality and prices of the consumables and services,
capacity of supply, delivery period, reputation and their past performance.
During the Track Record Period, our purchases were all settled in RMB and normally by
way of bank remittance. Where credit periods are provided, credit period offered by our five
largest suppliers for each year/period during the Track Record Period (including our
subcontractors) range from four days to 30 days.
Five largest suppliers for each year/period (including our subcontractors) during the Track
Record Period
Set out below are certain details of our relationship with and the respective background
information of our five largest suppliers (including third party service providers, such as the our
subcontractors, suppliers of consumables and other suppliers) for each year/period during the
Track Record Period:
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For the year ended 31 December 2020
Supplier
Business
relationship
since
Type of goods or
services provided Credit term
Payment
method
Transaction
amount
% of costs
of services
RMB’000 %
Shenzhen Jianke
Enterprise
Management Co.,
Ltd.* (܄
ʮ̡ )
2018 Cleaning service 5 days Bank
remittance
65,195 16.9
Xingjiangnan Labour
Market (Tianjin)
Co., Ltd. * (ی
ɛɢ̹ఙ (ݵ)
ʮ̡ )
2019 Cleaning service 5 days Bank
remittance
45,398 11.8
Supplier G 2019 Recruitment and
administration
services
N/A
Note 10 Bank
remittance
12,639 3.3
Lingong Station
Service Management
(Xiantao) Co., Ltd.*
(ਕ၍
ଣ(ࣹ)ʮ̡ )
2020 Cleaning service 30 days Bank
remittance
8,581 2.2
Generali China
Insurance Co., Ltd.
Guangdong Branch
2016 Supply of insurance
service
N/A
Note 10 Bank
remittance
4,365 1.1
Total 136,178 35.3
BUSINESS
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For the year ended 31 December 2021
Supplier
Business
relationship
since
Type of goods or
services provided Credit term
Payment
method
Transaction
amount
% of costs
of services
RMB’000 %
Shenzhen Jianke
Enterprise
Management Co.,
Ltd. * ( ଉέ̹ઠτ
ʮ
̡)
2018 Cleaning service 5 days Bank
remittance
88,079 18.6
Xingjiangnan Labour
Market (Tianjin)
Co., Ltd. * (ی
ɛɢ̹ఙ (ݵ)ࠢ
ʮ̡)
2019 Cleaning service 5 days Bank
remittance
39,972 8.4
Lingong Station
Service Management
(Xiantao) Co., Ltd.*
(ਕ၍
ଣ(ࣹ)ʮ̡ )
2020 Cleaning service 30 days Bank
remittance
26,681 5.6
Supplier G 2019 Recruitment and
administration
services
N/A
note 10 Bank
remittance
12,956 2.7
Guangzhou Hangzhen
Cleaning Products
Co., Ltd. * ( ᄿψঘ
ʮ
̡)
2013 Supply of cleaning
materials
5 days Bank
remittance
5,814 1.2
Total 173,502 36.5
BUSINESS
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--- page 200 ---
For the year ended 31 December 2022
Supplier
Business
relationship
since
Type of goods or
services provided Credit term
Payment
method
Transaction
amount
% of costs
of services
RMB’000 %
Supplier J 2022 Cleaning service 5 days Bank
remittance
75,024 15.0
Supplier K 2022 Cleaning service 5 days Bank
remittance
32,269 6.5
Lingong Station
Service Management
(Xiantao) Co., Ltd.*
(ਕ၍
ଣ(ࣹ)ʮ̡ )
2020 Cleaning service 30 days Bank
remittance
16,206 3.2
Shenzhen Jianke
Enterprise
Management Co.,
Ltd.* (܄
ʮ̡ )
2018 Cleaning service 5 days Bank
remittance
15,840 3.2
Supplier L 2021 Cleaning service 5 days Bank
remittance
14,281 2.9
Total 153,620 30.7
BUSINESS
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--- page 201 ---
For the six months ended 30 June 2023
Supplier
Business
relationship
since
Type of goods or
services provided Credit term
Payment
method
Transaction
amount
% of costs
of services
RMB’000 %
Supplier J 2022 Cleaning service 5 days Bank
remittance
39,457 15.7%
Supplier K 2022 Cleaning service 5 days Bank
remittance
22,557 9.0%
Supplier L 2021 Cleaning service 5 days Bank
remittance
10,883 4.3%
Lingong Station
Service Management
(Xiantao) Co., Ltd.*
(ਕ၍ଣ
ʮ̡ )
2020 Cleaning service 30 days Bank
remittance
5,988 2.4%
Guangzhou Hangzhen
Cleaning Products
Co., Ltd. * ( ᄿψ
ࠢ
ʮ̡)
2013 Supply of cleaning
materials
5 days Bank
remittance
2,111 0.8%
Total 80,996 32.3%
Notes:
(1) Shenzhen Jianke Enterprise Management Co., Ltd.* (ʮ̡ )i saP R C
established company, with registered share capital of RMB2 million, principally engaged in the provision
of human resource services and cleaning services.
(2) Generali China Insurance Co., Ltd. Guangdong Branch * (ʱʮ̡ ) is a branch
of a PRC established company principally engaged in the provision of insurance services, with a registered
share capital of RMB1,300 million and over 400 employees, and is a subsidiary of a company whose
shares are listed on the Shenzhen Stock Exchange engaged in property management investment
consultation and asset management.
(3) Xingjiangnan Labour Market (Tianjin) Co., Ltd. * (ɛɢ̹ఙ (ݵ)ʮ̡ ) is a PRC established
company, with registered share capital of RMB2.01 million, principally engaged in the provision of labour
and human resources services and building cleaning services.
(4) Supplier G is a PRC established company, with registered share capital of RMB5 million and over 400
employees, principally engaged in the provision of technical services in relation to cloud platforms and
softwares, human resources services, recruitment services and cleaning services.
BUSINESS
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(5) Lingong Yizhan Service Management (Xiantao) Co., Ltd.* (Former Name: Hubei Headhunt Human
Resource Development Co., Ltd.*) (ਕ၍ଣ (ࣹ)ʮ̡ (Τjಳ̏ᔖఙᓳɛɛɢ༟๕ක೯
ʮ̡ ) is a PRC established company, with registered share capital of RMB2 million, principally
engaged in the provision of labour dispatch and human resource services.
(6) Guangzhou Hangzhen Cleaning Products Co., Ltd.* (ʮ̡ ) is a PRC established
company, with registered share capital of RMB2 million, principally engaged in supply of cleaning
materials.
(7) Supplier J is a PRC established company, with registered share capital of RMB2 million, principally
engaged in the provision of labour dispatch and human resources services.
(8) Supplier K is a PRC established company, with registered share capital of RMB50 million, principally
engaged in the provision of labour dispatch and human resources services.
(9) Supplier L is a branch of a PRC established company, with registered share capital of RMB10 million,
principally engaged in the provision of corporate management and human resources services.
(10) N/A refers to no credit period specified in the contract.
Five largest subcontractors during the Track Record Period
Set out below are certain details of our relationship with and the respective background
information of our five largest subcontractors during the Track Record Period:
For the year ended 31 December 2020
Subcontractor
Business
relationship
since
Type of goods or
services provided Credit term
Payment
method
Transaction
amount
% of costs
of services
RMB’000 %
Shenzhen Jianke
Enterprise
Management Co.,
Ltd.* (܄
ʮ̡ )
2018 Cleaning service 5 days Bank
remittance
65,195 16.9
Xingjiangnan Labour
Market (Tianjin)
Co., Ltd. * (ی
ɛɢ̹ఙ (ݵ)
ʮ̡ )
2019 Cleaning service 5 days Bank
remittance
45,398 11.8
Lingong Station
Service Management
(Xiantao) Co., Ltd.*
(ਕ၍
ଣ(ࣹ)ʮ̡ )
2020 Cleaning service 30 days Bank
remittance
8,581 2.2
BUSINESS
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--- page 203 ---
Subcontractor
Business
relationship
since
Type of goods or
services provided Credit term
Payment
method
Transaction
amount
% of costs
of services
RMB’000 %
Guangzhou Ganghao
Cleaning Service
Co., Ltd.*
(؂
ʮ̡ )
2015 High-altitude cleaning
service
15 days Bank
remittance
3,029 0.8
Supplier F 2019 Cleaning service 30 days Bank
remittance
2,626 0.7
Total 124,829 32.4
For the year ended 31 December 2021
Subcontractor
Business
relationship
since
Type of goods or
services provided Credit term
Payment
method
Transaction
amount
% of costs
of services
RMB’000 %
Shenzhen Jianke
Enterprise
Management Co.,
Ltd.* (܄
ʮ̡ )
2018 Cleaning service 5 days Bank
remittance
88,079 18.6
Xingjiangnan Labour
Market (Tianjin)
Co., Ltd.*
(ɛɢ̹ఙ (˂
ݵ)ʮ̡ )
2019 Cleaning service 5 days Bank
remittance
39,972 8.4
Lingong Station
Service Management
(Xiantao) Co., Ltd.*
(ਕ၍
ଣ(ࣹ)ʮ̡ )
2020 Cleaning service 30 days Bank
remittance
26,681 5.6
Supplier L 2021 Cleaning service 5 days Bank
remittance
5,759 1.2
Supplier F 2019 Cleaning service 30 days Bank
remittance
2,882 0.6
Total 163,373 34.4
BUSINESS
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--- page 204 ---
For the year ended 31 December 2022
Subcontractor
Business
relationship
since
Type of goods or
services provided Credit term
Payment
method
Transaction
amount
% of costs
of services
RMB’000 %
Supplier J 2022 Cleaning service 5 days Bank
remittance
75,024 15.0
Supplier K 2022 Cleaning service 5 days Bank
remittance
32,269 6.5
Lingong Station
Service Management
(Xiantao) Co., Ltd.*
(ਕ၍
ଣ(ࣹ)ʮ̡ )
2020 Cleaning service 30 days Bank
remittance
16,206 3.2
Shenzhen Jianke
Enterprise
Management Co.,
Ltd.* (܄
ʮ̡ )
2018 Cleaning service 5 days Bank
remittance
15,840 3.2
Supplier L 2021 Cleaning service 5 days Bank
remittance
14,281 2.9
Total 153,620 30.8
For the six months ended 30 June 2023
Subcontractor
Business
relationship
since
Type of goods or
services provided Credit term
Payment
method
Transaction
amount
% of costs
of services
RMB’000 %
Supplier J 2022 Cleaning service 5 days Bank
remittance
39,457 15.7
Supplier K 2022 Cleaning service 5 days Bank
remittance
22,557 9.0
Supplier L 2021 Cleaning service 5 days Bank
remittance
10,883 4.3
BUSINESS
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--- page 205 ---
Subcontractor
Business
relationship
since
Type of goods or
services provided Credit term
Payment
method
Transaction
amount
% of costs
of services
RMB’000 %
Lingong Station
Service Management
(Xiantao) Co., Ltd.*
(ਕ၍
ଣ(ࣹ)ʮ̡ )
2020 Cleaning service 30 days Bank
remittance
5,988 2.4
Supplier M 2020 Cleaning service 15 days Bank
remittance
828 0.3
Total 79,713 31.7
Notes:
(1) Guangzhou Ganghao Cleaning Service Co., Ltd.* (ʮ̡ ) is a PRC established
company, with registered share capital of RMB0.88 million, principally engaged in supply of cleaning
products and provision of building cleaning services.
(2) Supplier F is a company established in the PRC, with registered capital of RMB0.5 million, principally
engaged in provision of human resource services and cleaning services.
(3) Supplier J is a PRC established company, with registered share capital of RMB2 million, principally
engaged in provision of labour dispatch and human resources services.
(4) Supplier K is a PRC established company, with registered share capital of RMB50 million, principally
engaged in provision of labour dispatch and human resources services.
(5) Supplier L is a branch of a PRC established company, with registered share capital of RMB10 million,
principally engaged in provision of corporate management and human resources services.
(6) Supplier M is a PRC established company, with registered capital of RMB50 million, principally engaged
in sale of cleaning products and provision of professional cleaning and building cleaning services.
BUSINESS
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--- page 206 ---
For the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June
2022 and 2023, our single largest supplier (and as our subcontractor) for each year/period
accounted for approximately 16.9%, 18.6%, 15.0%, 6.0% and 7.9% of the costs of services,
respectively. Our five largest suppliers for each year/period during the Track Record Period
(including our subcontractors) together accounted for approximately 35.3%, 36.5%, 30.7%,
30.6% and 32.3% of the total costs of services, respectively. For the years ended 31 December
2020, 2021 and 2022 and six months ended 30 June 2022 and 2023, the purchases from the five
largest suppliers for each year/period (including our subcontractors) together accounted for
approximately 74.9%, 71.0%, 67.3%, 67.4% and 72.3% of the total purchases, respectively. For
our supplier concentration risk, please refer to the section headed “Risk factors – During the
Track Record Period, we relied on certain major suppliers (including our subcontractors) to
assist us and major changes to our relationship could result in a material and adverse impact on
our business, profitability and results of operations” of this prospectus. Despite such supplier
concentration, our Directors consider that our business model to be sustainable as:
(i) our reliance on our five largest suppliers for the years ended 31 December 2020, 2021
and 2022 has been decreasing throughout the Track Record Period in terms of the total
purchases;
(ii) our Group has been engaging different suppliers to assist our business operations, for
example, Supplier J and K became two of our five largest suppliers for the year ended
31 December 2022 since our commencement of business relationships with them in
2022; and
(iii) our Directors are of the view that, in case of any shortage of supply from certain
suppliers, we are able to source from alternative suppliers with comparable quality
and prices for similar services or consumables, and hence our business operations
would not solely rely on the supply of a particular supplier.
The five largest suppliers for each year/period (including our subcontractors) of our Group
during the Track Record Period are Independent Third Parties. None of our Directors, their close
associates, or any Shareholders who to our Directors’ knowledge owned more than 5% of the
issued Shares of our Company as at the Latest Practicable Date had any interest in any of the
five largest suppliers of our Group for each year/period during the Track Record Period. Our
Directors further confirmed that, to their best knowledge and belief, there are no other past or
present relationships between our Company and our five largest suppliers and subcontractors,
their subsidiaries, directors, shareholders or senior management, or any of their respective
associates.
As aforementioned, our Directors consider that given the considerable numbers of
alternative suppliers in the market which can offer us comparable terms, we did not have any
undue reliance on any particular suppliers.
BUSINESS
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--- page 207 ---
Major terms of contracts with suppliers (including our subcontractors)
We normally make our purchases from our suppliers (including our subcontractors) by way
of written agreements or purchase orders except in the case of small ad-hoc or urgent services
conducted by verbal agreement. Our contracts with such suppliers typically include the
following major terms:
Subcontractors
Primary obligations of
subcontractors
Our subcontractors agree to provide certain cleaning or other
services to us on an as-needed basis.
Duration Duration of contracts varies depending on the nature
of the services offered. The arrangement is
project-by-project basis so there is not specified or there is a
relatively short period specified, being from two days to
three years during the Track Record Period.
Payment terms and contract
sum
Contracts will generally set out the contract sums payable
(or how and when the sums will be determined) and the
payment terms. Typically, we will pay the contract sums to
our subcontractors on a monthly basis. Some of our contracts
specify that payments are made within a certain period after
the receipt of payment from our customers under the main
service contract. In cases where the contract sum is not
fixed, the fees are normally determined on a monthly basis
after the provision of services and based on the actual
number of workers involved or services provided during the
previous month.
Suppliers of consumables
Primary obligations of
suppliers of consumables
Our suppliers agree to sell certain consumables to us on an
as-needed basis.
Unit price, quantity, types
and specifications of the
consumables
The quantity, types and specifications of the consumables
together with their corresponding unit price will be provided
in the contracts.
Duration Duration of the contracts varies depending on the needs of
the projects but are typically fixed for a period of one year.
Payment terms The payment terms will generally be provided in the
contracts and we will usually be offered credit period of five
days from the date of the confirmation of invoice.
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Return and exchange policy We are typically entitled to return and exchange goods
within a specified period set out in the contract if the
quality, quantity, types or specifications of the consumables
delivered are inconsistent with the terms of the contract.
As confirmed by Frost & Sullivan, it is a common market practise for customers to request
ad-hoc services under verbal agreements in the environmental cleaning and maintenance service
market. During the years ended 31 December 2020, 2021 and 2022 and the six months ended 30
June 2023, 2, 4, 4 and nil of our customers, who had already entered into written contracts with
us for the then existing projects, engaged our Group for ad-hoc services through verbal
agreements, respectively. The total revenue attributable to ad-hoc services provided under verbal
agreements were approximately RMB11,000, RMB0.2 million, RMB0.2 million and nil, which
contributed approximately less than 0.01%, 0.03%, 0.03% and nil of the total revenue for the
years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2023,
respectively.
Subcontractors and other third party service providers
Reasons for subcontracting and use of other third party service providers
We employ subcontracting arrangements and use various third party service providers in
our operations mainly given that (i) cleaning and maintenance services are labour intensive; (ii)
we may have a number of ongoing projects from time to time, some of them may be in different
provincial-level regions in the PRC; and (iii) we do not own a sufficient number of specialised
vehicles to complete certain projects.
According to the Industry Report, it is common market practice to employ subcontractors
or other human resource management solutions services providers given the labour shortage in
the industry. As advised by our PRC Legal Advisers, there is no mandatory requirement under
the PRC laws and regulations which requires the Group to obtain consent from customers prior
to the engagement of subcontractors, unless relevant terms are stipulated in the contract between
our Group and the customers disallowing our Group to engage subcontractors for the particular
project. Our Directors confirm that our Group has obtained necessary consents from our
customers prior to engaging subcontractors. In our Directors’ experience and in comparison to
providing our services through our in-house staff, the outsourcing of certain services to
subcontractors and other third party services providers does not provide significant cost
advantages although such outsourcing is generally more cost-efficient for one-off projects or to
address one-off requests involving a large service scope from customers, but this is subject to
terms negotiated on case by case basis. Furthermore, such outsourcing involves more risks and
work by us to ensure the third party service providers and their workers meet our standards and
comply with our safety, quality and environmental management systems. Given that we maintain
a large number of our own staff and increased the number of our operation staff to support our
business growth during the Track Record Period, as we prefer to use our own workforce where
possible in order to control the quality of our services and protect our reputation, subcontractors
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and other third party services providers are mainly used for assisting our workforce in the
provision of our services and otherwise engaged on as a needed basis.
Accordingly, we shall reduce the scale of our subcontracting from time to time despite the
increase in number of projects obtained. During the Track Record Period, some of our
subcontractors were engaged mainly for their specialised vehicles, such as garbage collection
vehicles and waste suction vehicles, to perform public space cleaning. In connection with our
business strategy to tender for more public space cleaning projects, we intend to expand our
fleet of vehicles (for further details, please refer to the section headed “Future plans and use of
proceeds” of this prospectus).
Basis for determining subcontracting fees and total subcontracting labour costs
Subcontracting fees are typically determined with reference to labour costs, size of area
covered by their services, cost of consumables and other costs incurred by the subcontractors.
For the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022
and 2023, our subcontracting labour costs amounted to approximately RMB149.9 million,
RMB188.9 million, RMB172.9 million, RMB84.4 million and RMB85.9 million, respectively.
For relevant sensitivity analysis, please refer to the section headed “Financial information – Key
factors affecting our results of operation and financial condition – Our ability to mitigate the
impact of employee benefit expenses and subcontracting labour costs” of this prospectus.
Our Group mainly employs subcontractors for the provision of manpower and/or specialised
vehicles to partake in our ongoing projects when our Group (i) has a sudden labour shortage due
to a large amount of ongoing projects, or (ii) does not own of sufficient number of specialised
vehicles to complete certain projects. As disclosed in the section headed “Risk factors – Risks
relating to our business and industry – We may be liable for any substandard service or
misconduct of our employees and third party service providers and we may incur substantial
costs to remedy any defects caused by them” of this prospectus, it is possible for us to incur
substantial costs for remedying damages caused by subcontractors, hence we have expanded our
labour force to 7,121 employees as at 30 June 2023 to avoid excessive employment of
subcontractors. For the years ended 31 December 2020, 2021 and 2022 and the six months ended
30 June 2022 and 2023, our subcontracting labour cost largely remained stable, amounting to
38.9%, 39.8%, 34.6%, 34.7% and 34.2% of our costs of services, respectively.
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MACHINERY, EQUIPMENT AND VEHICLES
In the course of our operations and especially in the provision of services at outdoor
service locations, we use a variety of owned and rented machinery, equipment and vehicles. The
exact types and number of machinery, equipment and vehicles required by us may change based
on the demand of our projects and our business strategies from time to time. During the Track
Record Period, we did not have significant amount of machinery, equipment and vehicles given
our focus on property cleaning sector which, according to the Industry Report, is more labour
intensive and less reliant on fixed assets unlike the public space cleaning sector. Our owned
machinery and equipment includes escalator cleaners, steam scrubbers, ride-on scrubber dryers,
marble reconditioning machine and dustproofing device for angle grinder and our owned
vehicles includes garbage collection vehicles, carriage trucks and cleaning boats. We rented
machinery and equipment including hand push type automatic washing machines and ride-on
scrubbers from third parties.
As at the Latest Practicable Date, the Group owned 14 specialised vehicles for operations,
mainly consisting of garbage collection vehicles, in which most of them had been in use for over
five years and had no residual value. The following table sets out the utilisation rate of our
specialised vehicles for the six months ended 30 June 2023:
Types of specialised vehicles Amount
Average
utilisation
rate Note 1
Average
age
Average
remaining
useful life
Note 2
Garbage collection vehicles 9 114.7% 5 years 1.18 years
Carriage trucks 3 116.5% 5 years 1.83 years
Cleaning boats 3 107.0% 5 years 0 years
Notes:
(1) The average utilisation rate is derived by the actual working days of the specialised vehicles divided by
the designated working days of a specialised vehicle. The designated working days of specialised vehicle
is calculated based on the following assumptions: (i) each vehicle is put to work six days per week; and
(ii) the maintenance of a specialised vehicle takes two to three days per year.
(2) Calculation of remaining useful life is based on the estimated useful life of five years.
In connection with our business strategy to enhance our capabilities and capture more
opportunities in the public space cleaning sector, we intend to purchase additional vehicles,
machineries and equipment (for further details, please refer to the section headed “Future plans
and use of proceeds” in this prospectus.
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LICENCES, CERTIFICATES AND QUALIFICATIONS
Our Directors and our PRC Legal Advisers confirmed that we have obtained and currently
maintain all necessary licences, certificates and qualifications required for our current business
operations in the PRC. As at the Latest Practicable Date, we held the following material
licences, certificates and qualifications in the PRC:
Licences, certificates and
qualifications Issuing authority Holder
Validity
Period
Operational Cleaning, Collection
and Transportation Services of
Municipal Solid Waste Licence*
(૶ધe
ਕ஢̙ᗇ )
Panyu District Branch of the
Guangzhou Urban Management
and Comprehensive Law*
Enforcement Bureau (߄
҅ )
Guangzhou
Shenghui
21 October
2022 to
20 October
2025
Certificate for Indoor
Environmental Pollution Control
Organisation – Grade A*
(ଣዚ࿴༟ሯഃॴ
Ñ͠ॴ )
Federation of Indoor Environmental
Purification Industry (National)
Associations* (ʫᐑྤଋʷБ
ุ(Ό਷)՘ึᑌຑ )
Guangzhou
Shenghui
29 August
2023 to
21 September
2026
Pest Control Service Qualification
Certificate* (ਕ
༟ሯᗇ )
Guangzhou Pest Control
Association* (ي
ԣՓ՘ึ )
Guangzhou
Shenghui
24 February
2022 to
31 March
2024
Road Transport Permit* ( ༸༩༶፩
຾ᐄ஢̙ᗇ )
Guangzhou Panyu Traffic
Management Terminal* ( ᄿψ̹
ਜʹஷ၍ଣᐼ१ )
Guangzhou
Shenghui
3 September
2021 to
30 September
2025
Stone & Floor Application
Conservation Specialty
Qualification Certificate –
AAAAA Grade* ( ͩҿήջᏐ͜
Ñ AAAAA
ॴ)
The Stone Application
Conservation Specialty
Committee of Guangdong Stone
Materials Association* (formerly
known as the Professional Stone
Care Committee of Guangdong
Stone Materials Association*)
(ͩҿБุ՘ึͩҿᏐ͜ᚐ
ึ )
Guangzhou
Shenghui
12 June 2023
to 11 June
2025
Construction Enterprise
Qualification Certificate* (ጘ
ࣣ)
Guangzhou Municipal Housing and
Urban-Rural Development
Bureau* (ண
҅)
Guangzhou
Shenghui
23 September
2020 to
23 September
2025
Qualification Certificate of Public
Cleaning and Disinfection
Service Organisation – Grade A*
(ਕዚ࿴༟ሯ
Ñ͠ॴ )
Guangdong Indoor Environmental
Health Association* (ʫ
ᐑྤሊ͛Бุ՘ึ )
Guangzhou
Shenghui
August 2023 to
August 2024
Note: In accordance with our practice, we intend to apply for renewal of such licences around one month prior to
the expiry date.
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Our marketing department is responsible for monitoring the expiration dates of our
licenses, certificates and qualifications and arranging for their renewal. During the application
for the renewal of such licenses, certificates and qualifications, the marketing department is
required to prepare and submit related documents required by relevant issuing bodies for
approval. Our Directors confirm that we have not experienced any material difficulty in
obtaining or renewing the required licences, certificates and qualifications for our business
operations during the Track Record Period and up to the Latest Practicable Date.
A W ARDS AND RECOGNITIONS
We have received a number of awards and certificates during our operating history in
recognition of the quality of our services and other strengths of our business. The following
table summarises certain more recent awards and certificates obtained by our Group:
Award/certificate Issuing bodies Y ear Recipient
Sewage, Septic Tank,
Pipeline Unclogging
Treatment Cleaning
Service Enterprise
Qualification Certificate –
National Level 1*
(Ϯ˥eʷᐰϫe၍༸ଯஷ
ਕΆุ༟ሯ
ɓॴ )
China Standard (Beijing)
Certification Service Centre*
(ᅺ (̏ԯ)ਕʕː )
2023 Guangxi Shenghui
Secondary Water Supply
Cleaning Service
Enterprise Qualification
Certificate* ( ɚϣԶ˥૶
ࣣ)
China Standard (Beijing)
Certification Service Centre*
(ᅺ (̏ԯ)ਕʕː )
2022 Guangxi Shenghui
Certificate of Corporate
Integrity Management*
(၍ଣ᜗ӻႩ
ࣣ)
Beijing Zhong’an Quality and
Environment Certification
Centre Co., Ltd.* ( ̏ԯʕτሯ
ʮ̡ )
2022 Guangxi Shenghui
Best Service provider*
(ਕԶᏐਠ )
Guangzhou Y uexiu Property
Development Co., Ltd.
Guangzhou Branch* ( ᄿψ൳Ӹ
ʮ̡ᄿψʱʮ̡ )
2022 Guangzhou Shenghui
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Award/certificate Issuing bodies Y ear Recipient
Advanced enterprise in
anti-epidemic work*
(ʈЪ΋ආΆุ )
Guangzhou Industry Association
of Sanitation*
(ᄿψᐑሊБุ՘ึ )
2021 Guangzhou Shenghui
Honorary Certificate of
2020 Guangdong Poverty
Alleviation Day and
Y angcheng Charity for the
People* (2020ҧம
͏
ࣣ)
People’s Government of
Xinzao Town, Panyu District,
Guangzhou City* (߄
ִ݁)
2021 Guangzhou Shenghui
Credit Enterprise* (Ꮄ
ሯΆุ )
Guangzhou Industry Association
of Sanitation*
(ᄿψᐑሊБุ՘ึ )
2017–2020 Guangzhou Shenghui
Top 500 Property Services
Enterprises – Cleaning
Services* (ਕΆุ
500ਕ )
China Property Management
Institution and China Real
Estate Appraisal Center of
Shanghai E-House Real Estate
Research Institute*
(֢׸
Ӻ৫ )
2020 Guangzhou Shenghui
Contract Honouring and
Credit Keeping Enterprise
in Guangdong* (ς
͜Άุ )
Guangzhou Administration Bureau
for Industry and Commerce*
(ᄿψ̹̹ఙ္ຖ၍ଣ҅ )
2011–2019 Guangzhou Shenghui
Labour Relations
Harmonious Enterprise in
Guangzhou City – A
Grade* (ڷ
ձፓΆุ Aॴ)
Office of Tripartite Consultative
Meeting on Labour Relations of
Panyu District, Guangzhou*
(ɧ˙՘
܃)
2017, 2018,
2019
Guangzhou Shenghui
Advanced Cleaning Service
Provider in Guangdong
province* (؂
ਕ΋ආఊЗ )
China Quality Credit Evaluation
Committee, China Quality
Brands Promotion Committee,
Beijing Bid Evaluation Centre*
(൙Пଡ଼
։ึ,ආપᄿଡ଼
։ึ,͜൙ᄆʕː )
2019 Guangzhou Shenghui
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Award/certificate Issuing bodies Y ear Recipient
Consumer Satisfaction
Five-Star Enterprise*
(Άุ )
Guangdong Stone Materials
Association*
(ͩҿБุ՘ึ )
2019 Guangzhou Shenghui
Quality Demonstration
Project of Zhujiang New
Town Leatop Plaza*
(лஷᄿఙᎴሯͪ
ᇍʈ೻ )
Guangdong Stone Materials
Association*
(ͩҿБุ՘ึ )
2019 Guangzhou Shenghui
Excellent Property
Management Supplier*
(ุ၍ଣԶᏐਠ )
Guangzhou Property Management
Industry Association*
(ุ၍ଣБุ՘ึ )
2018 Guangzhou Shenghui
2018 Top Ten Units of
Professional Technology
in Stone and Floor
Conserve Application
Industry* (2018ͩҿ
ήջᏐ͜ᚐଣБุਖ਼ุҦ
ஔɤԳఊЗ )
The Professional Stone Care
Committee of Guangdong Stone
Materials Association*
(ึ )
(currently known as the Stone
Application Conservation
Specialty Committee of
Guangdong Stone Materials
Association*) (ͩҿБุ
ึ )
2018 Guangzhou Shenghui
Top 100 Scale of Business*
(຾ᐄ஝ᅼ 100 ੶)
General Chamber of Commerce of
Panyu District, Guangzhou* ( ᄿ
ਜᐼਠึ )
2018 Guangzhou Shenghui
Sanitation Industry
Advanced Enterprise*
(ᐑሊ΋ආΆุ )
Guangzhou Industry Association
of Sanitation*
(ᄿψᐑሊБุ՘ึ )
2017 Guangzhou Shenghui
Honorary Certificate of
Accurate Poverty
Alleviation* ( ၚ๟ҧம࿲
ࣣ)
Guangzhou City Management
Bureau*
(ึ )
2017 Guangzhou Shenghui
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE
During the Track Record Period, we did not incur significant expenditures for compliance
with the environmental laws, and we do not expect to incur significant cost in relation to
compliance with environmental laws in the future.
The Group’s governance regarding environmental, social and climate-related risks and
opportunities
In order to ensure compliance with the relevant environmental and social laws and
regulations in the PRC, our Group has established an ESG governance mechanism to oversee the
implementation of the environmental, social and governance (“ ESG ”) related policies. Our
Directors consider that establishing and implementing sound ESG principles and practices will
increase the investment value of our Company and provide long term returns to our stakeholders.
To ensure the effectiveness of our ESG risk management measures and respective internal
control systems, our Board is and will be responsible for overseeing the formulation and
reporting of our ESG strategies and determining the ESG-related risks. The Group has also
established an ESG taskforce (the “ ESG Taskforce ”), which is chaired by Mr. Li, the chairman
of the Board of Directors, our executive Director and our Chief Executive Officer and members
are composed of representatives from different departments of our Group. The ESG Taskforce
shall support the Board in establishing and implementing ESG-related policies and procedures,
as well as monitoring and collecting ESG-related information for preparing disclosure in
compliance with the requirements of the Environmental, Social and Governance Reporting Guide
(“ESG Reporting Guide ”) in Appendix 27 of the Listing Rules, upon Listing and when
appropriate. The ESG Taskforce shall report to the Board regularly with regard to the
implementation of the ESG-related risk management and internal control mechanism. In
addition, upon Listing and when appropriate, an enterprise risk assessment will be conducted at
least once annually to cover the current and potential risks faced by our business, including but
not limited to the risks arising from the ESG and climate-related matters. Our Board will
continuously assess, or engage qualified independent third parties to evaluate, the risks and our
Group’s existing strategy, metrics and targets as well as internal controls, and necessary
improvements will be implemented to mitigate such risks. The management of relevant business
functions is responsible for providing guidance, advice, and support for the implementation of
ESG initiatives concerning environmental performance, employment and labour practices,
operating practices, as well as community investment. The management regularly conducts key
review and supervision on the progress and effectiveness of the ESG initiatives to identify risks
brought by ESG issues such as climate change. During the implementation process of ESG
initiatives, the management identifies material ESG-related opportunities and reports its analysis,
recommendations and action plans to the ESG Taskforce for review regularly.
To manage quality, environmental and occupational health and safety performance, the
Group has an established Management System which is certified under ISO 9001, ISO 14001
and ISO 45001 certifications.
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Impact of environmental, social and climate-related issues and opportunities
We acknowledge that climate-related issues pose a certain level of threat to us.
Climate-related risks identified by us can be classified into two major categories: physical risk
and transition risk.
Potential physical risks can arise from extreme weather events such as flooding and
typhoons and extreme heat. If such disasters were to occur in the regions where we operate, our
delivery of services, especially in the provision of services at outdoor locations, could be
adversely affected and disrupted as well as the cleaning service workload would be subsequently
increased. Striving to reduce the unforeseen impacts of emergency situations on our operations,
we have business continuity measures stipulated in our environmental, social and governance
(“ESG ”) policy, which outlines the mitigation measures of enabling our key operation to be
resumed under such extreme weather events. For the extreme heat circumstances, the Group has
adopted occupational health and safety guidelines, work arrangement plan which is in line with
the requirements stipulated under the High Temperature Labor Protection Measures of
Guangdong Province (جrespective protection measures and high
temperature allowance for our operational employees. Regular training is also provided to
operational employees to ensure their occupational safety.
Potential transition risks and opportunities may also result from the change in our
customers’ preference in terms of increasing demand of environmental and social risk assessment
on their suppliers and more stringent requirements on environmentally friendly services.
Furthermore, the implementation of strict fuel economy and emissions standards by the PRC
government in the medium and long term may raise the leasing and purchase costs of machinery,
equipment and vehicles, which may adversely impact on our financial performance. Our Group
continues to monitor the regulatory environment to ensure that our services meet the demands
and expectations of our customers and regulators.
In response to the aforementioned physical risks and transition risks, our ESG Taskforce
has further evaluated the likelihood of occurrence of those risks and the potential impact of
those risks on our Group’s business in the short, medium and long term horizons.
Horizon Risks Potential Impacts
Short term  Extreme weather conditions
such as typhoons, floods and
droughts
 Extreme heat
 Injuries or loss of personnel
 Disruption of service operation
 Damages to properties and
assets
 Delay in the supply of
consumables
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Horizon Risks Potential Impacts
Medium
term
 Extreme heat
 Change in customers’
preference
 Injuries or loss of personnel
 Disruption of service operation
 Increased cost of compliance
Long term  Change in climate-related
regulations
 Higher operating cost
Identification, assessment and management of environmental, social and climate-related
risks
Based on the consideration of our business nature, assessments conducted by our ESG
Taskforce, as well as materiality maps provided by well-known external institutions including
the ESG Industry Materiality Map by MSCI and SASB Standards by Sustainability Accounting
Standards Board, we have identified the material ESG issues highly related to our business, and
monitored on related performances. Other than the aforementioned governance, our Group will
conduct an enterprise risk assessment at least once a year, upon Listing and where appropriate,
to cover the current and potential risks that arose in our business including, but not limited to,
the risks arising from the ESG aspects and strategic risk around disruptive forces such as climate
change. Our Board will also assess or engage qualified independent third parties to evaluate the
risks and review our Group’s existing strategy and internal control, and necessary improvement
will be implemented to manage and mitigate such risks.
Our Group has formulated an integrated management policy to strive for environmental
protection and high quality service. Our policy aims to actively promote environmentally
friendly practices such as encouraging employees to reduce, reuse and recycle waste. For any
hazardous waste generated by our Group, we will engage qualified agencies for the disposal as
required by regulatory authorities.
We have established a fair labour practices policy, a training management system and an
occupational health and safety standards system which sets out our Group’s employment and
labour practices. In accordance with the relevant policies, we have adopted the following
measures to manage our employment matters.
 Working condition: we are committed to providing a positive work environment that
values the wide-ranging perspectives inherent in our diverse workforce and fosters the
achievement of business goals through implementing the fair labour practices policy
and relevant measures. Our policy aims to provide equal opportunities for employees
regardless of gender, age, race or any other social or personal characteristics. We have
taken measures including, but not limited to, (i) adopting fair labour practices among
the workforce and prohibiting discrimination against individuals; and (ii) establishing
communication channels such as opinion collection box and email.
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 Employment: we enter into labour contracts when we establish labour relationships
with our employees. The labour contracts set out the terms of employment to ensure
that the interest of our employees is protected. The employment relationship will be
confirmed by signing a labour contract after both the employee and our Group have
clarified their rights and obligations and agreed to the written employment terms. We
abide by local laws and regulations regarding employment practices such as
compensation, rest periods and working hours.
 Training: we have established a training management system to provide
corresponding training programmes specialised for the needs and requirements of
different employees. Training programmes, including environmental protection, quality
and occupational safety and health training, emergency response and rescue training,
specialised cleaning skills training and management skills training, are regularly
provided or arranged to our employees.
 Health and safety: as the majority of our employees are retired persons, the
occupational health and safety of our employees is of paramount importance. To
protect employees’ occupational health and safety, we have implemented the health
and safety standards system and relevant measures. Our management department
manages our occupational health and safety standards system to strive to reduce the
risk of workplace accidents. Our occupational health and safety standards system
meets ISO45001 standards and includes features such as the provision of protective
gears, safety-awareness education, safety signs and symbols, occupational safety and
health training, emergency response and rescue training, implementation of safety
officers supervision and the adoption of a major incidents reporting system. We have
taken measures including, but not limited to, (i) providing employees with appropriate
personal protective equipment during the provision of cleaning and maintenance
services; (ii) allocating on-spot emergency treatment materials; and (iii) requiring our
employees to comply with occupational health and safety guidelines which cover
machinery operation, chemical handling, use of electrical appliances, carrying heavy
objects and working at height.
Metrics and targets on environmental, social and climate-related risks
We have established ESG Policy and put in place various measures to govern, manage and
mitigate environmental, social and climate-related issues, which includes greenhouse gas
(“GHG ”) emissions and resource consumption. The ESG Policy has been established with
reference to the standards of Appendix 27 to the Listing Rules. Our GHG emissions consist of
(i) direct GHG emissions (scope 1), including the GHG emissions mainly from fuel consumption
of the company’s vehicles and machinery; and (ii) energy indirect GHG emissions (scope 2),
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including the GHG emissions mainly from the usage of purchased electricity. The GHG
emissions data is presented in terms of tonnes carbon dioxide equivalent (“ tCO 2e”). The
following table sets out a breakdown of our GHG emissions by scope and intensity for the years
ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023:
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
Direct GHG emissions
(Scope 1) (tCO 2e) 313 320 333 167 166
Energy indirect GHG
emissions (Scope 2) (tCO 2e) 201 152 160 78 66
Total GHG emissions
(tCO 2e) 514 472 493 245 232
Total GHG emissions intensity
(tCO 2e/million RMB
revenue) 1.10 0.84 0.83 0.85 0.78
For the year ended 31 December 2022, our Group’s total GHG emissions were
approximately 493 tCO 2e, which comprises approximately 333 tCO 2e of direct GHG emissions
(scope 1) and approximately 160 tCO 2e of energy indirect GHG emissions (scope 2). For the
year ended 31 December 2022, our Group’s total GHG emissions intensity was approximately
0.83 tCO
2e per RMB million revenue. Considering our Group’s business development and the
latest available full-year data, we have set an emission target of limiting the increase in our total
GHG emissions intensity to be not more than 10% in the next three years, using the intensity
level in the year ended 31 December 2022 as the baseline.
Our Group’s total GHG emissions decreased by approximately 5% from approximately 245
tCO
2e for the six months ended 30 June 2022 to approximately 232 tCO 2e for the six months
ended 30 June 2023. Our Group’s total GHG emissions intensity decreased by approximately
8.24% from approximately 0.85 tCO
2e per million RMB revenue for the six months ended 30
June 2022 to approximately 0.78 tCO 2e per million RMB revenue for the six months ended 30
June 2023.
Our resource consumption principally comprises energy consumption and water
consumption so as to support our business operations. Our available data on resource
consumption is focused on office use and does not include the resource consumption directly
resulted from the provision of services to customers. Our Group has established an internal
control system to collect quantitative data and monitor the usage on our resources. Such
resources include fuels, electricity and water purchased by our Group. The ESG Taskforce is
responsible for monitoring our Group’s resource consumption levels and the effectiveness of our
Group’s measures on resource conservation. The major types of energy consumed were direct
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energy consumption and indirect energy consumption. Direct energy consumption represents fuel
consumed by vehicles and machinery, and indirect energy consumption represents purchased
electricity. The following table sets out a breakdown of our energy consumption by type and
intensity for the years ended 31 December 2020, 2021 and 2022 and the six months ended 30
June 2022 and 2023:
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
Direct energy consumption
(MWh) 1,232 1,260 1,309 655 652
Indirect energy consumption
(MWh) 329 249 280 128 116
Total energy consumption
(MWh) 1,561 1,509 1,589 783 768
Total energy consumption
intensity (MWh/million
RMB revenue) 3.35 2.68 2.67 2.71 2.58
For the year ended 31 December 2022, our Group’s total energy consumption was
approximately 1,589 MWh, which comprises approximately 1,309 MWh of direct energy
consumption and approximately 280 MWh of indirect energy consumption. For the year ended
31 December 2022, our Group’s total energy consumption intensity was approximately 2.67
MWh per RMB million revenue. Considering our Group’s business development and the latest
available full-year data, we have set an energy use efficiency target of limiting the increase in
our total energy consumption intensity to be not more than 10% in the next three years, using
the intensity level in the year ended 31 December 2022 as the baseline.
Our Group’s total energy consumption decreased by approximately 2% from approximately
783 MWh for the six months ended 30 June 2022 to approximately 768 MWh for the six months
ended 30 June 2023. Our Group’s total energy consumption intensity decreased by approximately
4.80% from approximately 2.71 MWh per million RMB revenue for the six months ended 30
June 2022 to approximately 2.58 MWh per million RMB revenue for the six months ended 30
June 2023.
Our water consumption was mainly from our offices and facilities. The following table sets
out our total water consumption and intensity for the years ended 31 December 2020, 2021 and
2022 and the six months ended 30 June 2022 and 2023:
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Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
Total water consumption
(cubic metres) 14,858 10,108 15,980 7,295 7,114
Total water consumption
intensity (cubic
metres/million RMB
revenue) 31.91 17.94 26.89 25.23 23.85
For the year ended 31 December 2022, our Group’s total water consumption was
approximately 15,980 cubic metres. For the year ended 31 December 2022, our Group’s total
water consumption intensity was approximately 26.89 cubic metres per RMB million revenue.
Considering our Group’s business development and the latest available full-year data, we have
set a water efficiency target of limiting the increase in our total water consumption intensity to
be not more than 10% in the next three years, using the intensity level in the year ended 31
December 2022 as the baseline.
Our Group’s total water consumption decreased by approximately 2% from approximately
7,295 cubic metres for the six months ended 30 June 2022 to approximately 7,114 cubic metres
for the six months ended 30 June 2023. Our Group’s total water consumption intensity decreased
by approximately 5.47% from approximately 25.23 cubic metres per million RMB revenue for
the six months ended 30 June 2022 to approximately 23.85 cubic metres per million RMB
revenue for the six months ended 30 June 2023.
To strive to achieve efficient use of resources and GHG emission management, our ESG
Policy includes (i) monitoring and reviewing environmental performance indicators such as fuel,
electricity and water consumption levels, (ii) encouraging employees to limit the use of
unnecessary lighting and turn off machinery and equipment which are not in use to save energy
and costs; and (iii) machinery and equipment management programme which comprises regular
inspections and repair and maintenance to ensure their satisfactory condition and reliability.
In addition, we consume resources, including electricity and water, as well as use cleaning
chemicals when providing cleaning services to our customers. We have adopted an
environmental management system and been accredited with ISO 14001 (environmental
management) since 2009. Prior to successful tenders or direct engagements by our customers,
the relevant customer may require our Group to obtain ISO 14001 certification to demonstrate
our commitment to environmental protection. Our ISO 14001-certified environmental
management system assists us to manage the consumption of resources, including electricity and
water, when providing cleaning services to customers. During the course of our projects, our
Group’s cleaning and maintenance workers carry out work in our customers’ premises, where the
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electricity and water consumed are provided by our customers. Therefore, the Group is not able
to obtain records and data for water and electricity consumption specifically attributable to our
services but we still manage the consumption of electricity and water in accordance with our
ISO 14001-certified environment management system. We have also formulated usage guidelines
for cleaning chemicals used when providing cleaning services to customers.
We place a high priority on the responsible use of cleaning chemicals, recognising that
improper handling poses risks to the occupational health and safety of our employees, as well as
the environment. Therefore, we provide our employees with training on adhering to guidelines
for the proper usage of chemicals.
The following table sets out a breakdown of our use of common cleaning chemicals by
types for the year ended 31 December 2020, 2021 and 2022 and the six months ended 30 June
2022 and 2023:
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
Bleach (litres) 164,057 205,342 194,164 86,266 81,700
Total bleach use intensity
(litres/million RMB
revenue) 352.31 364.38 326.76 298.32 273.93
Detergents (litres) 66,368 89,486 80,139 36,011 30,711
Total detergents use intensity
(litres/million RMB
revenue) 142.52 158.79 134.87 124.53 102.97
Considering our Group’s business development and the latest available full-year data, we
have set cleaning chemicals use efficiency targets as follows:
 limit the increase in our total bleach use intensity to be not more than 10% in the next
three years, using the intensity level in the year ended 31 December 2022 as the
baseline; and
 limit the increase in our total detergents use intensity to be not more than 10% in the
next three years, using the intensity level in the year ended 31 December 2022 as the
baseline.
We take our corporate social responsibility seriously and in our charitable actions we make
donations and also pursue other poverty alleviation measures such as offering job opportunities
to the elderly and the retired. In recognition of our charitable actions, we have previously
received an Honorary Certificate of Accurate Poverty Alleviation* (ࣣin 2017
from the Guangzhou City Management Bureau* (ึ ).
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PROPERTIES
As at the Latest Practicable Date, we owned and leased a total of 18 properties in the PRC.
Our Directors confirmed that save and except for the properties set forth in Appendix III to
this prospectus, no single property interest that forms part of non-property activities has a
carrying amount of 15% or more and no single property interest that forms part of property
activities has a carrying amount of 1% or more, of the total assets. Accordingly, save and except
for the disclosure set forth in Appendix III to this prospectus, we are not required by Chapter 5
of the Listing Rules to value or include in this prospectus any valuation report of our other
property interests, and, pursuant to section 6(2) of the Companies Ordinance (Exemption of
Companies and Prospectuses from Compliance with Provisions) Notice (Chapter 32L of the
Laws of Hong Kong), this prospectus is exempted from compliance with the requirements of
section 342(1)(b) of the Companies (Miscellaneous Provisions) Ordinance and paragraph 34(2)
of the Third Schedule to the Companies (Miscellaneous Provisions) Ordinance.
Owned properties
As at the Latest Practicable Date, we owned 11 properties in Guangdong province with an
aggregated GFA of approximately 812.2 sq.m.. As at the Latest Practicable Date, we obtained the
property ownership certificates for all of the properties we own as set out below. The following
table summarises the information regarding our owned properties as at the Latest Practicable
Date:
Address
Approximate
GFA
Use of the
property
(sq.m.)
Unit 2101, No.81 Xian Lie Middle Road, Y uexiu
District, Guangzhou City, Guangdong province,
the PRC
35.4 Investment
Note
Unit 2102, No.81 Xian Lie Middle Road, Y uexiu
District, Guangzhou City, Guangdong province,
the PRC
52.2 Investment
Note
Unit 2106, No.81 Xian Lie Middle Road, Y uexiu
District, Guangzhou City, Guangdong province,
the PRC
32.2 Investment
Note
Unit 2107, No.81 Xian Lie Middle Road, Y uexiu
District, Guangzhou City, Guangdong province,
the PRC
31.4 Investment
Note
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Address
Approximate
GFA
Use of the
property
(sq.m.)
Carpark space B113, No.81 Xian Lie Middle
Road, Y uexiu District, Guangzhou City,
Guangdong province, the PRC
10.5 Carpark
Room 501, Block 1, No. 836 Dongfeng East
Road, Y uexiu District, Guangzhou City,
Guangdong province, the PRC
70.7 Office
Room 502, Block 1, No. 836 Dongfeng East
Road, Y uexiu District, Guangzhou City,
Guangdong province, the PRC
137.1 Office
Room 503, Block 1, No. 836 Dongfeng East
Road, Y uexiu District, Guangzhou City,
Guangdong province, the PRC
97.8 Office
Room 504, Block 1, No. 836 Dongfeng East
Road, Y uexiu District, Guangzhou City,
Guangdong province, the PRC
83.5 Office
Room 505, Block 1, No. 836 Dongfeng East
Road, Y uexiu District, Guangzhou City,
Guangdong province, the PRC
114.3 Office
Room 506, Block 1, No. 836 Dongfeng East
Road, Y uexiu District, Guangzhou City,
Guangdong province, the PRC
147.1 Office
Note: These units are currently held for investment purposes and are leased to an Independent Third Party for
office purposes. For further details, please refer to the valuation certificate of Property No. 1 in
Appendix III to this prospectus which refers to these units collectively as a property.
Leased properties
As at the Latest Practicable Date, we leased seven properties from Independent Third
Parties with two in Guangdong province, and one each in Hainan province, Guangxi Zhuang
autonomous region, Henan province, Beijing municipality and Chongqing municipality each and
with an aggregated GFA of approximately 7,597.7 sq.m..
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The following table summarises the information regarding our leased properties as at the
Latest Practicable Date:
Address
Approximate
GFA Term
Use of the
property
(sq.m.)
36 Xinguang Road, Xinzao
Town, Panyu District,
Guangzhou, Guangdong
province, the PRC
(Note s1&2 )
3,122.1 20 years from
1 April 2016 to
31 March 2036
partially as
office and
partially
sub-leased
Area #034, 6/F, Building 2,
15 Xiangyu Road, Airport
Development Zone,
Shuangfengqiao Street,
Y ubei District, Chongqing
Municipality, the PRC
10.0 one year from
9 December 2022
to 8 December
2023
office
No. 1606, Unit 3, Building 6,
Haoran Landscape
Community, 178 Minzu
Avenue, Qingxiu District,
Nanning, Guangxi Zhuang
Autonomous Region,
the PRC
120.8 one year form
14 November
2023 to
14 November
2024
office
Room 505, 5th Floor, Building
12, 13, 14, 15, Phase 2, Baoli
Xiuying Gang Project, 2
Haixia Road, Xiuying District,
Haikou, Hainan Province, the
PRC
33.93 one year from
16 April 2023 to
15 April 2024
office
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Address
Approximate
GFA Term
Use of the
property
(sq.m.)
(1) Nanfang Gewu Tuan
temporary parking lot,
27 Chigang Road, Haizhu
District, Guangzhou,
Guangdong province,
the PRC
(2) No. 13, Building 3,
27 Chigang Road, Haizhu
District, Guangzhou,
Guangdong province,
the PRC
(3) No. 16, First Floor,
37 Chigang Road, Haizhu
District, Guangzhou,
Guangdong province,
the PRC
(4) No. 15, First Floor,
27 Chigang Road, Haizhu
District, Guangzhou,
Guangdong province,
the PRC
(5) No. 12, Building 3,
27 Chigang Road, Haizhu
District, Guangzhou,
Guangdong province,
the PRC
(6) Room 102, 35 Chigang
Road, Haizhu District,
Guangzhou, Guangdong
province, the PRC
4,155.5 approximately
one year from
20 January 2023
to 19 January
2024
(1) as carpark,
(2)–(6)
sub-leased
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Address
Approximate
GFA Term
Use of the
property
(sq.m.)
608, 6th Floor, Henghua
Building, No. 65 Zhenghua
Road, Jinshui District,
Zhengzhou City, Henan
province, the PRC
42 one year from 9
June 2023 to 8
June 2024
office
A1, Room 301, 3rd Floor,
Tongniu International
Building, Building 2, No. 15
Guanghua Road, Chaoyang
District, Beijing
113.36 one year from 12
July 2023 to 11
July 2024
office
Notes:
(1) The leased property has a total site area of approximately 10,213.8 sq.m. and a total GFA of 3,122.12
sq.m., of which a site area of approximately 10,000 sq.m. is sub-leased to Guangzhou Pengsheng at
monthly rent of RMB86,000 from 1 July 2016 to 31 December 2020 and RMB 51,600 from 1 January 2021
to 30 June 2024, which we previously held a majority interest in prior to its disposal on October 2020 to
an Independent Third Party (for reasons and details of the disposal, please refer to the section headed
“History, Reorganisation and Group structure – Reorganisation – Step 1: Disposal and deregistration of the
Disposed/Deregistered Companies” of this prospectus). The sub-leased portion of this property is used by
Guangzhou Pengsheng for sports training purpose.
(2) We had not received the relevant property ownership certificate (ήପᛆᗇ) from the lessor for part of
this leased property comprising a security room, a sundries room and the roof of another part. Based on
our enquiries, we understand that the lessor, which is a state-owned entity, does not possess the relevant
certificates for these areas and such areas satisfy the relevant basic safety standard and are safe for use. In
addition, the usage by the sub-lessee for sports training purpose for the same leased property did not fully
comply with the approved land use of the property. As advised by our PRC Legal Advisers, if the property
is not used for the approved purpose, the landlord may be ordered to return the parcel of land on which the
property is situated by the relevant government authority and a fine may be imposed. Accordingly, the
validity of our leases may be affected.
As advised by our PRC Legal Advisers, pursuant to the Civil Code of the PRC and the relevant
Interpretations of Supreme People’s Court, a lessee shall pay the rent within the time limit in accordance
with lease contract. The parties may specify in the contract, the certain amount of liquidated damages shall
be paid upon default by a party, or the method of calculating the compensation for losses arising from the
breach. The lessor may request the lessee to pay fees for occupying the property according to the rent
standard stipulated in the contract even if the lease contract is invalid.
Although the usage of the property by the sublessee is defective, as for the property with certificates, the
lease contract entered into by our Group and the sublessee is the expression of true intentions of both
parties, which does not infringe upon the interests of the state, the collective or others or violate the
mandatory rules on effectiveness. The contract is valid and the rent and calculation methods of liquidated
damages has been provided for in the contract. Therefore, our Group has the right to receive such payment
from the sublessee in accordance with the lease contract. As for the property without certificates, our
Group still has the right to request the sublessee to pay fees for occupying the property according to the
rent standard stipulated in the lease contract even if the contract is invalid.
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Our Directors and our PRC Legal Advisers are of the view that further remedial actions are not necessary
and that these legal irregularities are not expected to materially and adversely affect our business and
results of operations for the following reasons: (i) the lease by us and sub-lease to Guangzhou Pengsheng
is part of a historical arrangement which began in 2016 and we have not received any claim of rights by,
or challenges from, any third parties or the PRC government in relation to the title of any of these leased
properties up to the Latest Practicable Date; (ii) the leased property has a total site area of approximately
10,213.8 sq.m. and a total GFA of 3,122.12 sq.m., of which as at the Latest Practicable Date approximately
189.0 sq.m. is for self-use as office purpose, and therefore if we are forced to relocate, our Directors
expect the cost and difficulty to seek an alternative premise to be relatively low; (iii) we have received a
confirmation from the relevant lessor that it agrees (a) to indemnify us for the losses in connection with
the lack of property ownership certificate and not to terminate the lease agreement; (b) to the sub-lease by
us and such usage by the sub-lessee and the lessor will not claim against us due to such circumstances;
(iv) we have received a confirmation from the sub-lessee that it undertakes to indemnify us for the losses
and bear the liability in connection with its usage; and (v) pursuant to the Deed of Indemnity, we have
obtained an indemnity from our Controlling Shareholders to indemnify our Group against any claims, fines
and other liabilities arising from such property defects.
In addition to the above, as at the Latest Practicable Date, we had not registered twelve of
the lease agreements with the relevant housing administrative authorities. The registration of
such leases requires the cooperation of our lessors and as at the Latest Practicable Date, we had
not obtained such lease registrations, primarily due to the difficulty of procuring our lessors’
cooperation to register such leases. As advised by our PRC Legal Advisers, pursuant to the Civil
Code of the PRC (Պ), failure to complete lease registration and filing
procedures would not affect the legal validity of the relevant lease agreements. However,
according to the Administrative Measures for Commercial Housing Leases (ॡ༣၍ଣ
), the housing administrative authorities may require the parties to the lease agreements to
complete lease registration within a prescribed period of time and the failure to do so may
subject the parties to the lease agreements to fines of no more than RMB10,000 for each case.
During the Track Record Period, we had not received any administrative penalties for failure to
register our leases. We believe the failure to complete lease registration will not have a material
adverse effect on our financial condition or results of operations.
INTELLECTUAL PROPERTY
As at the Latest Practicable Date, we had:
 registered 36 patents (comprising of 34 utility model patents and two invention patent)
in the PRC.
 registered two trademarks in the PRC and registered two trademarks in Hong Kong.
 10 registered copyrights in the PRC.
 registered www.gzshqj.com as our domain name.
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Please refer to the section headed “Statutory and general information – Further information
about the business of our Group – C. Intellectual property rights of our Group” in Appendix V to
this prospectus for further details of our material intellectual property rights.
As at the Latest Practicable Date, we were not aware of any material disputes or pending or
threatened claims against our Group in relation to material infringement of any intellectual
property rights of third parties.
RESEARCH AND DEVELOPMENT
In an industry characterised by labour intensiveness, we appreciate the need to enhance our
service efficiency through innovation and keep in line with the market trend of technological
advances. Accordingly, in the past and throughout the Track Record Period, we encouraged our
staff to conduct in-house research projects. Typically, such projects will involve preliminary
investigations into public sources if certain research is already registered by third parties and if
not, we will then commence our research. Once the research reaches a sufficiently advanced
stage, we will seek registration of relevant intellectual property rights. During the Track Record
Period, we completed research into improvements in our machinery and equipment which can be
used in our operation including but not limited to the following:
Research conducted Description and benefits
Safe and intelligent cleaning
technology for exterior wall
glass of high-rise building
– Cleaning with an automated drone, thereby
increasing the efficiency and reducing the
safety risks in connection with cleaning
exterior glass walls
Fine stone maintenance technology – Enhance the speed and quality of stone
maintenance through detection of defects and
data management and analysis
Remote garbage collection
maintenance and management
technology
– Monitor the amount of garbage in the garbage bin
through sensors and automatically and remotely
notify the cleaning staff to remove the garbage
based on capacity allowing for timely removal
of garbage
For further details of our patents and registered copyrights, please refer to the section
headed “Statutory and general information – Further information about the business of our
Group – C. Intellectual property rights of our Group” in Appendix V to this prospectus. As at the
Latest Practicable Date, all of our patents and registered copyright were for self-use in our
operations. In December 2020, Guangzhou Shenghui received recognition as a High and New
Technology Enterprise* ( ৷อҦஔΆุ ) by the relevant PRC governmental authorities.
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EMPLOYEES
Employees by function
As at 30 June 2023, we had 7,121 employees, all of whom are based in the PRC. The
following table sets out a breakdown of the number of our employees by functions, gender and
age group:
Functions
As at
30 June 2023
Administration and management 32
Operation 7,079
Finance 5
Marketing 5
Total 7,121
Gender
As at
30 June 2023
Male 1,718
Female 5,403
Total 7,121
Age group
As at
30 June 2023
18 to 35 years old 129
36 to 49 years old 376
50 years old or above 6,616
Total 7,121
Among all employees as at 30 June 2023, we employed 6,436 retired persons and 48
disabled persons respectively.
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Among our 7,078 operating staff, most of them are employed by Guangzhou Shenghui and
then re-allocated to different provincial-level regions in the PRC for execution of project work.
The following table sets out the number of operating staff allocated by geographical locations as
at 30 June 2023:
Geographical locations
As at
30 June 2023
Guangdong 4,902
Hainan 408
Chongqing 338
Guizhou 455
Guangxi 161
Jiangxi 62
Hubei 58
Heilongjiang 39
Anhui 57
Fujian 282
Henan 67
Shaanxi –
Hunan 249
Total 7,078
A number of our employees hold particular qualifications in connection with our services.
The table below sets forth the professional qualifications possessed by our employees as at 30
June 2023:
Qualification
Number of
employees
possessing such
qualification
Special Industry Operation Certificate – Providing installation,
maintenance and demolition services at high altitudes* ( त၇Ъุ
዁Ъ൛ –ৰЪุ )5 2
Stone Conservation & Floor Professional Qualification* ( ͩҿᏐ͜
ࣸ1 1
Employment Certificate of Cleaning of Secondary Water Supply
Facilities in Guangzhou* (ᆎɪ੪൛ )3 8
Guangzhou Rodents Control Officer Employment Certificate* ( ᄿψ
ࡰ4 3
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Recruitment policy and training
We normally recruit employees through online recruitment platforms and posting
recruitment notices. We use our best endeavours to attract and retain appropriate and suitable
workers to serve our Group. Our policy also aims to provide equal opportunities for employees
regardless of gender, age, race or any other social or personal characteristics. We prohibit all
forms of discrimination based on gender, age, disability and race. In this regard, we received an
Honorary Certificate of Accurate Poverty Alleviation* (ࣣin 2017 from the
Guangzhou City Management Bureau* (ึ ). As at 30 June 2023, we
achieved the following diversity ratios and social performance:
(a) Female to male gender ratio as approximately 3.14:1
(b) Employment of 6,436 retired persons, representing approximately 90.4% of total
workforce
(c) Employment of 48 disabled persons, representing approximately 0.7% of total
workforce
After recruitment, we provide or arrange various types of training to our employees,
including environmental protection, quality and occupational safety and health training,
emergency response and rescue training, specialised cleaning skills training and management
skills training. We will provide them with our training manual which we update from time to
time.
Labour union and employee relationship
We have a labour union which represents our employees’ interests and deals with our
management on resolving labour-related issues. Our Directors believe that we have maintained
good relationships with our employees and during the Track Record Period and up to the Latest
Practicable Date, there had been no complaint or claims from employees or labour dispute which
materially and adversely affected, or was likely to have a material adverse effect on our
operations.
Remuneration policy
Remuneration for our employees includes basic wages, discretionary bonuses and other
staff benefits. We participate in social insurance schemes and provide housing provident funds
for our employees in accordance with applicable regulations. Save as disclosed in the paragraph
headed “Historical non-compliance incidents” in this section, we have made payments to social
insurance and housing provident funds for our qualified employees.
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ENVIRONMENTAL, OCCUPATIONAL HEALTH AND SAFETY
Environmental compliance
Our operations are subject to the Environmental Protection Law of the PRC ( ʕശɛ͏΍
) and other PRC environmental requirements (for further details and other
material environmental laws, please refer to the section headed “Regulatory overview – PRC
laws and regulations – Laws and regulations on production safety and environmental protection”
of this prospectus).
Our Directors believe that our business operation does not generate hazardous materials
that would have a significant adverse effect on the environment. During the Track Record
Period, we did not incur any significant expenses for compliance with our environmental
obligations and do not expect to incur any significant expenses in this respect going forward. As
confirmed by our Directors and our PRC Legal Advisers after conducting relevant public
searches and/or having obtained relevant compliance certificate issued by the competent PRC
government authority, during the Track Record Period and up to the Latest Practicable Date, we
had not received any material administrative penalties from any environmental protection
departments of the PRC due to any failure to comply with any environmental laws and
regulations.
Occupational health and safety
According to the Industry Report, the occurrence of accidents resulting in bodily injury and
property damages are not uncommon in the industry. Accordingly, we have adopted an
occupational health and safety standards system as managed by our management department
which continuously seek to improve our system to reduce the risk of such accidents. Our
occupational health and safety standards system meets ISO45001 (formerly GB/T 28001)
standards. Our current occupational health and safety standards system includes the following
major features:
 Provision of protective gears: We provide protective gears, such as soft sole shoes,
safety belts, helmets and ropes, googles and reflective safety vests.
 Safety-awareness education: We provide safety-awareness education to our
employees in order to reduce occupational hazards and prevent injuries and accidents
in the workplace.
 Safety signs and symbols: We provide safety signs and symbols, such as prohibitions,
warnings, instructions, and prompts, in the workplace to remind our employees about
safety risks, best practices and other information.
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 Occupational safety and health training: We provide our employees with
occupational safety and health training, covering various topics including regulations
governing safety and health, industrial accident prevention, risk assessment, the use of
specialised equipment and safety on working at high altitudes.
 Emergency response and rescue training: We provide emergency response and
rescue training, such as standard first aid, first aid for electric shock and heatstroke
and artificial ventilation, in order to train our employees effective emergency response
skills, thus reducing the chances of casualties from accidents.
 Safety officers supervision and major incidents reporting system: We have safety
officers and on-site safety responsible officers to help us monitor the safety conditions
in our projects and to check compliance of the works in accordance with relevant
safety standards. We have also adopted a reporting system so that major safety
incidents are promptly brought to the attention of our management.
During the Track Record Period, our accident rate was relatively low. The table below sets
out the number of accidents and accidents rate of our Group during the Track Record Period:
Y ear ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
Number of accidents Note 1 39 – 52 7
Accident rate of our Group
Note 2 0.7% – 0.8% 0.1%
Notes:
(1) Other than the one fatal accident as described below and another fatal traffic accident that occurred in
2022 in which our Directors confirmed that our Group is not exposed to any liability from the accident as
at the Latest Practicable Date, the accidents which occurred during the Track Record Period were
relatively minor and included, inter alia, (i) contusion and bruise; (ii) slipping, tripping or falling on same
level; and (iii) sprain and strain. Our number of accidents increased during the Track Record Period mainly
due to the increase in our number of employees and projects over such period.
(2) The accident rate of our Group is calculated by dividing the number of accidents recorded in our internal
records by total number of frontline workers as at the end of the relevant period. Our Directors confirm
that the slightly increase in our accident rate for the year ended 31 December 2020 was mainly attributable
to the relatively heavier workload of our frontline workers at the start of the COVID-19 pandemic which
made them more susceptible to workplace injury.
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To the best of our Directors’ knowledge and belief, during the Track Record Period and up
to the Latest Practicable Date, our Group did not experience any significant incidents or
accidents in relation to workers’ safety except for one fatal accident which occurred in
December 2019 as noted below. This fatal accident relates to one of our employees who walked
up to the edge of the ninth floor of a building without permission and then lost balance and fell
from such height. Given that the relevant governmental authority was of the view that we did
not conduct sufficient safety supervision of on-site workers, did not seriously implement the
screening, identification and control of work safety accident hazards, and failed to effectively
and timely stop on-site worker’s violations of operation procedures in high-altitude operations
and risky operations, it imposed a fine of RMB230,000 on 20 May 2020. Our Group has paid the
fine accordingly. As advised by our PRC Legal Advisers, the penalty has been satisfied and our
Group is no longer exposed to any liability from the incident. After this accident and despite the
exceptional circumstances, we have strengthened our safety measures and provided safety
training to our employees particularly relating to high-altitude safety. We also require a safety
officer and an on-site safety responsible officer for every project to monitor safety levels and
check and keep records on, before and after the work, (i) the guard-rails of the suspended
working platform and other safety facilities, (ii) whether the workers’ safety belts, safety ropes
and other protective gears are properly worn, and (iii) whether the safety facilities and protective
gears are damaged. In preparation for the Listing, we have engaged independent internal control
consultants to perform a review over our internal controls, including but not limited to, (i)
relevant records such as attendance records for safety training of our employees; (ii) our relevant
occupational health and safety policies such as guidelines for cleaning external walls; (iii) our
safety measures focusing on prevention of high-altitude accident; and (iv) our crisis management
focusing on high-altitude accident such as emergency response plans. Based on the review
findings and recommendations provided by the internal control consultants, we have
strengthened our safety measures focusing on high-altitude safety, including the provision of
mandatory training to new employees, and promotion of safety measures through posting
materials regarding high-altitude safety on internal advertisement boards. Except for the
abovementioned fine, during the Track Record Period and up to the Latest Practicable Date,
there was no material claims or legal proceedings against us with respect to this accident.
INSURANCE
We maintain insurance policies that are required under the PRC laws and regulations
including pension insurance, work-related injury insurance, medical insurance, unemployment
insurance and maternity insurance. We also maintain public liability insurance to cover liabilities
for damages suffered by third parties arising out of our business operations.
Our Directors believe that our current insurance policies are adequate and the coverage of
the above insurance policies is consistent with industry norm considering our current operations
and the prevailing industry practice. However, we have certain uninsured risks which are not
covered by insurance because they are either uninsurable or it is not cost justifiable to insure
against such risks. For further details, please refer to the section headed “Risk factors – There is
no guarantee that our insurance coverage will adequately cover the risks related to our business
and operations and that our insurance expenses will not rise.” of this prospectus.
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Our insurance expenses were approximately RMB4.6 million, RMB2.3 million, RMB3.7
million, RMB2.0 million and RMB1.0 million for the years ended 31 December 2020, 2021 and
2022 and the six months ended 30 June 2022 and 2023, respectively.
LEGAL PROCEEDINGS
From time to time, we may be involved in legal proceedings or disputes during the ordinary
course of business, such as contractual disputes with our customers and suppliers. During the
Track Record Period and up to the Latest Practicable Date, none of our Company or any of our
subsidiaries have been involved in any litigation or arbitration of material importance that would
have a material adverse effect on our business, financial position or results of operations, and to
the best knowledge of our Directors, we are not aware of any pending or threatened litigation,
arbitration or claim of material importance against us or any of our subsidiaries, which could
have a material adverse effect on our Group’s business, financial position or results of
operations.
HISTORICAL NON-COMPLIANCE INCIDENTS
We had certain historical non-compliance incidents during the Track Record Period and up
to the Latest Practicable Date. As confirmed by our Directors and our PRC Legal Advisers, save
as disclosed below, our Group has complied in all material respects with the applicable laws and
regulations in the PRC during the Track Record Period and up to the Latest Practicable Date and
did not receive any notices for any fines or penalties for any non-compliance that is material or
systemic.
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We set out below a summary of our material and/or systemic non-compliance matters
during the Track Record Period and up to the Latest Practicable Date, their rectification actions
taken and current status:
Non-compliance incident
Reason(s) for the
non-compliance
Possible legal consequences
and potential maximum
penalties
(a) Remedies taken/to be taken,
the latest status
(b) rectification measures to
prevent future breach
Potential impact on our operations and
financial condition
Failure to make full social insurance and housing provident fund contributions
During the Track Record
Period, we did not make
full social insurance and
housing provident fund
contributions for all of our
eligible employees. Our
Directors have assessed
and estimated that the
amount of shortfall of
social insurance for the
years ended 31 December
2020, 2021 and 2022, and
for the six months ended
30 June 2023 was
approximately RMB1.9
million, nil, nil and nil,
respectively, and the
shortfall of contributions
to the housing provident
funds was approximately
RMB1.1 million, nil, nil
and nil, respectively, over
the same period.
The non-compliance was
primarily due to our large
labour force, our
additional staff arising
from the establishment of
our new Chongqing
branch office which we
are in the process of
setting up accounts for,
the miscalculations of the
payment amount for
certain individuals after
their salary changes and
our human resources staff
lacking sufficient
understanding of the
relevant requirements of
the relevant PRC laws and
regulations.
Our PRC Legal Advisers
have advised that,
pursuant to the relevant
PRC laws and regulations,
if we fail to pay the full
amount of social insurance
contributions as required,
we may be ordered to pay
the outstanding social
insurance contributions
within a stipulated
deadline and we may be
liable to a late payment
fee equivalent to 0.05% of
the outstanding amount
for each day of delay; if
we fail to make such
payments, we will be
liable to a fine amounting
to one to three times to
the amount of the
outstanding payments. In
respect of outstanding
housing provident fund
contributions, we may be
ordered to pay the
outstanding housing
provident fund
contributions within a
prescribed time period. If
the payment is not made
within such time limit, an
application may be made
by the authorities to PRC
courts for compulsory
enforcement.
On such basis, the maximum
potential penalties arising
from such non-compliance
would be RMB3.5 million,
RMB4.8 million, RMB6.1
million and RMB6.8
million as at 31 December
2020, 2021 and 2022 and
30 June 2023.
We had not received any orders
or notifications from the
relevant PRC authorities
requiring us to pay material
shortfalls or the penalties with
respect to social insurance and
housing provident funds during
the Track Record Period and
up to the Latest Practicable
Date.
We have updated our records on
the social insurance and
housing provident fund system.
However, if we are demanded
by the relevant government
authorities, we will make full
contributions or pay any
shortfalls within the time
period prescribed by them. We
have made full social insurance
and housing provident fund
contributions for all of our
eligible employees in
accordance with the relevant
PRC laws and regulations since
May 2021.
We have also made provisions in
relation to such incidents. The
total provisions made by our
Group in respect of the
shortfall in contribution to
social insurance and housing
provident funds and penalty
amounted to RMB22.2 million
as at 30 June 2023.
We have adopted additional
mechanisms for ensuring the
due payment of social
insurance and housing
provident fund contributions
including the double checking
of the calculations by our
finance department.
We have obtained written confirmations from
the relevant local social insurance and
housing provident fund regulatory authorities
(Note) , all of which state that no
administrative penalty was imposed during
the Track Record Period due to the
non-compliance. As advised by our PRC
Legal Advisers, such local regulatory
authorities are the competent authorities to
issue the above confirmations.
Our PRC Legal Advisers are of the view that
based on (i) written confirmations from the
relevant regulatory authorities, which state
that no administrative penalty has been
imposed on us; (ii) that we have taken
rectification measures for the payment of
outstanding social insurance and housing
provident fund contributions; (iii) that the
employees who failed to make full social
insurance or housing provident fund
contributions had submitted their
undertakings to us that they would not claim
against us and the deficit was attributable to
their personal reasons; (iv) that provisions
have been made to the shortfall in the unpaid
social insurance and housing provident fund
contributions so that we will be able to pay
the shortfall within the prescribed time limit
upon the request of the relevant regulatory
authorities; and (v) our Controlling
Shareholders have executed the Deed of
Indemnity to indemnify any economic loss
we suffered from the failure to fully
contribute to social insurance and housing
provident funds, the risk that we would be
subject to administrative penalties in relation
to social insurance or compulsory
enforcement in relation to housing provident
funds is very low and the said
non-compliance would not have any material
adverse effect on our financial conditions or
results of operations.
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Note : The relevant regulatory confirmations were obtained from (i) the Guangzhou Municipal Human Resources
and Social Security Affairs Service Centre (ਕʕː ), (ii) the Human
Resources and Social Security Bureau of Panyu District, Guangzhou (ღ
҅), (iii) the Healthcare Security Administration of Guangzhou (ღ҅ ), (iv) the Guangzhou
Housing Provident Fund Management Centre (၍ଣʕː ), (v) the Human Resources and
Social Security Bureau of Y ubei District, Chongqing (ღ҅ ), (vi) the
Healthcare Security Affairs Centre of Y ubei District, Chongqing (ღԫਕʕː ), (vii)
the Chongqing Municipal Housing Provident Fund Administration Centre (၍ଣʕː ),
(viii) the Nanning Municipal Human Resources and Social Security Bureau (ღ
҅), (ix) the Nanning Healthcare Security Affairs Administration Centre (ღԫุ၍ଣʕː ),
(x) the Healthcare Security Administration of Nanning (ღ҅ ), (xi) Guangxi Quzhi Housing
Provident Fund Management Centre (၍ଣʕː ), (xii) the Social Insurance Bureau of
Haikou (ᎈԫุ҅ ), (xiii) the Housing Provident Fund Administration of Haikou (ג
၍ଣ҅ ), (xiv) the Human Resources and Social Security Bureau of Zhengzhou ( ቍψ̹ɛɢ༟๕ձ
ღ҅ ) and (xv) the Zhengzhou Housing Provident Fund Administration Centre (၍ଣ
ʕː).
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Non-compliance incident
Reason(s) for the
non-compliance
Possible legal consequences
and potential maximum
penalties
(a) Remedies taken/to be taken,
the latest status
(b) rectification measures to
prevent future breach
Potential impact on our operations and
financial condition
Lack of relevant qualification in relation to project
In May 2020, Guangzhou
Shenghui entered into a
contract with a customer
which belongs to a PRC
state-owned company,
with a registered share
capital of approximately
RMB525 million, and is
principally engaged in the
provision of municipal
and public work, highway
work and constructions
work, for a road
construction project in
Longyan, Fujian province,
where it is responsible for
comprehensive pipe
gallery engineering, slope
and foundation pit support
engineering (the
“Ancillary Services ”),
with a contract sum of
RMB23.5 million prior to
obtaining the Construction
Enterprise Qualification
Certificate. It obtained the
relevant qualification in
September 2020.
As confirmed by the
Directors, we undertook
the project on the basis
that (i) the services that
our Group agreed to
undertake were
labour-intensive and did
not require specialised
knowledge or skillset from
workers which, in nature,
was similar to the
cleaning services provided
by our Group; (ii) our
Group was not required
under the contract to
provide any technicians
and specialised equipment
to conduct the project;
and (iii) the customer may
further engage our Group
to conduct cleaning
services upon the
completion of the project.
As confirmed by the
Directors, our Group did
not provide similar
services in other occasions
during the Track Record
Period.
During the year ended 31
December 2020, the net
income generated from
such project was
approximately RMB2.7
million.
As the project did not relate
to our core business and
we were approached by
the customer to render our
assistance, our marketing
department staff, being the
responsible department for
our licences, was not
familiar with the
qualification requirement
prior to entering into the
contract.
Our PRC Legal Advisers
have advised that,
pursuant to the relevant
PRC laws and regulations,
the relevant authority may
order cessation of the
illegal activity, impose a
fine of 2% to 4% of the
contract sum, and
confiscate the illegal
income, if any.
We had not received any orders
or notifications from the
relevant PRC authorities
requiring us to cease such
works nor received any
administrative penalties in
relation to such incident during
the Track Record Period and
up to the Latest Practicable
Date.
After this incident, we adopted a
more formal procedure to be
followed by our marketing
department prior to bidding for
new projects and particularly
when starting a new business
line and we will consult legal
advice when necessary.
We have obtained written confirmation from
the Housing and Urban-Rural Development
Bureau of Longyan, Fujian (̹И
ண҅ ), which states, among
others, that: (i) although we had not received
the relevant qualification upon signing of the
contract, it was not considered a material
violation; and (ii) it will not confiscate the
relevant income or impose any fine or other
penalties. As stated in the above
confirmation and advised by our PRC Legal
Advisers, the labour services performed in
the road construction project were governed
by the local regulatory authority as stated
above and the said authority is the competent
authority to issue the above confirmation.
Our PRC Legal Advisers are of the view that
based on the above and that we had obtained
the relevant qualification in September 2020,
the risk of penalty against us for such
incident is remote.
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Non-compliance incident
Reason(s) for the
non-compliance
Possible legal consequences
and potential maximum
penalties
(a) Remedies taken/to be taken,
the latest status
(b) rectification measures to
prevent future breach
Potential impact on our operations and
financial condition
Failure to register lease agreements
As at the Latest Practicable
Date, we had not
registered twelve of the
lease agreements with the
relevant housing
administrative authorities.
The registration of such
leases requires the
cooperation of our lessors
and as at the Latest
Practicable Date, we had
not obtained such lease
registrations, primarily
due to the difficulty of
procuring our lessors’
cooperation to register
such leases.
Our PRC Legal Advisers
have advised that,
pursuant to the
Administrative Measures
for Commercial Housing
Leases (ॡ༣၍
 ), the housing
authorities may require the
parties to the lease
agreements to complete
lease registration within a
prescribed period of time
and the failure to do so
may subject the parties to
the lease agreements to
fines no more than
RMB10,000 for each case.
As advised by our PRC Legal
Advisers, pursuant to the Civil
Code of the PRC ( ʕശɛ͏
Պ ), failure to
complete lease registration and
filing procedures would not
affect the legal validity of the
relevant lease agreements.
During the Track Record
Period, we had not received
any administrative penalties for
failure to register our leases.
Our PRC Legal Advisers are of the view that
the failure to complete leases registration
will not have a material adverse effect on
our financial condition or results of
operations.
Our Directors are of the view that the non-compliance incidents, individually and
collectively, will not have any material adverse impact on our Group’s business operations and
financial position having considered (i) the non-compliance incidents have been properly
rectified or otherwise is unlikely to reoccur; (ii) preventative measures have been or will be put
in place to prevent future occurrence; (iii) our PRC Legal Advisers’ advice having taken into
account the confirmations received from relevant regulatory authorities; and (iv) provision has
been made for the non-compliance incidents relating to social insurance and housing provident
fund contributions.
Our Directors are of the view that our internal control is sufficient and effective to prevent
the occurrence of the non-compliance incidents in the future. Our Directors have reached this
view after taking into account the reasons for such incidents and the preventative measures to
address them.
Indemnity given by our Controlling Shareholders
Our Controlling Shareholders, collectively as the indemnifiers, have entered into the Deed
of Indemnity whereby our Controlling Shareholders have agreed to indemnify our Group, subject
to the terms and conditions of the Deed of Indemnity, in respect of among others, any liabilities
and penalties which may arise from among others any non-compliance incidents of our Group
prior to the Share Offer becoming unconditional. Further details of the Deed of Indemnity are
set out in the section headed “Statutory and general information – F. Other information – 1. Tax
and other indemnities” in Appendix V to this prospectus.
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Provisions
We made provisions in respect of our failure to make adequate social insurance and housing
provident fund contributions as discussed above. Except as noted, no provision was made in the
financial statements of our Group in respect of the aforesaid non-compliances on the basis that
(i) the issues have been rectified or otherwise is unlikely to reoccur; (ii) up to the Latest
Practicable Date, our Directors were not aware of any prosecution instituted against us or any
notice for any fines or penalties in relation to the above non-compliances; (iii) our PRC Legal
Advisers’ advice on the risk of penalty having taken into account the confirmations received
from relevant regulatory authorities; and (iv) our Controlling Shareholders shall indemnify our
Group against the liabilities arising from such non-compliances pursuant to the Deed of
Indemnity.
IMPACT OF COVID-19
An outbreak of COVID-19 was first reported in December 2019, and the COVID-19
pandemic spread around the world during the Track Record Period. The PRC government took a
number of actions to control the spread, which included quarantining individuals infected with
or suspected of having COVID-19 and temporarily restricting residents from free travel. In
December 2022, the PRC government eased the restrictions previously imposed with respect to
the control of the COVID-19 pandemic. In May 2023, the World Health Organisation ended the
global emergency status for COVID-19, declaring that it is now an established and ongoing
health issue which no longer constitutes a public health emergency of international concern. As a
result, regional lockdown, quarantine requirements and inter-region travel restrictions have been
gradually lifted.
Impact on relevant industry and outlook
According to the Industry Report, due to the outbreak of COVID-19, the PRC government
has established related national policies to reinforce and standardised large-scale cleaning and
sanitising activities to improve cleaning and maintenance condition at community level. As such,
providing a clean and hygienic living environment has become an essential part in pandemic
control. Therefore, despite the adverse impact of COVID-19 pandemic on the PRC’s economy,
the environmental cleaning and maintenance service providers are able to benefit from these
unprecedented times. The increasing demand for service from the downstream market will serve
as an opportunity for the environmental cleaning and maintenance service industry and such
demand is anticipated to continue during the post-pandemic stage.
Impact on our business operations
To minimise the spread of COVID-19 in our workplace, we have implemented the
following measures and policies:
 provide personal protection equipment (including but not limited to surgical masks,
gloves and hand sanitisers) to our employees;
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 require mandatory body temperature check before entering our offices and project
sites and those who have fever or upper respiratory tract infection symptoms shall be
prohibited from working and should seek medical advice promptly;
 require our employees to wear masks at our offices and project sites; if any of our
employees are requested by governmental authorities to be quarantined, the affected
employees will continue to be paid during the quarantine period;
 require our employees to report to their respective project management team or
department if they or their close relatives have been confirmed to have contracted
COVID-19;
 maintain environmental hygiene and cleanliness of our offices and project sites;
 maintain adequate social distancing at our offices and project sites; and
 provide our workers the COVID-19 safety training.
As at the Latest Practicable Date, to the best knowledge and belief of our Directors, none
of our employees, including our senior management and our employees in higher-risk projects
such as relating to airports, had been confirmed as having contracted COVID-19 and there was
no material disruption to the daily administration and operation of our Group as a result of
COVID-19.
Our Directors confirm that given the nature of our business, during the Track Record
Period and up to the Latest Practicable Date, our projects were not halted, delayed or cancelled
due to the COVID-19 outbreak and instead COVID-19 has led to more business opportunities for
us in terms of customers’ interest in our cleaning and maintenance service as reflected in the
steady increase in the number of our projects and increasing revenue during the Track Record
Period.
Our current financial condition
Our cash and cash equivalent as at 30 June 2023 was approximately RMB49.9 million. We
will closely monitor the epidemic situation of COVID-19 and promptly implement necessary
measures to minimise any adverse effect on our financial condition and results.
Our Directors confirm that to the best of their knowledge and belief, subsequent to the
Track Record Period and up to the Latest Practicable Date, our Group had not received any
notice from: (i) our major customers terminating our existing projects with them; or (ii) our
major suppliers terminating our existing contracts with them relating to their provision of
consumables or services. Taking into account the above and the current levels of cash and cash
equivalents, we believe the outbreak of COVID-19 does not have a significant adverse impact on
our continuing business operation.
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RISK MANAGEMENT AND INTERNAL CONTROL
In preparation for the Listing, we have engaged independent internal control consultants
(the “ Internal Control Consultants ”) to perform a review over our internal controls in
December 2020 (the “ Internal Control Review ”). The selected areas of our internal control that
were reviewed by the Internal Control Consultants included overall corporate governance,
financial reporting, tender management cycles, revenue management of projects, cash and fund
management, investment management, fixed asset management, human resources and salary
management and information and technology management. During the course of the Internal
Control Review, the Internal Control Consultants provided their findings and recommendations.
We have accordingly taken the enhanced internal control measures to make improvements. The
Internal Control Consultants performed follow-up reviews from February 2021 to April 2022 to
review the status of the management actions taken by us to address the findings of the Internal
Control Review (the “ Follow-up Review ”). The Internal Control Consultants did not have any
further recommendation in the Follow up Review. The Internal Control Review and the
Follow-up Review were conducted based on information provided by us and no assurance or
opinion on internal control was expressed by the Internal Control Consultants. After considering
the implementation of the enhancement measures and the result of such Follow-up Review, our
Directors are satisfied that our internal control system is adequate and effective for our current
operational environment.
We have implemented various risk management policies and measures to identify, assess
and manage risks arising from our operations. Detailed risk categories identified by our
management, internal and external reporting mechanism, remedial measures and contingency
management have been codified in our policies. For more details on the major risks identified by
our management, please refer to the section headed “Risk factors – Risks relating to our
business and industry” of this prospectus.
In addition, we face various financial risks, including interest rate risk, credit risk, liquidity
risk and capital risk that arise during our ordinary course of business. Please refer to the section
headed “Financial information – Financial risk management” of this prospectus for a discussion
of these financial risks.
To monitor the ongoing implementation of our risk management policies and corporate
governance measures after the Share Offer, we have adopted or will adopt prior to Listing,
among other things, the following:
Risk management policies and fostering a compliance culture
 To manage key risks, we have adopted stringent measures and procedures under our
quality, safety and environmental management systems (for further details, please refer
to the paragraphs headed “Quality controls” and “Environmental, occupational health
and safety” in this section).
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 We strive to foster a strong compliance culture in our Group through: (i) a detailed
employee handbook provided to each of them after recruitment; (ii) on-going training
on various areas as detailed in the sub-paragraph headed “Recruitment policy and
training” in this section; and (iii) signs and posters placed on-site to provide day to
day reminders of risks and best practices.
 We are committed to social responsibilities as disclosed in the paragraph headed
“Environmental, social and governance” in this section, and consider environmental,
social and governance (“ ESG ”) essential to our continuous development. We plan to
set up metrics and targets for these ESG issues and to review our key ESG
performance on a regular basis. Our Directors will actively participate in designing
our ESG strategies and targets, and will evaluate, determine and address our
ESG-related risk. We may from time to time engage independent professional third
parties to help us to make necessary improvements. After the Listing, we will publish
an Environmental, Social and Governance Report each year pursuant to Appendix 27
of the Listing Rules to analyse and disclose important ESG matters, risk management
and the accomplishment of performance and objectives.
Anti-corruption and anti-bribery measures
As recommended by our Internal Control Consultants, we have formulated and adopted an
anti-corruption and anti-bribery regime. Key anti-corruption and anti-bribery measures include
the following:
 We provide anti-fraud and ethics training to our employees and distribute our
anti-corruption and anti-bribery policy including express prohibitions against
non-compliance to all employees;
 Our administration department is responsible for identifying improper conduct of our
employees and monitoring inter-department activities. The duties of our administration
department also include providing anti-corruption and anti-bribery compliance advice,
investigating potential corruption or fraudulent incidents, and initiating anti-fraud
promotional activities with our Group;
 Our customers and suppliers are required to sign an agreement to undertake that they
will not engage in bribery, corruption or unethical behaviors with our employees or
their families;
 We have a whistleblowing and complaint handling process and we will conduct
investigations for any suspected cases of bribery, corruption or other related
misconduct or fraudulent activities; and
 We undertake rectification measures with respect to any identified corrupt activities,
evaluation of the identified corrupt activities and establish preventative measures to
avoid future non-compliance.
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During the Track Record Period and up to the Latest Practicable Date, to the best of our
knowledge, there were no legal proceedings regarding corrupt or bribery practices brought
against us or any of our directors and employees.
Key corporate governance measures
 Our Directors attended a training session conducted by our legal advisers as to Hong
Kong laws on the on-going obligations and duties of a director of a company whose
shares are listed on the Stock Exchange.
 We have engaged Cinda International as our compliance adviser and will, upon
Listing, engage a legal adviser as to Hong Kong laws, which will advise and assist our
Board on compliance matters in relation to the Listing Rules and/or other relevant
laws and regulations applicable to our Company.
 Our Board is responsible for reviewing and approving our strategic development,
devising our risk management strategies and operational plans as well as appointing
our senior management. We will also have four Board committees, namely our Audit
Committee, our Remuneration Committee, our Nomination Committee and our
Investment Committee (for further details of their composition and duties, please refer
to the section headed “Directors and senior management – Board committees” of this
prospectus).
 We will comply with the Corporate Governance Code as set out in Appendix 14 to the
Listing Rules. Our Directors will review our corporate governance measures and our
compliance with the Corporate Governance Code each financial year and comply with
the “comply or explain” principle in our corporate governance reports to be included
in our annual reports after Listing. To avoid potential conflicts of interest, we will
implement corporate governance measures as set out in the section headed
“Relationship with our Controlling Shareholders – Corporate governance measures” of
this prospectus.
 We shall establish systems and manuals in relation to distribution of annual and
interim reports and publication, handling and monitoring of inside information prior to
public announcement and other requirements under the Listing Rules.
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INVESTMENT MANAGEMENT POLICY
We adopt stringent procedures for conducting investment activities. The entire process is
managed at the Group level by our finance department, working in close coordination with our
Investment Committee. We have established an investment management policy (the “ Investment
Management Policy ”) which sets out a clear guidance on the procedures relating to account
opening and closing, fund allocation, and transactions. In accordance with the Investment
Management Policy, the Company is prohibited from (i) conducting any securities trading
activities in secondary markets including, but not limited to, the trading of stocks, bonds,
options, futures, and derivatives, and (ii) borrowing to wholly or partially fund any investments.
To execute investment transactions, the following procedures shall be involved:
 Investment research: our staff shall conduct their own investment research or engage
third party researchers to analysis investment prospects. Upon completing the
research, a report shall be filed in our Company’s document system. Our finance
department shall hold regular meetings with our Investment Committee to discuss on
the report findings. Our Investment Committee and finance department will be
informed regularly on the condition of investment markets with sufficient research
work done, hence our Group shall be able to make investment decision efficiently and
effectively to prevent any loss-making investment.
 Decision-making: should our department staff decide to execute an investment
transaction, feasibility studies on the proposed transaction including, but not limited
to, the purchase amount, price, expected risks, risk control cost-benefit analysis,
stop-profit and cut-loss percentage, impacts on the operations of our Group and key
performance indicators, shall be sent together with the transaction request, to our
Investment Committee for approval. Our finance department must also formulate asset
allocation plans, including asset allocation types and proportions among different
markets, stocks, funds, bonds, and cash, and adjust asset allocation plans according to
market conditions, and report to our Investment Committee. Moreover, our finance
department may seek or engage investment consultant to assist on making any
investment decisions. These procedures enhance the cautiousness of our Group to
make any investment decision and prevent misappropriation of use of working capital.
 Execution of transaction: all transactions shall be carried out under the supervision
of the department head of our finance department, and all information relating the
transactions shall be kept confidential. The department head of our finance department
supervises all transactions, and our finance department must review the transactions
details on the transaction day, including, but not limited to, the stock name, number of
stocks traded, stock price and the total cost. The department head of our finance
department can request for fund transfer by submitting the reason(s) for the transfer
and the amount of funds when there is a need for funds in the stock account, the funds
can be transferred after the approval of our Investment Committee. In addition, the
enhanced internal control policy states clearly the prohibition of short-term securities
trading, including stocks, bonds, options, futures, derivatives etc, except commercial
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mergers or acquisition and equity investment and the prohibition of the use of margin
financing for investment. Meanwhile, our finance department must review the risk of
investment portfolio monthly and inform our Investment Committee of the market
situation in a timely manner, in order to facilitate the adjustment of investment
strategies. Our Investment Committee must issue investment summary and report to
our Directors on a monthly basis, analyse and summarise the investment behaviour of
our Group, and provide the suitable direction and evaluation for future investments.
With sufficient internal control, timely analysis and review in different aspects,
prohibition of short-term securities trading and use of margin financing, risk of severe
loss in investment can be minimised.
 Verification: Our department staff shall review all of the executed transactions
through the verification of transaction data. If an department has recorded a loss of
more than 20% of the investment amount, our department staff shall suggest to our
Investment Committee and our Board of the relevant risks. Moreover, if it is
discovered that a particular transaction may violate relevant laws or regulations, our
finance department shall immediately report to the Investment Committee.
The Investment Committee shall be responsible for the regular review of the Investment
Management Policy. The responsibilities of our Investment Committee include:
(a) reviewing and evaluating the performance of our Group’s past investment projects and
making recommendations to our Directors;
(b) monitoring and prohibiting our Group from participating in short-term securities
transactions, including stocks, bonds, options, futures, derivatives etc, except
commercial mergers or acquisition and equity investment;
(c) monitoring and prohibiting our Group from the use of margin financing;
(d) researching and reviewing our Group’s future development investment projects
(including mergers and acquisitions, joint ventures, equity investments, etc.), ensuring
that our Group can only invest in business related to its principal business and make
recommendations to our Directors;
(e) implementing investment decision-making procedures within the scope of the authority
of our Directors, and supervising the implementation of the investment
decision-making procedures;
(f) understanding and reviewing the policies related to our Group’s development, and
reporting to our Directors on matters that may have a significant impact on our
Group’s development and providing comments and suggestions; and
(g) handling other matters authorised by our Directors.
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Our Investment Committee comprised at least two members and our executive Directors
will not be members of the committee. Taking into account of the experience and qualifications
of the independent non-executive Directors including Ms. Y au Yin Hung (who has approximately
11 years of experience in the banking industry with a focus on providing securities and asset
management services) and Ms. Chong Sze Pui Joanne MH (who has over 18 years of experience
in auditing, taxation and business development), our Directors are of the view that our
Investment Committee has sufficient knowledge and qualification in advising and monitoring our
Group’s commercial mergers or acquisitions and equity investments.
For further details of its composition and duties, please refer to the section headed
“Directors and senior management – Board committees – Investment Committee” of this
prospectus.
As at the Latest Practicable Date, the Group is not involved in any securities trading
activities.
COMPETITIVE LANDSCAPE
According to the Industry Report, the environmental cleaning and maintenance industry in
the PRC is dominated by certain market players. In 2022, the top five market participants
accounted for an aggregate market share of approximately 9.3% by revenue in the environmental
cleaning and maintenance industry in the PRC. Our Group had a market share of approximately
0.1% of the environmental cleaning and maintenance industry in the PRC in 2022 in terms of
revenue. According to the Industry Report, this industry mainly comprises and is largely
dominated by two sectors: the property cleaning sector and the public space cleaning sector. The
public space cleaning sector mostly involves high contract sum projects with local government
customers which prefer large-scale service providers with good industry recognition. In contrast,
the property cleaning sector is more competitive and with lower barriers to entry given that it is
much more labour intensive with newcomers not required to invest heavily in fixed assets. For
further details of the competitive landscape, please refer to the section headed “Industry
overview – Competitive landscape of environmental cleaning and maintenance service market in
the PRC – Competition overview” of this prospectus. Our Group is able to compete effectively
given our competitive strengths including: -(i) being one of the well-established service
providers for property cleaning in Guangdong province with a strong brand recognition and
proven track record; (ii) being able to provide a variety of cleaning and maintenance services
and having strong capabilities to support our service offering; and (iii) having a diversified
customer base and strong relationship with our major customers (for further details of the above
and other competitive strengths, please refer to the paragraph headed “Competitive strengths” in
this section).
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OUR CONTROLLING SHAREHOLDERS
Immediately after completion of the Share Offer and the Capitalisation Issue (without
taking into account any Shares that may be allotted and issued pursuant to the exercise of any
options which may be granted under the Share Option Scheme), 36.095% of the issued share
capital of our Company will be owned by Prosperity Cleanness, which is a company
wholly-owned by Mr. Li; and 36.095% of the issued share capital of our Company will be
owned by Sunrise Cleanness, which is a company wholly-owned by Mr. Chen. Accordingly, each
of Prosperity Cleanness, Sunrise Cleanness, Mr. Li and Mr. Chen is a Controlling Shareholder.
For details of the shareholding interest of our Controlling Shareholders, please refer to the
section headed “Substantial Shareholders”. Mr. Li and Mr. Chen, who are both our executive
Directors, have confirmed that they are a group of Controlling Shareholders, further details of
which are set out in the paragraph headed “Controlling Shareholders’ Confirmation” in this
section.
Save as disclosed above, there is no other person who will, immediately following the
completion of the Share Offer and Capitalisation Issue (without taking into account any Shares
that may be allotted and issued pursuant to the exercise of any options which may be granted
under the Share Option Scheme), be directly or indirectly interested in 30% or more of the
Shares then in issue or have a direct or indirect equity interest in any member of our Group
representing 30% or more of the equity in such entity.
Prosperity Cleanness and Sunrise Cleanness are incorporated in the BVI by Mr. Li and Mr.
Chen, respectively, as private limited liability companies on 10 December 2020 and are
investment holding companies. Following our Reorganisation, Prosperity Cleanness and Sunrise
Cleanness became our Controlling Shareholders. For further details of the Reorganisation, see
the paragraph headed “History, Reorganisation and Group structure – Reorganisation” of this
prospectus.
For the background of Mr. Li and Mr. Chen, please refer to the section headed “Directors
and senior management” of this prospectus.
CONTROLLING SHAREHOLDERS’ CONFIRMATION
In preparation for the Listing, on 16 March 2021, Mr. Li and Mr. Chen executed the
Controlling Shareholders’ Confirmation, pursuant to which Mr. Li and Mr. Chen confirmed that
they have been a group of Controlling Shareholders and voted in an unanimous manner on all
matters required to be resolved by them in all shareholders’ meetings as shareholders and/or
ultimate beneficial owners (as the case may be) of Guangzhou Shenghui, Guangzhou Xinhui and
Guangxi Shenghui since the respective date of establishment of the foregoing companies and
will continue to be a group of Controlling Shareholders and vote in a unanimous manner on all
matters required to be resolved by them in all board (where applicable) and shareholders’
meeting as directors (where applicable), shareholders and/or ultimate beneficial owners (as the
case may be) of our Group until the Controlling Shareholders’ Confirmation is terminated in
writing.
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DELINEATION OF BUSINESS
Our Group is a cleaning and maintenance services provider providing a wide range of
services in the PRC including the provision of basic cleaning and maintenance service, garbage
collection and transportation service, waste collection and transportation service, water tank
cleaning service and ancillary services. As at the Latest Practicable Date, other than our Group,
one of our Controlling Shareholders, Mr. Chen, has invested in or operated business providing
housing construction services in the PRC (the “ Business currently owned by Mr. Chen ”).
Furthermore, during the Track Record Period, Mr. Chen had disposed of his entire equity interest
in Guangzhou Y uneng, which was engaged in green waste handling and handling and recycling
of waste woodwork and Wuhan Chuangsheng, which was engaged in the collection, storage,
utilisation and disposal of hazardous waste, as well as wholesale and retail of its recycled
products (the “ Other Businesses formerly owned by Mr. Chen ”, together with the Business
currently owned by Mr. Chen, the “ Other Businesses of Mr. Chen ”). Given the difference in the
nature of the businesses operated by our Group and the Other Businesses of Mr. Chen as further
detailed below, our Directors are of the view that there is clear delineation between our business
and the Other Businesses of Mr. Chen and as a result, none of the Other Businesses of Mr. Chen
would compete, or is expected to compete, directly or indirectly with our businesses.
Our Directors also confirmed that our Group had/has no overlapping shareholders and
directors (except Mr. Chen) with Zhujiang Sanitation, Wuhan Chuangsheng and Guangzhou
Y uneng during the Track Record Period. Also, there was no sharing of personnel, premises and
other resources among our Group, any of our Group’s members (or its shareholders, directors,
employees or their respective associates), each of Zhujiang Sanitation, Wuhan Chuangsheng and
Guangzhou Y uneng and/or their respective associates without being fully recharged to the
respective parties as at the Latest Practicable Date.
Zhujiang Sanitation
Zhujiang Sanitation is a sole proprietorship established in the PRC on 28 April 1999 by Mr.
Chen. As at the Latest Practicable Date, Zhujiang Sanitation had a registered capital of
RMB15,000 and Mr. Chen remained as its sole proprietor.
Zhujiang Sanitation was principally engaged in the provision of domestic waste transfer
and disposal services from 1 January 2018 to 10 December 2020. Domestic waste includes
kitchen and other waste generated by households were collected by Zhujiang Sanitation from
residential premises for disposal.
The revenue of Zhujiang Sanitation was approximately RMB0.4 million, RMB2.1 million,
RMB18,000 and nil for the years ended 31 December 2020, 2021, 2022 and the six months
ended 30 June 2023, respectively. Zhujiang Sanitation recorded a net profit of approximately
RMB11,700, RMB60,200, nil and nil for the years ended 31 December 2020, 2021, 2022 and the
six months ended 30 June 2023. Mr. Chen confirmed that Zhujiang Sanitation was a
profit-making entity for the foregoing financial years. However, the business of Zhujiang
Sanitation could not achieve much growth due to its small size of operation. In light of the
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insignificant return and operation, Zhujiang Sanitation was not merged to our Group so to keep
our Group’s structure simple. To have a clear delineation from our Group’s business, the
business scope of Zhujiang Sanitation was changed to provision of housing construction services
with effect from 11 December 2020.
During the Track Record Period, there was no transaction between Zhujiang Sanitation and
our Group. Mr. Chen confirmed that there were no overlapping clients or sharing of personnel,
premises and other resources between Zhujiang Sanitation and our Group or any of our Group’s
members (or its shareholders, directors, employees or their respective associates) without being
fully recharged to the respective parties as at the Latest Practicable Date. Mr. Chen further
confirmed that Zhujiang Sanitation was not involved in any incidents of material
non-compliance with the applicable laws and regulations in the PRC, nor was it engaged in any
litigation, arbitration or claim of material importance in the PRC during the Track Record Period
and up to the Latest Practicable Date.
Wuhan Chuangsheng
Wuhan Chuangsheng is a company established in the PRC with limited liability on 5
November 2007. During the Track Record Period, Wuhan Chuangsheng was owned as to 50%,
30%, 15% and 5% by Mr. Zhang Xiaonan (ی“() Mr. Zhang ”), Mr. Chen, Mr. Sun Dalu (࢑
ɽ༩) and Ms. Zhou Chunfang (ٹ݆respectively, all of whom (save for Mr. Chen) are
Independent Third Parties. On 21 September 2022, Mr. Zhang and Mr. Chen transferred their
entire shareholdings of 50% and 30% respectively to Wuhan Hechang Mechanical Equipment
Manufacture Company Limited* (ʮ̡ ). The registered capital of
Wuhan Chuangsheng was RMB10 million as at the Latest Practicable Date.
When Wuhan Chuangsheng was first established, it was wholly-owned by Mr. Hao Y unhua
(ৠ༶ശ )( “ Mr. Hao ”), an Independent Third Party. Mr. Chen first became a 40% shareholder of
Wuhan Chuangsheng on 4 June 2014, when he acquired 40% equity interest of Wuhan
Chuangsheng from Mr. Hao at a consideration of RMB400,000, which was determined with
reference to the then registered capital of Wuhan Chuangsheng. On 20 October 2014, Wuhan
Chuangsheng’s registered capital was increased from RMB1 million to RMB10 million. On 28
March 2018, Mr. Chen divested 10% of his equity interest in Wuhan Chuangsheng to Mr. Zhang
at a consideration of RMB1 million, which was determined with reference of the registered
capital of the company, and became a 30% shareholder of Wuhan Chuangsheng. Mr. Chen was
an executive director of Wuhan Chuangsheng from 4 June 2014 to 4 April 2018, and became a
supervisor of Wuhan Chuangsheng from 4 April 2018 to 21 September 2022. During the Track
Record Period, Wuhan Chuangsheng was primarily engaged in the collection, storage, utilisation
and disposal of hazardous waste, as well as wholesale and retail of its recycled products. The
hazardous waste includes dyeing reagents, printing oils and organic solvents which require
holder of Hazardous Waste Operation Licence to collect and handle. Wuhan Chuangsheng holds
the relevant licence but our Group does not. The hazardous waste is collected by Wuhan
Chuangsheng from the industrial properties in Wuhan, whereas our Group collects waste from
commercial and residential properties, hence the target customers of Wuhan Chuangsheng and
our Group are fundamentally different. In addition, the waste collection and transportation
services provided as part of our cleaning and maintenance services does not focus on hazardous
waste and we do not engage in the wholesale and retail of recycled products.
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Based on the financial statements of Wuhan Chuangsheng, the revenue of Wuhan
Chuangsheng was approximately RMB20.3 million, RMB41.02 million, RMB2.6 million and
RMB40,000 for the years ended 31 December 2020, 2021, 2022 and six months ended 30 June
2023, respectively. Wuhan Chuangsheng recorded a net profit of approximately RMB2.7 million,
RMB4.1 million, RMB1.3 million and RMB9,000 for the years ended 31 December 2020, 2021,
2022 and six months ended 30 June 2023, respectively.
During the Track Record Period, there was no transaction between Wuhan Chuangsheng
and our Group. Mr. Chen confirmed that there were no overlapping clients or sharing of
personnel, premises and other resources between Wuhan Chuangsheng and our Group or any of
our Group’s members (or its shareholders, directors, employees or their respective associates)
without being fully recharged to the respective parties as at the Latest Practicable Date. Mr.
Chen further confirmed that Wuhan Chuangsheng was not involved in any incidents of material
non-compliance with the applicable laws and regulations in the PRC, nor was it engaged in any
litigation, arbitration or claim of material importance in the PRC during the Track Record
Period.
Guangzhou Yuneng
Guangzhou Y uneng is a company established in the PRC with limited liability on 4 May
2016 and is owned as to 70% and 30% by Mr. Chen Zhipeng ( ௓қᘄ ), the son of Mr. Chen, and
Mr. Zou Hongjin (ږ“() Mr. Zou ”) an Independent Third Party, with a registered capital of
RMB3 million as at the Latest Practicable Date.
When Guangzhou Y uneng was first established, it was owned as to 70% and 30% by Mr.
Chen Zhipeng and Mr. Chen, respectively. On 23 December 2020, Mr. Chen disposed of his
entire equity interest in Guangzhou Y uneng (the “ Guangzhou Yuneng Disposal ”) to Mr. Zou, an
Independent Third Party at the consideration of RMB0.9 million, which was determined with
reference to the registered capital of Guangzhou Y uneng. On the same day, Mr. Chen resigned as
the managing director and general manager of Guangzhou Y uneng. Immediately after the
Guangzhou Y uneng Disposal, Mr. Chen ceased to hold any equity interest in Guangzhou Y uneng.
During the Track Record Period, Guangzhou Y uneng was primarily engaged in green waste
(tree debris) handling, handling and recycling of waste woodwork (furniture, old building
formwork and wood). Guangzhou Y uneng derived majority of its revenue from the collection,
recycling and re-processing of the green waste. During the Track Record Period, our Group did
not engage in the collection, recycling and re-processing of green waste and the sales of the
recycled products. As such, there is no overlapping of service provided by Guangzhou Y uneng
and our Group.
Based on the financial statements of Guangzhou Y uneng, the revenue of Guangzhou Y uneng
was approximately RMB7.2 million, RMB5.0 million, RMB3.5 million and RMB1.2 million for
the years ended 31 December 2020, 2021, 2022 and the six months ended 30 June 2023,
respectively. It recorded a net loss of approximately RMB2.9 million and RMB1.1 million for
the year ended 31 December 2022 and the six months ended 30 June 2023, and a net profit of
approximately RMB1.2 million and RMB0.5 million for the years ended 31 December 2020 and
2021 respectively.
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During the Track Record Period, there was no transaction between Guangzhou Y uneng and
our Group. Mr. Chen confirmed that there were no overlapping clients or sharing of personnel,
premises and other resources between Guangzhou Y uneng and our Group or any of our Group’s
members (or its shareholders, directors, employees or their respective associates) without being
fully recharged to the respective parties as at the Latest Practicable Date. Mr. Chen further
confirmed that Guangzhou Y uneng was not involved in any incidents of material non-compliance
with the applicable laws and regulations in the PRC, nor was it engaged in any litigation,
arbitration or claim of material importance in the PRC during the Track Record Period and prior
to the Guangzhou Y uneng Disposal.
RULE 8.10 OF THE LISTING RULES
Our Controlling Shareholders and Directors confirmed that neither of them nor their
respective close associates have any interest in a business, apart from the business of our Group,
which competes or is likely to compete, directly or indirectly, with our business, which would
require disclosure under Rule 8.10 of the Listing Rules.
INDEPENDENCE FROM OUR CONTROLLING SHAREHOLDERS
Having considered the following factors, our Directors consider that our Group is capable
of carrying on our business independently from our Controlling Shareholders and their
respective close associates (other than the members of our Group) upon Listing.
Financial independence
We are financially independent of our Controlling Shareholders and their respective close
associates. We have sufficient capital and are able to independently obtain banking facilities to
operate our business independently, and have adequate resources to support our daily operations.
In addition, our Group has an independent financial system and makes financial decisions
according to our own business needs. As at the Latest Practicable Date, all personal guarantees
provided by our Controlling Shareholders on our borrowings have been fully released.
During the Track Record Period, our Group had certain amounts due to and/or from our
Controlling Shareholders, namely Mr. Li and Mr. Chen. As at 31 December 2020, the amount
due from Mr. Li to our Group was approximately RMB2.0 million respectively as shareholder’s
loan. As at 31 December 2021, 2022 and 30 June 2023, the amount due to Mr. Li was
approximately RMB6.3 million, RMB13.8 million and RMB16.1 million respectively represented
mainly the funds advance from Mr. Li mainly for paying the listing expenses and the
consideration payable to Mr. Li in relation to our Group’s acquisition of the interest in
Guangzhou Shenghui from him in FY2021 as part of the Reorganisation. As at 31 December
2020, 2021, 2022 and 30 June 2023, the amount due to Mr. Chen was approximately RMB0.2
million, RMB1.4 million, RMB1.4 million and RMB1.4 million respectively represented mainly
the consideration payable to Mr. Chen in relation to our Group’s acquisition of the interest in
Guangzhou Shenghui from him in FY2021 as part of the Reorganisation. The amounts due to Mr.
Li and Mr. Chen will be waived by our Group before Listing. Based on the above, our Directors
are satisfied that we are able to maintain financial independence from our Controlling
Shareholders and their respective close associates.
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Operational independence
We have sufficient operational capacity in terms of capital, facilities, premises and
employees to operate our business independently. We also have independent access to suppliers
and customers.
Our Group has established our own organisational structure made up of individual
departments, each with specific areas of responsibilities. Our Group had not shared any
operational resources, such as office premises, sales and marketing and general administration
resources with our Controlling Shareholders and their close associates during the Track Record
Period. Our Group has also established a set of internal control procedures to facilitate the
effective operation of our business. We also have our own capability and personnel to perform
all essential administrative functions, including financial and accounting management, invoicing
and billing, human resources and information technology.
Our major customers and suppliers (including the suppliers of consumables and services)
are independent from our Controlling Shareholders and their respective close associates. We do
not rely on our Controlling Shareholders or their close associates and have independent access to
our suppliers for the provision of services, consumables and equipment.
Based on the above, our Directors are satisfied that we had been operating independently
from our Controlling Shareholders during the Track Record Period and will continue to operate
independently.
Management independence
Although our Controlling Shareholders will maintain controlling interests in our Company
upon completion of the Share Offer and the Capitalisation Issue, the day-to-day management and
operations of our Group will be the responsibility of all our executive Directors and senior
management. Our Board has five Directors comprising two executive Directors and three
independent non-executive Directors.
Our Board and senior management operate as a matter of fact independently of our
Controlling Shareholders and they are in a position to fully discharge their duties to our
Shareholders as a whole after the Listing without reference to our Controlling Shareholders.
Each of our Directors is aware of his/her fiduciary duties as a Director which require,
amongst other things, that he/she acts for the benefit of 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. In the event that there is a potential conflict of interest arising out of any transaction to
be entered into between our Group and our Directors or their respective close associates, the
interested Director(s) will abstain from voting and participation at the relevant Board meetings
of our Company in respect of such transactions and will not be counted in the quorum. In the
circumstances where all our executive Directors are required to abstain from voting on board
resolutions due to potential conflict of interest, it will fall to our independent non-executive
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Directors to exercise their business judgement to make decision as our Board. Given the
experience of our independent non-executive Directors, details of which are set out in the
section headed “Directors and senior management” of this prospectus, our Group believes that
the remaining Board can still function properly in the event that all our executive Directors are
required to abstain from voting. Our Group has also employed other senior management with the
experience and calibre to conduct our business.
Having considered the above factors, our Directors are satisfied that they are able to
perform their roles in our Company independently, and our Directors are of the view that our
Company is capable of managing our business independently from our Controlling Shareholders.
NON-COMPETITION UNDERTAKINGS
In order to avoid any future competition between our Group and our Controlling
Shareholders, each of our Controlling Shareholders has entered into the Deed of
Non-competition on 14 November 2023 under which each of them has jointly and severally and
unconditionally and irrevocably undertaken and covenanted with our Company (for itself and as
trustee for each of its subsidiaries) that for so long as he/it and/or his/its close associates,
directly or indirectly, whether individually or taken together, remain a controlling shareholder of
our Company:
(i) he/ it will not, and will procure his/its close associates not to (other than through our
Group or in respect of each of our Controlling Shareholders (together with his/ its
close associates), as a holder of not more than 5% of the issued shares or stock of any
class or debentures of any company listed on any recognised stock exchange) directly
or indirectly carry on, engage or otherwise be interested (in each case whether as
shareholder, director, partner, agent, employee or otherwise and whether for profit,
reward or otherwise) in any business which is or may be in competition with the
business carried on by our Group from time to time (the “ Restricted Activity ”),
except where our Company’s approval as mentioned in the paragraph below is
obtained;
(ii) he/it will not, and will procure his/its close associates not to, directly or indirectly,
solicit, interfere with or entice away from any member of our Group, any natural
person, legal entity, enterprise or otherwise who, to any of our Controlling
Shareholders’ knowledge, as at the date of the Deed of Non-competition, is or has
been or will after the date of the Deed of Non-competition be, a customer, supplier,
distributor, sales or management, technical staff or an employee (of managerial grade
or above) of any member of our Group; and
(iii) he/it will not, and will procure his/its close associates not to, exploit his/its knowledge
or information obtained from our Group to compete, directly or indirectly, with the
Restricted Activity.
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If any of our Controlling Shareholders and/or his/its close associates decides to invest, be
engaged, or participate in any Restricted Activity (the “ New Business Opportunities ”), whether
directly or indirectly, in compliance with the Deed of Non-competition, he/it shall and/or shall
procure his/its close associates (other than members of our Group) to disclose the terms of such
New Business Opportunities to our Company and our Directors as soon as practicable and use
his/its best endeavours to procure that such New Business Opportunities are offered to our
Company on terms no less favourable than the terms on which such New Business Opportunities
are offered to him/it and/or his/its close associates. When any New Business Opportunities are
referred to our Company by any of our Controlling Shareholders, our independent non-executive
Directors will consider such opportunity on various aspects including viability and profitability.
Our Controlling Shareholders and their respective close associates are entitled to engage or
have an interest in the New Business Opportunities, provided that our Company has confirmed
in writing (the “ Approval Notice ”) that none of our Group members wishes to be engaged or
interested in such New Business Opportunities and that our Company has approved in writing
the relevant Controlling Shareholders and their respective close associates to engage or have any
interest in such New Business Opportunities. Any Director who is interested in such New
Business Opportunities shall not vote on relevant resolutions approving the Approval Notice. If
prior to its consummation there is any material change in the nature, terms or conditions of any
New Business Opportunities pursued by any Controlling Shareholder and/or his/its close
associates with the approval of our Company, such Controlling Shareholder shall and shall
procure his/its close associates to, refer such revised opportunities to our Company as if they
were New Business Opportunities.
The Deed of Non-competition and the rights and obligations thereunder are conditional and
will take effect immediately upon Listing.
The obligations of each Controlling Shareholders under the Deed of Non-competition will
remain in effect until:
(a) the date on which our Shares cease to be listed on the Stock Exchange; or
(b) such Controlling Shareholder and his/its close associates, individually and/or
collectively, cease to be deemed as a controlling shareholder of our Company (within
the meaning defined in the Listing Rules from time to time); or
(c) such Controlling Shareholder and his/its close associates, individually and/or
collectively beneficially own or are interested in the entire issued share capital of our
Company,
whichever occurs first.
Nothing in the Deed of Non-competition shall prevent our Controlling Shareholders or any
of their associates from carrying on any business whatsoever other than the Restricted Activity.
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CORPORATE GOVERNANCE MEASURES
The following corporate governance measures will be adopted to monitor the compliance of
the Deed of Non-competition and to avoid any other potential conflicts of interest:
(a) we are committed that our Board should include a balanced composition of executive
Directors 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 their
independent judgement 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 refer to the paragraph headed “Directors and senior
management – Directors – Independent non-executive Directors” of this prospectus;
(b) our independent non-executive Directors will review and will disclose decisions with
basis, on an annual basis, the compliance with the Deed of Non-competition by our
Controlling Shareholders and their respective close associates;
(c) our Board shall request our Controlling Shareholders to promptly provide all
information necessary for the annual review by our independent non-executive
Directors and the enforcement of the Deed of Non-competition and provide to our
Company a written confirmation relating to the compliance of the Deed of
Non-competition and make an annual declaration on compliance with the Deed of
Non-competition in the annual report of our Company;
(d) our Company will disclose decisions with basis on matters reviewed by our
independent non-executive Directors relating to compliance with and enforcement of
the non-competition undertakings by our Controlling Shareholders in the annual
reports of our Company and/or by way of announcements published by our Company;
(e) any New Business Opportunities under the Deed of Non-Competition and all other
matters determined by our Board as having a potential conflict of interest with our
Controlling Shareholders will be referred to our independent non-executive Directors
for discussion and decision. When necessary, such independent non-executive
Directors will engage an independent financial adviser to advise them on the relevant
matters. In the event any New Business Opportunities presented by or otherwise
arising in connection with any of our Controlling Shareholders are turned down by our
Group according to the Deed of Non-competition, our Company will disclose the
decision, as well as the basis for such decision in the annual report of our Company.
The annual report of our Company will include the views and decisions, with bases, of
our independent non-executive Directors on whether to take up any New Business
Opportunities under the Deed of Non-competition or other matters having a potential
conflict of interest with our Controlling Shareholders that have been referred to our
independent non-executive Directors;
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
– 249 –


--- page 258 ---
(f) our independent non-executive Directors will be responsible for deciding whether or
not to allow our Controlling Shareholders and/or their respective close associates to
involve or participate in the New Business Opportunities and if so, any condition to be
imposed;
(g) in the event that there is any potential conflict of interest relating to the business of
our Group between our Group and our Controlling Shareholders, the interested
Directors, or as the case may be, our Controlling Shareholders would, according to the
Articles or the Listing Rules, be required to declare his/her/its interests and, where
required, abstain from participating in the relevant Board meeting or general meeting
and voting on the transaction and not count as quorum where required; and
(h) our Company has appointed Cinda International as our compliance adviser, which
upon enquiry of our Company, will provide advice and guidance to our Company in
respect of compliance with the Listing Rules.
Further, any transaction that is proposed between our Group and our Controlling
Shareholders and their respective close associates will be required to comply with the
requirements of the Listing Rules, including, where appropriate, the reporting, annual review,
announcement and independent Shareholders’ approval requirements. With the corporate
governance measures comprising the measures set out above, our Directors believe that the
interest of our Shareholders will be protected.
RELATIONSHIP WITH OUR CONTROLLING SHAREHOLDERS
– 250 –


--- page 259 ---
OVERVIEW
Prior to Listing, our Group has entered into certain transactions with a connected person of
our Company during the Track Record Period. These transactions will continue after Listing and
constitute continuing connected transactions (as defined under the Listing Rules) of our
Company. Details of these transactions are set out in the paragraph headed “Fully exempted
continuing connected transactions” below.
Guangzhou Zhujia Hotel Management Company Limited* (ʮ̡ )i s
a limited liability company established in the PRC on 12 March 2014 (“ Guangzhou Zhujia ”)
and is principally engaged in the management of a hotel in Panyu District, Guangzhou city of
the PRC. Guangzhou Zhujia is owned by Mr. Chen and Mr. Li (both are our Controlling
Shareholders and executive Directors), together with Mr. Yi Y ulin (؍and Mr. Huang Lin
(؍both of whom are Independent Third Parties) as to 45%, 25%, 20% and 10%,
respectively.
Mr. Chen is our executive Director and a Controlling Shareholder. By virtue of Mr. Chen
holding over 30% equity interest of Guangzhou Zhujia, Guangzhou Zhujia is an associate of Mr.
Chen and therefore a connected person of our Company under Chapter 14A of the Listing Rules.
FULLY EXEMPTED CONTINUING CONNECTED TRANSACTIONS
Background
During the Track Record Period and up to the Latest Practicable Date, in the ordinary
course of business, Guangzhou Zhujia provided accommodation, transportation, hospitality
and/or other related services (the “ Services ”) to (i) Guangzhou Shenghui’s employees ordinarily
based in other provinces and cities of the PRC who came to Guangzhou for business purposes
such as for meetings, trainings or providing support to our Group; and (ii) Guangzhou
Shenghui’s clients for business purpose. The aggregate amount of fees paid by Guangzhou
Shenghui to Guangzhou Zhujia for the Services was approximately RMB33,150, RMB21,600, nil
and nil for the years ended 31 December 2020, 2021, 2022 and the six months ended 30 June
2023, respectively.
Framework agreement
On 14 November 2023, Guangzhou Shenghui and Guangzhou Zhujia entered into a
framework agreement (the “ Framework Agreement ”), pursuant to which Guangzhou Zhujia
agreed to provide accommodation, hospitality, and other services to Guangzhou Shenghui (the
“Transactions ”) for a term of three years with effect from the Listing Date (which can be
extended or renewed), in accordance with the basic principles set out in the Framework
Agreement. The basic principles require (i) the terms and conditions of the Transactions
(including the pricing) to be fair and reasonable, comply with the Listing Rules relating to
connected transactions, and on normal commercial terms applicable to transactions entered into
by our Group with Independent Third Parties, i.e., determined after arm’s length negotiation,
CONNECTED TRANSACTION
– 251 –


--- page 260 ---
with reference to the prevailing market rate, and no less favourable to our Group than offered by
Independent Third Parties for the provision of the same or similar services; and (ii) the total
annual Transactions amount shall not exceed the de minimis exemption threshold under the Rule
14A.76 of the Listing Rules.
Listing Rules implication
As all applicable percentage ratios in respect of the provision of Services by Guangzhou
Zhujia to Guangzhou Shenghui is expected by our Directors to fall below 0.1%, the provision of
Services by Guangzhou Zhujia to Guangzhou Shenghui falls within the de minimis transaction
exemption under Rule 14A.76(1)(a) of the Listing Rules and is not subject to any reporting,
announcement or independent Shareholders’ approval requirements under Chapter 14A of the
Listing Rules.
View of our Directors
In light of the above, our Directors consider that the Framework Agreement is entered into
(i) in the ordinary and usual course of our business; and (ii) on normal commercial terms or
better to our Group, which are fair and reasonable and in the interests of our Company and our
Shareholders as a whole. Our Company will comply with the relevant requirements under
Chapter 14A of the Listing Rules as and when required.
CONNECTED TRANSACTION
– 252 –


--- page 261 ---
OVERVIEW
Our Board consists of two executive Directors and three independent non-executive
Directors. Our senior management team consists of four individuals (excluding our executive
Directors). The following table sets out the information concerning our Directors and members
of our senior management:
DIRECTORS
Name Age
Date of joining
our Group
Present
position within
our Group
Date of
appointment
as a Director
Roles and
responsibilities
Relationship
with other
Director(s)/
member(s) of
senior
management
(other than that
through or
relating to our
Group)
(Note)
Executive Directors
Li Chenghua
(ശ )
50 4 August 2000 Chairman, chief
executive
officer and
executive
Director
4 January 2021 Overall strategic
planning,
management,
operation and
business
development of
our Group
Nil
Chen Liming
(׼)
53 4 August 2000 Executive
Director
16 March 2021 Providing
industrial
advice to our
Group as well
as strategic
management of
and formulating
business
strategies for
our Group
Nil
DIRECTORS AND SENIOR MANAGEMENT
– 253 –


--- page 262 ---
Name Age
Date of joining
our Group
Present
position within
our Group
Date of
appointment
as a Director
Roles and
responsibilities
Relationship
with other
Director(s)/
member(s) of
senior
management
(other than that
through or
relating to our
Group)
(Note)
Independent non-executive Directors
Chong Sze
Pui Joanne,
MH ( ੵ་
੃)
50 14 November
2023
Independent
non-executive
Director
14 November
2023
Providing
independent
judgement on
issues of
strategy, policy,
performance,
accountability,
resources, key
appointments
and standards
of conduct
Nil
Cheung Bo
Man
(ੵᘒ˖ )
35 14 November
2023
Independent
non-executive
Director
14 November
2023
Providing
independent
judgement on
issues of
strategy, policy,
performance,
accountability,
resources, key
appointments
and standards
of conduct
Nil
DIRECTORS AND SENIOR MANAGEMENT
– 254 –


--- page 263 ---
Name Age
Date of joining
our Group
Present
position within
our Group
Date of
appointment
as a Director
Roles and
responsibilities
Relationship
with other
Director(s)/
member(s) of
senior
management
(other than that
through or
relating to our
Group)
(Note)
Y au Yin Hung
(ࠀ)
36 14 November
2023
Independent
non-executive
Director
14 November
2023
Providing
independent
judgement on
issues of
strategy, policy,
performance,
accountability,
resources, key
appointments
and standards
of conduct
Nil
Note: This refers to spouse; any person cohabiting with a Director or senior manager as a spouse; and any relative
meaning a child or step-child regardless of age, a parent or step-parent, a brother, sister, step-brother or
step-sister, a mother-in-law, a father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law.
Executive Directors
Mr. Li Chenghua (ശ ), aged 50, joined our Group in August 2000 and is one of the
founders of our Group. He was appointed as a Director on 4 January 2021 and re-designated as
the Chairman, chief executive officer and an executive Director of our Company on 16 March
2021. Mr. Li is responsible for overall strategic planning, management, operation and business
development of our Group. He is currently also a director of our subsidiaries Shenghui
Cleanness (BVI), Shenghui Cleanness (HK), Guangzhou Xinhui and Guangzhou Shenghui.
Mr. Li is an entrepreneur with over 25 years of management and operational experience in
the cleaning service industry and has led the growth of our Group over the years.
Mr. Li completed an on-job CEO Training Course (Executive Master of Business
Administration)* (EMBAफ ) at Sun Y at-sen University in the PRC in April 2014.
Mr. Li is also an active member of the sanitation industry in Guangzhou as he served as the
president of the Industry Association of Sanitation of Panyu District of Guangzhou City* ( ᄿψ
ਜᐑሊБุ՘ึ ) from October 2016 to October 2020 and was elected as the vice
president of the Guangzhou Industry Association of Sanitation ( ᄿψᐑሊБุ՘ึ ) for three
consecutive terms from December 2011 to December 2023.
DIRECTORS AND SENIOR MANAGEMENT
– 255 –


--- page 264 ---
Mr. Li was a director or supervisor of the following companies at the time of their
respective dissolution. The relevant details are as follows:
Company
name
Place of
establishment Position held
Nature of
business
immediately
prior to
dissolution
Date of
dissolution
Means of
dissolution
Guangzhou
Shengfeng
PRC Executive
director and
general
manager
Guangzhou
Shengfeng was
a dormant
company prior
to dissolution
11 November
2020
Deregistration
Guangzhou
Pinwaipin
PRC Supervisor Food importer 23 November
2020
Deregistration
Mr. Li confirmed that the above companies were solvent immediately prior to their
respective dissolution. He further confirmed that there was no fraudulent act or misfeasance on
his part leading to the dissolution of such companies and he is not aware of any actual or
potential claim that has been or will be made against him as a result of the dissolution of such
companies.
Mr. Chen Liming (׼) aged 53, joined our Group in August 2000 and is one of the
founders of our Group. He was appointed as a Director on 16 March 2021 and re-designated as
an executive Director on the same day. Mr. Chen is responsible for providing industrial advice to
our Group, as well as strategic management of and formulating business strategies for our
Group. He is also a director of our subsidiaries Shenghui Cleanness (BVI) and Shenghui
Cleanness (HK).
Mr. Chen is an entrepreneur with over 23 years of management and operational experience
in the cleaning service industry and has led the growth of our Group over the years. Prior to the
establishment of our Group, Mr. Chen had experience in the cleaning industry. Since April 1999,
he has been operating Zhujiang Sanitation as a sole proprietor, which principally provided waste
transfer and disposal services since its establishment and during most of the Track Record
Period. For the purpose of focusing the operations of cleaning related businesses by our Group,
Mr. Chen ceased the operation of the domestic waste transfer and disposal business of Zhujiang
Sanitation on 11 December 2020. For further details, please refer to the section headed
“Relationship with our Controlling Shareholders” of this prospectus.
In August 2000, Mr. Chen co-founded Guangzhou Shenghui with Mr. Li and has been
responsible for overseeing the daily operations of Guangzhou Shenghui. He also provided
strategic advice to our Group since our establishment. Mr. Chen also gained managerial and
operational experience when he served as (i) an executive director and manager of Guangzhou
DIRECTORS AND SENIOR MANAGEMENT
– 256 –


--- page 265 ---
Shuoguo Property Management Co., Ltd.* (ʮ̡ ), a property management
company, since April 2007; (ii) an executive director of Wuhan Chuangsheng, an environmental
technology company, from June 2014 to April 2018; as well as (iii) the executive director and
manager of Guangzhou Y uneng, an environmental technology company, from May 2016 to
December 2020.
Mr. Chen also completed three on-job courses conducted by Sun Y at-sen University ( ʕʆ
ɽኪ) in the PRC, namely (i) the Executive Master of Business Administration Course for
Corporate CEOs ( ΆุCEO ᐼ൒EMBAफ ) in June 2011; (ii) the CEO Training Course
(Executive Master of Business Administration) (EMBAफ ) in May 2013; and (iii)
the Advanced Training Course on Corporate Entrepreneurship and Innovation* ( Άุ௴ุ௴อ৷
फ ) in December 2013.
Mr. Chen has been actively engaged in social and political affairs in the PRC. Set out
below are some of the key positions held by Mr. Chen:
No. Name of organisation Position held
Y ear of
appointment
1. Guangzhou Panyu New Chamber of
Commerce*
(ਜอிਠึ )
Member October 2010
2. Guangzhou Panyu General Chamber of
Commerce*
(ਜʈਠุᑌΥึ
(ᐼਠึ ))
Executive
committee
member
January 2013
Vice-chairman 2016
3. Guangzhou Panyu Nancun Town
Chamber of Commerce*
(Ӏᕄਠึ )
Board member June 2013
4. Guangzhou Panyu General Chamber of
Commerce*
(ਜᐼਠึ )
Board member December 2013
5. Guangzhou Panyu Nancun General
Chamber of Commerce*
(Ӏᐼਠึ )
Vice president June 2016
DIRECTORS AND SENIOR MANAGEMENT
– 257 –


--- page 266 ---
No. Name of organisation Position held
Y ear of
appointment
6. Chinese People’s Political Consultative
Conference Guangzhou Municipal
Committee of Nansha District
(՘ਠึᙄᄿψ̹
ึ )
Committee member October 2016
7. Hunan Chamber of Commerce in
Guangdong*
(ਠึ )
President January 2017
Mr. Chen was a director or supervisor of the following companies at the time or within 12
months from the time of their respective dissolution. The relevant details are as follows:
Company name
Place of
establishment Position held
Nature of business
immediately prior to
dissolution
Date of
dissolution
Means of
dissolution
Ҧ
ʮ̡
(Hubei Shengyuanhua
Environmental
Technology Co., Ltd.*)
PRC Executive
director and
general
manager
Research, development
and sales of, among
others, environmentally
friendly products
30 September
2015
Deregistration
Ҧ
ʮ̡
(Guangzhou Gaoshang
Environmental
Technology Co., Ltd.*)
PRC Supervisor Promotion and
development of
environmentally
friendly technological
services
20 May 2019 Deregistration
Guangzhou Shengfeng PRC Supervisor Dormant 11 November
2020
Deregistration
Mr. Chen confirmed that the above companies were solvent immediately prior to their
respective dissolution. He further confirmed that there was no fraudulent act or misfeasance on
his part leading to the dissolution of such companies and he is not aware of any actual or
potential claim that has been or will be made against him as a result of the dissolution of such
companies.
DIRECTORS AND SENIOR MANAGEMENT
– 258 –


--- page 267 ---
Independent non-executive Directors
Ms. Chong Sze Pui Joanne, MH ( ੵ་੃ ), aged 50, was appointed as an independent
non-executive Director on 14 November 2023 and is responsible for providing independent
judgement on issues of strategy, policy, performance, accountability, resources, key appointments
and standards of conduct. She is the chairperson of our Audit Committee and our Investment
Committee and a member of our Remuneration Committee and our Nomination Committee.
Ms. Chong has over 19 years of experience in auditing, taxation and business development.
She started her career as an accountant trainee at Gary Posner Chartered Accountant in Ontario,
Canada from November 1996 to December 1997. Ms. Chong was then employed by Render &
Partners LLP , an accounting firm, in Ontario, Canada from January 1999 to September 2000. She
returned to Hong Kong to join Charles Chan, Ip & Fung CPA Ltd. in July 2001 as an audit
supervisor and left the company in July 2004 as a manager. Ms. Chong then worked for Deloitte
Touche Tohmatsu since August 2004 and left the firm in October 2016 as a manager of their
clients and markets department. Since then, she spent her time on serving the community and
was appointed as an independent non-executive director of Art Group Holdings Limited, a
company principally engaged in property operating business and biotechnology business listed
on the Main Board (stock code: 565), since December 2016.
Ms. Chong obtained a Bachelor’s Degree of Commerce from the University of Melbourne
in Australia in 1994.
Ms. Chong is (i) a member of the American Institute of Certified Public Accountants since
February 1998; (ii) a Chartered Accountant of the Institute of Chartered Accountants of Ontario,
Canada since January 2000; and (iii) a member of the Hong Kong Institute of Certified Public
Accountants since February 2003. She has an outstanding contribution to community service and
has been awarded The Medal of Honour by the Hong Kong government in 2014.
Ms. Chong was a director of the following company at the time of its dissolution. The
relevant details are as follows:
Company name
Place of
incorporation
Nature of
business
immediately
prior to
dissolution
Date of
dissolution
Means of
dissolution
China Asian
International Limited
Hong Kong No business
commenced
22 August 2008 Deregistration
DIRECTORS AND SENIOR MANAGEMENT
– 259 –


--- page 268 ---
Ms. Chong confirmed that the above company was solvent immediately prior to its
dissolution. Ms. Chong further confirmed that there was no fraudulent act or misfeasance on her
part leading to the dissolution of such company and she is not aware of any actual or potential
claim that has been or will be made against her as a result of the dissolution of such company.
Ms. Cheung Bo Man ( ੵᘒ˖ ) (“Ms. Cheung ”), aged 35, was appointed as an independent
non-executive Director on 14 November 2023 and is responsible for providing independent
judgement on issues of strategy, policy, performance, accountability, resources, key appointments
and standards of conduct. She is the chairperson of the Remuneration Committee and a member
of our Audit Committee, our Nomination Committee and our Investment Committee.
Ms. Cheung has over 11 years of experience in the legal industry. She joined Messrs.
Cheung Tong & Rosa Solicitors, which ceased to operate in August 2021, as a trainee solicitor in
July 2012 and was admitted as a solicitor of Hong Kong in September 2014. Ms. Cheung began
practising corporate and commercial law at Messrs. Cheung Tong & Rosa Solicitors since then
and practised as a partner of the firm from October 2017 to July 2021. She joined Messrs.
Ronald Tong & Co as a part-time partner in June 2021 and practised as a full-time partner since
August 2021. Ms. Cheung has experience in corporate transactions involving listed companies,
takeover and mergers transactions, and advises listed companies on transactions and compliance
issues involving the Listing Rules and the Takeovers Code. Since 25 April 2017, she has been
the company secretary of China Display Optoelectronics Technology Holding Limited (stock
code: 334), a company principally engaged in the manufacture and sale of liquid crystal display
(LCD) modules for use in mobile phones and tablets and providing processing services of LCD
modules and listed on the Main Board.
Ms. Cheung obtained a Bachelor of Business Administration (Law) degree and a Bachelor
of Laws degree from the University of Hong Kong in December 2009 and November 2011
respectively, and further obtained a Postgraduate Certificate in Laws from the University of
Hong Kong in June 2012.
Ms. Y au Yin Hung (ࠀ) aged 36, was appointed as an independent non-executive
Director on 14 November 2023 and is responsible for providing independent judgement on
issues of strategy, policy, performance, accountability, resources, key appointments and
standards of conduct. She is the chairperson of our Nomination Committee and a member of our
Audit Committee, our Remuneration Committee and our Investment Committee.
DIRECTORS AND SENIOR MANAGEMENT
– 260 –


--- page 269 ---
Ms. Y au has approximately 12 years of experience in the banking industry with a focus on
providing securities and asset management services. She started her career as an account
executive trainee at HSBC Broking Securities (Asia) Limited in December 2009, where she was
responsible for handling client account matters, with her last position as an account executive
when she left the firm in February 2011. From March 2011 to April 2011, Ms. Y au worked as a
securities officer of Citibank (Hong Kong) Limited, where she provided securities dealing
services to bank retail customers. From April 2011 to February 2016, Ms. Y au served in Nomura
International (Hong Kong) Limited, an investment firm, where her last position was wealth
manager. Ms. Y au then worked for Credit Suisse AG Hong Kong Branch from March 2016 to
December 2018 and provided services on Type 1 (dealing in securities) and Type 4 (advising on
securities) regulated activities as defined under the SFO. From September 2019 to September
2020, she was employed by Parksong Mining and Resource Recycling Limited, a subsidiary of
Greentech Technology International Limited (a company listed on the Main Board (stock code:
195) (“ Greentech ”), and was a responsible officer of Ocean Cedar Asset Management Company
Limited, also a subsidiary of Greentech, for Type 4 (advising on securities) and Type 9 (asset
management) regulated activities defined under the SFO from May 2020 to September 2020.
Since then, Ms. Y au has been devoting her time to managing accounts for her family business.
Ms. Y au was appointed as director of Green Education Foundation Limited since October 2021.
Ms. Y au obtained a Bachelor of Science with a major in Environmental Economics and
Policy from the University of California, Berkeley in December 2008. She further obtained a
Master of Finance from the University of Hong Kong in November 2012.
Disclosure under Rule 13.51(2) of the Listing Rules
Save as disclosed above, each of our Directors (i) did not hold other positions in our
Company or other members of our Group as at the Latest Practicable Date; (ii) had no other
relationship with any Directors, senior management or substantial or controlling shareholders of
our Company as at the Latest Practicable Date; and (iii) did not hold any other directorships in
listed companies in the three years prior to the date of this prospectus. Immediately following
completion of the Share Offer and the Capitalisation Issue, save as the interests in our Shares
which are disclosed in the section headed “Substantial Shareholders” in this prospectus, each of
our Directors will not have any interest in our Shares within the meaning of Part XV of the SFO.
Save as disclosed herein, to the best of the knowledge, information and belief of our
Directors having made all reasonable enquiries, there were no other matters with respect to the
appointment of our Directors that need to be brought to the attention of our Shareholders and
there was no information relating to our Directors that is required to be disclosed pursuant to
Rules 13.51(2)(h) to (v) of the Listing Rules as at the Latest Practicable Date.
DIRECTORS AND SENIOR MANAGEMENT
– 261 –


--- page 270 ---
SENIOR MANAGEMENT
Name Age
Date of joining
our Group
Position within
our Group Roles and responsibilities
Relationship
with other
Director(s)/
member(s) of
senior
management
(other than that
through or
relating to our
Group)
(Note)
Xing Guojun
(ࠏ)
44 1 November 2002 Managing
director
Overall management and
operation of our Group
Nil
Cao Zuoping
(૎ढ़̻ )
47 1 November 2010 Merchandising
manager
Supervision and
management of the
procurement of cleaning
products and equipment
of our Group
Nil
Chen
Chiqiong
(௓ይᖘ )
39 24 December
2009
Administrative
manager
Overall supervision of our
operations as well as
managing internal and
external relationships of
our Group
Nil
Li Langquan
(ҽईΌ )
38 1 May 2013 Marketing
director
Overseeing and supervising
tendering and marketing
activities as well as
business development of
our Group
Nil
Note: This refers to spouse; any person cohabiting with a Director or senior manager as a spouse; and any
relative meaning a child or step-child regardless of age, a parent or step-parent, a brother, sister,
step-brother or step-sister, a mother-in-law, a father-in-law, son-in-law, daughter-in-law, brother-in-law or
sister-in-law.
Mr. Xing Guojun (ࠏ) aged 44, is the managing director of our Group. He joined our
Group as a head of administration in November 2002 where he was responsible for managing the
daily operation of the domestic cleaning services department. In January 2006, Mr. Xing was
promoted as an administrative assistant manager and was thereafter promoted to general manager
in January 2010. He became a managing director of Guangzhou Shenghui in March 2017. He has
approximately 19 years of managerial experience in the cleaning service industry and is
responsible for the overall management and operation of our Group.
DIRECTORS AND SENIOR MANAGEMENT
– 262 –


--- page 271 ---
Mr. Xing started off his career as a trainee civilian policeman of Hubei Zaoyang Public
Security Bureau Criminal Police Brigade* (᙮ʕඟ ) from June
2001 to October 2002, prior to joining our Group.
Mr. Xing keeps abreast with industrial development and completed vocational training
courses between December 2005 to December 2019 conducted by the Guangzhou Industry
Association of Sanitation* ( ᄿψᐑሊБุ՘ึ ), the Senior Civil Servant Training Centre of the
PRC* (੃৅ʕː ) and the Talent Exchange Centre of Ministry of Industry and
Information Technology of the PRC* (ʕː ). He was also
accredited as a third level/senior skill level cleaner* ( ɧॴ/ࡰin November 2014
by the Ministry of Human Resources and Social Security of the PRC* (ღ௅ ).
Mr. Xing completed his studies in criminal investigation at Hubei Public Security College*
(ࣧnow known as Hubei University of Police* (ኪ৫ )) in June
2001.
Mr. Cao Zuoping ( ૎ढ़̻ ), aged 47, is the merchandising manager of our Group. He
joined our Group in November 2010 as project manager and was promoted to his current
position in May 2011. Mr. Cao is primarily responsible for the supervision and management of
the procurement of cleaning products and equipment of our Group.
Prior to joining our Group, Mr. Cao started his career as a fire and security foreman at
Guangdong Weibo Communication Bureau* (҅ ), from January 1997 to
December 2001, where he was responsible for handling fire safety matters. He then gained over
seven years of managerial experience as a property manager and head of security at Guangdong
Gongcheng Property Management Co., Ltd.* (ʮ̡ ) from January 2002
to October 2009, during which he was mainly responsible for property management and security
of the management office.
Mr. Cao completed the property management programme at China Central Radio and TV
University* ( ʕ̯ᄿᅧཥൖɽኪ ) (now known as the Open University of China* (ɽኪ ))
in the PRC in January 2011. He also obtained a completion certificate (ࣣfrom the
Guangzhou Property Management Association* (ุ၍ଣ՘ึ ) in November 2003.
Ms. Chen Chiqiong ( ௓ይᖘ ), aged 39, is the administrative manager of our Group. She
has approximately 12 years of experience in administrative management. Ms. Chen first joined
our Group in December 2009 as an administrative assistant. She was then promoted to
administrative supervisor in May 2011 where she was responsible for settling payment and
arranging employment contracts. In March 2018, Ms. Chen was promoted to her current position
and she is primarily responsible for the overall supervision of our operations as well as
managing internal relationships of our Group.
DIRECTORS AND SENIOR MANAGEMENT
– 263 –


--- page 272 ---
Ms. Chen completed her computer studies at Hubei Huangshi Institute of Education* ( ಳ̏
රͩ઺ԃኪ৫ ) (now known as Huangshi Polytechnic College* (ࣧin July
2004. She was also accredited a second level labour relations coordinator* (՘ሜ
ࡰby the Ministry of Human Resources and Social Security of the PRC* (ึ
ღ௅ ) in January 2019.
Mr. Li Langquan ( ҽईΌ ), aged 38, is the marketing director of our Group. He has over
six years of tendering and marketing experience and is primarily responsible for overseeing and
supervising tendering and marketing activities as well as business development of our Group.
Mr. Li first joined our Group as a marketing manager in May 2013 but left our Group in
May 2014. He re-joined our Group in May 2016 as a marketing manager and was promoted to
vice marketing director in August 2018. Mr. Li was further promoted to his current position in
March 2021.
Mr. Li completed his studies in plant protection* (ᚐ ) at the South China University
of Tropical Agriculture* (ᆠ੭ุ༵ɽኪ ) in the PRC in June 2007. He was accredited as a
fifth level/primary skill level pest control officer* ( ʞॴ/ࡰb yt h e
Ministry of Human Resources and Social Security in Guangzhou of the PRC* ( ᄿψ̹ɛɢ༟๕
ღ҅ ) in May 2014. Mr. Li has also obtained a Stone Application Conservation and
Floor Project Manager Certificate of Post Training* ( ͩҿᏐ͜ᚐଣeήջධͦ຾ଣ΂ᔖ੃৅ᗇ
ࣣaccredited by the Guangdong Stone Materials Association Stone Application Specialised
Committee* (ึ ) in June 2019. He has further
obtained a Certificate of Training Project for Urgent and Shortage Talents in the Industry and
Information Technology Field* (ࣣas an Urban
Sanitation Engineer* (ࢪaccredited by the Ministry of Industry and Information
Technology Talent Exchange Center* (ʕː ) of the PRC in December
2019.
Directorship of our senior management
None of the members of our senior management team has held any directorship in any
company, the securities of which are or have been listed on any securities market in Hong Kong
or overseas in the last three years.
COMPANY SECRETARY
Ms. Law Kwok Wing ( ᖯ࿈൘ ) (“Ms. Law ”), aged 37, was appointed as the company
secretary of our Company on 16 March 2021 and is responsible for our company secretarial
affairs.
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Ms. Law has over five years of experience in the auditing field and over six years of
experience in compliance and corporate governance matters for various listed companies in
Hong Kong. From January 2012 to January 2014, she worked at Deloitte Touche Tohmatsu as
senior of its audit department. From March 2014 to January 2021, she worked at Greater China
Appraisal Limited (a valuation company) with her last position as manager of its professional
development and standards division. Since January 2021, Ms. Law has been working with
Acclime Corporate Services Limited which amalgamated with BPO Global Services Limited (a
corporate services company) as senior manager of its listed company division.
Ms. Law obtained a Degree of Bachelor of Business Administration from Lingnan
University in Hong Kong in October 2008. Ms. Law has been a member of the Hong Kong
Institute of Certified Public Accountants since September 2013.
During the three years preceding the Latest Practicable Date, Ms. Law has not been a
director of any public companies, the securities of which are listed on any securities market in
Hong Kong or overseas.
BOARD COMMITTEES
We have established the Audit Committee, the Remuneration Committee, the Nomination
Committee and the Investment Committee. Each committee operates in accordance with its terms
of reference established by our Board.
Audit Committee
Our Audit Committee was established on 14 November 2023 with written terms of
reference in compliance with Rule 3.21 of the Listing Rules and paragraph D.3.3 of the
Corporate Governance Code. Our Audit Committee comprises three independent non-executive
Directors, namely Ms. Chong Sze Pui Joanne, MH, Ms. Cheung Bo Man and Ms. Y au Yin Hung.
The chairperson of our Audit Committee is Ms. Chong Sze Pui Joanne, MH.
The primary duties of our Audit Committee include reviewing and monitoring our external
auditor’s independence and objectivity and the effectiveness of the audit process, monitoring the
integrity of our financial information and reviewing significant financial reporting judgements
and overseeing our financial reporting system and risk management and internal control systems.
Remuneration Committee
Our Remuneration Committee was established on 14 November 2023 with written terms of
reference in compliance with Rule 3.25 of the Listing Rules and paragraph E.1.2 of the
Corporate Governance Code. Our Remuneration Committee comprises three independent
non-executive Directors, namely Ms. Cheung Bo Man, Ms. Chong Sze Pui Joanne, MH and Ms.
Y au Yin Hung. The chairperson of our Remuneration Committee is Ms. Cheung Bo Man.
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The primary role of our Remuneration Committee includes making recommendations to our
Board on our remuneration policy and structure of the remuneration packages, bonuses and other
compensation payable to our Directors and senior management, the establishment of a formal
and transparent procedure for developing our remuneration policy as well as to ensure that no
Director or his/her associate is involved in deciding his/her own remuneration.
Nomination Committee
Our Nomination Committee was established on 14 November 2023 with written terms of
reference in compliance with paragraph B.3.1 of the Corporate Governance Code. Our
Nomination Committee comprises three independent non-executive Directors, namely Ms. Y au
Yin Hung, Ms. Chong Sze Pui Joanne, MH and Ms. Cheung Bo Man. The chairperson of the
Nomination Committee is Ms. Y au Yin Hung.
The primary duties of our Nomination Committee include conducting an annual review of
the structure, size and composition of our Board and making recommendations on any proposed
changes to our Board, identifying suitably qualified individuals to become Board members and
making recommendations to our Board on the selection of individuals nominated for Board
membership, assessing the independence of our independent non-executive Directors and making
recommendations to our Board on the appointment and re-appointment of Directors and
succession planning for Directors.
Investment Committee
Our Investment Committee was established on 14 November 2023 with written terms of
reference. Our Investment Committee comprises three independent non-executive Directors,
namely Ms. Chong Sze Pui Joanne, MH, Ms. Cheung Bo Man and Ms. Y au Yin Hung. The
chairperson of our Investment Committee is Ms. Chong Sze Pui Joanne, MH.
The primary duties of our Investment Committee include reviewing and monitoring the
performance of our Group’s investments and reporting to our Board, overseeing the
implementation of the investment management policies and developing relevant investment
management policies.
REMUNERATION OF DIRECTORS AND SENIOR MANAGEMENT
Our Directors and senior management receive compensation in the form of fees, salaries,
allowances, benefits in kind, discretionary bonuses and defined contributions, and their
respective remuneration is determined with reference to salaries paid by comparable companies,
experience, responsibilities, workload, the time devoted to our Group, individual performance
and the performance of our Group. Our Group also reimburses them for expenses which are
necessarily and reasonably incurred for providing services to our Group or executing their
functions in relation to the operations of our Group. Our Group regularly reviews and determines
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the remuneration packages of our Directors and senior management. After Listing, our
Remuneration Committee will assist our Board in reviewing and determining the remuneration
packages.
For the years ended 31 December 2020, 2021, 2022 and the six months ended 30 June
2023, the aggregate amount of compensation (including fees, salaries, allowances, benefits in
kind, discretionary bonuses and defined contributions) paid by our Group to our Directors was
approximately RMB0.4 million, RMB0.5 million, RMB0.6 million and RMB0.3 million,
respectively. Under the current arrangements, we estimate that the aggregate amount of
compensation payable to, and benefits in kind receivable by, our Directors (excluding
discretionary bonuses) for the year ending 31 December 2023 will be approximately RMB0.6
million.
For the years ended 31 December 2020, 2021, 2022 and the six months ended 30 June
2023, the aggregate amount of compensation (including fees, salaries, allowances, benefits in
kind, discretionary bonuses and defined contributions) paid by our Group to our five highest
paid individuals (excluding our executive Directors) was approximately RMB2.1 million,
RMB2.4 million, RMB2.5 million and RMB1.3 million, respectively.
Please refer to note 10 to the Accountant’s Report set out in Appendix I to this prospectus
for details of the remuneration of our Directors and the five highest paid individuals during the
Track Record Period and the paragraph headed “D. Disclosure of interests – 3. Particulars of
service agreements and letters of appointment” in Appendix V of this prospectus for details of
the terms of our Directors’ service agreements and letters of appointment.
During the Track Record Period, no remuneration was paid by our Group to, or receivable
by, our Directors or the five highest paid individuals as an inducement to join or upon joining
our Group. No compensation was paid by our Group to, or receivable by, our Directors, past
Directors or the five highest paid individuals during the Track Record Period for the loss of any
office in connection with the management of the affairs of any member of our Group. None of
our Directors waived or agreed to waive any emoluments during the Track Record Period. Save
as disclosed in this paragraph, no other payments have been paid, or are payable, by our
Company or any of our subsidiaries to our Directors and the five highest paid individuals during
the Track Record Period.
SHARE OPTION SCHEME
Our Directors may also receive options to be granted under the Share Option Scheme. The
principal terms of the Share Option Scheme are summarised in the paragraph headed “E. Share
Option Scheme” in Appendix V to this prospectus.
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COMPLIANCE WITH THE CORPORATE GOVERNANCE CODE
Our Company will comply with the Corporate Governance Code, with the exception of
code provision C.2.1, which requires the roles of chairman and chief executive to be separate
and not to be performed by the same individual.
Mr. Li currently holds both positions. Throughout our history, Mr. Li, our Chairman, chief
executive officer, executive Director and Controlling Shareholder, has held key leadership
position of our Group and has been responsible for overseeing all aspects of the operations of
our Group including strategic planning, management, operation and business development. Our
Directors (including our independent non-executive Directors) consider that Mr. Li is the best
candidate for both positions and the present arrangements are beneficial and in the interests of
our Group and our Shareholders as a whole.
Our Directors will review our corporate governance policies and compliance with the
Corporate Governance Code each financial year and apply the “comply or explain” principle in
our corporate governance report which will be included in our annual reports after the Listing.
OUR BOARD DIVERSITY POLICY
Our Directors have a balanced mix of experience and industry background, including but
not limited to experience in the fields of cleaning services, legal, banking as well as auditing
and accounting. Further, our Directors range from 35 years old to 53 years old, and comprise
two male and three female. Our three independent non-executive Directors who have different
industry backgrounds, represent more than one-third of our Board members.
We have adopted a Board diversity policy which sets out the approach to achieve and
maintain an appropriate balance of diversity perspectives of our Board that are relevant to our
business growth. Pursuant to our Board diversity policy, selection of Board candidates will be
based on a range of diversity perspectives with reference to our business model and specific
needs, including but not limited to gender, age, cultural and educational background, ethnicity,
professional experience, skills, knowledge, length of service and industry experience. The
ultimate decision will be based on merit and contribution that the selected candidates will bring
to our Board.
Our Nomination Committee is responsible for ensuring the diversity of our Board. After
Listing, our Nomination Committee will review our Board diversity policy from time to time to
ensure its continued effectiveness and we will disclose the implementation of our Board
diversity policy in our corporate governance report on an annual basis.
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COMPLIANCE ADVISER
In compliance with Rule 3A.19 of the Listing Rules, we have appointed Cinda International
as our compliance adviser to provide advisory services to our Company. Pursuant to Rule 3A.23
of the Listing Rules, it is expected that our compliance adviser will, among others, advise our
Company with due care and skill on the following circumstances:
(a) before the publication of any regulatory announcement, circular or financial report;
(b) where a transaction, which might be a notifiable or connected transaction, is
contemplated including share issues and share repurchases;
(c) where our Company proposes to use the proceeds from the Share Offer in a manner
different from that detailed in this prospectus or where our business activities,
developments or results deviate from any forecast, estimate or other information in
this prospectus; and
(d) where the Stock Exchange makes an inquiry of us under 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 we distribute our annual report in respect of our financial results for the first full
financial year commencing after the Listing Date and such appointment may be subject to
extension by mutual agreement.
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SUBSTANTIAL SHAREHOLDERS
Immediately following completion of the Share Offer and the Capitalisation Issue (without
taking into account of any Shares that may be allotted and issued pursuant to the exercise of any
options which may be granted under the Share Option Scheme), based on the information
available on the Latest Practicable Date, the following persons/entities will have an interest or a
short position in our Shares or underlying Shares which would be required to be disclosed to our
Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, directly or
indirectly, be 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:
Name of Substantial
Shareholders
Capacity/
Nature of interest
Number of
Shares held
(Note 1)
Percentage of
shareholding
interest in our
Company
Prosperity Cleanness Beneficial owner
(Notes 2 and 3)
1,173,087,500 (L) 72.19%
Mr. Li Interest of controlled
corporation
(Notes 2 and 3)
1,173,087,500 (L) 72.19%
Ms. Tang Y ongzhen
(ޜ)
“(Ms. Tang ”)
Interest of Spouse
(Note 4)
1,173,087,500 (L) 72.19%
Sunrise Cleanness Beneficial owner
(Notes 2 and 5)
1,173,087,500 (L) 72.19%
Mr. Chen Interest of controlled
corporation
(Notes 2 and 5)
1,173,087,500 (L) 72.19%
Notes:
1. The letter “L” denotes the entity/person’s long position in our Shares.
2. On 16 March 2021, Mr. Li and Mr. Chen executed the Controlling Shareholders’ Confirmation, pursuant to
which Mr. Li and Mr. Chen confirmed that they have been a group of controlling shareholders, details of
which are set out in the section headed “Relationship with our Controlling Shareholders” of this
prospectus. Accordingly, each of our Controlling Shareholders, i.e. Mr. Li, Prosperity Cleanness (being
wholly owned by Mr. Li), Mr. Chen and Sunrise Cleanness (being wholly owned by Mr. Chen) are deemed
to be interested in 72.19% of the issued share capital of our Company.
SUBSTANTIAL SHAREHOLDERS
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3. Shares in which Mr. Li is interested consist of (i) 586,543,750 Shares held by Prosperity Cleanness, a
company he wholly owned, and Mr. Li is therefore deemed to be interested in all the Shares held by
Prosperity Cleanness by virtue of the SFO; and (ii) 586,543,750 Shares in which Mr. Li is deemed to be
interested as a result of the Controlling Shareholders’ Confirmation.
4. Ms. Tang is the spouse of Mr. Li and is therefore deemed to be interested in all the Shares held or
interested in by Mr. Li by virtue of the SFO.
5. Shares in which Mr. Chen is interested consist of (i) 586,543,750 Shares held by Sunrise Cleanness, a
company he wholly owned, and is therefore deemed to be interested in all the Shares held by Sunrise
Cleanness by virtue of the SFO; and (ii) 586,543,750 Shares in which Mr. Chen is deemed to be interested
as a result of the Controlling Shareholders’ Confirmation.
Save as disclosed above, our Directors are not aware of any person who will, immediately
following completion of the Share Offer and the Capitalisation Issue (without taking into
account any Shares that may be allotted and issued pursuant to the exercise of any options which
may be granted under the Share Option Scheme), have an interest or short position in our Shares
or underlying Shares which would be required to be disclosed to our Company under the
provisions of Divisions 2 and 3 of Part XV of the SFO, or, directly or indirectly, be 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. Our Directors are not
aware of any arrangement which may at a subsequent date result in a change of control of our
Company.
UNDERTAKINGS
Each of our Controlling Shareholders has given certain undertakings in respect of our
Shares held by them to our Company, the Sole Sponsor, the Sole Overall Coordinator (for itself
and on behalf of the Public Offer Underwriters) and the Stock Exchange, details of which are set
out in the section headed “Underwriting” of this prospectus. Our Controlling Shareholders and
our Company have also given undertakings in respect of the Shares to the Stock Exchange as
required by Rules 10.07(1) and 10.08 of the Listing Rules, respectively.
SUBSTANTIAL SHAREHOLDERS
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SHARE CAPITAL
The authorised and issued share capital of our Company fully paid up or credited as fully
paid up immediately following the completion of the Share Offer and the Capitalisation Issue
(without taking into account any Shares that may be allotted and issued pursuant to the exercise
of any options which may be granted under the Share Option Scheme) are as follows:
Authorised share capital: HK$
10,000,000,000 Shares 100,000,000
Shares in issue or to be issued, fully paid or credited as fully paid:
1,000 Share in issue as at the date of this
prospectus
10
1,251,249,000 New Shares to be issued pursuant to the
Capitalisation Issue (including
40,625,000 Sale Shares) (Note)
12,512,490
373,750,000 New Shares to be issued pursuant to the
Share Offer
3,737,500
1,625,000,000 Total Shares 16,250,000
Note: Pursuant to the written resolutions of all our then Shareholders passed on 14 November 2023, conditional
upon the share premium account of our Company being credited as a result of the allotment and issue of
new Shares pursuant to the Share Offer, our Directors were authorised to capitalise the amount of
HK$12,512,490 standing to the credit of the share premium account of our Company and to apply such
sum in paying up in full at par a total of 1,251,249,000 new Shares (including 40,625,000 Sale Shares) for
allotment and issue to our then existing Shareholders registered as such at the close of business on 14
November 2023, in proportion to their then respective existing shareholding in our Company.
ASSUMPTIONS
The above table assumes that the Share Offer becomes unconditional and the issue of
Shares pursuant to the Share Offer and the Capitalisation Issue are made. It takes no account of
any Shares that may be allotted and issued pursuant to the exercise of any options which may be
granted under the Share Option Scheme or any Shares which may be issued or repurchased by us
pursuant to the general mandates granted to our Directors to issue or repurchase Shares as
described below.
SHARE CAPITAL
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MINIMUM PUBLIC FLOAT
Pursuant to Rule 8.08(1) of the Listing Rules, at the time of Listing and at all times
thereafter, our Company must maintain the minimum prescribed percentage of 25% of our issued
share capital in the hands of the public (as defined in the Listing Rules).
RANKINGS
The Offer Shares will be ordinary shares in the share capital of our Company and will rank
pari passu in all respects with all Shares in issue or to be issued as mentioned in this prospectus
and, in particular, will rank in full for all dividends or other distributions declared, made or paid
on our Shares in respect of a record date which falls after the date of this prospectus save for the
entitlement under the Capitalisation Issue.
CAPITALISATION ISSUE
Pursuant to the written resolutions of all our then Shareholders passed on 14 November
2023, conditional upon the share premium account of our Company being credited as a result of
the allotment and issue of new Shares pursuant to the Share Offer, our Directors were authorised
to allot and issue a total of 1,251,249,000 new Shares (including 40,625,000 Sale Shares) to our
then existing Shareholders registered as such at the close of business on 14 November 2023, in
proportion to their then respective existing shareholding in our Company, credited as fully paid
at par, by way of capitalisation of the sum of HK$12,512,490 standing to the credit of the share
premium account of our Company, and our Shares to be allotted and issued pursuant to this
resolution shall rank pari passu in all respects with the Shares in issue (save for the right to
participate in the Capitalisation Issue).
SHARE OPTION SCHEME
Pursuant to the written resolutions of all our then Shareholders passed on 14 November
2023, our Company has conditionally adopted the Share Option Scheme. The principal terms of
the Share Option Scheme are summarised in the paragraph headed “E. Share Option Scheme” in
Appendix V to this prospectus.
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GENERAL MANDATE TO ALLOT AND ISSUE SHARES
Conditional on the conditions as stated in the section headed “Structure and conditions of
the Share Offer” of this prospectus being fulfilled, our Directors have been granted a general
unconditional mandate to, among others, allot, issue and deal with Shares and to make or grant
offers, agreements or options which would or might require Shares to be allotted and issued or
dealt with subject to the requirement that the aggregate number of Shares so allotted and issued
or agreed conditionally or unconditionally to be allotted and issued (otherwise than pursuant to a
rights issue, scrip dividend scheme or similar arrangements, or a specific authority granted by
our Shareholders in general meeting) shall not exceed:
(a) 20% of the aggregate number of Shares in issue immediately following the completion
of the Share Offer and the Capitalisation Issue (excluding Shares that may be allotted
and issued pursuant to the exercise of any options which may be granted under the
Share Option Scheme); and
(b) the aggregate number of Shares repurchased pursuant to the authority granted to our
Directors as referred to in the paragraph headed “General mandate to repurchase
Shares” in this section below.
This general mandate to issue Shares will remain in effect until the earliest of:
(a) the conclusion of the next annual general meeting of our Company;
(b) the date by which the next annual general meeting of our Company is required by the
Articles or any other applicable laws of the Cayman Islands to be held; or
(c) the passing of an ordinary resolution by our Shareholders in general meeting revoking
or varying or renewing the authority given to our Directors,
whichever is the earliest.
For further details of this general mandate, please refer to the paragraph headed “A. Further
information about our Company – 4. Written resolutions of our Shareholders” in Appendix V to
this prospectus.
GENERAL MANDATE TO REPURCHASE SHARES
Conditional on the conditions as stated in the section headed “Structure and Conditions of
the Share Offer” of this prospectus being fulfilled, our Directors have been granted a general
mandate to exercise all powers of our Company to purchase on the Stock Exchange or on any
other stock exchange(s) on which the securities of our Company may be listed and which is
recognised by the SFC and the Stock Exchange for this purpose, such number of Shares not
exceeding 10% of the aggregate number of Shares in issue immediately following completion of
SHARE CAPITAL
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the Share Offer and the Capitalisation Issue (excluding Shares that may be allotted and issued
pursuant to the exercise of any options which may be granted under the Share Option Scheme).
This mandate only relates to repurchases made on the Stock Exchange, or on any other
stock exchange(s) on which the Shares are listed and which is recognised by the SFC and the
Stock Exchange for this purpose, and such repurchases are made in accordance with all
applicable laws and the requirements of the Listing Rules.
The general mandate to repurchase Shares will remain in effect until the earliest of:
(a) the conclusion of the next annual general meeting of our Company;
(b) the date by which the next annual general meeting of our Company is required by the
Articles or any other applicable laws of the Cayman Islands to be held; or
(c) the passing of an ordinary resolution by our Shareholders in general meeting revoking
or varying or renewing the authority given to our Directors,
whichever is the earliest.
For further details of this general mandate, please refer to the paragraph headed “A. Further
information about our Company – 6. Repurchase by our Company of our own securities” in
Appendix V to this prospectus.
CIRCUMSTANCES UNDER WHICH GENERAL MEETING AND CLASS MEETING ARE
REQUIRED
Pursuant to the Companies Act and the terms of the Memorandum and Articles of
Association, our Company may from time to time by ordinary resolution of our Shareholders (i)
increase our share capital; (ii) consolidate our capital into shares of larger amount; (iii) divide
our Shares into several classes; (iv) subdivide 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 Companies Act, reduce the share capital or capital redemption reserve by our
Shareholders passing a special resolution. For further details, please refer to the paragraph
headed “2. Articles of Association – (a) Shares – (iii) Alteration of capital” in Appendix IV to
this prospectus.
Pursuant to the Companies Act and the terms of the Memorandum and Articles of
Association, all or any of the special rights attached to our Shares or any class of shares may 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. For
further details, please refer to the paragraph headed “2. Articles of Association – (a) Shares –
(ii) V ariation of rights of existing shares or classes of shares” in Appendix IV to this prospectus.
SHARE CAPITAL
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You should read the following discussion and analysis of our financial conditions and
results of operations in conjunction with our consolidated financial statements included in the
Accountant’ s Report, which has been prepared in accordance with HKFRSs, as set out in
Appendix I to this prospectus, and the unaudited pro forma financial information included in
Appendix II to this prospectus, in each case together with the accompanying notes.
The following discussion contains forward-looking statements that involve risks and
uncertainties. These statements are based on assumptions and analyses made by our Group in
light of our experience and perception of historical trends, current conditions and expected
future developments. Our actual results and timing of selected events could differ materially
from those anticipated in these forward-looking statements that involve risks and
uncertainties; and could be the result of various factors, including but not limited to those set
out under the section headed “Risk factors” of this prospectus.
Any discrepancies in any table or elsewhere in this prospectus between totals and sums
of amounts listed herein are due to rounding.
OVERVIEW
We are a cleaning and maintenance services provider in Guangdong province in the PRC.
With industry experience of over 20 years and foothold in Guangdong province, we have
steadily developed our business since our establishment in 2000 to offer a wide range of services
to over 700 customers and extend the coverage of our operations to 14 provincial-level regions
in the PRC.
All of our revenue is derived from the provision of cleaning and maintenance services. For
the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and
2023, our revenue was approximately RMB465.7 million, RMB563.5 million, RMB594.2
million, RMB289.2 million and RMB298.3 million, respectively, and our profit and total
comprehensive income attributable to owners of the Company was approximately RMB31.3
million, RMB39.9 million, RMB34.4 million, RMB15.4 million and RMB15.3 million,
respectively. We achieved growth in our revenue mainly by increasing the number of our
projects in progress and increased revenue from our customers by leveraging our
well-established position, strong brand recognition and proven tracking record allowing us to
capture the growing demand for cleaning and maintenance service in the PRC. Our net profit
margin before non-recurring listing expenses was relatively stable for the respective years ended
31 December 2020, 2021 and 2022 and the respective periods for the six months ended 30 June
2022 and 30 June 2023.
FINANCIAL INFORMATION
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KEY FACTORS AFFECTING OUR RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Our results of operations have been and will continue to be affected by a number of factors,
including those set out below:
The level of expenditure on cleaning and maintenance services by customers in the PRC
All of our revenue during the Track Record Period was derived from the provision of
cleaning and maintenance services in the PRC, with a majority being derived from the provision
of property cleaning services. According to Industry Report, due to the increasingly complicated
cleaning requirements, property management groups, tenants, and owners will outsource the
cleaning service to the professional cleaning services providers in order to reduce their overall
operation costs. Furthermore, the volume of floor space completed per annual construction of
property building in the PRC remains robust and serves as a strong market driver for the
development and growth of the property cleaning sector (for details of markets drivers in the
industry, please refer to the section headed “Industry overview – Environmental cleaning and
maintenance service market analysis in the PRC – Market drivers” of this prospectus). If there is
any reduction in the level of expenditure on cleaning and maintenance services by customers in
the PRC or its property cleaning sector, it may affect the demand for our services and affect our
prices. If this were to occur, our business, financial condition and prospects may be materially
and adversely affected.
Our ability to mitigate the impact of employee benefit expenses and subcontracting labour
costs
Given that our business operation is labour-intensive, a significant portion of our operating
costs comprises employee benefit expenses and subcontracting labour costs. For the years ended
31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023, our
employee benefit expenses recorded in our cost of services were approximately RMB208.8
million, RMB254.5 million, RMB291.9 million, RMB142.4 million and RMB151.1 million,
representing approximately 54.1%, 53.7%, 58.4%, 58.5% and 60.2% of our cost of services,
respectively. Employee benefit expenses recorded in our general and administrative expenses
amounted to approximately RMB23.3 million, RMB30.3 million, RMB32.1 million, RMB14.6
million and RMB14.8 million, representing approximately 69.2%, 67.3%, 62.9%, 54.8% and
61.8% of our general and administrative expenses, respectively. We have also outsourced certain
general cleaning, high-altitude cleaning and water cleaning services to third party service
providers. For the years ended 31 December 2020, 2021 and 2022 and the six months ended 30
June 2022 and 2023, we incurred subcontracting labour costs of approximately RMB149.9
million, RMB188.9 million, RMB172.9 million, RMB84.4 million and RMB85.9 million,
representing approximately 38.9%, 39.8%, 34.6%, 34.7% and 34.2% of our cost of services,
respectively. Our employee benefit expenses is impacted by our strategy to offer attractive
remuneration packages and bonuses to our workers. In the future, our employee benefit expenses
and subcontracting labour costs may be affected by further increases in the size of our
workforce, the costs charged by our third party service providers and the prescribed minimum
wage and employee benefits in the provincial-level regions which we operate.
FINANCIAL INFORMATION
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The following table sets forth the sensitivity analysis illustrating the impact of hypothetical
fluctuations of our employee benefit expenses and subcontracting labour cost in our cost of
services on our gross profit for the year during the Track Record Period with all other variables
being held constant. The hypothetical fluctuation rate for our employee benefit expenses and
subcontracting labour cost are set at 15% and 20% during the Track Record Period, which are
determined by reference to the historical year-on-year fluctuation of employee benefit expenses
and subcontracting labour cost during the Track Record Period.
For the year ended
31 December
For the six months
ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Employee benefit expenses
Increase/(Decrease) by:
+20% (41,757) (50,898) (58,388) (28,485) (30,228)
+15% (31,318) (38,174) (43,791) (21,363) (22,671)
-15% 31,318 38,174 43,791 21,363 22,671
-20% 41,757 50,898 58,388 28,485 30,228
For the year ended
31 December
For the six months
ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Subcontracting labour cost
Increase/(Decrease) by:
+20% (29,988) (37,776) (34,582) (16,873) (17,188)
+15% (22,491) (28,332) (25,937) (12,654) (12,891)
-15% 22,491 28,332 25,937 12,654 12,891
-20% 29,988 37,776 34,582 16,873 17,188
Our profitability is largely affected by our ability to control our operating costs, in
particular, employee benefit expenses and subcontracting labour costs. If we are unable to
control our operating costs or successfully pass on the cost impact to our customers, we may be
unable to maintain our profitability and our business, financial condition and results of operation
may be materially and adversely affected.
FINANCIAL INFORMATION
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Our ability to compete effectively in a highly competitive market and offer competitive bids
to attract new business
The environmental cleaning and maintenance service industry is highly competitive
according to the Industry Report. Depending on the relevant sector within the industry, we may
need to adjust our strategies to compete effectively against larger and smaller market players.
According to the Industry Report, in relation to the public space cleaning sector, it is an industry
norm that the local governments, which are the main clients in this sector, prefer large-scale
service providers equipped with sufficient amount of machinery, equipment and vehicles such as
garbage collection vehicles and waste suction vehicles. On the other hand, the property cleaning
sector comparatively requires lower level of mechanisation than the public space cleaning sector.
Generally, handy machinery and equipment are used, such as escalator cleaners, steam scrubbers,
ride-on scrubber dryers, marble reconditioning machine and dust proofing device for angle
grinder. Thus, small and medium-scale businesses are still able to acquire the contracts with
relatively lower rates and higher flexibility compare to large-scale service providers. Given the
above, we may need to invest more heavily in garbage collection vehicles and waste suction
vehicles for bids in relation to larger projects in the public space cleaning sector and make more
competitive bids by adjusting our prices for smaller projects in the property cleaning sector. If
we do not adjust our tender strategies and business strategies effectively, we may lose business
opportunities. Even if we are successful, our investments to secure our projects and our offer of
competitive bids may reduce our profit margins and expose us to losses if our cost of services
increases beyond expectation. Accordingly, if we cannot compete effectively, our business,
financial condition, results of operations and prospects may be materially and adversely affected.
Furthermore our customers typically award contracts through a competitive process, we
generally secure our major contracts with customers through the tender process. For the years
ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023, our
tender success rate was approximately 33.8%, 28.1%, 50.8%, 39.2% and 48.3%, respectively, for
all tenders and approximately 87.0%, 73.5%, 77.3%, 81.0% and 78.7%, respectively, for tenders
involving new contracts for existing projects. In the event of direct engagement by our
customers, we may still need to submit quotation proposals attractive enough to our customers in
the event they are seeking quotes from multiple service providers. There is no guarantee that we
can successfully obtain contracts in the future as it is subject to our ability to meet the
requirements imposed by our customers and offer competitive bids. If we are unable to identify
and secure sufficient new contracts on commercially attractive terms, our financial results and
prospects may be materially and adversely affected.
FINANCIAL INFORMATION
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Branding positioning and pricing ability
Our financial position and results of operations are affected by our ability to maintain or
increase the fee we charge for our services, which is, in part, affected by our ability to
continuously maintain and enhance our brand recognition and industry position. We intend to
further strengthen our brand recognition to expand our property cleaning business and facilitate
our business development.
Our revenue is dependent on fees charged for our services. We generally price our cleaning
and maintenance services by taking into account following major factors: (i) scope of services;
(ii) service location(s) and area of coverage; (iii) timetable; (iv) prevailing market rates; (v)
labour costs; (vi) management costs; (vii) tax; and (viii) determination of a reasonable profit
margin. We have to achieve a balance between pricing our services competitively while
maintaining our brand image as a quality cleaning and maintenance service provider and
ensuring reasonable profit margins. Failure to balance various factors in determining our pricing
could materially and adversely affect our financial position and results of operations.
BASIS OF PRESENTATION
Immediately prior to and after the Reorganisation, our business is conducted through
Guangzhou Shenghui and its subsidiaries and controlled by our Controlling Shareholders.
Pursuant to the Reorganisation, our business is transferred to and held by our Company. Our
Company has not been involved in any other business prior to the Reorganisation and does not
meet the definition of a business. The Reorganisation is merely a reorganisation of our business
with no change in management of such business and the ultimate controlling shareholders of our
business remain the same. For further details, please refer to Note 1.3 of the Accountant’s
Report in Appendix I to this prospectus.
SIGNIFICANT ACCOUNTING POLICIES
The Historical Financial Information have been prepared in accordance with Hong Kong
Financial Reporting Standards (“ HKFRS ”) issued by the Hong Kong Institute of Certified Public
Accountants (“ HKICPA ”) as set out below. The Historical Financial Information has been
prepared under the historical cost convention, as modified by the revaluation of financial assets
at fair value through profit or loss which are measured at fair value. The significant accounting
policies adopted by our Group and estimates which are important for the understanding of our
financial conditions and results of operations are set forth in Note 2 and Note 34 of the
Accountant’s Report in Appendix I to this prospectus.
FINANCIAL INFORMATION
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Revenue recognition
Revenue is recognised when control over a product or service is transferred to the
customer, at the amount of promised consideration to which our Group is expected to be
entitled, excluding those amounts collected on behalf of third parties. Revenue excludes value
added tax or other sales taxes and is after deduction of any trade discounts.
The revenue of our Group arises from the provision of cleaning and maintenance services.
Depending on the terms of the contract, control of the service may be transferred over time or at
a point in time. Control of the service is transferred over time if our Group’s performance:
 provides all of the benefits received and consumed simultaneously by the customer;
 creates or enhances an asset that the customer controls as our Group performs; or
 does not create an asset with an alternative use to our Group and our Group has an
enforceable right to payment for performance completed to date.
If control of the goods or services transfers over time, revenue is recognised over the
period of the contract by reference to the progress towards complete satisfaction of that
performance obligation. Otherwise, revenue is recognised at a point in time when the customer
obtains control of the goods or service.
When either party to a contract has performed, our Group presents the contract in the
consolidated statements of financial position as a contract asset or a contract liability, depending
on the relationship between our Group’s performance and the customer’s payment.
A contract asset is our Group’s right to consideration in exchange for services that our
Group has transferred to a customer. Incremental costs incurred to obtain a contact, if
recoverable, are capitalised and presented as assets under “contract assets” and subsequently
amortised when the related revenue is recognised.
If a customer pays consideration or our Group has a right to an amount of consideration
that is unconditional, before the services are provided to the customer, our Group presents the
amount as a contract liability when the payment is received or a receivable is recorded
(whichever is earlier).
A receivable is recorded when our Group has an unconditional right to consideration. A
right to consideration is unconditional if only the passage of time is required before payment of
that consideration is due.
FINANCIAL INFORMATION
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Employee benefits
(a) Pension obligations
Our Group only operates defined contribution pension plans. In accordance with the rules
and regulations in the PRC, the PRC based employees of our Group participate in various
defined contribution retirement benefit plans organised by the relevant municipal and provincial
governments in the PRC under which our Group and the PRC based employees are required to
make monthly contributions to these plans calculated as a percentage of the employees’ salaries.
The municipal and provincial governments undertake to assume the retirement benefit
obligations of all existing and future retired PRC based employees’ payable under the plans
described above. Other than the monthly contributions, our Group has no further obligation for
the payment of retirement and other post-retirement benefits of its employees. The assets of
these plans are held separately from those of our Group in independently administrated funds
managed by the governments.
Our Group’s contributions to the defined contribution retirement scheme are expensed as
incurred.
(b) Housing funds, medical insurances and other social insurances
Employees of our Group in the PRC are entitled to participate in various
government-supervised housing funds, medical insurances and other social insurances. Our
Group contributes on a monthly basis to these funds based on certain percentages of the salaries
of the employees, subject to certain ceiling. Our Group’s liability in respect of these funds is
limited to the contributions payable in each year. Contributions to the housing funds, medical
insurances and other social insurances are expensed as incurred.
(c) Employee leave entitlements
Employee entitlements to annual leave are recognised when they accrue to employees. A
provision is made for the estimated liability for annual leave as a result of services rendered by
employees up to the end of the reporting period.
Employee entitlements to sick leave and maternity leave are not recognised until the time
of leave.
FINANCIAL INFORMATION
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Trade and other receivables
Trade receivables are amounts due from customer for services provided in the ordinary
course of business.
Trade receivables are recognised initially at the amount of consideration that is
unconditional unless they contain significant financing components, when they are recognised at
fair value. Our Group holds the trade receivables with the objective to collect the contractual
cash flows and therefore measures them subsequently at amortised cost using the effective
interest method. Further information about our Group’s accounting for trade receivables and
other receivables and a description of our Group’s impairment policies is set out in Note 21 and
Note 3.1 (iii) of the Accountant’s Report in Appendix I to this prospectus respectively.
If collection of trade and other receivables is expected in one year or less (or in the normal
operating cycle of the business if longer), they are classified as current assets. If not, they are
presented as non-current assets.
Trade and other payables
Trade payables are obligations to pay for goods or services that have been acquired in the
ordinary course of business from suppliers. Trade and other payables are recognised initially at
fair value and subsequently measured at amortised cost using effective interest method. They are
classified as current liabilities if payment is due within one year or less (or in the normal
operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Leases
Our Group as a lessee
Leases are recognised as a right-of-use asset and a corresponding liability at the date at
which the leased asset is available for use by our Group. Assets and liabilities arising from a
lease are initially measured on a present value basis. Lease liabilities include the net present
value of the following lease payments:
 fixed payments (including in-substance fixed payments), less any lease incentives
receivable;
 variable lease payments that are based on an index or a rate, initially measured using
the index or rate as at the commencement date;
 amounts expected to be payable by our Group under residual value guarantees;
 the exercise price of a purchase option if our Group is reasonably certain to exercise
that option; and
 payments of penalties for terminating the lease, if the lease term reflects our Group
exercising that option.
FINANCIAL INFORMATION
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Payments associated with short-term leases are recognised on a straight-line basis as an
expense in the consolidated statements of comprehensive income. Short-term leases are leases
with a lease term of 12 months or less.
Lease payments to be made under reasonably certain extension options are also included in
the measurement of the liability.
Our lease payments are discounted using the interest rate implicit in the lease. If that rate
cannot be readily determined, which is generally the case for leases in our Group, the lessee’s
incremental borrowing rate is used, being the rate that the individual lessee would have to pay to
borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a
similar economic environment with similar terms, security and conditions.
Our Group’s right-of-use assets consist of leases for building and machinery.
Right-of-use assets resulted from lease payments are stated at cost less accumulated
depreciation and accumulated impairment losses, if any. Cost represents consideration paid for
the rights to use the assets and other direct related costs from the date when the respective rights
were granted. Depreciation of lease payments is calculated on a straight-line basis over the lease
terms as stated in the lease contracts and is charged to profit or loss.
Our Group as a lessor
Lease income from operating leases where our Group acts as the lessor is recognised on a
straight-line basis over the lease term. Initial direct costs incurred in obtaining the operating
lease are added to the carrying amount of the underlying asset and recognised as expenses over
the lease term on the same basis as lease income. The respective leased assets are included in
the consolidated statements of financial position based on their nature.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Our Group makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, seldom equal the related actual results. The estimates
and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are addressed below. Further
details are set out in Note 4 of the Accountant’s Report in Appendix I to this prospectus.
FINANCIAL INFORMATION
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RESULTS OF OPERATIONS
The consolidated statements of comprehensive income during the Track Record Period are
summarised below, which have been extracted from, and should be read in conjunction with, the
Accountant’s Report set out in Appendix I to this prospectus:
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Revenue 465,664 563,541 594,204 289,173 298,251
Cost of services (385,746) (474,296) (499,795) (243,433) (251,074)
Gross profit 79,918 89,245 94,409 45,740 47,177
Selling and marketing
expenses (3,111) (3,076) (3,983) (1,966) (2,730)
General and administrative
expenses (33,682) (45,033) (51,060) (26,627) (24,042)
Impairment losses on financial
assets (4,580) (2,333) (4,185) (1,905) (5,016)
Other income, net 8,238 7,155 5,109 3,437 2,235
Other gain/(loss), net (7,345) (3) – – –
Operating profit 39,438 45,955 40,290 18,679 17,624
Finance expenses, net (1,172) (404) (422) (236) (197)
Share of net profit of
associates 23 6––––
Profit before income tax 38,502 45,551 39,868 18,443 17,427
Income tax expenses (7,190) (5,630) (5,479) (3,051) (2,119)
Profit and total
comprehensive income for
the year/period
attributable to owners of
the Company 31,312 39,921 34,389 15,392 15,308
FINANCIAL INFORMATION
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DESCRIPTION ON SELECTED ITEMS OF THE CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
Revenue
During the Track Record Period, we derived our revenue primarily from (i) property
cleaning services for various type of commercial building, residential building, transportation
hub, shopping mall, public utilities and industrial park; (ii) public space cleaning services
primarily for road sweeping and cityscape cleaning and (iii) other cleaning services such as river
cleaning. For details, please refer to the paragraph headed “Business – Our services” in this
prospectus. We recorded revenue of approximately RMB465.7 million, RMB563.5 million,
RMB594.2 million, RMB289.2 million and RMB298.3 million for the years ended 31 December
2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023, respectively.
For the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June
2022 and 2023, our revenue generated from property cleaning services accounted for 95.9%,
96.5%, 96.6%, 96.4% and 95.8%, respectively, of our total revenue. For the years ended 31
December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023, our revenue
generated from public space cleaning accounted for 3.9%, 3.5%, 3.4%, 3.6% and 4.2%,
respectively, of our total revenue. For the years ended 31 December 2020, 2021 and 2022 and
the six months ended 30 June 2022 and 2023, our revenue generated from other cleaning
accounted for 0.1%, nil, nil, nil and nil, respectively, of our total revenue.
The following table sets out a breakdown of our revenue by principal service categories
during the years/periods indicated:
Y ear ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited)
Property cleaning
– Commercial building 211,433 45.4 249,927 44.3 289,624 48.7 133,863 46.3 159,780 53.6
– Residential building 96,078 20.6 135,813 24.1 143,721 24.2 70,255 24.3 64,446 21.6
– Transportation hub 63,362 13.6 61,384 10.9 52,029 8.8 28,913 10.0 16,759 5.6
– Shopping mall 52,749 11.3 71,171 12.6 64,372 10.8 34,721 12.0 27,228 9.1
– Public utilities
Note 1 16,691 3.6 12,696 2.3 11,981 2.0 4,724 1.6 9,122 3.1
– Industrial park 6,624 1.4 12,981 2.3 12,339 2.1 6,453 2.2 8,276 2.8
Public space cleaning Note 2 18,360 3.9 19,569 3.5 20,138 3.4 10,244 3.6 12,640 4.2
Other cleaning Note 3 367 0.1 – – – – – – – –
465,664 100.0 563,541 100.0 594,204 100.0 289,173 100.0 298,251 100.0
FINANCIAL INFORMATION
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Notes:
(1) Public utilities cleaning primarily consists of government offices and school cleaning.
(2) Public space cleaning primarily consists of road sweeping and cityscape cleaning.
(3) Other cleaning primarily consists of river cleaning.
Revenue from property cleaning service
Our revenue generated from our property cleaning service amounted to approximately
RMB446.9 million, RMB544.0 million, RMB574.1 million, RMB278.9 million and RMB285.6
million for the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June
2022 and 2023, respectively, representing approximately 95.9%, 96.5%, 96.6%, 96.4% and
95.8%, respectively, of our total revenue for the same period. Revenue from property cleaning
service recorded an increasing trend during the Track Record Period. The increase was primarily
driven by the increase in our number of projects during the years in property cleaning service.
Our number of projects in property cleaning service during the years ended 31 December 2020,
2021 and 2022 and the six months ended 30 June 2022 and 2023 was 238, 252, 291, 251 and
285, respectively. For more details, please refer to the paragraph headed “– Period-to-period
comparison of results of operations” in this section.
Revenue from public space cleaning service
Our revenue generated from our public space cleaning service amounted to approximately
RMB18.4 million, RMB19.6 million, RMB20.1 million, RMB10.2 million and RMB12.6 million
for the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022
and 2023, respectively, representing approximately 3.9%, 3.5%, 3.4%, 3.6% and 4.2%,
respectively, of our total revenue for the same period. Our revenue generated from public space
cleaning service during the Track Record Period remained relatively stable but decrease in the
percentage of total revenue, as our specialised vehicles, which are the core fixed assets for
providing public space cleaning, were fully utilised. Our number of projects in public space
cleaning service during the years ended 31 December 2020, 2021 and 2022 and the six months
ended 30 June 2022 and 2023 was 4, 7, 5, 5 and 7, respectively. For more details, please refer to
the paragraph headed “– Period-to-period comparison of results of operations” in this section.
Revenue from other cleaning service
Our revenue generated from our other cleaning service amounted to RMB0.4 million, nil,
nil, nil and nil for the years ended 31 December 2020, 2021, 2022 and the six months ended 30
June 2022 and 2023, respectively, representing approximately 0.1%, nil, nil, nil and nil,
respectively, of our total revenue for the same period. The continuous decrease in the revenue
generated from our other cleaning service during the Track Record Period was primarily driven
by the decrease in our number of projects during the years in other cleaning service. Our number
of projects in other cleaning service during the years ended 31 December 2020, 2021 and 2022
and the six months ended 30 June 2022 and 2023 was 1, nil, nil, nil and nil, respectively. For
more details, please refer to the paragraph headed “– Period-to-period comparison of results of
operations” in this section.
FINANCIAL INFORMATION
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The following table sets out a breakdown of our revenue generated from the sales by
provincial-level regions in the PRC of the customers for the Track Record Period:
Y ear ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited)
Guangdong 390,973 84.0 459,108 81.5 467,337 78.6 224,353 77.6 234,692 78.7
Hainan 45,382 9.7 43,287 7.7 42,936 7.2 25,303 8.8 15,870 5.3
Chongqing 9,047 1.9 21,200 3.8 24,384 4.1 12,247 4.2 13,036 4.4
Guangxi 8,767 1.9 10,100 1.8 10,545 1.8 5,107 1.7 5,527 1.8
Others
Note 11,495 2.5 29,846 5.2 49,002 8.3 22,163 7.7 29,126 9.8
465,664 100.0 563,541 100.0 594,204 100.0 289,173 100.0 298,251 100.0
Note : Others include Anhui, Fujian, Guizhou, Heilongjiang, Henan, Hubei, Hunan, Jiangxi, Shaanxi and Y unan.
During the Track Record Period, we generated majority of our sales from Guangdong which
contributed approximately 84.0%, 81.5%, 78.6%, 77.6% and 78.7% of the total sales for the
years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and
2023, respectively. Following Guangdong, Hainan contributed the second largest sales to our
Group. Approximately 9.7%, 7.7%, 7.2%, 8.8% and 5.3% of the total sales were generated from
Hainan for the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June
2022 and 2023, respectively. Starting from the year ended 31 December 2020, Chongqing
contributed the third largest sales to our Group with a number of notable property cleaning
projects. During the Track Record Period, the Group’s revenue generated in Hainan Province and
Chongqing, in aggregate, amounted to approximately RMB54.4 million, RMB64.5 million,
RMB67.3 million, RMB37.6 million and RMB28.9 million respectively, representing
approximately 11.6%, 11.5%, 11.3%, 13.0% and 9.7% of the total revenue for the years ended 31
December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023, respectively.
During the Track Record Period, our revenue from Guangxi, Chongqing, Hainan and others
was approximately RMB74.7 million, RMB104.4 million, RMB126.9 million and RMB64.8
million and RMB63.6 million, respectively, representing a CAGR of approximately 30.3% from
2020 to 2022 and a slightly decrease of approximately 1.9% from the six months ended 30 June
2022 to 30 June 2023.
Cost of services
Our cost of services primarily consisted of employee benefit expenses, subcontracting
labour costs, cost of cleaning materials consumed, insurance expenses, depreciation,
maintenance and utilities expenses and other expenses. Our employee benefit expenses consist
primarily of (i) salaries, wages and bonuses; (ii) social insurance and housing provident fund
FINANCIAL INFORMATION
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--- page 297 ---
contribution; and (iii) other employee benefits. Our subcontracting labour costs consist primarily
of fees paid to third party service providers for cleaning service, high-altitude cleaning service,
water cleaning services and other services. Cost of cleaning materials consumed mainly
comprised cost of garbage bags, toilet papers, chemicals and detergents which used when
providing general cleaning services. Our insurance expenses consist primarily of the pension
insurance, work-related injury insurance, medical insurance, unemployment insurance and
maternity insurance. Other expenses mainly related to taxes and surcharges, uniform expenses,
motor vehicles expenses, short-term lease expenses and other sundry expenses.
The following table sets forth a breakdown of our cost of services during the years/periods
indicated:
For the year ended 31 December For the six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited)
Employee benefit expenses 208,786 54.1 254,490 53.7 291,941 58.4 142,423 58.5 151,138 60.2
Subcontracting labour costs 149,939 38.9 188,882 39.8 172,910 34.6 84,363 34.7 85,939 34.2
Cost of cleaning materials
consumed 12,897 3.3 17,034 3.6 18,903 3.8 9,175 3.9 7,732 3.1
Insurance expenses 4,594 1.2 2,261 0.5 3,664 0.7 1,958 0.8 957 0.4
Depreciation 2,134 0.6 2,582 0.5 2,572 0.5 1,267 0.5 1,335 0.5
Maintenance and utilities
expenses 2,284 0.6 1,509 0.3 1,803 0.4 907 0.4 907 0.4
Other expenses
Note 5,112 1.3 7,538 1.6 8,002 1.6 3,340 1.2 3,066 1.2
TOTAL 385,746 100.0 474,296 100.0 499,795 100.0 243,433 100.0 251,074 100.0
Note: Other expenses mainly related to taxes and surcharges, uniform expenses, motor vehicles expenses,
short-term lease expenses and other sundry expenses.
During the Track Record Period, the main factors affecting our cost of services were our
employee benefit expenses and subcontracting labour costs. The increase in employee benefit
expenses and subcontracting labour costs was mainly due to the expansion of our scale of
operations in different provincial-level regions in the PRC, given that our cleaning and
maintenance services are labour intensive and we cannot permanently retain all necessary
operation staff for project and execution and do not own a sufficient number of specialised
vehicles to complete certain projects. Our employee benefit expenses included in cost of sales
and our subcontracting labour costs in aggregate amounted to RMB358.7 million, RMB443.4
million, RMB464.9 million, RMB226.8 million and RMB237.1 million, accounting for
approximately 93.0%, 93.5%, 93.0%, 93.2% and 94.4% of our cost of services for the years
ended 31 December 2020, 2021 and 2022 and 30 June 2022 and 2023, respectively.
FINANCIAL INFORMATION
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Gross profit and gross profit margin
The following table sets out a breakdown of our revenue, gross profit and gross profit
margin according to principal service categories during the years/periods indicated:
Y ear ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
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
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited)
Property cleaning
– Commercial building 38,637 18.3 44,303 17.7 51,126 17.7 23,546 17.6 27,765 17.4
– Residential building 12,918 13.4 14,761 10.9 15,727 10.9 7,755 11.0 6,798 10.5
– Transportation hub 10,338 16.3 9,602 15.6 8,367 16.1 4,573 15.8 2,600 15.5
– Shopping mall 10,515 19.9 12,138 17.1 10,985 17.1 5,886 17.0 4,623 17.0
– Public utilities
Note 1 2,787 16.7 2,052 16.2 1,961 16.4 770 16.3 1,459 16.0
– Industrial park 1,345 20.3 2,672 20.6 2,536 20.6 1,260 19.5 1,658 20.0
Public space cleaning Note 2 3,367 18.3 3,717 19.0 3,707 18.4 1,950 19.0 2,274 18.0
Other cleaning Note 3 1 1 3 . 1 –– –– –– ––
79,918 17.2 89,245 15.8 94,409 15.9 45,740 15.8 47,177 15.8
Notes:
(1) Public utilities cleaning primarily consists of government offices and school cleaning.
(2) Public space cleaning primarily consists of road sweeping and cityscape cleaning.
(3) Other cleaning primarily consists of river cleaning.
We generated gross profit of approximately RMB79.9 million, RMB89.2 million, RMB94.4
million, RMB45.7 million and RMB47.2 million for the years ended 31 December 2020, 2021
and 2022 and the six months ended 30 June 2022 and 2023, respectively, representing gross
profit margins of approximately 17.2%, 15.8%, 15.9%, 15.8% and 15.8% for the corresponding
periods, respectively.
FINANCIAL INFORMATION
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--- page 299 ---
Other income
Our other income mainly comprised (i) rental income earned from the lease or sub-lease of
our owned or leased properties in the PRC to Independent Third Parties, one of which is
Guangzhou Pengsheng, which we previously held a majority interest in prior to its disposal in
October 2020 to an Independent Third Party; (ii) penalty on late payment of rental income from
the sub-lease of a leased property to Guangzhou Pengsheng; (iii) non-recurring net
income/(losses) from the provision of ancillary services for a road construction project during
the year ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and
(iv) value added tax refund.
The following table sets forth a breakdown of our other income, net for the years/periods
indicated:
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Rental income 1,345 848 2,917 1,194 1,687
Penalty on late payment of
rental income (Note) 1,24 1––––
V alue-added tax refund 2,425 2,107 2,193 1,093 643
Government grant 172 37 777 768 –
Net income/(losses) from the
provision of construction
labor services 2,656 4,328 (822) 330 –
Dividend income from
financial assets at fair value
through
profit or loss 8 4––––
Donation (130) – (50) (50) (70)
Others 445 (165) 94 102 (25)
8,238 7,155 5,109 3,437 2,235
Note: The penalty arising from the late payment of rental income represented an interest of 0.1% charged on the
outstanding rental income receivable from Guangzhou Pengsheng during the Track Record Period. The late
payment from Guangzhou Pengsheng was mainly due to the fact that we previously held a majority interest
in it prior to its disposal until October 2020. Our Directors considered that there was no liquidity or
operational negative impact for the late payment allowed to Guangzhou Pengsheng as it was controlled by
Guangzhou Shenghui until October 2020. In January 2021, our Group reached a commercial settlement
with Guangzhou Pengsheng to settle the total rental receivables at approximately RMB1.2 million and all
remaining of rental receivables penalty on late payment of rental income previously charged, in total of
RMB5,915,000 were waived and were written off as bad debts for the year ended 31 December 2021.
Please refer to the section headed “History, Reorganisation and Group Structure – Reorganisation” of this
prospectus for details.
FINANCIAL INFORMATION
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--- page 300 ---
Other loss
Our other loss comprised (i) fair value loss on financial assets at fair value through profit
or loss; (ii) loss on disposal of investments in associates; and (iii) loss on disposal of property,
plant and equipment.
The following table sets forth a breakdown of our other loss for the years/periods indicated:
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Fair value loss on financial
assets at fair value through
profit or loss (“ FVTPL ”) (7,114) ––––
Loss on disposal of
investments in associates,
net (174) ––––
Loss on disposal of property,
plant and equipment, net (57) (3) – – –
(7,345) (3) – – –
Please refer to the paragraph headed “Financial assets at fair value through profit or loss”
in this section for details.
FINANCIAL INFORMATION
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--- page 301 ---
Selling and marketing expenses
Our selling and marketing expenses primarily consisted of marketing and entertainment
expenses, office and communication expenses and tendering expense with the increases in such
expenses in line with the expansion of our operations. The following table sets forth a
breakdown of our marketing expenses for the periods indicated:
For the year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited)
Marketing and
entertainment expenses 1,862 59.8 2,635 85.7 3,434 86.2 1,855 94.3 2,113 77.4
Office and communication
expenses 53 1.7 – – – – – – – –
Tendering expenses 610 19.6 433 14.1 549 13.8 111 5.7 617 22.6
Others 586 18.9 8 0.2 – – – – – –
TOTAL 3,111 100.0 3,076 100.0 3,983 100.0 1,966 100.0 2,730 100.0
General and administrative expenses
Our general and administrative expenses mainly comprised (i) employee benefit expenses
payable to our Directors and staff in the administrative functions; (ii) cost of cleaning material
consumed for research and development; (iii) Listing expenses; (iv) depreciation expenses of
property, plant and equipment, investment properties and right-of-use assets; and (v) motor
vehicle expenses. Our general and administrative expenses amounted to approximately, RMB33.7
million, RMB45.0 million, RMB51.1 million, RMB26.6 million and RMB24.0 million for the
years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and
2023, respectively.
FINANCIAL INFORMATION
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--- page 302 ---
The following table sets forth a breakdown of our general and administrative expenses for
the years/periods indicated:
For the year ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 % RMB’000 % RMB’000 % RMB’000 % RMB’000 %
(Unaudited)
Employee benefit expenses 23,312 69.2 30,314 67.3 32,120 62.9 14,595 54.8 14,848 61.8
Cost of cleaning material
consumed 1,215 3.6 2,373 5.3 1,125 2.2 784 2.9 813 3.4
Listing expenses 3,892 11.6 5,777 12.8 7,859 15.4 6,428 24.1 3,233 13.4
Depreciation 1,224 3.6 1,221 2.7 1,147 2.2 581 2.2 545 2.3
Motor vehicle expenses 459 1.4 1,073 2.4 741 1.5 350 1.3 592 2.5
Maintenance and utility
expenses 247 0.7 144 0.3 310 0.6 141 0.5 101 0.4
Office and communication
expenses 1,589 4.7 1,716 3.8 1,543 3.0 635 24 773 3.2
Travelling expenses 662 2.0 1,146 2.5 1,682 3.3 1,261 4.8 976 4.1
Short-term lease expense 110 0.3 144 0.3 2,175 4.3 1,007 3.8 1,168 4.9
Professional service fees 353 1.1 113 0.3 100 0.2 50 0.2 158 0.7
Other expenses
(Note) 619 1.8 1,012 2.3 2,258 4.4 795 3.0 835 3.3
TOTAL 33,682 100.0 45,033 100.0 51,060 100.0 26,627 100.0 24,042 100.0
Note : Other general and administrative expenses mainly comprised of bank fees and charges, information
technology expenses, telecommunication expenses and other miscellaneous administrative expenses.
Finance expenses, net
Our net finance expenses comprised interest income from banks and loan interest expense
arising from bank borrowings and lease liabilities amounted to approximately RMB1.2 million,
RMB0.4 million, RMB0.4 million, RMB0.2 million and RMB0.2 million for the years ended 31
December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023, respectively.
Please refer to the paragraph headed “Indebtedness” in this section for details.
FINANCIAL INFORMATION
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--- page 303 ---
The following table sets forth a breakdown of our finance costs for the years/periods
indicated:
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Finance income
Bank interest income 134 92 153 109 72
Finance expenses
Interest expense on bank and
other borrowings (848) (55) (148) (121) (53)
Interest expense on lease
liabilities (458) (441) (427) (224) (216)
(1,172) (404) (422) (236) (197)
Share of net profit of associates
Our share of net profit of associates were approximately RMB0.2 million, nil, nil, nil and
nil for the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June
2022 and 2023, respectively. All investments in associates were disposed during the year ended
31 December 2020 due to reorganisation in preparation for the Listing. Please refer to the
section headed “History, Reorganisation and Group structure – Reorganisation” of this
prospectus and Note 18 of the Accountant’s Report in Appendix I to this prospectus for details.
FINANCIAL INFORMATION
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--- page 304 ---
Income tax expenses
Our income tax expenses primarily consist of current income tax payable at the statutory
rates applicable to our assessable profit before taxation as determined under relevant laws and
regulations and deferred income tax expense/credit arising from the movement in deferred tax
assets recognised for the reporting periods. For the year ended 31 December 2020, 2021 and
2022 and the six months ended 30 June 2022 and 2023, our income tax expenses were
approximately RMB7.2 million, RMB5.6 million and RMB5.5 million, RMB3.1 million and
RMB2.1 million, respectively. The following table sets forth a breakdown of our income tax
expenses for the periods indicated:
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Current income
tax 6,618 6,160 6,108 3,337 2,871
Deferred income
tax 572 (530) (629) (286) (752)
7,190 5,630 5,479 3,051 2,119
According to the applicable PRC tax regulations, the general enterprise income tax rate in
PRC is 25% and our PRC entities had been subject to the statutory enterprise income rate during
the Track Record Period. Guangzhou Shenghui has been qualified as a High and New
Technology Enterprise and enjoyed a preferential income tax rate of 15% since 2020, which is
subject to review and renewal once every three years. The High and New Technology Enterprise
Certificate was obtained and be remained valid for 3 years from December 2020 to December
2023. No provision for Hong Kong Profits Tax has been made as we had no assessable profits
arising in Hong Kong during the Track Record Period. Our effective income tax rates were
18.7%, 12.4%, 13.7%, 16.5% and 12.2% for the year ended 31 December 2020, 2021 and 2022
and the six months ended 30 June 2022 and 2023, respectively. Our effective income tax rates
decreased from 18.7% for the year ended 31 December 2020 to approximately 12.4% for the
year ended 31 December 2021, which was mainly attributable to a subsidiary with a preferential
income tax rate of 15% since December 2020. Our effective tax rate increased from
approximately 12.4% for the year ended 31 December 2021 to approximately 13.7% for the year
ended 31 December 2022, which was mainly attributable to the decrease in deductible expenses
incurred for the year ended 31 December 2022. Our effective tax rate decreased from
approximately 16.5% for the six months ended 30 June 2022 to approximately 12.2% for the six
months ended 30 June 2023, which was mainly attributable to Guangzhou Shenghui enjoyed the
increased additional tax deduction rate from 75% to 100% since 2023.
FINANCIAL INFORMATION
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--- page 305 ---
Our Directors confirm that, during the Track Record Period and up to the Latest Practicable
Date, our Group did not have any unresolved tax issue or dispute with the relevant tax
authorities.
PERIOD-TO-PERIOD COMPARISON OF RESULTS OF OPERATIONS
Six months ended 30 June 2023 compared to six months ended 30 June 2022
Revenue
Our total revenue increased by approximately 3.1% from approximately RMB289.2 million
for the six months ended 30 June 2022 to approximately RMB298.3 million for the six months
ended 30 June 2023, primarily due to our overall business growth.
 Property cleaning service. Our revenue generated from our property cleaning service
increased by approximately 2.4% from approximately RMB278.9 million for the six
months ended 30 June 2022 to approximately RMB285.6 million for the six months
ended 30 June 2023, which was mainly driven by the increase in cleaning service at
commercial buildings, public utilities and industrial park. Our number of projects in
property cleaning service increased from 251 projects during the six months ended 30
June 2022 to 285 projects during the six months ended 30 June 2023.
– Commercial building . Our revenue generated from commercial building increased
by approximately 19.3% from approximately RMB133.9 million for the six
months ended 30 June 2022 to approximately RMB159.8 million for the six
months ended 30 June 2023, which was primarily attributable to (i) 46 new
projects which contributed approximately RMB20.4 million of revenue in total
during the six months ended 30 June 2023, such as a project engaged by a
leading property developer listed on the Hong Kong Stock Exchange; (ii) our
broadened service scope such as not only providing basic cleaning and
maintenance but also garbage collection and transportation in existing projects;
and (iii) our increased service coverage due to increased serving units in the
existing projects during the six months ended 30 June 2023 as a result of our
business expansion contributed by our increased tendering efforts.
– Residential building . Our revenue generated from residential building decreased
by approximately 8.4% from approximately RMB70.3 million for the six months
ended 30 June 2022 to approximately RMB64.4 million for the six months ended
30 June 2023, which was primarily attributable to several contracts in different
projects which have ended during 2022 and partially offset by the 18 new
projects which contributed approximately RMB6.6 million of revenue in total
during the six months ended 30 June 2023, such as a project engaged by a
leading property management company listed on the Hong Kong Stock Exchange,
as a result of our business expansion contributed by our increased tendering
efforts.
FINANCIAL INFORMATION
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--- page 306 ---
– Transportation hub . Our revenue generated from transportation hub decreased by
approximately 41.9% from approximately RMB28.9 million for the six months
ended 30 June 2022 to approximately RMB16.8 million for the year ended 30
June 2023, which was primarily attributable to several contracts in different
projects which have ended during 2022 and first quarter of 2023 and partially
offset by a new project which contributed approximately RMB1.3 million of
revenue in total during the six months ended 30 June 2023 as a result of our
business expansion contributed by our increased tendering efforts.
– Shopping mall . Our revenue generated from shopping mall decreased by
approximately 21.6% from approximately RMB34.7 million for the six months
ended 30 June 2022 to approximately RMB27.2 million for the six months ended
30 June 2023, which was primarily due to a project which contributed significant
revenue has ended in 2022.
– Public utilities . Our revenue generated from public utilities increased by
approximately 93.6% from approximately RMB4.7 million for the six months
ended 30 June 2022 to approximately RMB9.1 million 30 June 2023, which was
mainly due to four new projects which contributed approximately RMB5.2
million of revenue in total during the six months ended 30 June 2023, as a result
of our business expansion contributed by our increased tendering efforts.
– Industrial park . Our revenue generated from industrial park increased by
approximately 27.7% from approximately RMB6.5 million for the six months
ended 30 June 2022 to approximately RMB8.3 million for the six months ended
30 June 2023, which was primarily due to four new projects which contributed
approximately RMB2.5 million of revenue in total during the six months ended
30 June 2023 as a result of our business expansion contributed by our increased
tendering efforts.
 Public space cleaning service . Our revenue generated from public space cleaning
service increased by approximately 23.5% from approximately RMB10.2 million for
the six months ended 30 June 2022 to approximately RMB12.6 million for six months
ended 30 June 2023, which was primarily attributable to two new projects which
contributed approximately RMB2.5 million of revenue in total during the six months
ended 30 June 2023.
 Other cleaning service . There was no revenue generated from other cleaning service
for the six months ended 30 June 2022 and 2023.
FINANCIAL INFORMATION
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--- page 307 ---
Cost of services
Our cost of services increased by approximately RMB7.7 million or 3.2% from
approximately RMB243.4 million for the six months ended 30 June 2022 to approximately
RMB251.1 million for the six months ended 30 June 2023. Such increase was mainly
attributable to the increase in employee benefit expenses from approximately RMB142.4 million
to approximately RMB151.1 million due to the increased number of workers employed over the
corresponding periods in order to meet the manpower requirement of increased number of
projects.
Gross profit and gross profit margin
As a result of the foregoing, our total gross profit increased by 3.3% from approximately
RMB45.7 million for the six months ended 30 June 2022 to approximately RMB47.2 million for
the six months ended 30 June 2023. Our gross profit margin remained relatively stable at 15.8%
and 15.8% for the six months ended 30 June 2022 and 2023, respectively.
 Property cleaning service . Gross profit of our property cleaning service increased by
approximately 2.5% from approximately RMB43.8 million for the six months ended
30 June 2022 to approximately RMB44.9 million for the six months ended 30 June
2023 due to the increase in revenue during the six months ended 30 June 2023, mainly
driven by revenue generated from commercial building, public utilities and industrial
park. Gross profit margin of our property cleaning service remained relatively stable
at 15.7% and 15.7% for the six months ended 30 June 2022 and 2023, respectively.
– Commercial building . Gross profit of our commercial building increased by
approximately 18.3% from approximately RMB23.5 million for the six months
ended 30 June 2022 to approximately RMB27.8 million for the six months ended
30 June 2023 which was mainly due to the increase in our revenue during the six
months ended 30 June 2023. Gross profit margin of our commercial building
remained relatively stable at 17.6% and 17.4% for the six months ended 30 June
2022 and 2023, respectively.
– Residential building . Gross profit of our residential building decreased by
approximately 12.8% from approximately RMB7.8 million for the six months
ended 30 June 2022 to approximately RMB6.8 million for the six months ended
30 June 2023 which was mainly attributable to the decrease in our revenue
during the six months ended 30 June 2023 and the gross profit margin of our
residential building remained relatively stable at 11.0% and 10.5% for the six
months ended 30 June 2022 and 2023, respectively.
FINANCIAL INFORMATION
– 299 –


--- page 308 ---
– Transportation hub . Gross profit of our transportation hub decreased by
approximately 43.5% from approximately RMB4.6 million for the six months
ended 30 June 2022 to approximately RMB2.6 million for the six months ended
30 June 2023 which was mainly due to the decrease in our revenue during the six
months ended 30 June 2023. Gross profit margin of our transportation hub
remained relatively stable at 15.8% and 15.5% for the six months ended 30 June
2022 and 2023, respectively.
– Shopping mall . Gross profit of our shopping mall decreased by approximately
22.0% from approximately RMB5.9 million for the six months ended 30 June
2022 to approximately RMB4.6 million for the six months ended 30 June 2023
which was mainly due to the decrease in our revenue during the six months
ended 30 June 2023. Gross profit margin of our shopping mall remained
relatively stable at 17.0% and 17.0% for the six months ended 30 June 2022 and
2023, respectively.
– Public utilities. Gross profit of our public utilities increased by approximately
87.5% from approximately RMB0.8 million for the six months ended 30 June
2022 to approximately RMB1.5 million for the six months ended 30 June 2023
which was mainly due to the increase in our revenue during the six months ended
30 June 2023. Gross profit margin of our public utilities remained relatively
stable at 16.3% and 16.0% for the six months ended 30 June 2022 and 2023,
respectively.
– Industrial park . Gross profit of our industrial park increased by approximately
30.8% from approximately RMB1.3 million for the six months ended 30 June
2022 to approximately RMB1.7 million for the six months ended 30 June 2023
which was mainly due to the increase in our revenue during the six months ended
30 June 2023. Gross profit margin of our industrial park remained relatively
stable at 19.5% and 20.0% for the six months ended 30 June 2022 and 2023,
respectively.
 Public space cleaning service . Gross profit of our public space cleaning service
increased by approximately 15.0% from approximately RMB2.0 million for the six
months ended 30 June 2022 to approximately RMB2.3 million for the six months
ended 30 June 2023 which was mainly due to the increase in revenue during the six
months ended 30 June 2023. Gross profit margin of our public space cleaning service
remained relatively stable at 19.0% and 18.0% for the six months ended 30 June 2022
and 2023, respectively.
 Other cleaning service . Gross profit of our other cleaning service remained at nil for
the six months ended 30 June 2022 and 2023 as no revenue was derived from other
cleaning service during the six months ended 30 June 2022 and 2023.
FINANCIAL INFORMATION
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--- page 309 ---
Other income
Our other income decreased by approximately RMB1.2 million or 35.3% from
approximately RMB3.4 million for the six months ended 30 June 2022 to approximately RMB2.2
million for the six months ended 30 June 2023. The decrease was mainly attributable to the
decrease in PRC government grant by RMB0.8 million and the decrease in value–added tax
refund by approximately RMB0.5 million.
Other loss
Our other loss remained stable at nil and nil for the six months ended 30 June 2022 and
2023, respectively.
Selling and marketing expenses
Our selling and marketing expenses increased by approximately RMB0.7 million or 35.0%
from approximately RMB2.0 million for the six months ended 30 June 2022 to approximately
RMB2.7 million for the six months ended 30 June 2023. The increase was mainly attributable to
the increase in tendering expenses by RMB0.5 million, which contributed to increase in number
of tenders.
General and administrative expenses
Our general and administrative expenses decreased by approximately RMB2.6 million or
9.8% from approximately RMB26.6 million for the six months ended 30 June 2022 to
approximately RMB24.0 million for the six months ended 30 June 2023. Such decrease was
mainly attributable to the decrease in Listing expenses by approximately RMB3.2 million.
Finance expenses, net
Our finance expenses, net remained stable at RMB0.2 million and RMB0.2 million for the
six months ended 30 June 2022 and 2023, respectively.
Income tax expenses
Our income tax expenses decreased by approximately RMB1.0 million or 32.3% from
approximately RMB3.1 million for the six months ended 30 June 2022 to approximately RMB2.1
million for the six months ended 30 June 2023. Effective tax rate decreased from approximately
16.5% for the six months ended 30 June 2022 to 12.2% for the six months ended 30 June 2023,
which was mainly attributable to Guangzhou Shenghui enjoyed the increased additional tax
deducting rate from 75% to 100% since 1 January 2023. For details, please refer to Note 12 of
the Accountant’s Report in Appendix I to this prospectus.
FINANCIAL INFORMATION
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--- page 310 ---
Net profit and net profit margin
As a result of the foregoing, our net profit slightly decreased from approximately RMB15.4
million for the six months ended 30 June 2022 to approximately RMB15.3 million for the six
months ended 30 June 2023, and our net profit margin remained stable at 5.3% and 5.1% for the
six months ended 30 June 2022 and 2023, respectively.
Y ear ended 31 December 2022 compared to year ended 31 December 2021
Revenue
Our total revenue increased by approximately 5.4% from approximately RMB563.5 million
for the year ended 31 December 2021 to approximately RMB594.2 million for the year ended 31
December 2022, primarily due to our overall business growth.
 Property cleaning service . Our revenue generated from our property cleaning service
increased by approximately 5.5% from approximately RMB544.0 million for the year
ended 31 December 2021 to approximately RMB574.1 million for the year ended 31
December 2022, which was mainly driven by the increase in cleaning service at
commercial buildings and residential buildings. Our number of projects in property
cleaning service increased from 252 projects during the year ended 31 December 2021
to 291 projects during the year ended 31 December 2022.
– Commercial building . Our revenue generated from commercial building increased
by approximately 15.9% from approximately RMB249.9 million for the year
ended 31 December 2021 to approximately RMB289.6 million for the year ended
31 December 2022, which was primarily attributable to (i) 54 new projects which
contributed approximately RMB33.0 million of revenue in total during the year
ended 31 December 2022, such as a project engaged by one of the largest
property management companies in the PRC who listed on the Main Board in
Hong Kong; (ii) our broadened service scope such as not only providing basic
cleaning and maintenance but also garbage collection and transportation in
existing projects; and (iii) our increased service coverage due to increased
serving units in the existing projects during the year ended 31 December 2022 as
a result of our business expansion contributed by our increased tendering efforts.
– Residential building . Our revenue generated from residential building increased
by approximately 5.8% from approximately RMB135.8 million for the year ended
31 December 2021 to approximately RMB143.7 million for the year ended 31
December 2022, which was primarily attributable to 23 new projects which
contributed approximately RMB12.1 million of revenue in total during the year
ended 31 December 2022, such as a project engaged by one of the largest
property management companies in the PRC who listed on the Main Board in
Hong Kong, as a result of our business expansion contributed by our increased
tendering efforts.
FINANCIAL INFORMATION
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--- page 311 ---
– Transportation hub . Our revenue generated from transportation hub decreased by
approximately 15.3% from approximately RMB61.4 million for the year ended 31
December 2021 to approximately RMB52.0 million for the year ended 31
December 2022, which was primarily attributable to a project which contributed
significant revenue which has ended in 2021 and the completion of several
contracts in different projects in 2022.
– Shopping mall . Our revenue generated from shopping mall decreased by
approximately 9.6% from approximately RMB71.2 million for the year ended 31
December 2021 to approximately RMB64.4 million for the year ended 31
December 2022, which was primarily due to the completion of several contracts
in different projects in 2022 and offset by three new projects which contributed
approximately RMB1.9 million of revenue in total during the year ended 31
December 2022 as a result of our business expansion contributed by our
increased tendering efforts.
– Public utilities . Our revenue generated from public utilities decreased by
approximately 5.5% from approximately RMB12.7 million for the year ended 31
December 2021 to approximately RMB12.0 million 31 December 2022, which
was mainly due to several contracts in different projects which have ended
during 2022 and offset by eight new projects which contributed approximately
RMB2.0 million in total in 2022 as a result of our business expansion contributed
by our increased tendering efforts.
– Industrial park . Our revenue generated from industrial park decreased by
approximately 5.4% from approximately RMB13.0 million for the year ended 31
December 2021 to approximately RMB12.3 million for the year ended 31
December 2022, which was primarily due to the completion of several contracts
in different projects in 2022 and offset by two new projects which contributed
approximately RMB1.0 million of revenue in total during the year ended 31
December 2022 as a result of our business expansion contributed by our
increased tendering efforts.
 Public space cleaning service . Our revenue generated from public space cleaning
service increased by approximately 2.6% from approximately RMB19.6 million for the
year ended 31 December 2021 to approximately RMB20.1 million for year ended 31
December 2022, which was primarily attributable to a new project which contributed
approximately RMB2.5 million of revenue in total during the year ended 31 December
2022.
 Other cleaning service . There was no revenue generated from other cleaning service
for the years ended 31 December 2021 and 2022.
FINANCIAL INFORMATION
– 303 –


--- page 312 ---
Cost of services
Our cost of services increased by approximately RMB25.5 million or 5.4% from
approximately RMB474.3 million for the year ended 31 December 2021 to approximately
RMB499.8 million for the year ended 31 December 2022. Such increase was mainly attributable
to the increase in employee benefit expenses from approximately RMB254.5 million to
approximately RMB291.9 million due to the increased number of workers employed over the
corresponding periods in order to meet the manpower requirement of increased number of
projects.
Gross profit and gross profit margin
As a result of the foregoing, our total gross profit increased by 5.8% from approximately
RMB89.2 million for the year ended 31 December 2021 to approximately RMB94.4 million for
the year ended 31 December 2022. Our gross profit margin remained relatively stable at 15.8%
and 15.9% for the years ended 31 December 2021 and 2022, respectively.
 Property cleaning service . Gross profit of our property cleaning service increased by
approximately 6.1% from approximately RMB85.5 million for the year ended 31
December 2021 to approximately RMB90.7 million for the year ended 31 December
2022 due to the increase in revenue during the year ended 31 December 2022, mainly
driven by revenue generated from commercial building and residential building. Gross
profit margin of our property cleaning service relatively stable at 15.7% and 15.8% for
the years ended 31 December 2021 and 2022, respectively.
– Commercial building . Gross profit of our commercial building increased by
approximately 15.3% from approximately RMB44.3 million for the year ended 31
December 2021 to approximately RMB51.1 million for the year ended 31
December 2022 which was mainly due to the increase in our revenue during the
year ended 31 December 2022. Gross profit margin of our commercial building
remained relatively stable at 17.7% and 17.7% for the years ended 31 December
2021 and 2022, respectively.
– Residential building . Gross profit of our residential building increased by
approximately 6.1% from approximately RMB14.8 million for the year ended 31
December 2021 to approximately RMB15.7 million for the year ended 31
December 2022 which was mainly attributable to the increase in our revenue
during the year ended 31 December 2022 and the gross profit margin of our
residential building remained relatively stable at 10.9% and 10.9% for the years
ended 31 December 2021 and 2022, respectively.
FINANCIAL INFORMATION
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– Transportation hub . Gross profit of our transportation hub decreased by
approximately 12.5% from approximately RMB9.6 million for the year ended 31
December 2021 to approximately RMB8.4 million for the year ended 31
December 2022 which was mainly due to the decrease in our revenue during the
year ended 31 December 2022. Gross profit margin of our transportation hub
remained relatively stable at 15.6% and 16.1% for the years ended 31 December
2021 and 2022, respectively.
– Shopping mall . Gross profit of our shopping mall decreased by approximately
9.1% from approximately RMB12.1 million for the year ended 31 December
2021 to approximately RMB11.0 million for the year ended 31 December 2022
which was mainly due to the decrease in our revenue during the year ended 31
December 2022. Gross profit margin of our shopping mall remained relatively
stable at 17.1% and 17.1% for the years ended 31 December 2021 and 2022,
respectively.
– Public utilities. Gross profit of our public utilities remained relatively stable at
RMB2.1 million and RMB2.0 million for the years ended 31 December 2021 and
2022, respectively. Gross profit margin of our public utilities remained relatively
stable at 16.2% and 16.4% for the years ended 31 December 2021 and 2022,
respectively.
– Industrial park . Gross profit of our industrial park remained relatively stable at
RMB2.7 million and RMB2.5 million for the years ended 31 December 2021 and
2022, respectively. Gross profit margin of our industrial park remained relatively
stable at 20.6% and 20.6% for the years ended 31 December 2021 and 2022,
respectively.
 Public space cleaning service . Gross profit of our public space cleaning service
remained relatively stable at RMB3.7 million and RMB3.7 million for the years ended
31 December 2021 and 2022, respectively. Gross profit margin of our public space
cleaning service remained relatively stable at 19.0% and 18.4% for the years ended 31
December 2021 and 2022, respectively.
 Other cleaning service . Gross profit of our other cleaning service remained at nil for
the years ended 31 December 2021 and 2022 as no revenue was derived from other
cleaning service during the years ended 31 December 2021 and 2022.
FINANCIAL INFORMATION
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Other income
Our other income decreased by approximately RMB2.1 million or 29.2% from
approximately RMB7.2 million for the year ended 31 December 2021 to approximately RMB5.1
million for the year ended 31 December 2022. The decrease was mainly attributable to decrease
in net non-recurring income from the provision of ancillary services for a road construction
project of approximately RMB5.2 million due to the provision of ancillary services has been
completed and the decrease in contract sum led to negative income derived by input method.
And offset by the increase in rental income by RMB2.1 million for the new sub-lease of our
leased shops and carparks.
Other loss
Our other loss remained stable at RMB3,000 and nil for the years ended 31 December 2021
and 2022, respectively.
Selling and marketing expenses
Our selling and marketing expenses increased by approximately RMB0.9 million or 29.0%
from approximately RMB3.1 million for the year ended 31 December 2021 to approximately
RMB4.0 million for the year ended 31 December 2022. The increase was mainly attributable to
the increase in marketing and entertainment expenses by RMB0.8 million, which contributed to
our growth in project numbers.
General and administrative expenses
Our general and administrative expenses increased by approximately RMB6.1 million or
13.6% from approximately RMB45.0 million for the year ended 31 December 2021 to
approximately RMB51.1 million for the year ended 31 December 2022. Such increase was
mainly attributable to the increase in Listing expenses by approximately RMB2.1 million and the
increase in short-term lease expenses by RMB2.0 million from our newly leased shops and
carpark in the year ended 31 December 2022.
Finance expenses, net
Our finance expenses, net remained stable at RMB0.4 million and RMB0.4 million for the
years ended 31 December 2021 and 2022, respectively.
FINANCIAL INFORMATION
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Income tax expenses
Our income tax expenses decreased by approximately RMB0.1 million or 1.8% from
approximately RMB5.6 million for the year ended 31 December 2021 to approximately RMB5.5
million for the year ended 31 December 2022. Effective tax rate increased from approximately
12.4% for the year ended 31 December 2021 to 13.7% for the year ended 31 December 2022,
which was mainly attributable to less deductible expenses incurred for year ended 31 December
2022. For details, please refer to Note 12 of the Accountant’s Report in Appendix I to this
prospectus.
Net profit and net profit margin
As a result of the foregoing, our net profit decreased slightly by approximately RMB5.5
million or 13.8% from RMB39.9 million for the year ended 31 December 2021 to approximately
RMB34.4 million for the year ended 31 December 2022, whilst our net profit margin decreased
from 7.1% for the year ended 31 December 2021 to 5.8% for the year ended 31 December 2022.
Y ear ended 31 December 2021 compared to year ended 31 December 2020
Revenue
Our total revenue increased by approximately 21.0% from approximately RMB465.7
million for the year ended 31 December 2020 to approximately RMB563.5 million for the year
ended 31 December 2021, primarily due to our overall business growth.
 Property cleaning service . Our revenue generated from our property cleaning service
increased by approximately 21.7% from approximately RMB446.9 million for the year
ended 31 December 2020 to approximately RMB544.0 million for the year ended 31
December 2021, which was mainly driven by revenue generated from commercial
building, shopping mall and residential building. Our number of projects in property
cleaning service increased from 238 projects during the year ended 31 December 2020
to 252 projects during the year ended 31 December 2021.
– Commercial building. Our revenue generated from commercial building increased
by 18.2% from approximately RMB211.4 million for the year ended 31
December 2020 to approximately RMB249.9 million for the year ended 31
December 2021, which was primarily due to (i) 23 new projects which
contributed approximately RMB10.5 million of revenue in total in 2021, such as
Raffle City Chongqing (ᅅԸ၅ɻᄿఙ ); and (ii) our increased service coverage
due to increased serving units in the existing projects in 2021 as a result of our
business expansion contributed by our increased tendering effort.
FINANCIAL INFORMATION
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– Residential building. Our revenue generated from residential building increased
by 41.3% from approximately RMB96.1 million for the year ended 31 December
2020 to approximately RMB135.8 million for the year ended 31 December 2021,
which was primarily due to (i) 18 new projects which contributed approximately
RMB13.6 million of revenue in total in 2021, such as a project engaged by one
of the largest established integrated property developers and largest real estate
builders in the PRC who listed on the Main Board in Hong Kong; and (ii) our
increased service coverage in terms of the number of residential units we served
in the existing projects in 2021 as a result of our business expansion contributed
by our increased tendering effort.
– Transportation hub. Our revenue generated from transportation hub decreased by
3.2% from approximately RMB63.4 million for the year ended 31 December
2020 to approximately RMB61.4 million for the year ended 31 December 2021,
which was primarily attributable to several contracts in different projects ended
in 2021 and partially offset by the revenue contribution of the project, Chongqing
Jiangbei International Airport (ᅅϪ̏਷ყዚఙ ), since July 2020.
– Shopping mall. Our revenue generated from shopping mall increased by 35.1%
from approximately RMB52.7 million for the year ended 31 December 2020 to
approximately RMB71.2 million for the year ended 31 December 2021, which
was primarily due to (i) seven new projects which contributed approximately
RMB10.1 million of revenue in total in 2021, such as a project engaged by a
leading property management company listed on the Main Board in Hong Kong
with operations in 196 cities in the PRC as result of our business expansion
contributed by our increased tendering effort; and (ii) a project which started in
the last quarter of 2020 and contributed significant amount of revenue in 2021.
– Public utilities. Our revenue generated from public utilities decreased by
approximately 24.0% from approximately RMB16.7 million for the year ended 31
December 2020 to approximately RMB12.7 million for the year ended 31
December 2021, which was mainly due to the completion of several contracts in
different projects in 2021 and offset by three new projects which contributed
approximately RMB1.8 million in total in 2021.
– Industrial park. Our revenue generated from industrial park increased by
approximately 97.0% from approximately RMB6.6 million for the year ended 31
December 2020 to approximately RMB13.0 million for the year ended 31
December 2021, which was primarily due to a new project which contributed
approximately RMB1.7 million of revenue in 2021 as a result of our business
expansion contributed by our increased tendering effort and a project which
started in the last quarter of 2020 and contributed significant amount of revenue
in 2021.
FINANCIAL INFORMATION
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--- page 317 ---
 Public space cleaning service . Our revenue generated from public space cleaning
service increased by approximately 6.5% from approximately RMB18.4 million for the
year ended 31 December 2020 to approximately RMB19.6 million for year ended 31
December 2021, which was primarily attributable to the increase in number of projects
in public space cleaning service from four projects during the year ended 31
December 2020 to seven projects during the year ended 31 December 2021 as a result
of our business expansion contributed by our increased tendering effort.
 Other cleaning service . Our revenue generated from other cleaning services decreased
from approximately RMB0.4 million for the year ended 31 December 2020 to nil for
year ended 31 December 2021, which was primarily attributable to the decrease in
number of projects in other cleaning service from one project during the year ended
31 December 2020 to nil project during the year ended 31 December 2021.
Cost of services
Our cost of services increased by approximately RMB88.6 million or 23.0% from
approximately RMB385.7 million for the year ended 31 December 2020 to approximately
RMB474.3 million for the year ended 31 December 2021. Such increase was mainly attributable
to the increase in (i) employee benefit expenses from approximately RMB208.8 million to
approximately RMB254.5 million due to increased number of workers employed over the
corresponding periods in order to meet the manpower of increased number of projects; and (ii)
the subcontracting labour costs increased from approximately RMB149.9 million for the year
ended 31 December 2020 to approximately RMB188.9 million for the year ended 31 December
2021, which also mainly due to the increased manpower resources in order to support the
business and revenue growth.
Gross profit and gross profit margin
As a result of the foregoing, our total gross profit increased by approximately 11.6% from
approximately RMB79.9 million for the year ended 31 December 2020 to approximately
RMB89.2 million for the year ended 31 December 2021. Our gross profit margin decreased from
17.2% for the year ended 31 December 2020 to 15.8% for the year ended 31 December 2021.
 Property cleaning service . Gross profit of our property cleaning service increased by
approximately 11.8% from approximately RMB76.5 million for the year ended 31
December 2020 to approximately RMB85.5 million for the year ended 31 December
2021 due to the increase in revenue in 2021, mainly driven by commercial building,
shopping mall and residential building. Gross profit margin of our property cleaning
service decreased from 17.1% for the year ended 31 December 2020 to 15.7% for the
year ended 31 December 2021, respectively, which was mainly driven by the decrease
in gross profit margin in shopping mall and residential building.
FINANCIAL INFORMATION
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– Commercial building. Gross profit of our commercial building increased by
approximately 14.8% from approximately RMB38.6 million for the year ended 31
December 2020 to approximately RMB44.3 million for the year ended 31
December 2021 which was mainly due to the increase in our revenue during
2021. Gross profit margin of our commercial building remained relatively stable
at 18.3% and 17.7% for the year ended 31 December 2020 and 2021,
respectively.
– Residential building. Gross profit of our residential building increased by 14.3%
from RMB12.9 million for the year ended 31 December 2020 to RMB14.8
million for the year ended 31 December 2021 which was mainly due to the
increase in our revenue during 2021. Gross profit margin of our residential
building decreased from 13.4% for the year ended 31 December 2020 to 10.9%
for the year ended 31 December 2021, which was mainly attributable to (i) the
decrease in cleaning workforce in residential building needed as the PRC
government announced and encouraged the public to reduce outdoor activities in
2020, while the outbreak of COVID-19 is effectively controlled, viable
treatments for COVID-19 became commercially available along with relaxation
of the restrictions under the zero-COVID strategy and the subsequent normalised
economic activities in 2021, so the cleaning workforce required increased during
the year ended 31 December 2021; and (ii) the increase in cleaning materials
consumed in residential building for the year ended 31 December 2021.
– Transportation hub. Gross profit of our transportation hub decreased by 6.8%
from RMB10.3 million for the year ended 31 December 2020 to RMB9.6 million
for the year ended 31 December 2021 which was mainly due to the decrease in
our revenue during 2021. Gross profit margin of our transportation hub remained
relatively stable at 16.3% and 15.6% for the year ended 31 December 2020 and
2021, respectively.
– Shopping mall. Gross profit of our shopping mall increased by 15.4% from
RMB10.5 million for the year ended 31 December 2020 to RMB12.1 million for
the year ended 31 December 2021 which was mainly due to the increase in our
revenue during 2021. Gross profit margin of our shopping mall decreased from
19.9% for the year ended 31 December 2020 to 17.1% for the year ended 31
December 2021, which was mainly attributable to (i) the decrease in cleaning
workforce in shopping mall needed as the PRC government announced and
encouraged the public to reduce outdoor activities in 2020, while the outbreak of
COVID-19 is effectively controlled, viable treatments for COVID-19 became
commercially available along with relaxation of the restrictions under the
zero-COVID strategy and the subsequent normalised economic activities in 2021,
so the cleaning workforce required increased during the year ended 31 December
2021 and (ii) the increase in cleaning workforce was needed as the crowd volume
increased in shopping mall in Guangzhou due to the active retail sales in
FINANCIAL INFORMATION
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--- page 319 ---
Guangzhou which was reflected by the increase in total retail sales of consumer
goods by approximately 9.8% from the year ended 31 December 2020 to the year
ended 31 December 2021.
– Public utilities . Gross profit of our public utilities decreased by 25.0% from
approximately RMB2.8 million for the year ended 31 December 2020 to
approximately RMB2.1 million for the year ended 31 December 2021 which was
mainly due to the decrease in our revenue during 2021. Gross profit margin of
our public utilities remained relatively stable at 16.7% and 16.2% for the year
ended 31 December 2020 and 2021, respectively.
– Industrial park . Gross profit of our industrial park increased by approximately
107.7% from approximately RMB1.3 million for the year ended 31 December
2020 to approximately RMB2.7 million for the year ended 31 December 2021
which was mainly due to the increase in our revenue during 2021. Gross profit
margin of our industrial park remained relatively stable at 20.3% and 20.6% for
the year ended 31 December 2020 and 2021, respectively.
 Public space cleaning service . Gross profit of our public space cleaning service
increased by approximately 8.8% from approximately RMB3.4 million for the year
ended 31 December 2020 to approximately RMB3.7 million for the year ended 31
December 2021 which was mainly due to the increase in revenue in 2021. Gross profit
margin of our public space cleaning service remained relatively stable at 18.3% and
19.0% for the year ended 31 December 2020 and 2021, respectively.
 Other cleaning service . Gross profit of our other cleaning service decreased from
approximately RMB11,000 for the year ended 31 December 2020 to nil for the year
ended 31 December 2021. Gross profit margin of our other cleaning service decreased
from 3.1% for the year ended 31 December 2020 to nil for the year ended 31
December 2021 as no revenue was derived from other cleaning service during 2021.
Other income
Our other income decreased by approximately RMB1.0 million or 12.2% from
approximately RMB8.2 million for the year ended 31 December 2020 to approximately RMB7.2
million for the year ended 31 December 2021. The decrease was mainly attributable to the
decrease in penalty on the late payment of rental income due to the Group reached a commercial
settlement with Guangzhou Pengsheng to settle the total rental receivables and all remaining of
rental receivables and penalty on late payment of rental income previously charged were waived
and were written off as bad debts for the year ended 31 December 2021.
FINANCIAL INFORMATION
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Other loss
Our other loss decrease from approximately RMB7.3 million for the year ended 31
December 2020 to approximately RMB3,000 for the year ended 31 December 2021 was mainly
attributable to the decrease in fair value loss on financial assets at fair value through profit or
loss for year ended 31 December 2021 by approximately RMB7.1 million due to the investment
in fund and wealth management product were all disposed during the year ended 31 December
2020.
Selling and marketing expenses
Our selling and marketing expenses remained stable at RMB3.1 million and RMB3.1
million for the year ended 31 December 2020 and 2021, respectively.
General and administrative expenses
Our general and administrative expenses increased by approximately RMB11.3 million or
33.5% from approximately RMB33.7 million for the year ended 31 December 2020 to
approximately RMB45.0 million for the year ended 31 December 2021. Such increase was
mainly attributable to (i) the increase in employee benefit expenses by RMB7.0 million due to
the increase in salaries for staffs in research and development function and (ii) the increase in
Listing expenses by RMB1.9 million. The increase in salaries for staff in research and
development function was mainly attributable to the resources contributed to the development of
7 new patents (with 2 of them applying for registration), in which all patents are related to the
enhancement of service efficiency and safety when performing our services. In 2021, we were
awarded the Stone & Floor Application Conservation Specialty Qualification Certificate –
AAAAA Grade by the Stone Application Conservation Specialty Committee of Guangdong Stone
Materials Association, and the number of accidents occurred while performing our services
decreased from 39 for the year ended 31 December 2020 to nil for the year ended 31 December
2021.
Finance expenses, net
Our finance expenses, net decreased by approximately RMB0.8 million or 66.7% from
approximately RMB1.2 million for the year ended 31 December 2020 to approximately RMB0.4
million for the year ended 31 December 2021. Such decrease was mainly attributable to the
decrease in interest expense on bank borrowings by RMB0.8 million due to (i) our bank
borrowings were repaid during the year ended 31 December 2020 and (ii) we had new bank
borrowings in late of December 2021.
FINANCIAL INFORMATION
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Income tax expenses
Our income tax expenses decreased by approximately RMB1.6 million or 22.2% from
approximately RMB7.2 million for the year ended 31 December 2020 to approximately RMB5.6
million for the year ended 31 December 2021. Effective tax rate decreased from approximately
18.7% for the year ended 31 December 2020 to 12.4% for the year ended 31 December 2021,
which was mainly attributable to a subsidiary with a preferential income tax rate of 15% since
December 2020. For details, please refer to Note 12 of the Accountant’s Report in Appendix I to
this prospectus.
Net profit and net profit margin
As a result of the foregoing, our net profit increased by approximately RMB8.6 million or
27.5% from approximately RMB31.3 million for the year ended 31 December 2020 to
approximately RMB39.9 million for the year ended 31 December 2021, whilst our net profit
margin remained stable at 6.7% and 7.1% for the year ended 31 December 2020 and 2021,
respectively.
LIQUIDITY AND CAPITAL RESOURCES
Financial resources
Our principal sources of funds have historically been our equity capital, cash generated
from our operations and bank borrowings. Our primary liquidity requirements are to finance our
business operations, working capital needs and future plans. Going forward, we expect these
sources of funds to continue to be our principal sources of liquidity, and we may use a portion
of the net proceeds from the Share Offer due to us to finance some of our liquidity requirements.
For details of our future plans, please refer to the sections headed “Business – Business
strategies” and “Future plans and use of proceeds” of this prospectus.
We regularly monitor our liquidity requirements to ensure that we maintain sufficient cash
resources for our working capital requirements and capital expenditure needs. During the Track
Record Period and up to the Latest Practicable Date, we did not experience any difficulties in
settling our obligations in the normal course of business which would otherwise have a material
impact to our business, financial condition or results of operations.
FINANCIAL INFORMATION
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Consolidated statements of Cash Flow
The following table summarises our consolidated statements of cash flows for the periods
indicated:
Y ear ended
31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Operating cash flow before
changes in working capital 54,637 52,094 48,194 22,433 24,523
Changes in working capital (26,273) (32,993) (37,256) (45,647) (25,702)
Interest paid and/or tax paid (6,337) (4,175) (5,159) (3,419) (3,384)
Net cash generated from/(used in)
operating activities 22,027 14,926 5,779 (26,633) (4,563)
Net cash generated from/(used in)
investing activities (5,425) (7,423) 1,823 3,079 (1,854)
Net cash generated from/(used in)
financing activities (5,215) (22,749) (5,071) (6,529) 1,553
Net increase/(decrease) in cash
and cash equivalents 11,387 (15,246) 2,531 (30,083) (4,864)
Cash and cash equivalents at
beginning of the year 56,050 67,437 52,191 52,191 54,722
Cash and cash equivalents at end
of the year 67,437 52,191 54,722 21,108 49,858
Cash flow from operating activities
Our net cash generated from operating activities reflects (i) profit before income tax
adjusted for non-cash and non-operating items such as depreciation, finance income and costs,
dividend income, fair value (gain)/losses on financial assets at fair value through profit or loss,
loss of disposal of property, plant and equipment, share of net (profit)/loss of associates, loss on
disposal of investments in associates, impairment losses on financial assets, reversal of
impairment losses on financial assets; (ii) the effects of movements in working capital, such as
changes in trade and other receivables, trade and other payables; and (iii) income tax paid.
FINANCIAL INFORMATION
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For the six months ended 30 June 2022, our net cash used in operating activities was
RMB26.6 million, representing our profit before taxation of RMB18.4 million and adjusted by
an increase in trade and other receivables of RMB47.8 million which was in line with our
revenue growth, and partially offset by the increase in trade and other payables of RMB2.1
million which was mainly due to the increase in amount due to Mr. Li as we had advances from
Mr. Li in order to settle Listing expenses and the increase in Listing expenses payable.
For the six months ended 30 June 2023, our net cash used in operating activities was
RMB4.6 million, representing our profit before taxation of RMB17.6 million and adjusted by an
increase in trade and other receivables of RMB30.0 million which was in line with our business
growth, and partially offset by the increase in trade and other payables of RMB4.3 million which
was mainly due to the increase in amount due to Mr. Li as we had advances from Mr. Li in order
to settle Listing expenses and the increase in Listing expenses payable.
For the year ended 31 December 2022, our net cash generated from operating activities was
RMB5.8 million, representing our profit before taxation of RMB39.9 million and adjusted by an
increase in trade and other payables of RMB7.3 million which was mainly due to the increase in
amount due to Mr. Li that we had advances from Mr. Li in order to settle Listing expenses, and
partially offset by the increase in trade and other receivables of RMB44.5 million which was in
line with our revenue growth.
For the year ended 31 December 2021, our net cash generated from operating activities was
RMB14.9 million, representing our profit before taxation of RMB45.6 million and adjusted by
an increase in trade and other payables of RMB2.6 million which was mainly due to the increase
in amount due to Mr. Li that we had advances from Mr. Li in order to settle Listing expenses,
and partially offset by the increase in trade and other receivables of RMB35.6 million which was
in line with our revenue growth.
For the year ended 31 December 2020, our net cash generated from operating activities was
RMB22.0 million, representing our profit before taxation of RMB38.5 million and adjusted by
an increase in trade and other payables of RMB15.0 million mainly due to the increase in
payroll, bonus and social insurance payables as our increased manpower resources in order to
support our business expansion, and partially offset by the increase in trade and other
receivables of RMB41.3 million which was in line with our revenue growth.
Cash flow from investing activities
Cash flow from investing activities mainly consisted of purchase of property, plant and
equipment and acquisition and disposal of financial assets at fair value through profit or loss.
For the six months ended 30 June 2022, we had net cash generated from investing activities
of approximately RMB3.1 million, which mainly resulted from (i) decrease in restricted bank
deposits of approximately RMB4.1 million and partially offset by (ii) the purchase of property,
plant and equipment of approximately RMB1.1 million.
FINANCIAL INFORMATION
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--- page 324 ---
For the six months ended 30 June 2023, we had net cash used in investing activities of
approximately RMB1.9 million, which mainly resulted from the purchase of property, plant and
equipment of approximately RMB2.3 million.
For the year ended 31 December 2022, we had net cash generated from investing activities
of approximately RMB1.8 million, which mainly resulted from (i) decrease in restricted bank
deposits of approximately RMB3.6 million and partially offset by (ii) the purchase of property,
plant and equipment of approximately RMB1.9 million.
For the year ended 31 December 2021, we had net cash used in investing activities of
approximately RMB7.4 million, which mainly resulted from (i) the purchases of property, plant
and equipment of approximately RMB4.1 million and (ii) increase in restricted bank deposits of
approximately RMB5.4 million and partially offset by (iii) the net repayment from Mr. Li and
related parties of approximately RMB1.9 million.
For the year ended 31 December 2020, we had net cash used in investing activities of
approximately RMB5.4 million, which mainly resulted from (i) net cash used in acquisition of
and disposal for investment in financial assets of approximately RMB3.0 million; (ii) the
purchase of property, plant and equipment of approximately RMB4.3 million; and partially offset
by (iii) the proceeds from disposal of associates of approximately RMB0.9 million due to
Reorganisation purpose.
Cash flow from financing activities
Cash flow from financing activities mainly consisted of proceeds from and repayments of
bank and other borrowings, dividend paid to controlling shareholders and capital reduction of a
subsidiary and return of capital to controlling shareholders.
For the six months ended 30 June 2022, we had net cash used in financing activities of
approximately RMB6.5 million, which mainly reflected the combined effects of (i) the
repayments of bank and other borrowings of approximately RMB10.0 million; partially offset by
(ii) the net advances from Mr. Chen and Mr. Li of approximately RMB5.0 million.
For the six months ended 30 June 2023, we had net cash generated from financing
activities of approximately RMB1.6 million, which mainly due to the net advances from Mr.
Chen and Mr. Li of approximately RMB2.3 million.
For the year ended 31 December 2022, we had net cash used in financing activities of
approximately RMB5.1 million, which mainly reflected the combined effects of (i) the
repayments of bank and other borrowings of approximately RMB10.0 million and partially offset
by (ii) the net advances from Mr. Chen and Mr. Li of approximately RMB7.5 million.
FINANCIAL INFORMATION
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For the year ended 31 December 2021, we had net cash used in financing activities of
approximately RMB22.7 million, which mainly reflected the combined effects of (i) dividend
paid to Controlling Shareholders of approximately RMB28.2 million; (ii) capital reduction of a
subsidiary and return of capital of Controlling Shareholders of approximately RMB12.3 million;
partially offset by (iii) the proceeds from bank and other borrowings of approximately RMB10.0
million; (iv) the net advances from related companies, Mr. Chen and Mr. Li of approximately
RMB5.0 million and (v) the issuance of share approximately RMB4.0 million.
For the year ended 31 December 2020, we had net cash used in financing activities of
approximately RMB5.2 million, which mainly reflected the combined effects of (i) repayments
of bank and other borrowing of approximately RMB44.4 million; (ii) lease payments for
principal portion of lease liabilities of approximately RMB0.5 million; (iii) interest paid on lease
liabilities and bank borrowings of approximately RMB0.5 million and RMB0.8 million,
respectively; (iv) listing expenses paid of approximately RMB0.7 million; partially offset by (v)
the proceeds from bank and other borrowings of approximately RMB39.4 million and (vi)
disposal of excluded entities of approximately RMB2.1 million due to Reorganisation purpose.
Net current assets
The following table sets forth the breakdown of our current assets and liabilities as at the
dates indicated:
As at 31 December
As at
30 June
As at
30 September
2020 2021 2022 2023 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Current assets
Trade and other receivables and
prepayments 156,650 190,240 228,923 252,146 274,501
Financial assets at fair value
through profit or loss –––––
Restricted bank deposits – 5,388 1,780 1,453 1,816
Cash and cash equivalents 67,437 52,191 54,722 49,858 50,507
224,087 247,819 285,425 303,457 326,824
Current liabilities
Trade and other payables 89,392 98,735 111,755 117,963 119,978
Current income tax payable 17,252 19,238 20,187 19,674 21,315
Bank borrowings – 10,010 – – 9,472
Lease liabilities 715 668 676 684 693
107,359 128,651 132,618 138,321 151,458
Net current assets 116,728 119,168 152,807 165,136 175,366
FINANCIAL INFORMATION
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Our Group maintained net current assets position of approximately RMB116.7 million,
RMB119.2 million, RMB152.8 million, RMB165.1 million and RMB175.4 million as at 31
December 2020, 2021 and 2022 and 30 June 2023 and 30 September 2023, respectively.
Our net current assets increased from approximately RMB116.7 million as at 31 December
2020 to approximately RMB119.2 million as at 31 December 2021. The increase was mainly
attributable to (i) the increase in trade and other receivables and prepayments by approximately
RMB33.6 million which was in line with the growth in our revenue in 2021; (ii) the increase in
restricted bank deposits by approximately RMB5.4 million; partially offset by (iii) the decrease
in cash and cash equivalents by approximately RMB15.2 million; (iv) the increase in bank
borrowings by approximately RMB10.0 million; (v) the increase in trade and other payables by
approximately RMB9.3 million mainly due to the increase in amount due to Mr. Li as we had
advances from Mr. Li in order to settle Listing expenses; and (vi) the increase in current income
tax payable by approximately RMB2.0 million due to the V A T tax payable derived from our
increase in revenue.
Our net current assets increased from approximately RMB119.2 million as at 31 December
2021 to approximately RMB152.8 million as at 31 December 2022. The increase was mainly due
to (i) the increase in trade and other receivables and prepayments by approximately RMB38.7
million due to our increase in trade receivables; (ii) the decrease in bank borrowings by
approximately RMB10.0 million; partially offset by (iii) the increase in trade and other payables
by RMB13.0 million due to the increase in amount due to Mr. Li as we had advances from Mr.
Li in order to settle Listing expenses and the increase in Listing expenses payable and (iv) the
decrease in restricted bank deposits by approximately RMB3.6 million.
Our net current assets increased from approximately RMB152.8 million as at 31 December
2022 to approximately RMB165.1 million as at 30 June 2023. The increase was mainly
attributable to (i) increase in trade receivables and other receivables and prepayments by
approximately RMB23.2 million which was in line with the growth in our revenue; (ii) partially
offset by the decrease in cash and cash equivalents by approximately RMB4.9 million; and (iii)
the increase in trade and other payables by RMB6.2 million due to the increase in amount due to
Mr. Li as we had advances from Mr. Li in order to settle Listing expenses and the increase in
Listing expenses payable.
Our net current assets increased from approximately RMB165.1 million as at 30 June 2023
to approximately RMB175.4 million as at 30 September 2023. The increase was mainly
attributable to the increase in trade receivables and other receivables and prepayments by
approximately RMB22.4 million which was in line with the growth in our revenue; and partially
offset by the increase in bank borrowings by approximately RMB9.5 million.
FINANCIAL INFORMATION
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WORKING CAPITAL SUFFICIENCY
During the Track record Period, we met our working capital needs through a combination
of cash generated from operations, bank borrowings and advances from Mr. Chen and Mr. Li.
We manage our cash flow and working capital by closely monitoring and managing, among other
things, the level of trade payables and receivables. We also review future cash flow
requirements, assess our ability to meet debt repayment schedules and adjust our investment and
financing plans, if necessary, to ensure that we maintain sufficient working capital to support
our business operations and expansion plans.
We had net cash inflows in operating activities of approximately RMB22.0 million,
RMB14.9 million and RMB5.8 million and cash outflow of approximately RMB26.6 million and
RMB4.6 million for the years ended 31 December 2020, 2021 and 2022 and the six months
ended 30 June 2022 and 30 June 2023, respectively. We recorded negative operating cash flows
for the six months ended 30 June 2022 and 30 June 2023, primarily due to the increase in our
trade receivables. During the Track Record Period, we recorded positive operating profit before
working capital changes. Our finance department regularly monitor current and expected
liquidity requirements to ensure that it maintains sufficient reserves of cash to meet its liquidity
requirements in short and longer term. Due to the efforts of our finance department, the negative
operating cash flows of approximately RMB26.6 million for the six months ended 30 June 2022
decreased significantly to RMB4.6 million for the six months ended 30 June 2023. We plan to
improve our net operating cash outflow by (i) enhancing our internal credit risk management
through the credit management system established by our Group, strictly adhering to our policy
of dealing only with customers of appropriate creditworthiness and history, and carrying out
regular internal reviews to ensure compliance with such policy to reduce our credit risk
exposure; (ii) closely monitoring the settlement of receivables and the payment schedules of our
customers, timely reminding them of due payments, taking active follow-up actions to collect
outstanding trade receivables and recover any overdue debts, and routinely review our collection
and recovery process; and (iii) further expand our business and market coverage to increase our
profit from operating activities.
Our Directors are of the opinion that, taking into account the financial resources presently
available to our Group, including our internal resources, cash generated from our operations and
the estimated net proceeds from the Share Offer, we have sufficient working capital for our
present working capital requirements and for at least the next 12 months from the date of this
prospectus.
Our Directors confirm that there was no material defaults in payment of trade and non-trade
payments and bank borrowings, and/or breaches of financial covenants during the Track Record
Period and up to the Latest Practicable Date.
FINANCIAL INFORMATION
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DISCUSSION ON SELECTED ITEMS FROM THE CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
Property, plant & equipment
Our property, plant and equipment mainly consists of building, plant and machinery, motor
vehicles, furniture, fixtures and office equipment. Our property, plant and equipment amounted
to RMB14.8 million, RMB15.7 million, RMB14.5 million and RMB15.1 million, respectively, as
at 31 December 2020, 2021 and 2022 and 30 June 2023. Please refer to Note 15 of the
Accountant’s Report in Appendix I to this prospectus for details.
Investment properties
Our investment properties consist of (i) Property 1, which are buildings situated in the PRC
amounted to approximately RMB1.4 million, RMB1.2 million, RMB1.1 million and RMB1.1
million as at 31 December 2020, 2021 and 2022 and 30 June 2023 and (ii) Property 2, which is a
land use rights of property leased from an independent third party for 20 years and was
sub-leased to Guangzhou Pengsheng of our Group for eight years under operating leases with
rentals payable on a monthly basis. Property 2 was amounted to approximately RMB6.2 million,
RMB5.8 million, RMB5.4 million and RMB5.1 million as at 31 December 2020, 2021 and 2022
and 30 June 2023. The lease for Property 2 was recognised as a right-of-use asset under HKFRS
16 and it was subsequently sub-leased to Guangzhou Pengsheng, it was therefore counted as an
investment property under HKAS 40 in our consolidated statements of financial condition.
Please refer to the section headed “Property valuation report – Summary of values” in Appendix
III to this prospectus for details of Property 1 and Property 2.
Property interest and property valuation
The statement below shows the reconciliation of aggregate amounts of certain properties as
selected in our audited consolidated financial information as at 30 June 2023 as set forth in
Appendix I to this prospectus with the valuation of these properties as at 31 August 2023 as set
forth in Appendix III to this prospectus.
FINANCIAL INFORMATION
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RMB’000
Carrying amount of the properties being valued by the Property V aluer
as at 30 June 2023
Investment properties 6,239
Less: Depreciation during the period 1 July 2023
to 31 August 2023 (86)
Carrying amount of the properties as at 31 August 2023 6,153
Add: Net valuation surplus of Property 1 (Note 1) 2,017
Less: Investment properties of Property 2
with no commercial value (Note 2) (5,100)
V aluation of properties of our Group as at 31 August 2023 as set out in
the property valuation report in Appendix III to this prospectus 3,070
Notes:
(1) The net revaluation surplus of investment properties was not included in our Group’s financial information
for the period ended 30 June 2023 in accordance with our accounting policy to state such property
interests at costs less subsequent accumulated depreciation and subsequent accumulated impairment losses,
if any.
(2) Carrying amount of Property 2 as at 30 June 2023 was recognised as a investment property under relevant
accounting policies for purposes of Appendix I to this prospectus. However, for purposes of valuation of
Property 2 as at 31 August 2023 in Appendix III, the property valuer assigned no commercial value due to
the property interests being a leased by our Group.
Leases have been recognised in the form of an asset (for the right-of-use assets) and a
financial liability (for the payment obligation for the lease) in our Group’s consolidated
statement of financial position. For details, see Note 34.6 to the Accountant’s Report set out in
Appendix I to this prospectus.
Right-of-use assets
Our right-of-use assets represented the leases that we entered into in order to be used as
our office and machinery. The carrying amount of these right-of-use assets was approximately
RMB0.1 million, nil, nil and nil as at 31 December 2020, 2021 and 2022 and 30 June 2023,
respectively. Please refer to Note 17 of the Accountant’s Report in Appendix I to this prospectus
for details.
FINANCIAL INFORMATION
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Trade and other receivables
The following table sets forth a breakdown of our trade and other receivables as at the
dates indicated:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables 142,358 175,591 220,774 251,957
Less: allowance for impairment (6,712) (9,088) (13,273) (18,186)
135,646 166,503 207,501 233,771
Deposits 14,760 16,089 14,971 13,489
Less: allowance for impairment (3,238) (4,214) (4,214) (4,214)
11,522 11,875 10,757 9,275
Less: deposits – non-current
portion (5,410) (3,154) (4,809) (6,536)
Deposits – current portion 6,112 8,721 5,948 2,739
Other receivables
– Tendering deposits 5,044 2,051 3,174 4,464
Less: allowance for impairment – (179) (179) (282)
5,044 1,872 2,995 4,182
– Amounts due from related
companies/parties/then
related companies 7,136 111 – –
Less: allowance for impairment (7,113) – – –
2 3 1 1 1––
– Amounts due from Mr. Li 2,03 4–––
– Receivables from the
provision of construction
labor service 3,761 9,605 6,957 5,457
10,862 11,588 9,952 9,639
FINANCIAL INFORMATION
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As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Prepayments on
– Utilities expenses 760 619 743 732
– Insurance expenses 2,071 1,555 1,170 510
– Deferred listing expenses 1,199 1,254 3,609 4,755
4,030 3,428 5,522 5,997
Trade and other receivables
and prepayment, net 156,650 190,240 228,923 252,146
Trade receivables
Our trade receivables mainly represented outstanding receivables from our customers. Our
trade receivables increased from approximately RMB135.6 million as at 31 December 2020 to
approximately RMB166.5 million as at 31 December 2021 increased to approximately
RMB207.5 million as at 31 December 2022 and further increased to approximately RMB233.8
million as at 30 June 2023, which was in line with the growth in our revenue during Track
Record Period and mainly attributable to the late settlement from customers and slow economic
resurgence after lockdown policy of the PRC government during the year ended 31 December
2022.
We generally grant a credit term ranging from 30 days to 110 days to our customers.
FINANCIAL INFORMATION
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The following table sets forth the ageing analysis of our trade receivables based on invoice
dates as at the dates indicated and our trade receivables turnover days during the Track Record
Period:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
0–60 days 104,346 134,254 154,862 163,734
61–180 days 25,132 24,591 28,698 36,031
181–365 days 4,008 9,616 26,245 35,763
1–2 years 4,986 3,084 7,289 10,123
2–3 years 2,079 3,118 2,149 3,420
3–4 years 1,807 928 1,531 2,886
142,358 175,591 220,774 251,957
Trade receivables turnover days
(Note) 99.8 103.0 121.7 144.2
The following table sets forth the subsequent settlement of our trade receivables as at 30
June 2023 by age group:
As at
30 June 2023
Balance settled
as at Latest
Practicable Date
Balance overdue
as at Latest
Practicable Date
RMB’000 RMB’000 RMB’000
0–60 days 163,734 111,243 6,920
61–180 days 36,031 22,606 13,425
181–365 days 35,763 21,574 14,189
1–2 years 10,123 7,073 3,050
2–3 years 3,420 1,520 1,900
3–4 years 2,886 1,142 1,744
251,957 165,158 41,228
Note: Trade receivables turnover days are calculated based on the average of the opening and closing balance
of gross trade receivables divided by revenue for the corresponding period and multiplied by the
number of days in the relevant period.
FINANCIAL INFORMATION
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Our trade receivables turnover days were 99.8 days, 103.0 days, 121.7 days and 144.2 days
for the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2023,
respectively. Our trade receivables turnover days remained relatively stable in 2020, 2021 and
increased in 2022 and the six months ended 30 June 2023 which was mainly attributable to the
late settlement from customers and slow economic resurgence after the lockdown policy of the
PRC government during the year ended 31 December 2022. As at Latest Practicable Date,
according to our general credit term ranging from 30 days to 110 days to our customers and the
aging analysis of our trade receivables based on the invoice dates, approximately RMB41.2
million of trade receivables over 120 days were remain unsettled. In respect of the receivables
which were past due, our management will follow up with such customers and monitor their
creditworthiness. At the best knowledge of our Directors, there has been no any dispute between
our Group and our customers, and none of our customers have experienced financial difficulties
in settling their amounts due to us.
Our Group measures loss allowances for trade receivables at an amount equal to lifetime
expected credit losses (ECLs), which is calculated using a provision matrix. The Group assesses
the trade receivables for impairment on a collection group basis which focus on the customer’s
credit risk characteristics, past collection information and aging profiles. For details of credit
risk and ECLs for accounts receivables, please refer to Note 3.1 to the Accountant’s Report set
out in Appendix I to this prospectus. It is our Directors’ view that the Group accounts for its
credit risk of trade receivables by approximately providing for expected credit losses on timely
basis, therefore, sufficient provision has been made and no recoverability issue for trade
receivable is noted.
For the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June
2023, approximately RMB1.9 million, RMB2.4 million, RMB4.2 million and RMB4.9 million
had been provided for impairment of trade receivables due from customers, respectively. As a
result, the allowance for impairment of trade receivables was approximately RMB6.7 million,
RMB9.1 million, RMB13.3 million and RMB18.2 million as at 31 December 2020, 2021 and
2022 and 30 June 2023, respectively.
As at Latest Practicable Date, approximately RMB141.4 million, RMB173.8 million,
RMB183.8 million and RMB165.2 million, or 99.3%, 99.0%, 83.3% and 65.5%, respectively of
trade receivables as at 31 December 2020, 2021 and 2022 and 30 June 2023 was settled. Taking
into account our continuous attempts to collect the outstanding trade receivables from those
customers and their subsequent settlement progress and past settlement pattern, it is our
Directors’ view that there is no material recoverability issue with our outstanding trade
receivables.
FINANCIAL INFORMATION
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Deposits
Our deposits represents the amount paid to customers for the guarantee of performance of
the provision of cleaning services. Our deposits increased from approximately RMB11.5 million
as at 31 December 2020 to approximately RMB11.9 million as at 31 December 2021 which was
in line with our revenue growth during the Track Record Period. Our deposits decreased from
approximately RMB11.9 million as at 31 December 2021 to RMB10.8 million as at 31 December
2022 which was mainly due to more tender deposits was repaid by the offerees and there was
more tenders without the requirement of tender deposit during 2022. Our deposits decreased
from approximately RMB10.8 million as at 31 December 2022 to RMB9.3 million as at 30 June
2023 which was mainly due to a certain project has ended during the six months ended 30 June
2023, which contributed significant amount of deposits.
Other receivables
Our other receivables increased from approximately RMB10.9 million as at 31 December
2020 to approximately RMB11.6 million as at 31 December 2021 mainly attributable to (i) the
increase in receivable from the provision of certain ancillary services for a road construction
project by approximately RMB5.8 million due to the ongoing progress of the project during the
year ended 31 December 2021; partially offset by (ii) the decrease of amount due from Mr. Li by
approximately RMB2.0 million due to the offset by the listing expenses paid on behalf of the
Group by Mr. Li during the year ended 31 December 2021; and (iii) the decrease in tender
deposits of approximately RMB1.2 million due to more tender deposits was repaid by the tender
offerees during 2021. Our other receivables decreased from approximately RMB11.6 million as
at 31 December 2021 to approximately RMB10.0 million as at 31 December 2022 mainly
attributable to the decrease in receivable from the provision of certain ancillary services for a
road construction project by approximately RMB2.6 million due to the settlement received
during the year ended 31 December 2022. Our other receivable decreased from approximately
RMB10.0 million as at 31 December 2022 to approximately RMB9.6 million as at 30 June 2023
mainly attributable to the decrease in receivable from the provision of certain ancillary services
by approximately RMB1.5 million due to the settlement received during the period ended 30
June 2023.
Prepayment
Prepayments mainly included utility expense, insurance expense paid for employees and
deferred listing expenses. Our prepayments decreased from approximately RMB4.0 million as at
31 December 2020 to approximately RMB3.4 million as at 31 December 2021 mainly due to the
decrease of prepayment of insurances expenses by approximately RMB0.5 million due to PRC
government launched new policy in 2021, which we could make single work-related injury
insurance contribution, instead of making employer’s liability insurance contribution, resulting
in the decrease in insurance expense during 2021. Our prepayments increased from
approximately RMB3.4 million as at 31 December 2021 to approximately RMB5.5 million as at
31 December 2022 mainly due to the prepayment in relation to Listing expenses of
approximately RMB3.6 million which was recorded as at 31 December 2022. Our prepayments
FINANCIAL INFORMATION
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increased from approximately RMB5.5 million as at 31 December 2022 to approximately
RMB6.0 million as at 30 June 2023 mainly due to the prepayment in relation to Listing expenses
of approximately RMB4.8 million which was recorded as at 30 June 2023.
Financial assets at fair value through profit or loss
Our financial assets at fair value through profit or loss consist of investments in a fund and
wealth management products.
During the Track Record Period, we invested in three types of investment products, namely
investment in funds, wealth management products and listed securities in the PRC which were
funded by our internal resources and other borrowings during the Track Record Period. Our
investment in fund as at 31 December 2019 related to an investment in the principal amount of
approximately RMB0.8 million in a mutual fund focusing on stocks in the healthcare sector
which adopts a strategy for higher excess returns through moderate risk exposure and positive
risk control. The fund does not guarantee repayment of the principal. In 2020, we also invested
and disposed of our investments in three exchange-traded funds, one listed open-ended fund and
two non-listed open-ended funds. Wealth management products were mainly related to our
investment in the principal amount of RMB3.0 million in certain short-term low risk financial
products issued by a large commercial bank in the PRC and which invests principally in highly
liquid assets such as bonds and deposits, debts assets and other assets. In general, neither the
principal nor the return of any wealth management products is protected or guaranteed by the
issuing bank. Only our wealth management products were classified as level 3 financial assets in
terms of inputs to valuation methods used to estimate fair value. For more details of such
investment products including the expected investment income rates of such products and the
fair value estimations, please see Note 22 of the Accountant’s Report in Appendix I to this
prospectus. Our investment in listed securities in the PRC related to 34 companies which shares
were listed on the Shenzhen Stock Exchange or the Shanghai Stock Exchange and all of such
securities were all acquired and disposed of in 2020.
During the year ended 31 December 2020, 2021 and 2022 and the six months ended 30
June 2023, our fair value loss on these financial assets were approximately RMB7.1 million, nil,
nil and nil, respectively.
Our financial assets at fair value through profit or loss remained stable at nil as of 31
December 2020, 2021 and 2022 and 30 June 2023, which was primarily due to the investment in
fund and wealth management product were disposed during the year ended 31 December 2020.
We did not have any financial assets at fair value through profit or loss as at 31 December
2022 and up to the Latest Practicable Date. During the year ended 31 December 2020, our Group
invested in listed securities which were traded in the Shenzhen Stock Exchange and Shanghai
Stock Exchange, but all these listed securities were disposed during the same year. We made our
investments from time to time to make use of our available cash for higher yield as compared to
cash deposits and in 2020, we started investing in the listed securities in view of the material
increase in available cash during the Track Record Period, a positive outlook of the mainland
FINANCIAL INFORMATION
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stock markets as well as the attractiveness of certain listed securities which our Directors
considered also to be highly liquid. With sufficient working capital for operation and in view of
the favourable condition of the mainland stock market, in which the Shanghai Stock Exchange
Composite Index increased by approximately 26.6% and the Shenzhen Stock Exchange
Composite Index increased by approximately 39.9% from April 2020 to December 2020, our
Group intended to benefit from such increase with an aim of improving its cash position and
assisting its future funding needs. Moreover, the securities trading account was followed up by a
licensed senior investment consultant with over 12 years of experience in equity research and
investment and obtained the required regulatory licence, who provided investment advice and
communicated with our Group, while our Group studied the equity research reports and obtained
the required authorisation under the memorandum and articles of our Group.
However, in preparation for the Listing, our Directors wished to focus more on our core
business and the funding needs of our business and its development and therefore we disposed
of such investments and settled associated borrowings in 2020. The total amount invested by our
Group in these listed securities amounted to RMB142.8 million, among which 18.1% of the
amount was financed by borrowings. After the disposal of the corresponding securities and up to
the Latest Practicable Date, the Group did not participate in any new securities trading activities.
Our Directors confirm that all future investments will be conducted pursuant to our investment
management policy (the “ Investment Management Policy ”) (for further details of the policy,
please refer to the section headed “Business – Investment Management Policy” of this
prospectus). After the Listing, investing in investment products will be subject to the Group’s
compliance with the requirements under Chapter 14 of the Listing Rules.
We carry out our investment activities with a balance of capital preservation and yield
enhancement, and during the Track Record Period our investment portfolio has been focused
mainly on funds and securities listed and traded in the Shenzhen Stock Exchange and the
Shanghai Stock Exchange. To control our risk exposure, the Investment Management Policy
shall prohibit us from (i) conducting any securities trading activities in secondary markets
including, but not limited to, the trading of stocks, bonds, options, futures and derivatives, and
(ii) borrowing to wholly or partially fund any investments. Our Directors are aware of the
“Guidance note on directors’ duties in the context of valuations in corporate transactions” issued
by the SFC on 15 May 2017 and will also take it into account for future investments. Taking
into account (i) the prohibitions and restrictions on future investments and related borrowings as
set out in our new internal control policies; (ii) the more thorough and multi-level assessment
for such issues will be conducted by the finance department as overseen by our Investment
Committee in the future; and (iii) the finance department will have more time than our Directors
to analyse and monitor the on-going performance of investments ensuring compliance with our
policies, our Directors believe that our enhanced internal control policies are adequate and
effective to mitigate our past practices regarding the historical investments.
FINANCIAL INFORMATION
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The Sole Sponsor’s view on the suitability of our Directors, and the adequacy and
effectiveness of our Company’s enhanced internal control measures
Under Rules 3.08 and 3.09 of the Listing Rules, every director must (a) act honestly and in
good faith in the interests of the company as a whole; (b) act for proper purpose; (c) be
answerable to the issuer for the application or misapplication of its assets; (d) avoid actual and
potential conflicts of interest and duty; (e) disclose fully and fairly his interests in contracts with
the issuer; and (f) apply such degree of skill, care and diligence as may reasonably be expected
of a person of his knowledge and experience and holding his office within the issuer.
– Act honestly and in good faith in the interests of the company as a whole; Be answerable to
the issuer for the application or misapplication of its assets; Avoid actual and potential
conflicts of interest and duty. Our Directors were aware of and understood the potential
investment risk exposure in the interests of our Company by the risk tolerance assessment
report during the securities account opening. Prior to making investment decision, our
Directors acted honestly and avoided actual and potential conflicts of interest and duty by
obtaining the required authorisation under the memorandum and articles of our Company as
mentioned in the internal control policy.
During the investing activities, for the sake of protecting the interests of our Company, our
Directors set a stop-profit and cut-loss boundary at a profit or loss percentage within 20%
for each security, limiting any potential loss and ensuring our Group had sufficient working
capital for operation, this resulted in no defaulted payment or significant delay in payment
to employee and suppliers during the Track Record Period. In addition, for the best interest
of the Group, our Directors have stopped trading of security since 1 January 2021 and
established an investment management policy enhancing the internal control and
established our Investment Committee monitored by competent personnel to ensure the
policy being properly implemented after recording a significant loss from a certain of
security.
– Act for proper purpose. Our Directors conducted investment activities with an aim to
improve the cash position for future funding needs. The mainland stock market was
experiencing growth back in 2020. The Shanghai Stock Exchange Composite Index
increased by approximately 26.6% and the Shenzhen Stock Exchange Composite Index
increased by approximately 39.9% from April 2020 to December 2020. With the guidance
and assistance of the licensed consultant, our Directors were aware of the investment
opportunities and have decided to adopt margin financing under the favourable market
situation with a view to magnify the return from investment to as to further improve the
cash position for our Group’s future funding needs and expansion.
During the time when such investment decision was made, our Directors considered the
expected return with and without using margin financing. Our Directors also evaluated the
risk of incurring loss and considered that our Group was able to bear any possible loss.
FINANCIAL INFORMATION
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During the year ended 31 December 2020, we experienced investment losses due to the
impact of a certain security with the stock price fluctuating significantly during the trading
period. With the use of margin financing, the significant losses contributed by this
particular security magnified from approximately RMB4.8 million to RMB6.6 million.
Despite the fact that the Group experienced investment losses and losses were magnified by
the use of margin financing, our Directors act for a proper purpose to improve the cash
position for our Group’s future funding needs and expansion. Notwithstanding such loss,
there was no impact on our Group’s working capital for operation during the Track Record
Period.
– Disclose fully and fairly his interests in contracts with the issuer . Not applicable.
– Apply such degree of skill, care and diligence as may reasonably be expected of a person of
his knowledge and experience and holding his office within the issuer .
Before investment
With the guidance and explanation of the licensed consultant, our Directors applied skill,
care and diligence through understanding the potential risk exposure of investing securities by
the risk tolerance assessment report as mentioned above. Moreover, after receiving the
investment advice from the competent and licensed senior investment consultant, who had over
12 years of experience in equity research and investment, our Directors communicated with the
consultant, held discussion and studied the equity research reports before making any investment
decision.
During investment
Our Directors applied skill, care and diligence by setting a stop-profit and cut-loss at profit
or loss percentage limit within 20% for each security, which is a widespread understanding of a
general investor, during investment. Hence, potential loss can be limited and our Group shall be
able to ensure a sufficient working capital for operation.
After investment
After experiencing loss from securities, our Directors applied skill, care and diligence by
establishing an investment management policy to enhance the internal control and established
our Investment Committee monitored by competent personnel to ensure the policy being
properly implemented.
In light of the above, the Sole Sponsor is of the view that our Directors have satisfied the
requirements under Rules 3.08 and 3.09 and are suitable of being our Directors.
FINANCIAL INFORMATION
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Upon reviewing the enhanced internal control measures implemented by our Group, which
set out clear guidance on investment research, decision-making, execution of transactions and
verification procedures, the Sole Sponsor is of the view that with clear segregation of duties,
scope of authorisation and approval procedures, different internal control procedures, review
procedures and analysis procedures, the enhanced internal control policy is adequate and
effective for our Group to minimise the risk in investment activities and enhance the
appropriateness of usage of working capital.
Trade and other payables
The following table sets forth a breakdown of our trade and other payables as at the dates
indicated:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade payables 28,482 32,672 31,511 30,818
Other payables
– Utility 182 388 388 533
– Listing expenses 2,810 3,611 5,959 8,688
– Amount due to Mr. Chen 180 1,405 1,405 1,405
– Amount due to Mr. Li – 6,274 13,765 16,075
– Amount due to related
parties/companies/then
related companies 317 17 1 1
– Payroll, bonus and social
insurance payables 53,779 49,755 52,006 52,912
– Other tax payable 3,642 4,613 6,720 7,531
60,910 66,063 80,244 87,145
Trade and other payables 89,392 98,735 111,755 117,963
FINANCIAL INFORMATION
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Trade payables
Our trade payables mainly represented amounts due to our suppliers (including our
subcontractors).
Our trade payables increased from approximately RMB28.5 million as at 31 December
2020 to approximately RMB32.7 million as at 31 December 2021, which was mainly due to our
revenue growth and increased purchase of supplies and subcontracting labor cost. Our trade
payables decreased from RMB32.7 million as at 31 December 2021 to RMB31.5 million as at 31
December 2022 and further decreased to RMB30.8 million as at 30 June 2023, which was
mainly due to our settlement to suppliers during 2022 and the six months ended 30 June 2023.
Our trade payables were due according to the terms on the relevant contracts. In general,
our suppliers (including our subcontractors) grant us a credit term of up to 30 days from the date
of performed services and we settle our payment by bank transfer.
The following table sets forth the ageing analysis of our trade payables based on invoice
date as at the dates indicated and our trade payables turnover days during the Track Record
Period:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
0–60 days 21,660 28,755 25,302 22,802
61–180 days 3,149 2,670 1,711 2,006
181–365 days 1,568 174 996 2,538
More than 1 years 2,105 1,073 3,502 3,472
28,482 32,672 31,511 30,818
Trade payables turnover days
(Note) 26.3 23.5 23.4 22.5
Note: Trade payables turnover days are calculate based on the average of the opening and closing balance of
trade payables divided by the adjusted cost of services for the corresponding period and multiplied by the
number of days in the relevant period.
Our trade payables turnover days were 26.3 days, 23.5 days, 23.4 days and 22.5 days for
the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2023,
respectively. Our trade payable turnover days remained relatively stable for the years ended 31
December 2020, 2021 and 2022 and the six months ended 30 June 2023.
FINANCIAL INFORMATION
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As at Latest Practicable Date, approximately RMB22.2 million or 72.1% of trade payables
as at 30 June 2023 has been settled.
Other payables
Other payables mainly comprised (i) utility and listing expense; (ii) payroll, bonus and
social insurance payable; (iii) other tax payable; and (iv) amount due to Mr. Chen, Mr. Li and
related parties/companies.
Our other payables were recorded at approximately RMB60.9 million, RMB66.1 million,
RMB80.2 million and RMB87.1 million as at 31 December 2020, 2021 and 2022 and 30 June
2023, respectively. Our other payables increased from approximately RMB60.9 million as at 31
December 2020 to approximately RMB66.1 million as at 31 December 2021 primarily
attributable to (i) the increase in amount due to Mr. Li by approximately RMB6.3 million as we
had advances from Mr. Li in order to settle Listing expenses and the result of the consideration
of acquiring the interest in Guangzhou Shenghui from Mr. Li; (ii) the increase in amount due to
Mr. Chen by approximately RMB1.2 million as the result of the consideration of acquiring the
interest in Guangzhou Shenghui from Mr. Chen; (iii) the increase in other tax payable by
approximately RMB1.0 million due to the V A T tax payable derived from our increase in revenue;
(iv) the increase in listing expenses payable by RMB0.8 million; and partially offset by (v) the
decrease in payroll, bonus and social insurance payables by approximately RMB4.0 million
mainly due to the decrease in bonus during the year ended 31 December 2021.
Our other payables increased from approximately RMB66.1 million as at 30 December
2021 to approximately RMB80.2 million as at 31 December 2022 primarily attributable to (i) the
increase in amount due to Mr. Li by approximately RMB7.5 million as we had advances from
Mr. Li in order to settle Listing expenses; (ii) the increase in Listing expenses payable by
approximately RMB2.3 million; and (iii) the increase in other tax payable by approximately
RMB2.1 million.
Our other payables increased from approximately RMB80.2 million as at 31 December
2022 to approximately RMB87.1 million as at 30 June 2023 primarily attributable to (i) the
increase in amount due to Mr. Li by approximately RMB2.3 million as we had advances from
Mr. Li in order to settle Listing expenses; (ii) the increase in listing expenses payable by
approximately RMB2.7 million; and (iii) the increase in other tax payable by approximately
RMB0.8 million.
FINANCIAL INFORMATION
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INDEBTEDNESS
The following table sets forth the breakdown of our indebtedness as at the dates indicated:
As at 31 December
As at
30 June
As at
30 September
2020 2021 2022 2023 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Current position
Bank borrowings – 10,010 – – 9,472
Lease liabilities 715 668 676 684 693
715 10,678 676 684 10,165
Non-current
position
Lease liabilities 6,998 6,771 6,524 6,394 6,323
TOTAL 7,713 17,449 7,200 7,078 16,488
During the Track Record Period and up to 30 September 2023, being the Latest Practicable
Date for determining indebtedness, our Group’s total indebtedness consisted of bank borrowings
and lease liabilities.
As at the Latest Practicable Date, we had unutilised banking facilities of approximately
RMB20.0 million from reputable commercial bank in China.
FINANCIAL INFORMATION
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Bank borrowings
The following table sets forth a breakdown of our bank borrowings as at the dates
indicated:
As at 31 December
As at
30 June
As at
30 September
2020 2021 2022 2023 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
Bank borrowings:
– secured and
guaranteed
Within one year – 10,010 – – –
– unsecured
Within three months –––– 9,472
Our bank borrowings as at 31 December 2021 were all denominate in RMB and were
interest-bearing at the interest rates ranging from 4.0% to 5.0% per annum and secured by
certain buildings, restricted bank deposits of our Group and the personal guarantees by Mr. Li
and Mr. Chen. As at 31 December 2022, our bank borrowings as at 31 December 2021 were
fully repaid and the above securities and personal guarantees were released as at the Latest
Practicable Date.
Our unsecured bank borrowings as at 30 September 2023 were all dominate in RMB and
were interest-bearing at the interest rate 4.1% per annum and repayable within three months. As
at the Latest Practicable Date, our unsecured bank borrowings as at 30 September 2023 were
fully repaid and we had unutilised banking facilities of approximately RMB20.0 million.
Lease liabilities
We recognised right-of-use assets, investment properties and the corresponding lease
liabilities in respect of all leases, except for short-term leases in our consolidated statements of
financial position.
Our lease liabilities were denominated in RMB and discount rate applied was 5.8% to 6.3%
as at 31 December 2020, 2021 and 2022 and 30 June 2023.
FINANCIAL INFORMATION
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A maturity analysis of our lease liabilities is shown in the table below:
As at 31 December
As at
30 June
As at 30
September
2020 2021 2022 2023 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(unaudited)
The present value of lease
liabilities is as follows:
Within 1 year 715 668 676 684 693
Later than 1 year but not later
than 2 years 628 636 659 667 667
Later than 2 years but not later
than 5 years 1,737 1,787 1,823 1,846 1,861
Over 5 years 4,633 4,348 4,042 388 3,795
7,713 7,439 7,200 7,078 7,016
As at 31 December 2020, 2021 and 2022 and 30 June 2023 and 30 September 2023, our
Group has lease liabilities amounted to approximately RMB7.7 million, RMB7.4 million,
RMB7.2 million, RMB7.1 million and RMB7.0 million, respectively.
During the Track Record Period, our Group leased buildings and machinery for its
operations. Lease contracts are entered into for fixed term of 1 to 5 years. One of the investment
properties was leased from an Independent Third Party for 20 years and was sub-leased to
Guangzhou Pengsheng for 8 years under operating leases with rentals payable on a monthly
basis.
Contingent liabilities
As at 30 September 2023, our Directors confirmed that, up to the date of this prospectus,
our Group did not record any other contingent liabilities and our Directors are not aware of any
litigation or claims of material importance pending or threatened against any member of our
Group.
Material indebtedness change
Our Directors have confirmed that there was no material adverse change in our Group’s
indebtedness and contingent liabilities since 30 September 2023, being the latest practicable date
for determining our Group’s indebtedness, and up to the date of this prospectus.
FINANCIAL INFORMATION
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Save as disclosed in this paragraphs headed “Indebtedness” and “Related party
transactions” in this section, during the Track Record Period and up to 30 September 2023,
being the latest practicable date for the purpose of the indebtedness statement in this prospectus,
we do not have any debt securities, term loans, borrowings or indebtedness in the nature of
borrowing, mortgages, charges, hire purchase commitments, contingent liabilities, debentures or
guarantees. Our Directors confirmed that we had neither experienced any difficulties in
obtaining or repaying, nor breached any major covenant or restriction of our bank loans or other
bank facilities during the Track Record Period. As at the Latest Practicable Date, there are no
material covenants that would materially limit our ability to undertake additional debt or equity
financing. As at the Latest Practicable Date, save as disclosed in this paragraph headed “bank
borrowings”, we did not have any bank borrowings or banking facilities.
CAPITAL EXPENDITURE AND COMMITMENTS
Capital expenditure
Our capital expenditure for the years ended 31 December 2020, 2021 and 2022 and 30 June
2023 amounted to approximately RMB4.3 million, RMB4.1 million, RMB1.9 million and
RMB2.3 million, respectively, comprising mainly expenditures for the purchase of property,
plant and equipment.
Since 30 June 2023 and up to 30 September 2023, our Group did not incur any material
capital expenditure which were not provided for in our consolidated statements of financial
position.
Capital commitments
Our Group did not have any significant capital commitments as at 31 December 2020 and
2021 and 2022 and 30 June 2023.
OFF-BALANCE SHEET TRANSACTIONS
Our Directors confirmed that, our Group had not entered into any material off-balance sheet
commitments and arrangements during the Track Record Period and up to 30 September 2023.
FINANCIAL INFORMATION
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RELATED PARTY TRANSACTIONS
During the Track Record Period, we had certain related party transactions, mainly in
relation to (i) purchase or sales of goods and services; (ii) rental income and rental expense
which the relative balances were impaired during the years ended 31 December 2020, 2021 and
2022 and 30 June 2023; (iii) loans to or from related parties and interest income and expenses;
and (iv) key management compensation. The following table sets forth the breakdown of our
balances with related parties as at the dates indicated:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade in nature:
Amounts due from/(to)
related parties
Trade payables (259) (17) (1) (1)
Non-trade in nature:
Amounts due from/(to)
related parties
Other receivables 2,05 7–––
Other payables (238) (7,679) (15,170) (17,480)
Amounts due to related parties totalling approximately RMB0.3 million, RMB17,000 and
RMB1,000 and RMB1,000 as at 31 December 2020, 2021 and 2022 and 30 June 2023,
respectively, were arising from ordinary course of business, which were related to the provision
of garbage collection and cleaning services to our Group and such business relationship has
ceased.
As at 31 December 2020, amounts due from related parties totalling approximately RMB2.1
million were of non-trade nature, which mainly comprised amount due from a related company
which has been fully settled, and the advances due from Mr. Li which was settled during 31
December 2021. As at 31 December 2020, 2021 and 2022 and 30 June 2023, amounts due to
related parties totalling approximately RMB238,000, RMB7.7 million, RMB15.2 million and
RMB17.5 million, respectively, were of non-trade nature, which the balance of RMB7.7 million,
RMB15.2 million and RMB17.5 million as at 31 December 2021 and 2022 and 30 June 2023,
respectively was mainly comprised of the advances from Mr. Li from the settlement of Listing
expenses. The amount due to related parties mainly comprised the advances from Mr. Chen and
Mr. Li and will be waived before the Listing.
FINANCIAL INFORMATION
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Balances with related parties above are unsecured, interest-free and repayable on demand,
except for the loan due from Mr. Li amounting to RMB5.6 million as at 31 December 2020
which carried an interest of RMB12,600 was settled in January 2021 and the amount due to Mr.
Li of approximately RMB11.8 million as at 31 December 2021 which carried an interest rate of
approximately 0.36% per annum was settled in December 2021. As advised by the PRC Legal
Advisers, Guangzhou Shenghui has carried out internal procedures for the lending and entered
into a loan contract with Mr. Li to agree upon the loan amount, interest and other relevant
matters. Thus, the loan due from Mr. Li which carried interest is in compliance with relevant
laws and regulations.
Our Directors confirmed that these transactions were conducted on normal commercial
terms and/or that such terms were no less favourable to our Group than terms otherwise
available to Independent Third Parties and were fair, reasonable and in the interest of our
Shareholders as a whole.
For further details on related party transactions and balances, see Note 30 to our
consolidated financial statements set forth in the Accountant’s Report included in Appendix I to
this prospectus.
KEY FINANCIAL RATIOS
The following table provides a summary of our key financial ratios for the periods
indicated or as at the dates indicated and should be read in conjunction with the Accountant’s
Report set out in Appendix I to this prospectus:
As at 31 December
As at
30 June
Note 2020 2021 2022 2023
Return on equity (%) 1 22.1 28.0 19.4 N/A
Return on total assets (%) 2 12.2 14.4 10.9 N/A
Current ratio (times) 3 2.1 1.9 2.2 2.2
Gearing ratio (%) 4 5.5 12.2 4.1 3.7
Net debt to equity ratio (%) 5 Net Cash Net Cash Net Cash Net Cash
Interest coverage (times) 6 30.5 92.8 70.3 65.8
Notes:
1. Return on equity is calculated based on the net profit divided by the total equity as at the end of the
respective period and multiplied by 100.0%.
2. Return on total assets is calculated based on the net profit divided by the total assets as at the end of the
respective period and multiplied by 100.0%.
3. Current ratio is calculated based on the total current assets divided by the total current liabilities as at the
end of the respective period.
FINANCIAL INFORMATION
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4. Gearing ratio is calculated based on the total borrowings and lease liabilities divided by total equity as at
the end of the respective period and multiplied by 100.0%.
5. Net debt to equity ratio is calculated based on the net debts (total debts net of cash and cash equivalents)
divided by total equity as at the end of the respective period and multiplied by 100.0%.
6. Interest coverage is calculated by dividing profit before taxation and interest by the finance cost as at the
end of the respective period.
Return on equity
Our return on equity was approximately 22.1%, 28.0% and 19.4% for the years ended 31
December 2020, 2021 and 2022, respectively. The increase in our return on equity for the year
ended 31 December 2021 was mainly due to the increase in net profits compared to 2020. The
decrease in our return on equity for the year ended 31 December 2022 was mainly due to the
decrease in net profits and increase in total equity compared to 2021.
Return on total assets
Our return on total assets was approximately 12.2%, 14.4% and 10.9% for the years ended
31 December 2020, 2021 and 2022, respectively. The increase in our return on total assets for
the year ended 31 December 2021 was mainly due to the increase in net profits compared to
2020. The decrease in our return on total assets for the year ended 31 December 2022 was
mainly due to the decrease in net profits and increase in current assets compared to 2021.
Current ratio
Our current ratio was approximately 2.1 times, 1.9 times, 2.2 times and 2.2 times as at 31
December 2020, 2021 and 2022 and 30 June 2023, respectively. The decrease in our current ratio
as at 31 December 2021 was mainly attributable to (i) the increase in bank borrowings by
approximately RMB10.0 million; and (ii) the increase in trade and other payables of
approximately RMB9.3 million. The increase in our current ratio as at 31 December 2022 was
mainly attributable to combined effect of (i) the increase in trade and other receivables of
approximately RMB44.7 million; (ii) the decrease in bank borrowings of approximately
RMB10.0 million and (iii) the decrease in cash and cash equivalents of approximately RMB30.1
million. The increase in our current ratio as at 31 December 2022 was mainly due to (i) the
increase in trade and other receivables and prepayment of approximately RMB38.7 million; (ii)
the decrease in bank borrowings by approximately RMB10.0 million and (iii) the increase in
cash and cash equivalents of approximately RMB2.5 million. Our current ratio as at 30 June
2023 remained stable at 2.2 times.
FINANCIAL INFORMATION
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Gearing ratio
Our gearing ratio was approximately 5.5%, 12.2%, 4.1% and 3.7% as at 31 December 2020,
2021 and 2022 and 30 June 2023, respectively. The increase in our gearing ratio at 31 December
2021 was mainly attributable to the increase in bank borrowings by approximately RMB10.0
million in 2021. The decrease in our gearing ratio at 31 December 2022 was mainly attributable
to the decrease in bank borrowings by approximately RMB10.0 million as at 31 December 2022.
Our gearing ratio as at 30 June 2023 remained stable at 3.7%.
Net debt to equity ratio
We recorded net cash positions as our cash and cash equivalents balances were in excess of
our borrowings as at 31 December 2020, 2021 and 2022 and 30 June 2023.
Interest coverage
Our interest coverage was approximately 30.5 times, 92.8 times, 70.3 times and 65.8 times
for the years ended 31 December 2020, 2021 and 2022 and 30 June 2023, respectively. The
increase in our interest coverage for the year ended 31 December 2021 was mainly attributable
to (i) lower finance costs incurred as a result of our bank borrowings fully repaid during the
year ended 31 December 2020; and (ii) we had new bank borrowings in late of December 2021.
The decrease in our interest coverage for the year ended 31 December 2022 was mainly
attributable to the lower profit before taxation and interest for the year ended 31 December
2022. The decrease in our interest coverage for the six months ended 30 June 2023 was mainly
attributable to the lower profit before taxation and interest for the period ending 30 June 2023.
FINANCIAL RISK MANAGEMENT
During the normal course of business, our Group is exposed to various types of financial
risks including interest rate risk, credit risk, liquidity risk and capital risk. Please refer to the
section headed “Business – Risk management and internal control” of this prospectus for other
key risk management discussion. Our Board is responsible for setting the objectives and
underlying principles of financial risk management, further details of which are set out in Note 3
of the Accountant’s Report in Appendix I to this prospectus.
Interest rate risk
Our Group is exposed to interest rate risk on its borrowings and bank deposits. The interest
rates and terms of repayment of our borrowings are disclosed in Note 27 of the Accountant’s
Report in Appendix I to this prospectus.
We currently do not have an interest rate hedging policy and have not entered into any
interest rate swaps and/or contracts to hedge our exposure, but will monitor our interest rate risk
exposure in the future.
FINANCIAL INFORMATION
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Credit risk
Credit risk is the risk that a counterparty will default on its contractual obligations
resulting in financial loss to our Group. Our Group is exposed to credit risk in relation to our
cash and bank deposits as well as trade receivables and other receivables. For trade receivables,
our Group has established a credit management system as detailed in the section headed
“Business – Risk management and internal control” in this prospectus and adopts the policy of
dealing only with customers of appropriate creditworthiness and history. For financial assets, our
Group adopts the policy of only dealing with financial institutions and other counterparties with
high credit ratings. Our bank deposits are held by reputable banks that are considered to have
limited credit risk as they are leading players with good reputation. Credit risk to an individual
counterparty is restricted by credit limits which are approved by our Directors based on ongoing
credit assessments. The counterparty’s payment profile and credit exposure are monitored by our
Directors continuously.
We consider the probability of default upon initial recognition of assets and whether there
has been a significant increase in credit risk on an ongoing basis throughout each reporting
period. We consider available reasonable and supportive forward-looking information, including
indicators such as internal credit rating, external credit rating, actual or expected significant
adverse changes in business, financial or economic conditions that are expected to cause a
significant change to a customer’s ability to meet its obligations, actual or expected significant
changes in our debtor or customer’s operating results, significant increases in credit risk on
other financial instruments of the same customer, or significant changes in the expected
performance and behaviour of a customer.
We adopt the general approach for expected credit loss of other receivables including
amounts due from related parties. We consider these financial assets have not significantly
increased in credit risk from initial recognition, and thus, they are classified in stage one and
only considered 12-month expected credit losses. Considering the history of default and forward
looking factor, the expected credit loss is immaterial.
Credit exposure to an individual counter-party is restricted by credit limits that are
approved by the directors based on on-going credit evaluation. The counter-party’s payment
profile and credit exposure are continuously monitored by the directors of our Group.
Our Group is exposed to credit risk concentration as detailed in Note 3.1(iii) of the
Accountant’s Report in Appendix I to this prospectus. Our major customers are reputable
organisations and therefore, management considers our credit risk limited.
FINANCIAL INFORMATION
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Liquidity risk
Liquidity risk is the risk that our Group will encounter difficulties in raising funds to meet
commitments associated with financial instruments. In the management of liquidity risk, our
Group ensures that we have adequate funding through our ability to operate profitably and
ensuring we have sufficient cash balance to meet our normal operating commitments and
adequate amount of committed credit facilities. For details of the maturity profile of our Group’s
financial liabilities, please see Note 3.1(iv) of the Accountant’s Report in Appendix I to this
prospectus.
Capital risk
Our Group regularly reviews and manages our capital structure to ensure optimal capital
structure and shareholder returns, taking into account our future capital requirements of our
Group and capital efficiency, prevailing and projected profitability, projected operating cash
flows, projected capital expenditures and projected strategic investment opportunities. Our
Group currently has not adopted any formal dividend plan.
In order to maintain or adjust the capital structure, our Group may adjust the amount of
dividends paid to the shareholder, return capital to the shareholder, issue new shares or sell
assets to reduce debt.
Gearing has a significant influence on our capital structure and we monitor our capital
using gearing ratio as well as our current and expected liquidity requirement and adjusting our
capital structure to reflect the change in economic conditions affecting our Group. For further
details of our Group’s gearing ratio, please refer to Note 3.3 of the Accountant’s Report in
Appendix I to this prospectus.
LISTING EXPENSES
Our Directors estimate that the total amount of expenses in relation to the Listing is
approximately RMB42.1 million (equivalent to approximately HK$47.1 million), which
amounted to 35.0% of gross proceeds of the initial public offering based on an Offer Price of
HK$0.36 per Offer Share (being the mid-point of the Offer Price range stated in this prospectus),
of which (i) underwriting-related expenses, including underwriting commission and other
expenses are approximately RMB8.4 million (equivalent to approximately HK$9.4 million) and
(ii) non-underwriting-related expenses are approximately RMB33.7 million (equivalent to
approximately HK$37.7 million), comprising (a) fees and expenses of legal advisers and
accountants of approximately RMB18.7 million (equivalent to approximately HK$20.9 million)
and (b) other fees and expenses, including sponsor fee, of approximately RMB15.0 million
(equivalent to approximately HK$16.8 million). Out of the amount of approximately RMB42.1
million, approximately RMB13.9 million is directly attributable to the issue of the Listing and is
expected to be accounted for as a deduction from equity upon Listing. The remaining amount of
approximately RMB28.2 million, which cannot be so deducted, shall be charged to profit or loss.
Of the approximately RMB28.2 million that shall be charged to profit or loss, approximately
FINANCIAL INFORMATION
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RMB20.8 million has been charged during the Track Record Period and approximately RMB7.4
million is expected to be incurred for after the Track Record Period. Expenses in relation to the
Listing are non-recurring in nature. Our financial performance and results of operations for the
years after Track Record Period will be adversely affected by the estimated expenses in relation
to the Listing.
Our Directors would like to emphasise that the amount of the Listing expenses is a current
estimate for reference only and the final amount to be recognised in our consolidated financial
statements for the year ending 31 December 2023 is subject to adjustment based on audit and the
then changes in variables and assumptions.
DIVIDEND AND DIVIDEND POLICY
During the Track Record Period, Guangzhou Shenghui declared and distributed dividends
of approximately RMB28.2 million to its then shareholders in January 2021. The payment of
such dividends was financed by our Group’s internal resources. Our historical declarations of
dividends may not reflect our future declarations of dividends. We have no current plans for
future dividend payments. Our Company currently does not have any predetermined dividend
payout ratio.
Under Cayman Island law, dividends may be paid out of the profits of our Company or out
of sums standing to the credit of our share premium account provided that under no
circumstances may dividends be paid if this would result in the Company being unable to pay its
debts as they fall due in the ordinary course of business. Future dividend payments will also
depend on the availability of dividends we will receive from our subsidiaries in the PRC. The
recommendation of the payment of dividend is subject to the absolute discretion of our Board,
subject to certain requirements of Cayman Islands Law. Our Shareholders may by ordinary
resolution declare a dividend, but no dividend may exceed the amount recommended by our
Directors. The amount of any dividends to be declared and paid in the future will depend on,
among other things, our results of operations, cash flows and financial condition, operating and
capital requirements and other relevant factors. There will be no assurance that our Company
will be able to declare or distribute any dividend in the amount set out in any plan of our Board
or at all.
DISTRIBUTABLE RESERVES
Our Company was incorporated on 4 January 2021. As at 30 June 2023, our Company had
no distributable reserves available for distribution to our Shareholders.
UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET
TANGIBLE ASSETS
See “Unaudited Pro Forma Financial Information” in Appendix II to this prospectus for
further details.
FINANCIAL INFORMATION
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DISCLOSURE REQUIRED UNDER THE LISTING RULES
Our Directors have confirmed that, as at the date of this prospectus, they were not aware of
any circumstances which would give rise to a disclosure requirement under Rules 13.13 to 13.19
of the Listing Rules.
RECENT DEVELOPMENT
Please refer to the section headed “Summary – Recent developments” of this prospectus.
NO MATERIAL ADVERSE CHANGE
As far as our Directors are aware, there had been no material adverse change in the market
conditions or the industry and environment in which our Group operates that materially and
adversely affect our financial and operation position since 30 June 2023 and up to the date of
this prospectus.
Save for the expenses in connection with the Listing, up to the date of this prospectus, our
Directors confirm that there has been no material adverse change in our financial or trading
position or prospects since 30 June 2023, being the date on which the latest audited financial
statements of our Group were made up and there had been no events since 30 June 2023 which
would materially affect the information shown in our consolidated financial statements included
in the Accountant’s Report set out in Appendix I to this prospectus.
FINANCIAL INFORMATION
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FUTURE PLANS
Please refer to the section headed “Business – Business strategies” of this prospectus for a
detailed description of our business strategies.
USE OF PROCEEDS
We estimate that the aggregate net proceeds of the Share Offer (after deducting
underwriting fees and estimated expenses payable by us in connection with the Share Offer, and
assuming an Offer Price of HK$0.36 per Offer Share, being the mid-point of the indicative Offer
Price range of HK$0.32 to HK$0.40 per Offer Share) will be approximately HK$87.4 million.
We intend to apply such net proceeds in the following manner:
 Approximately HK$61.4 million representing approximately 70.3% of the net proceeds
from the Share Offer, for expanding our geographic presence across the PRC, among
which
(1) approximately HK$42.7 million, representing approximately 48.9% of the net
proceeds from the Share Offer will be used to establish three branch offices
locally in the first quarter of 2024 in first and new first-tier cities such as
Beijing, Shanghai and Hangzhou in the PRC which have strong demand for
property cleaning services. It is contemplated that each new branch office would
initially consist of managers, marketing staff responsible for business
development and sufficient operation staff. We estimate the main costs for the
above include expenses for incorporating the entity, renting an office at such
locations, attracting quality staff through an attractive remuneration package and
purchasing basic equipment, machinery and vehicles. Additional staff will be
hired and equipment and machinery purchased based on the actual scope and
scale of services to be rendered under the new service agreements between us
and customers.
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Further breakdown of major costs
The following table sets out a further breakdown of major costs associated
with the establishment of new branch offices in Beijing, Shanghai and Hangzhou
based on a timeframe from 1 January 2024 to 31 August 2026:
Beijing Shanghai Hangzhou
HK$ million HK$ million HK$ million
Rental and office
expenses
Note 1 0.8 0.9 0.5
Staff costs Note 2 12.0 12.0 12.0
Preliminary tendering,
cost of materials
and miscellaneous
expenses
Note 3 1.5 1.5 1.5
Notes:
(1) The rental and office expenses are estimated based on quotations obtained for a
monthly rental of approximately RMB180/100 sq.m., RMB200/100 sq.m. and
RMB75/100 sq.m. for Beijing, Shanghai and Hangzhou, respectively.
(2) In determining the amount for staff costs, our Directors considered that generally staff
costs represent the most significant major costs due to the labour intensive nature of
our business, and based on our experience we require significant available cash-flow for
the salaries, social insurance and housing provident funds payments for sufficient
workers to operate our business. With reference to our over 6,347 staff dedicated to
operations as at 31 December 2022, our Directors believe that our expected hiring of at
least 270 staff (comprising five managerial staff and around 85 operations and other
staff for each location) is reasonable. The staff costs are estimated based on two types
of staff: (i) managerial staff; and (ii) operations and other staff. It is estimated that
initially, five managerial staff will be hired for each location with an average salary and
benefits (including social insurance and housing provident funds) of RMB7,500/month
and around 85 operations and other staff will be hired for each location with an average
salary and benefits (including social insurance and housing provident funds) of
RMB4,000/month.
(3) The preliminary tendering, cost of materials and miscellaneous expenses are estimated
by reference to our past experience.
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Strategic considerations for establishing new branch office
Historically, it has been our business strategy to cultivate and develop the
client network and reputation in Guangdong province, especially in the Greater
Bay Area. Since our establishment, we have established three branch offices for
the purpose of our business expansion in three different geographical locations,
i.e. Haikou Branch, Chongqing Branch and Zhengzhou Branch. For details of our
business strategy in establishing branch offices, please refer to the section headed
“Business – Business strategies – Continue to increase our market share by
expanding our presence in the PRC in both existing and new markets – Expand
market coverage by establishment of new branch offices – Our historical success
in establishing Haikou Branch and Chongqing Branch and Our Established
Zhengzhou Branch” in this prospectus.
As part of our growth strategy, we wish to accelerate our expansion in new
markets, in particular to have more sizeable projects and gain a foothold in the
markets in Beijing, Shanghai and Hangzhou, the PRC.
By utilising proceeds from the Share Offer to establish three new branch
offices locally in each of Beijing, Shanghai and Hangzhou in the PRC, we intend
to have not only office and operation staff but also business development staff in
these markets to build a stronger local presence which can cater to and provide
greater attention to customers in the region. In addition, based on the past
experience of the management of our Group, we believe we need to have a local
presence with timely and sufficient supports in order for us to win the tenders of
sizeable projects and maintain long lasting relationships with customers in these
new markets. As at the Latest Practicable Date, Shenghui Cleanness (Beijing)
was established in preparation of our development plans, which we expect to be
in full operation after we devote our resources involving the hiring of office,
operation and business development staff. Upon listing, we intend to utilise the
proceeds to fully commit to the devotion of resources into Shenghui Cleanness
(Beijing) where we may attract more tenders and secure more projects in Beijing.
As a cleaning and maintenance services provider, we strive to establish
brand presence in existing markets and expand to new markets, so as to further
grow our business. Our end-users are customers located in local community,
therefore, establishing local presence can enable our Group to reach out to our
customers most directly and have a better understanding of local markets’ needs.
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According to the Industry Report, it is generally the market practice for
cleaning and maintenance services providers to set up a local office before or
shortly after being awarded a service contract. However, it is favourable to our
Group’s business expansion to establish branch offices before being awarded a
service contract for reasons set out below:
– To fulfil tender offerors’ requirement . In order to be qualified to bid
certain sizable projects such as the Raffles City Chongqing project,
bidders are required to establish a branch office/subsidiary, but not a
temporary project company, in Chongqing before submitting the
tenders.
Moreover, as confirmed by Frost & Sullivan, tender offerors usually
consider the existence of a branch office as one of the assessment
indicators during the tendering process, our Group will hence gain
competitive advantage through the establishment of branch office when
securing a tender.
– Management advantage. The main purpose of setting up a temporary
project company in different provinces or cities is to arrange social
insurance and housing provident funds for local staff of one-off
projects and/or with less sizable contract sums. With increasing scale
of operation, our Directors believe that the management advantages
such as cost-saving effect, compliance with regional restrictions on
opening of social insurance and housing provident fund accounts,
increasing staff loyalty and efficiency of recruitment of local staff can
be obtained.
– Restriction on age of cleaning workers. The historical strategy of our
Group to hire retired persons as cleaning staff may not be appropriate
for certain sizeable customers or large-scale contracts (especially for
high-end commercial premises such as Guangzhou Taikoo Hui ( ᄿψ˄
̚ි)) due to the restrictions on the age of the cleaning workers or
percentage restrictions on employing retired workers. For our Group to
be able to hire non-retired local cleaning workers, there is a need to set
up local offices so as to open social insurance and housing provident
funds accounts for workers in compliance with regional regulations. As
such, setting up local offices will enable our Group to (i) reduce the
number of retired workers employed so as to satisfy the requirements
of more sizeable contracts; and (ii) contribute to non-retired workers’
social insurance and housing provident funds effectively and
efficiently.
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– To build up reputation and enhance efficiency of marketing efforts.
Through the establishment of branch office, our Group shall be able to
daily and directly contact with the key players and stakeholders in the
industry as well as relevant local government authorities and respond
to their comments and requirements in a timely and efficient manner,
hence enables our Group to familiarise ourselves with local regulatory
practices and customs, customer preferences and behaviour, the
reliability of local contractors and suppliers, business practices and
business environments, which in turn enables our Group to receive
tender invitations from sizeable customers, secure tenders and execute
projects in a more effective way.
In contrast, temporary project companies with limited size and
structure merely contribute to the arrangement of social insurance and
housing provident funds for local staff of one-off projects and/or with
less sizable contract sums, and can bring limited marketing effect to
our Group’s business and can unlikely help our Group establish local
presence in such provinces.
– Increased demand of having local office and staff. Since the
COVID-19 pandemic, the PRC cities such as Shanghai are subject to
lockdown from time to time, which led to the decrease in staff mobility
to provide services across different provinces. As confirmed by Frost
& Sullivan, there is an increasing demand for local presence of
workers from tender offerors since the outbreak of the COVID-19
pandemic. Due to provincial policy towards pandemic control, some
regional market would be affected as domestic transit across region
would be somehow restricted. This will further impose an impact on
regular service delivery across provinces in the environmental and
maintenance service industry. Hence, our Directors consider that it is
essential for our Group to set up local offices and have local staff
present in different provinces to increase our Group’s competitiveness
in securing tenders in future.
According to the Industry Report, the property cleaning market size in
Beijing is expected to increase significantly from approximately RMB7.4 billion
in 2023 to approximately RMB11.3 billion in 2027 with a CAGR of
approximately 11.1% and the market size of the property cleaning sector in
Shanghai is expected to grow at a higher CAGR of approximately 10.9% from
approximately RMB9.3 billion in 2023 to approximately RMB12.8 billion in
2027. The property cleaning market in Zhejiang province, where Hangzhou is
located, is also expected to witness a growth with the market size of property
cleaning in Zhejiang province expected to increase from approximately RMB46.0
billion in 2023 to approximately RMB55.2 billion in 2027 with CAGR of
approximately 4.7%. Hangzhou, as the capital city of Zhejiang province and key
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contributor to the economic growth of the province, has experienced rapid growth
in recent years with noticeable urbanisation process, which has generated
substantial demand for cleaning and maintenance services in relation to city
streets, public facilities and different types of properties, including residential
and commercial properties. As the market demand is driven by the cities’
continuing economic development and urbanisation, Hangzhou is expected to
have remarkable growth potential. The market size of property cleaning sector in
Hangzhou has increased from RMB1.6 billion in 2018 to a predicted value of
RMB2.2 billion in 2022, representing a CAGR of 8.3%, and it is anticipated to
further arise from RMB2.3 billion in 2023 to RMB3.2 billion in 2027 with a
CAGR of 8.6%. Based on the potential opportunities for our Group considering
the significant demand for property cleaning as demonstrated by the large market
size of the property cleaning markets in Beijing, Shanghai and Zhejiang (which
Hangzhou forms a part) and the overall growth trend in these markets, Beijing,
Shanghai and Hangzhou are determined to be suitable locations for establishing
new subsidiaries or branch offices and despite the maturity of the market in
Beijing and Shanghai.
According to the Industry Report, to enter into such markets in Beijing,
Shanghai, and Hangzhou, it is crucial for new market entrants to have a proven
and outstanding track record, reputation, expertise and industrial recognition and
such factors serve as a barrier to entry for most entrants to enter into such
markets. For further details on the market potentials and our ability to replicate
our success in Guangdong province to Beijing, Shanghai and Hangzhou, please
refer to the section headed “Business – Business strategies – Continue to increase
our market share by expanding our presence in the PRC in both existing and new
markets – Expand market coverage by establishment of new branch offices –
Potentials in Beijing, Shanghai and Hangzhou and our ability to replicate our
success in Guangdong province” in this prospectus.
Our Directors believe that (a) by leveraging on our existing relationship
with reputable property developers and property management companies, (b) with
our expertise and capabilities to provide a variety of cleaning and maintenance
services and past success in undertaking projects across 14 provincial-level
regions in the PRC, (c) with the competitive advantages we may enjoy after we
have obtained our listing status upon Listing, and (d) by recruiting local
management staff who are familiar with the trends in the local competitive
landscape, we can compete effectively with the market incumbents and
successfully expand our business in such cities with substantial market demand.
Our Directors confirm that our Group has not entered into any projects in
Beijing, Shanghai and Hangzhou during the Track Record Period.
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Breakeven and investment payback periods
Breakeven period refers to the number of months needed for the revenue
generated by establishing new branch offices in Beijing, Shanghai and Hangzhou
to cover the relevant operating costs and expenses on accounting basis, taking
into account the non-cash items such as depreciation expenses.
For illustrative purposes only, based on the assumptions that (i) our new
branch offices will be established and the relevant operating costs and expenses
will begin to incur in the first quarter of 2024; (ii) on a conservative basis, the
tendering process will commence after the establishment of new branch offices in
the first quarter of 2024, and new projects will commence in March 2024; (iii)
the new branch offices are able to capture the property and public space cleaning
market shares in Beijing, Shanghai and Hangzhou, according to our Group’s
historical property and public space cleaning market share in the PRC in 2021;
and (iv) the operating costs and expenses of new branch offices mainly include
staff costs, rental expenses and tendering expenses and there will be no material
change in the market, fiscal and economic conditions, our Directors expect that
breakeven period will be approximately thirteen months after the establishment
of branch offices in the first quarter of 2024.
Investment payback period refers to the number of years needed for the
accumulated cash inflows from establishing new branch offices in Beijing,
Shanghai and Hangzhou to equate the total cash outflow for operating the three
new branch offices. For illustrative purposes only, based on the assumptions that
(i) our new branch offices will be established and the relevant operating costs
and expenses will begin to incur in the first quarter of 2024; (ii) on a
conservative basis, the tendering process will commence after the establishment
of new branch offices in the first quarter of 2024, and new projects will
commence in March 2024; (iii) the new branch offices are able to capture the
property and public space cleaning market shares in Beijing, Shanghai and
Hangzhou, according to our Group’s historical property and public space cleaning
market share in the PRC in 2021; (iv) staff costs, rental expenses and other
related costs are expected to be paid at the end of the next month to which they
are related; (v) based on the credit terms granted to our customers and the
historical average trade receivables turnover period, the revenue is expected to be
received approximately 3 months after the month of revenue generated and (vi)
the operating costs and expenses of new branch offices mainly include staff
costs, rental expenses and tendering expenses and there will be no material
change in the market, fiscal and economic conditions, our Directors expect that
the investment payback period will be approximately four years and nine months
after the establishment of branch offices in the first quarter of 2024.
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(2) approximately HK$18.7 million, representing approximately 21.4% of the net
proceeds from the Share Offer will be used to pursue strategic acquisitions of the
entire or invest in a majority interest in one or two cleaning and maintenance
services provider(s) in the PRC. Given that we are also considering target(s) in
the Greater Bay Area, there may be overlap, to a certain extent, between our
service offering and the service offering of the acquisition target(s).
Our Directors are of the view that the acquisition of the potential targets will
bring the following synergistic effect:
– Operational synergy . Our Directors are of the view that our Group and
potential targets can share resources and expertise, such as technologies and
knowledge, market contribution, patents and service management through
merger or acquisition, thereby can subsequently engage in different types of
service contracts which we were not capable of engaging in before the
merger or acquisition.
Our Group shall also be able to grow our clientele gradually based on the
existing customers of the potential targets; and that the potential targets,
upon earning the reputation as a subsidiary of our Group and receiving
additional resources from our Group, shall be able to tender and secure
more sizeable projects introduced by our existing customers. The customer
base can be enlarged by sharing the marketing networks and channels
between our Group and the potential targets and hence improve the income
as a whole.
As a result of the acquisition, our Group and the potential targets can
improve our market share, industry concentration and ability on price
setting. On the other hand, we can also enjoy economies of scale to lower
the operation cost through the expansion of operating scale.
– Management synergy. The management cost of our Group and potential
targets can be saved and management efficiency can be improved as a
number of enterprises are managed in the same group. Our Group and
potential targets may experience better service delivery, enhanced utilisation
of resources, improvement in employee motivation, and more opportunities
for growing the business. An acquisition may also reduce job duplication
and make use of excess management resources.
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– Financial synergy. When the scale of our Group is expanded through
acquisition, the source of funds will be more diversified. The potential
targets can obtain funds from our Group and invest in projects with higher
returns which improve the efficiency of capital utilisation. On the other
hand, higher investment returns can bring more capital returns to our Group.
This cycle can increase the internal funds and maintain sufficient cashflow
within our Group.
When the capital of our Group and the potential target is expanded, the
bankruptcy risk is relatively reduced, the solvency and the ability to obtain
external loans are improved, hence our Group and the potential targets can
increase our credit ratings and reduce barriers for external financing.
Hence, our Directors believe that the acquisition(s) will promote the growth
and expansion of our existing business and any cannibalisation effect shall
be minimal. As at the Latest Practicable Date, we had neither identified any
particular acquisition target(s) nor entered into any formal agreements for
acquisition. Taking into account reasonable time to identify acquisition
targets(s), conduct necessary due diligence, structure the transaction, and
negotiate the agreement, we expect to identify and complete the above
acquisition on or before 2026.
Although we have not yet approached any particular acquisition target(s) for
discussions on potential acquisitions, and the actual acquisition costs will
depend on the commercial terms negotiated between the vendor(s) and us,
we have allocated an amount of net proceeds from the Share Offer for this
purpose by reference to the expected annual revenue of the potential
acquisition target(s) of not less than RMB20 million. The acquisition costs
will be financed by a combination of net proceeds from the Share Offer,
internal resources and/or bank borrowings. Taking into account the limited
data available in public database for private companies and that necessary
due diligence are yet to be done by our Group, our Directors confirm that
not less than three potential targets would preliminarily meet our Group’s
acquisition criteria, which are (a) small to medium size businesses which
operate in the cleaning and maintenance services industry in the PRC and
operate in regions where there is strong demand for cleaning and
maintenance services for commercial properties such as the Greater Bay
Area including Guangzhou and other cities in Guangdong province; (b)
established for over 15 years in the cleaning and maintenance industry and
(c) not less than RMB20 million in terms of annual revenue.
 Approximately HK$16.9 million representing approximately 19.4% of the net proceeds
from the Share Offer, for enhancing our service capabilities to capture opportunities in
the public space cleaning sector.
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In connection with the above, we intend to purchase specialised vehicles for garbage
collection and for waste suction with vehicle treatment capabilities, hire professional
staff (including managers and vehicle drivers and operations staff) and rent sufficient
car-parking spaces in connection with the new vehicles after taking into account the
size of such vehicles and the limits of our current owned and rented properties.
Further breakdown of major costs
The following table sets out a further breakdown of the major costs associated
with the enhancement of our service capabilities to capture opportunities in the public
space cleaning sector:
Quantity
Estimated
costs
RMB million
Purchase garbage collection vehicle
Note 1 5 2.8
Purchase waste suction vehicle Note 2 5 5.2
Hire professional staff Note 3 22 5.9
Rent car parking spaces Note 4 1,000 sq.m. 1.4
Notes:
(1) The costs for garbage collection vehicles are estimated based on the quoted unit price of
approximately RMB560,000. Their estimated useful life is five years.
(2) The costs for waste suction vehicles are estimated based on the quoted unit price of
approximately RMB1.0 million. Their estimated useful life is five years.
(3) We plan to hire one manager and 10 drivers for each of our garbage collection and waste
suction services. The staff costs are estimated for 30 months based on an average salary and
benefits (including social insurance and housing provident funds) of RMB7,500/month for
manager and RMB9,000/month for drivers with reference to the market rate.
(4) Among our current owned and rented properties, we only have one owned car parking space
with a GFA of approximately 10.5 sq.m., which is insufficient to accommodate the five new
garbage collection vehicles and five new waste suction vehicles to support our operation
needs.
Cost-benefit analysis for acquisition of specialised vehicles
Performing public space cleaning projects with our own specialised vehicles
involves the garbage collection process and the garbage transportation process. With
reference to our Group’s single existing public cleaning project, the daily garbage
collected for the project is 1.6 tonnes and it is assumed that the garbage collection
vehicle operates 2 round trips per day for below analysis.
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During the garbage collection process, (i) a specialised garbage collection vehicle
with a value of RMB6,800 and 36 months of estimated useful life; and (ii) 2 working
hours by 3 general cleaning staff for garbage collection with monthly salary of
RMB6,000
(Note 1) are required. During the garbage transportation process, (i) a
specialised garbage transportation vehicle with a value of RMB560,000, 60 months
estimated useful life and garbage collection capacity of 25 tonnes; (ii) 8 working
hours by a driver for garbage transportation with monthly salary of RMB9,000
(Note 2)
and (iii) fuel costs for 2 round trips for garbage transportation of 31.1km per one-way
trip, are required.
Based on our existing public space cleaning projects, with the assumption and
the fact that the garbage transportation process serves several public cleaning projects,
the garbage transportation fee should be amortised to a single project according to the
proportion of 1.6 tonnes of garbage collected per day for a single project to the 50
tonnes garbage collection capacity for a specialised garbage transportation vehicle
with 2 round trips per day.
Notes:
(1) A general cleaning staff with monthly salary of RMB6,000 works 26 days per months and 8 hours
per day.
(2) A driver with monthly salary of RMB9,000 works 26 days per month and 8 hours per day.
The following table illustrates the average monthly costs of acquiring specialised
vehicles:
ACQUIRING SPECIALISED VEHICLES
Garbage collection
Value
Estimated
useful life
Average
monthly costs
(RMB) (RMB)
– V ehicle and equipment 6,800 36 months 189
Average
hourly rate
Daily
operation
hours
Average
monthly costs
(RMB) (RMB)
– Employees (3 staff
required) 28.85 2 hours 5,264.42
Garbage collection fee (A) 5,453.31
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Garbage transportation
Value
Estimated
useful life
Average
monthly costs
(RMB) (RMB)
– V ehicle and equipment 560,000 60 months 9,333.33
Average
hourly rate
Daily
operation
hours
Average
monthly costs
(RMB) (RMB)
– Employees (1 staff
required) 43.27 8 hours 10,528.85
Distance
Fuel
Consumption
Oil price
per Litre
Average
costs per
trip
Average
monthly
costs
(RMB) (RMB) (RMB)
– Fuel costs 124.4km
35.4L/
100km 7.72 340 10,340.76
Garbage
Transportation
Fee 30,202.94
Amortisation to
project cost (B) 966.49
Total average
monthly cost
((C)=(A)+(B)) 6,419.81
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The following table illustrates the average monthly costs of subcontracting based
on the subcontracting fee in the specialised vehicle subcontracting agreement related
to the same public cleaning service project:
SUBCONTRACTING
Subcontracting
fee per year
Average
monthly costs
(RMB) (RMB)
– Subcontracting (2 hours per day) 110,970 9,248.50
As such, our Directors believe that there is a necessity for our Group to procure
more garbage collection and waste suction vehicles, such as compression refuse
collectors and sewage purification treatment vehicle. In accordance with the Industry
Report, the most commonly used vehicles in the cleaning of public facilities such as
streets, lanes, parks, common areas, public toilet cleaning and sanitising include
garbage collection vehicles and waste suction vehicles. We may consider leasing
specialised vehicles to perform other specific tasks which are not commonly seen in
public cleaning projects.
 Approximately HK$6.7 million representing approximately 7.6% of the net proceeds
from the Share Offer, for adoption of technological advances in the industry,
specifically the purchase of cleaning robots, and upgrading our IT system.
Further breakdown of major costs
In connection with the above and based on quotations obtained, we intend to
allocate approximately HK$4.5 million for the purchase of cleaning robots and
approximately HK$2.2 million for upgrading our IT systems. Based on the cost of
RMB198,800 per robot, it is expected that 20 cleaning robots will be purchased. This
number may be adjusted based on further changes to the market price for suitable
cleaning robot models at the time of purchase.
 Approximately HK$2.3 million representing approximately 2.5% of the net proceeds
from the Share Offer, to expand our marketing department and strengthen our brand
recognition through promotional activities.
 The remaining approximately HK$0.1 million, representing approximately 0.2% of the
net proceeds from the Share Offer, for our working capital and for general corporate
purposes.
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To the extent our net proceeds from the Share Offer are not sufficient to fund the purposes
set out above, we intend to finance the balance through a variety of means, including cash
generated from operations and bank financing.
We will not receive any of the proceeds from the sale of the Sale Shares by our Selling
Shareholders in the Share Offer. Our Selling Shareholders estimate that they will receive, in
aggregate, net proceeds from the Share Offer of approximately HK$13.6 million, after deducting
the estimated underwriting commissions and expenses payable by them in the Share Offer and
assuming an Offer Price of HK$0.36 per Offer Share, being the mid-point of the indicative Offer
Price range of HK$0.32 to HK$0.40 per Offer Share in this prospectus.
If the Offer Price is set at the high end of the indicative Offer Price range, being HK$0.40
per Offer Share, the net proceeds of the Share Offer will increase by approximately HK$13.9
million. If the Offer Price is set at the low end of the indicative Offer Price range, being
HK$0.32 per Offer Share, the net proceeds of the Share Offer will decrease by approximately
HK$13.9 million. In such event, we will increase or decrease the allocation of the net proceeds
to the above purposes pro-rata to what is set out above.
Should our Directors decide to reallocate the intended use of proceeds to other business
plans and/or new projects of our Group to a material extent and/or there is to be any material
modification to the use of proceeds as described above, we will make appropriate
announcement(s) in due course. To the extent that the net proceeds of the Share Offer are not
immediately required for the above purposes or if we are unable to affect any part of our future
development plans as intended, we will hold such funds in short-term deposits with licensed
banks and authorised financial institutions in Hong Kong or the PRC (as defined under the SFO,
the Law of the People’s Republic of China on Commercial Banks (ج)
and other relevant laws in the PRC). We will also disclose the same in the relevant annual
report.
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IMPLEMENTATION PLANS
The following table sets forth a breakdown of how the net proceeds to be received by us
from the Share Offer, and assuming an Offer Price of HK$0.36 per Offer Share, being the
mid-point of the indicative Offer Price range of HK$0.32 to HK$0.40 per Offer Share) are
intended to be applied and the timing of application:
For the
year
ending 31
December
2024
For
the year
ending 31
December
2025
For
the year
ending 31
December
2026
For
the year
ending 31
December
2027
Total amount used from
net proceeds
RMB
million
RMB
million
RMB
million
RMB
million
RMB
million
HK$
million %
Expanding our geographic
presence across the PRC
– Establish new subsidiaries
and branches
Note 1 13.6 15.3 9.3 – 38.2 42.7 48.9
– Strategic acquisition(s) Note 2 – – 16.7 – 16.7 18.7 21.4
Sub-total 54.9 61.4 70.3
Enhancing our service
capabilities Note 3 9.7 2.7 2.4 0.3 15.1 16.9 19.4
Adopting technological
advances and upgrading our
IT system
Note 4 6 . 0––– 6 . 0 6 . 7 7 , 6
Expanding our marketing
department and strengthen our
brand recognition
Note 5 1.3 0.7 – – 2.0 2.3 2.5
General working capital 0.1 0.1 0.2
Notes:
(1) We intend to establish three new branches or subsidiaries (including hiring relevant staff, identifying and
renting office at the relevant locations), one in Beijing, Shanghai and Hangzhou each, all the first quarter
of 2024.
(2) We intend to begin the relevant strategic acquisition process including the engagement of professional
advisers and kick-off the process within 12 month from the Listing Date. Afterwards, the identification and
selection of potential acquisition target(s), due diligence, signing of documents and payment of the
consideration are expected to be completed on or before 31 December 2026.
(3) We intend to purchase 10 specialised vehicles and hire two managers and 20 drivers in the fourth quarter
of 2024. We will finalise the selection of the car parking spaces on or before 28 February 2024 and
commence the rental of such properties in March 2024.
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(4) We intend to purchase 20 cleaning robots in the first quarter of 2024. In relation to upgrading our IT
systems, we will obtain final quotations, select service provider and finalise the implementation plan for
upgrading our IT systems and of such upgrades after relevant design, implementation and testing on or
before 28 February 2024.
(5) We intend to engage marketing agent to promote public awareness of our brand in the first quarter of
2024.
The above implementation plans are draft up based on current economic conditions which
are inherently subject to many uncertainties and factors outside of our control in particular, the
risk factors as set out in the section headed “Risk factors” of this prospectus. We cannot assure
you that our business strategies will be achieved and our implementation plans will materialise
in accordance with the above estimated time frame or at all.
REASONS FOR LISTING
According to the Industry Report, the environmental cleaning and maintenance industry in
the PRC mainly comprises and is largely dominated by two sectors, namely the property
cleaning and public space cleaning sectors. These two sectors have been growing steadily and
their total market size is expected to reach approximately RMB622.8 billion in 2027,
representing a CAGR of approximately 8.8% from 2023 to 2027. In addition, due to the outbreak
of COVID-19, the PRC government has established related national policies to reinforce and
standardised large-scale cleaning and sanitising activities to improve cleaning and maintenance
condition at community level. Therefore, despite the adverse impact of COVID-19 pandemic on
the economy, the environmental cleaning and maintenance service providers are beneficiaries
during these unprecedented times. Despite our strong position in the commercial property
cleaning sector in Guangdong province, our Group has a market share of approximately 0.1% in
the overall industry in PRC in terms of revenue in 2022 according to the Industry Report,
indicating a huge potential for future growth and expansion in this growing industry particularly
in the public space cleaning sector and in provincial-level regions beyond Guangdong province.
Our Directors consider that the Listing will provide wide-ranging benefits to our Group
including:
(a) according to the Industry Report, the public space cleaning sector mostly involves
high contract sum projects with local government customers which prefer large-scale
service providers with good industry recognition and four of the five largest dominant
players in the industry identified have listing status. In order to strengthen our
position in the property cleaning sector in Guangdong province and substantially
expand our business in the long run, we believe the Listing will help to elevate the
profile of our Group, increase our recognition among potential customers and
competitiveness to tender for sizeable projects and raise our visibility with customers
particularly government customers which would help to generate more business
opportunities in the public space cleaning sector and as we expand our market
presence outside of Guangdong province and across the PRC through opening new
branches and/or acquisitions and investments as part of our business strategy;
FUTURE PLANS AND USE OF PROCEEDS
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(b) our major customers, which includes reputable property management companies and
companies listed on the Stock Exchange and other major stock exchanges, may prefer
to work with listed companies given their greater transparency with stringent
regulatory compliance, announcements, financial disclosure and corporate governance
and general regulatory supervision by the relevant regulatory bodies. In addition due
to market conditions and uncertainties due to COVID-19, our Directors believe the
listing status will provide our business partners with greater security and comfort
when engaging in business with us as compared with private service providers;
(c) labour shortage is a major challenge in our industry according to the Industry Report
and our Directors believe that the listing status will help our Group raise staff morale
and confidence in our Group, which would improve our ability to attract, recruit,
retain and motivate experienced and qualified staff; and
(d) the Listing will broaden our Group’s shareholder base and strengthen our capital base.
FUTURE PLANS AND USE OF PROCEEDS
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PUBLIC OFFER UNDERWRITERS
Sole Overall Coordinator
Cinda International Capital Limited
Joint Global Coordinators
Cinda International Capital Limited
ICBC International Securities Limited
CCB International Capital Limited
Y uen Meta (International) Securities Limited
China Sunrise Securities (International) Limited
Public Offer Underwriters
Cinda International Capital Limited
ICBC International Securities Limited
CCB International Capital Limited
Y uen Meta (International) Securities Limited
China Sunrise Securities (International) Limited
ABCI Securities Company Limited
CEB International Capital Corporation Limited
China Everbright Securities (HK) Limited
China Industrial Securities International Capital Limited
CMB International Capital Limited
CMBC Securities Company Limited
Eddid Securities and Futures Limited
Gear Securities Investment Limited
Grand Moore Capital Limited
Livermore Holdings Limited
Realord Asia Pacific Securities Limited
SBI China Capital Financial Services Limited
Soochow Securities International Brokerage Limited
SPDB International Capital Limited
Zheshang International Financial Holdings Co., Limited
Zhongtai International Securities Limited
UNDERWRITING ARRANGEMENTS AND EXPENSES
Public Offer Underwriting Agreement
Pursuant to the Public Offer Underwriting Agreement, our Company has agreed to offer
initially 41,437,500 Shares for subscription by members of the public in Hong Kong on and
subject to the terms and conditions of this prospectus.
UNDERWRITING
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Subject to, among other conditions, the granting of the approval for the listing of, and
permission to deal in, all our Shares in issue and any Shares to be issued as mentioned in this
prospectus (including any Shares which may fall to be issued upon the exercise of the options
which may be granted under the Share Option Scheme) by the Listing Committee and to certain
other conditions set out in the Public Offer Underwriting Agreement, the Public Offer
Underwriters have severally, but not jointly, agreed to subscribe or procure subscribers for their
respective applicable proportions of the Public Offer Shares now being offered which are not
taken up under the Public Offer on the terms and conditions of this prospectus and the Public
Offer Underwriting Agreement.
In addition, the Public Offer Underwriting Agreement is conditional on and subject to the
Placing Underwriting Agreement having been executed, becoming, and continuing to be,
unconditional and not having been terminated.
Grounds for termination
The obligations of the Public Offer Underwriters to subscribe or procure subscribers for the
Public Offer Shares under the Public Offer Underwriting Agreement will be subject to
termination by notice in writing to us from the Sole Overall Coordinator and the Joint Global
Coordinators (for themselves and on behalf of the other Public Offer Underwriters) with
immediate effect if any of the following events occur prior to 8:00 a.m. on the Listing Date:
(a) there has come to the notice of the Sole Sponsor, the Sole Overall Coordinator and the
Joint Global Coordinators:
(i) that any statement contained in any of this prospectus and/or any notices,
announcements, advertisements, communications or other documents issued or
used by or on behalf of us in connection with the Share Offer (including any
supplement or amendment thereto) (collectively, the “ Relevant Documents ”),
was, when it was issued, or has become, untrue, incorrect, 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
the sole and absolute opinion of the Sole Overall Coordinator and the Joint
Global Coordinators (for themselves and on behalf of the other Public Offer
Underwriters), fair and honest and based on reasonable assumptions, when taken
as a whole; or
(ii) that any matter has arisen or has 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 a material omission therefrom;
or
(iii) any breach of any of the obligations imposed or to be imposed upon any party to
the Public Offer Underwriting Agreement or the Placing Underwriting Agreement
(in each case, other than on the part of any of the Underwriters); or
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(iv) any event, act or omission which gives or is likely to give rise to any material
liability of any of us, our executive Directors and our Controlling Shareholders
(the “ Warrantors ”) pursuant to the indemnities given by them under the Public
Offer Underwriting Agreement or under the Placing Underwriting Agreement; or
(v) any change or development or event 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 member of us (the
“Group Company ”); or
(vi) any material breach of, or any event or circumstance rendering untrue or
incorrect in any material respect, any of the representations, warranties,
agreements and undertakings to be given by the Warrantors respectively in terms
set out in the Public Offer Underwriting Agreement; or
(vii) the approval by the Listing Committee of the listing of, and permission to deal
in, the Shares 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 acceptance of the CSRC of the filings in respect of the Share Offer (the
“CSRC Filings ”) and the publication of the filing results in respect of the CSRC
Filings on its website is rejected or not granted, on or before the date of the
Listing, or if granted or accepted, the acceptance is subsequently withdrawn,
cancelled, qualified, revoked, invalidated or withheld; or
(ix) withdrawal of any of the Relevant Documents or the Share Offer; or
(x) any person (other than the Public Offer Underwriters) has withdrawn or sought to
withdraw its consent to being named in any of the Public Offer Documents (as
defined in the Public Offer Underwriting Agreement) or to the issue of any of the
Public Offer Documents (as defined in the Public Offer Underwriting
Agreement); or
(xi) 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
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(xii) an authority or a political body or organisation in any relevant jurisdiction has
commenced any investigation or other action, or announced an intention to
investigate or take other action, against any of our Directors and senior
management member of the Group as set out in the section headed “Directors and
senior management” of this prospectus; or
(xiii)a portion of the orders in the book-building process, which is considered by the
Sole Overall Coordinator and the Joint Global Coordinators (for themselves and
on behalf of the other Public Offer Underwriters) in their absolute opinion to be
material, at the time the Placing Underwriting Agreement is entered into, or the
investment commitments by any cornerstone investors after signing of
agreements with such cornerstone investors, have been withdrawn, terminated or
cancelled, and the Sole Overall Coordinator and the Joint Global Coordinators, in
their sole and absolute discretion, concludes that it is therefore inadvisable or
inexpedient or impracticable to proceed with the Share Offer; or
(xiv) any material loss or damage has been sustained 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 Sole Overall Coordinator and the
Joint Global Coordinators (for themselves and on behalf of the other Public Offer
Underwriters) in their sole absolute opinion to be material; or
(b) there shall develop, occur, exist or come into effect:
(i) any local, national, regional, international 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, civil commotion,
acts of war, outbreak or escalation of hostilities (whether or not war is declared),
acts of God, acts of terrorism, declaration of a local, national, regional or
international emergency, riot, public disorder, economic sanctions, outbreaks of
diseases, pandemics or epidemics (including, without limitation, Severe Acute
Respiratory Syndrome, avian influenza A (H5N1), Swine Flu (H1N1), Middle
East Respiratory Syndrome, Coronavirus disease (COVID-19) or such related or
mutated forms) or interruption or delay in transportation); or
(ii) any change or development involving a prospective change, or any event or
circumstance or series of events or circumstances likely to result in any change
or development involving a prospective change, in any local, regional, national,
international, financial, economic, political, military, industrial, fiscal, legal
regulatory, currency, credit or market conditions (including, without limitation,
conditions in the stock and bond markets, money and foreign exchange markets,
the interbank markets and credit markets); or
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(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) on the Stock Exchange, the New Y ork
Stock Exchange, the London Stock Exchange, the NASDAQ Global Market, the
Shanghai Stock Exchange, the Shenzhen Stock Exchange and the Tokyo Stock
Exchange; or
(iv) any new law(s), rule(s), statute(s), ordinance(s), regulation(s), guideline(s),
opinion(s), notice(s), circular(s), order(s), judgment(s), decree(s) or ruling(s) of
any governmental authority (“ Law(s) ”), 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 or other competent authority, in each case, in or affecting any of Hong
Kong, the PRC, the United States, the Cayman Islands, the BVI, the European
Union (or any member thereof) or any other jurisdictions relevant to any Group
Company or the Share Offer (the “ Specific Jurisdictions ”); or
(v) any general moratorium on commercial banking activities, or any disruption in
commercial banking activities, foreign exchange trading or securities settlement
or clearance services or procedures or matters, in or affecting any of the Specific
Jurisdictions; or
(vi) any imposition of economic sanctions, in whatever form, directly or indirectly,
by or for any of the Specific Jurisdictions; or
(vii) a change or development involving a prospective change in or affecting taxation
or exchange control (or the 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 HK dollars or the RMB against any foreign currency) in or
affecting any of the Specific Jurisdictions or affecting an investment in the
Shares; or
(viii) any change or development involving a prospective change, or a materialisation
of, any of the risks set out in the section headed “Risk factors” of this
prospectus; or
(ix) any litigation or claim of any third party being threatened or instigated against
any Group Company or any of the Warrantors; or
UNDERWRITING
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(x) any of our Directors and senior management members of us as set out in the
section headed “Directors and senior management” of this prospectus being
charged with an indictable offence or prohibited by operation of Law or
otherwise disqualified from taking part in the management of a company; or
(xi) the chairman of our Board of chief executive officer of us vacating his or her
office; or
(xii) 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
(xiii) a contravention by any Group Company or any Director of the Listing Rules, the
Companies Ordinance or any other Laws applicable to the Share Offer; or
(xiv) a prohibition on us for whatever reason from allotting, issuing or selling the
Offer Shares pursuant to the terms of the Share Offer; or
(xv) non-compliance of this prospectus, the CSRC Filings and the other Relevant
Documents or any aspect of the Share Offer with the Listing Rules, the CSRC
Rules or any other Laws applicable to the Share Offer; or
(xvi) the issue or requirement to issue by us of a supplement or amendment to this
prospectus and/or any other documents in connection with the Share Offer
pursuant to the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, the Listing Rules, the CSRC Rules or any requirement or request of
the Stock Exchange, the SFC and/or the CSRC; or
(xvii) a valid 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,
which, in each case individually or in aggregate in the sole and absolute opinion of the Sole
Overall Coordinator and the Joint Global Coordinators (for themselves and on behalf of the
other Public Offer Underwriters):
(a) has or is or will or may or could be expected to have a material 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 us or any Group Company or on any present or prospective
shareholder of us in his, her or its capacity as such; or
UNDERWRITING
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(b) has or will or may have or could be expected to have a material adverse effect on the
success, marketability or pricing of the Share Offer or the level of applications under
the Public Offer or the level of interest under the Placing; or
(c) makes or will make or may make it inadvisable, inexpedient or impracticable for any
part of the Public Offer Underwriting Agreement or the Share Offer to be performed
or implemented or proceeded with as envisaged or to market the Share Offer or shall
otherwise result in a material interruption to or delay thereof; or
(d) has or will or may have the effect of making any part of the Public Offer
Underwriting Agreement (including underwriting) incapable of performance in
accordance with its terms or which prevents the processing of applications and/or
payments pursuant to the Share Offer or pursuant to the underwriting thereof in any
material respect.
Undertakings to the Stock Exchange pursuant to the Listing Rules
Undertaking by our Company
Pursuant to Rule 10.08 of the Listing Rules, we will not issue any further shares or
securities convertible into equity securities (whether or not of a class already listed) or enter
into any agreement to such issue within six months from the Listing Date (whether or not such
issue of shares or securities will be completed within six months from the Listing Date) except
for:
(a) the issue of shares, the listing of which has been approved by the Stock Exchange,
pursuant to a share scheme under Chapter 17 of the Listing Rules;
(b) any capitalisation issue, capital reduction or consolidation or sub-division of Shares;
and
(c) the issue of shares or securities pursuant to an agreement entered into before the
Listing Date, the material terms of which have been disclosed in this prospectus in
connection with the Share Offer.
UNDERWRITING
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Undertaking by our Controlling Shareholders
Pursuant to Rule 10.07 of the Listing Rules, each of our Controlling Shareholders has
undertaken to (among others) us and the Stock Exchange that, save as permitted under the
Listing Rules, he or it will not, and shall procure that the relevant registered holder(s) of the
Shares will not:
(a) in the period commencing on the date of this prospectus and ending on the date which
is six months from the Listing Date, dispose of, or enter into any agreement to dispose
of or otherwise create any options, rights, interests or encumbrances in respect of any
of our Shares in respect of which he or it is shown by this prospectus to be the
beneficial owner(s); or
(b) in the period of six months commencing on the date which the period referred to in
paragraph (a) above expires, dispose of, or enter into any agreement to dispose of or
otherwise create any options, rights, interests or encumbrances in respect of any of the
Shares referred to in paragraph (a) above if, immediately following such disposal, or
upon the exercise or enforcement of such options, rights, interests or encumbrances,
he or it would cease to be our controlling shareholder (as defined in the Listing
Rules).
Further, pursuant to Note (3) to Rule 10.07(2) of the Listing Rules, each of our Controlling
Shareholders has undertaken to (among others) us and the Stock Exchange that, within the
period commencing on the date of this prospectus and ending on the date which is 12 months
from the Listing Date, he or it will:
(a) when he or it pledges or charges any Shares beneficially owned by him or it in favour
of an authorised institution (as defined in the Banking Ordinance, Chapter 155 of the
Laws of Hong Kong) for a bona fide commercial loan pursuant to Note (2) to Rule
10.07(2) of the Listing Rules, immediately inform us in writing of such pledge or
charge together with the number of Shares so pledged or charged; and
(b) when he or it receives indications, either verbal or written, from the pledgee or
chargee that any of the pledged or charged Shares will be disposed of, immediately
inform us of such indications.
We will also inform the Stock Exchange as soon as we have been informed of any of the
above matters, if any, by any of our Controlling Shareholders and disclose such matters by way
of an announcement in accordance with the Listing Rules as soon as possible.
UNDERWRITING
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Undertakings pursuant to the Public Offer Underwriting Agreement
Undertaking by our Company
We have undertaken to each of the Sole Sponsor, the Sole Overall Coordinator, the Joint
Global Coordinators, the Joint Bookrunners, the Joint Lead Managers and the Public Offer
Underwriters that except pursuant to the Capitalisation Issue and the Share Offer, during the
period commencing on the date of the Public Offer Underwriting Agreement and ending on, and
including, the date that is six months after the Listing Date (the “ First Six-Month Period ”), we
will not, and will procure each other Group Company not to, without the prior written consent of
the Sole Sponsor, the Sole Overall Coordinator and the Joint Global Coordinators (for
themselves and on behalf of the Public Offer Underwriters) and unless in compliance with the
requirements of the Listing Rules:
(a) allot, issue, sell, accept subscription for, offer to allot, issue or 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 a pledge, charge, lien, mortgage, option, restriction, right of first refusal,
security interest, claim, pre-emption rights, equity interest, third party rights or
interests or rights of the same nature as that of the foregoing or other encumbrances or
security interest of any kind or another type of preferential arrangement (including
without limitation, retention arrangement) having similar effect (“ 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 us or
any shares or other securities of such other Group Company, 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
such other Group Company, as applicable), or deposit any Shares or other securities of
us or any shares or other securities of such other Group Company, as applicable, with
a depositary in connection with the issue of depositary receipts; or repurchase any
Shares or other securities of us or any shares or other securities of such other Group
Company, as applicable; or
(b) enter into any swap 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 us
or any shares or other securities of such other Group Company, 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 warrants or other rights to purchase, any Shares or other securities of
us or any shares or other securities of such other Group Company, as applicable); or
(c) enter into any transaction with the same economic effect as any transactions specified
in (a) or (b) above; or
UNDERWRITING
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(d) offer to or agree to or announce any intention to effect any transaction specified in
(a), (b) or (c) above,
in each case, whether any of the transactions specified in (a), (b) or (c) above is to be settled by
delivery of Shares or other securities of us or shares or other securities of such other Group
Company, 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 also undertaken that we will not, and will procure each other Group Company not
to, enter into any of the transactions specified in (a), (b) or (c) above or offer to or agree to or
announce any intention to effect any such transaction, such that any of our Controlling
Shareholders would cease to be a controlling shareholder (as defined in the Listing Rules) of us
during the period of six months immediately following the expiry of the First Six-Month Period
(the “ Second Six-Month Period ”).
In the event that, during the Second Six-Month Period, we enter into any of the
transactions specified in (a), (b) or (c) above or offers to or agrees to or announces any intention
to effect any such transaction, we shall take all reasonable steps to ensure that it will not create
a disorderly or false market in any Shares or other securities of us. Each of our Controlling
Shareholders undertakes to each of the Sole Overall Coordinator, the Joint Global Coordinators
and the Public Offer Underwriters to use its best endeavors to procure us to comply with the
above undertakings.
Undertakings by our Controlling Shareholders
Each of our Controlling Shareholders has jointly and severally undertaken to each of us,
the Sole Sponsor, the Sole Overall Coordinator, the Joint Global Coordinators, the Joint
Bookrunners, the Joint Lead Managers and the Public Offer Underwriters) that, except in
compliance with the requirements under Rule 10.07(3) of the Listing Rules, without the prior
written consent of the Sole Sponsor, the Sole Overall Coordinator and the Joint Global
Coordinators (for themselves and on behalf of the Public Offer Underwriters):
(i) at any time during the First Six-Month Period, he or it shall not, and shall procure that
the relevant registered holder(s), any nominee or trustee holding on trust for it/her and
the companies controlled by it/she (together, the “ Controlled Entities ”) shall not,
(a) sell, offer to sell, contract or agree to sell, mortgage, charge, pledge,
hypothecate, lend, grant or sell any option, warrant, contract or right to sell, or
otherwise transfer or dispose of or create 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 us 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/her
UNDERWRITING
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directly or indirectly through its/her Controlled Entities (the “ Relevant
Securities ”), or deposit any Relevant Securities with a depositary in connection
with the issue of depositary receipts; or
(b) 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;
or
(c) enter into or effect any transaction with the same economic effect as any of the
transactions referred to in sub-paragraphs (a) or (b) above; or
(d) offer to or agree to or announce any intention to enter into or effect any of the
transactions referred to in sub-paragraphs (a), (b) or (c) above, which any of the
foregoing transactions referred to in sub-paragraphs (a), (b), (c) or (d) is to be
settled by delivery of Shares or such other securities of us 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);
(ii) at any time during the Second Six-Month Period, it/she shall not, and shall procure
that the Controlled Entities shall not, enter into any of the transactions referred to in
(i)(a), (b) or (c) above or offer to or agree to or announce any intention to enter into
any such transaction if, immediately following any sale, transfer or disposal or upon
the exercise or enforcement of any option, right, interest or Encumbrance pursuant to
such transaction, it/she would cease to be a “controlling shareholder” (as defined in
the Listing Rules) of us or would together with the other Controlling Shareholders
cease to be “controlling shareholders” (as defined in the Listing Rules) of us;
(iii) in the event that he or it enters into any of the transactions specified in (i)(a), (b) or
(c) above or offer to or agrees to or announce any intention to effect any such
transaction within the Second Six-Month Period, he or it shall take all reasonable
steps to ensure that it/she will not create a disorderly or false market for any Shares or
other securities of us; and
(iv) he or it 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/she or by the registered holder(s)
and/or other Controlled Entities of any Shares or other securities of us.
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Each of our Controlling Shareholders has further undertaken to each of us, the Stock
Exchange, the Sole Sponsor, the Sole Overall Coordinator and the Joint Global Coordinators (for
themselves and on behalf of Public Offer Underwriters) that, within the period from the date by
reference to which disclosure of its/her shareholding in us is made in this prospectus and ending
on the date which is 12 months from the Listing Date, it/she will:
(i) when he or it pledges or charges any securities or interests in the Relevant Securities
in favour of an authorised institution pursuant to Note 2 to Rule 10.07(2) of the
Listing Rules, immediately inform us and the Sole Sponsor in writing of such pledges
or charges together with the number of securities and nature of interest so pledged or
charged; and
(ii) when he or it receives indications, either verbal or written, from any pledgee or
chargee that any of the pledged or charged securities or interests in the securities of us
will be sold, transferred or disposed of, immediately inform us and the Sole Sponsor
in writing of such indications.
We shall inform the Stock Exchange in writing as soon as we have been informed of any of
the matters referred to above (if any) by our Controlling Shareholders and disclose such matters
by way of an announcement to be published in accordance with the Listing Rules as soon as
possible.
Placing
In connection with the Placing, it is expected that our Company, our Selling Shareholders,
our Controlling Shareholders and our executive Directors will enter into the Placing
Underwriting Agreement with, among others, the Sole Sponsor, the Sole Overall Coordinator, the
Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers and the Placing
Underwriters.
Under the Placing Underwriting Agreement, subject to the conditions set forth therein, the
Placing Underwriters are expected to severally, but not jointly, agree to act as agents of our
Company to procure subscribers for the Placing Shares initially being offered pursuant to the
Placing. For further details, please refer to the section headed “Structure and conditions of the
Share Offer – The Placing” in this prospectus. It is also expected that upon the entering into of
the Placing Underwriting Agreement, the Placing will be fully underwritten.
Indemnity
Our Company, our Controlling Shareholders and our executive Directors have agreed to
indemnify the Sole Sponsor, the Sole Overall Coordinator, the Joint Global Coordinators, the
Joint Bookrunners, the Joint Lead Managers, the Capital Market Intermediaries and the Public
Offer Underwriters from certain losses which they may suffer, including losses arising from their
performance of their obligations under the Public Offer Underwriting Agreement and any breach
by our Company or our Controlling Shareholders of the Public Offer Underwriting Agreement.
UNDERWRITING
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--- page 383 ---
Fees, commission and expenses
The aggregate of the fees payable by the Company to all syndicate Capital Market
Intermediaries amount to 7.0% of the gross proceeds of the initial public offering (the “ Fixed
Fees ”). As our Company will not pay the Underwriters any discretionary incentive fee for the
Share Offer (the “ Discretionary Fee ”), the ratio of the Fixed Fees and Discretionary Fee is
therefore 100:0.
The fees and commissions, the Stock Exchange trading fee, the SFC transaction levy and
the AFRC transaction levy payable and borne by us in connection with the offering of the Offer
Shares under the Public Offer and the Placing, are estimated to amount to approximately
RMB42.1 million in aggregate (based on an Offer Price of HK$0.36 per Share, being the
midpoint of the indicative Offer Price range of HK$0.32 to HK$0.40 per Share).
The Selling Shareholders shall bear, and be responsible for the payment of, all the
underwriting commission, incentive fee (if any), the Stock Exchange trading fee, the SFC
transaction levy and the AFRC transaction levy in connection with the sale of the Sale Shares
under the Placing. Such listing expenses payable by the Selling Shareholder in connection with
the sale of the Sale Shares (based on an Offer Price of HK$0.36 per Share, being the midpoint
of the indicative Offer Price range of HK$0.32 to HK$0.40 per Share) are estimated to be
RMB1.0 million.
An aggregate amount of approximately HK4.4 million is payable by our Company as
sponsor fees to the Sole Sponsor.
The commissions and fees are determined after arm’s length negotiations between our
Company and the Public Offer Underwriters and/or other parties by reference to the current
market conditions.
Independence of the Sole Sponsor
No director, employee and close associate of the Sole Sponsor who is involved in providing
advice to our Company has or, as a result of the Listing and/or the Share Offer, may have any
interest in any class of securities of our Company or any other members of our Group (including
options or rights to subscribe for such securities). No director, employee and close associate of
the Sole Sponsor has any directorship in our Company or any other members of our Group. The
Sole Sponsor satisfies the independence criteria applicable to sponsors set forth in Rule 3A.07 of
the Listing Rules.
PUBLIC OFFER UNDERWRITERS’ INTERESTS IN OUR COMPANY
Save for the abovementioned, its interests and obligations under the Underwriting
Agreements, the Public Offer Underwriters are not interested legally or beneficially in any
shares in any member of our Group or has any right (whether legally enforceable or not) or
option to subscribe for or to nominate persons to subscribe for any shares in any member of our
Group.
UNDERWRITING
– 375 –


--- page 384 ---
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
The Share Offer comprises:
(a) the Public Offer of 41,437,500 Public Offer Shares (subject to reallocation as
mentioned below) as described under the paragraph headed “The Public Offer” in this
section; and
(b) the Placing of 372,937,500 Placing Shares (comprising 332,312,500 new Shares and
40,625,000 Sale Shares) (subject to reallocation as mentioned below) as described
below in this section.
The Offer Shares will represent approximately 25.5% of the total issued share capital of our
Company immediately after the completion of the Share Offer and the Capitalisation Issue.
Investors may apply for the Offer Shares under the Public Offer or indicate an interest, if
qualified to do so, for the Placing Shares under the Placing, but may not do both. The Public
Offer is open to members of the public in Hong Kong as well as to institutional, professional
and other investors in Hong Kong. The Placing will involve selective marketing of the Offer
Shares to institutional, professional and other investors. The Placing Underwriters are soliciting
from prospective investors indications of interest in acquiring the Offer Shares in the Placing.
Prospective investors will be required to specify the number of Offer Shares under the Placing
they would be prepared to acquire either at different prices or at a particular price.
The number of Offer Shares to be offered under the Public Offer and the Placing
respectively may be subject to reallocation as described in the paragraph headed “Pricing and
allocation” in this section.
CONDITIONS OF THE SHARE OFFER
Acceptance of all applications for the Offer Shares is conditional upon, amongst other
things, the satisfaction of all the following conditions, in each case on or before the dates and
times specified in the Underwriting Agreements (unless and to the extent such conditions are
validly waived on or before such dates and times) and in any event not later than 30 days after
the date of this prospectus:
1. Listing
The Listing Committee granting the approval of the listing of, and permission to deal
in, the Shares in issue and the Shares to be issued pursuant to the Share Offer (including
the Shares which may be allotted and issued upon the exercise of any option which may be
granted under the Share Option Scheme) and such listing and permission not subsequently
being revoked prior to the commencement of dealings in the Shares on the Stock Exchange.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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--- page 385 ---
2. Placing Underwriting Agreement
The execution and delivery of the Placing Underwriting Agreement on or about the
Price Determination Date.
3. Obligations under Underwriting Agreements
The obligations of the Underwriters under each of the Underwriting Agreements
becoming and remaining unconditional (including, if relevant, as a result of a waiver of any
condition(s)) and such obligations not being terminated in accordance with the terms of the
Underwriting Agreements.
4. Price determination
The Offer Price having been determined and the execution of the Price Determination
Agreement on or before the Price Determination Date.
If, for any reason, the Offer Price is not agreed between our Company (for
ourselves and on behalf of our Selling Shareholders) and the Sole Overall Coordinator
and the Joint Global Coordinators (for themselves and on behalf of the Underwriters)
on or before Friday, 1 December 2023, the Share Offer will not proceed and will lapse.
If, for any reason, the Offer Price is not agreed between the Sole Overall Coordinator
and the Joint Global Coordinators (for themselves and on behalf of the Underwriters) and
our Company (for ourselves and on behalf of our Selling Shareholders) by the Price
Determination Date, the Share Offer will lapse and will not proceed.
The consummation of each of the Public Offer and the Placing is conditional upon,
among other things, the other offering becoming and remaining unconditional and not
having been terminated in accordance with their respective terms.
If such conditions have not been fulfilled or waived prior to the times and dates specified,
the Share Offer will lapse and the Stock Exchange will be notified immediately. Notice of the
lapse of the Share Offer will be published by our Company on the Stock Exchange’s website at
www.hkexnews.hk and our Company’s website at www.gzshqj.com on the next Business Day
following such lapse. In such a situation, all application monies will be returned, without
interest, on the terms set out in the section headed “How to apply for the Public Offer Shares –
D. Despatch/collection of share certificates and refund of application monies” of this prospectus.
In the meantime, all application monies will be held in separate bank account(s) with the
receiving bank or other bank(s) in Hong Kong licensed under the Banking Ordinance (Chapter
155 of the Laws of Hong Kong).
Share certificates issued in respect of the Offer Shares will only become valid at 8:00 a.m.
on the Listing Date provided that the Share Offer has become unconditional in all respects.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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--- page 386 ---
THE PUBLIC OFFER
Number of Shares initially offered
We are initially offering 41,437,500 Public Offer Shares for subscription by the public in
Hong Kong at the Offer Price, representing 10% of the total number of Shares initially available
under the Share Offer. Subject to the reallocation of Offer Shares between the Placing and the
Public Offer, the number of Shares initially offered under the Public Offer will represent
approximately 2.6% of the total issued share capital of our Company immediately after the
completion of the Share Offer and the Capitalisation Issue. The Public Offer is open to members
of the public in Hong Kong as well as to institutional, professional and/or other investors.
Professional investors generally include brokers, dealers, companies (including fund managers)
whose ordinary business involves dealings in shares and other securities and corporate entities
which regularly invest in shares and other securities. Completion of the Public Offer is subject
to the conditions set out in the paragraph headed “Conditions of the Share Offer” in this section.
Allocation
Allocation of the Offer Shares to investors under the Share Offer will be based solely on
the level of valid applications received under the Share Offer. The basis of allocation may vary,
depending on the number of the Public Offer Shares validly applied for by applicants. Allocation
of the Offer Shares could, where appropriate, consist of balloting, which would mean that some
applicants may receive a higher allocation than others who have applied for the same number of
the Public Offer Shares, and those applicants who are not successful in the ballot may not
receive any Public Offer Shares.
For allocation purposes only, the total number of the Offer Shares initially available under
the Public Offering (after taking into account any allocation) is to be divided into two pools
(subject to adjustment of odd lot size): Pool A and Pool B. Accordingly, the maximum number of
Public Offer Shares initially in Pool A and Pool B will be 20,722,500 and 20,715,000,
respectively. The Public Offer Shares in Pool A will be allocated on an equitable basis to
applicants who have applied for Public Offer Shares with an aggregate price of HK$5 million
(excluding the brokerage, SFC transaction levy, the AFRC transaction levy, and the Stock
Exchange trading fee payable) or less. The Offer Shares in Pool B will be allocated on an
equitable basis to applicants who have applied for Offer Shares with an aggregate price of more
than HK$5 million (excluding the brokerage, SFC transaction levy, the AFRC transaction levy
and the Stock Exchange trading fee payable).
Investors should be aware that applications in Pool A and applications in Pool B may
receive different allocation ratios. If the Public Offer Shares in one (but not both) of the pools
are under-subscribed, the surplus Public Offer Shares will be transferred to the other pool to
satisfy demand in that other pool and be allocated accordingly. For the purpose of this
subsection only, the “price” for the Public Offer Shares means the price payable on application
therein (without regard to the Offer Price as finally determined). Applicants can only receive an
allocation of the Offer Shares from either Pool A or Pool B but not from both pools.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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--- page 387 ---
Multiple or suspected multiple applications and any application for more than 20,715,000
Public Offer Shares (being approximately 50% of the 41,437,500 Public Offer Shares initially
available under the Public Offering) are liable to be rejected. Each applicant under the Public
Offer will also 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 have not received any Shares under the Placing, and such applicant’s application is
liable to be rejected if the said undertaking and/or confirmation is breached and/or untrue (as the
case may be).
The final Offer Price, the level of indication of interest in the Placing, level of applications
in the Public Offer and the basis of allocation of the Public Offer Shares are expected to be
announced on Monday, 4 December 2023 through a variety of channels as described in the
section headed “How to apply for the Public Offer Shares – B. Publication of results” of this
prospectus.
Reallocation of the Offer Shares between the Public Offer and the Placing
The Offer Shares to be offered in the Public Offer and the Placing may, in certain
circumstances, be reallocated as between these offerings at the discretion of the Sole Overall
Coordinator and the Joint Global Coordinators.
The allocation of the Offer Shares between the Public Offer and the Placing is subject to
reallocation on the following basis:
(a) where the Placing Shares are fully subscribed or oversubscribed:
(i) if the Public Offer Shares are undersubscribed, the Sole Overall Coordinator and
the Joint Global Coordinators (for themselves and on behalf of the Underwriters)
has the authority in its absolute discretion to reallocate all or any unsubscribed
Public Offer Shares to the Placing, in such proportions as the Sole Overall
Coordinator and the Joint Global Coordinators deem appropriate;
(ii) if the number of Offer Shares validly applied for under the Public Offer are not
undersubscribed but represents less than 15 times the number of the Offer Shares
initially available for subscription under the Public Offer, then up to 41,437,500
Offer Shares may be reallocated to the Public Offer from the Placing, so that the
total number of the Offer Shares available under the Public Offer will be
increased to 82,875,000 Offer Shares, representing 20% of the total number of
the Offer Shares initially available under the Share Offer;
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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--- page 388 ---
(iii) if the number of Offer Shares validly applied for under the Public Offer
represents (1) 15 times or more but less than 50 times, (2) 50 times or more but
less than 100 times, and (3) 100 times or more of the number of Offer Shares
initially available under the Public Offer, the Offer Shares will be reallocated to
the Public Offer from the Placing in accordance with the clawback requirements
set forth in paragraph 4.2 of Practice Note 18 of the Listing Rules, so that the
total number of Public Offer Shares will be increased to 124,312,500 Offer
Shares (in the case of (1)), 165,750,000 Offer Shares (in the case of (2)), and
207,187,500 Offer Shares (in the case of (3)), representing 30%, 40% and 50% of
the Offer Shares initially available under the Share Offer, respectively;
(b) where the Placing Shares are undersubscribed:
(i) if the Public Offer Shares are also undersubscribed, the Share Offer will not
proceed unless the Underwriters would subscribe for or procure subscribers for
their respective applicable proportions of the Offer Shares being offered which
are not taken up under the Share Offer on the terms and conditions of this
prospectus and the Underwriting Agreements; and
(ii) if the Public Offer Shares are fully subscribed or oversubscribed (irrespective of
the extent of over-subscription), then up to 41,437,500 Offer Shares may be
reallocated to the Public Offer from the Placing, so that the total number of the
Offer Shares available under the Public Offer will be increased to 82,875,000
Offer Shares, representing 20% of the total number of the Offer Shares initially
available under the Share Offer.
In the event of reallocation of Offer Shares from the Placing to the Public Offer in the
circumstances described in paragraph (a)(ii) or (b)(ii) above, the final Offer Price shall be
fixed at the bottom end of the Offer Price range (i.e. HK$0.32 per Offer Share) according
to HKEX Guidance Letter HKEX-GL91-18 issued by the Stock Exchange.
Details of any reallocation of Offer Shares between the Public Offer and the Placing will be
disclosed in the results announcement of the Share Offer, which is expected to be published on
or before Monday, 4 December 2023.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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--- page 389 ---
THE PLACING
Number of the Offer Shares initially offered
Subject to the reallocation as described above, the number of Offer Shares to be initially
offered under the Placing will be 372,937,500 Shares, representing 90% of the total number of
the Offer Shares initially available under the Share Offer. Subject to the reallocation of the Offer
Shares between the Placing and the Public Offer, the number of Shares initially offered under
the Placing will represent approximately 23.0% of our Company’s enlarged issue share capital
immediately after the completion of the Share Offer and the Capitalisation Issue.
Allocation
Pursuant to the Placing, the Placing Shares will be conditionally placed by the Placing
Underwriters. The Placing Shares will be selectively placed to certain professional and
institutional and other investors anticipated to have a sizeable demand for such Placing Shares in
Hong Kong. The Placing is subject to the Public Offer being unconditional.
Allocation of Offer Shares pursuant to the Placing will be effected in accordance with the
book-building process described in the paragraph headed “Offer Price – Price determination of
the Share Offer” 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 it is expected that the relevant investor is likely to buy further Offer
Shares, and/or hold or sell its Offer 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 Company and our
Shareholders as a whole.
The Sole Overall Coordinator and the Joint Global Coordinators (for themselves and on
behalf of the Underwriters) may require any investor who has been offered Placing Shares under
the Placing, and who has made an application under the Public Offer, to provide sufficient
information to the Sole Overall Coordinator and the Joint Global Coordinators so as to allow
them to identify the relevant applications under the Public Offer and to ensure that they are
excluded from any application of Offer Shares under the Public Offer.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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--- page 390 ---
OFFER PRICE
Price determination of the Share Offer
The Offer Price will be fixed by agreement between the Sole Overall Coordinator and the
Joint Global Coordinators (for themselves and on behalf of the Underwriters) and our Company
(for ourselves and on behalf of our Selling Shareholders) on the Price Determination Date,
which is expected to be on or around Friday, 1 December 2023. If our Company (for ourselves
and on behalf of our Selling Shareholders) and the Sole Overall Coordinator and the Joint
Global Coordinators (for themselves and on behalf of the Underwriters) are unable to reach an
agreement on the Offer Price on or before Friday, 1 December 2023, the Share Offer will not
become unconditional and will lapse immediately.
The Sole Overall Coordinator and the Joint Global Coordinators (for themselves and on
behalf of the Underwriters) may, with the consent of our Company (for ourselves and on behalf
of our Selling Shareholders), based on the level of interest expressed by prospective
professional, institutional and other investors during the book-building process, reduce the
indicative Offer Price range and/or the number of Offer Shares below those stated in this
prospectus at any time on or prior to the morning of the last day for lodging applications under
the Public Offer. In such 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 Public Offer, cause to be published on the website of the Stock Exchange
at www.hkexnews.hk and on the website of our Company at www.gzshqj.com a notice of the
reduction or to be announced in such manner as permitted under the Listing Rules and agreed
between our Company (for ourselves and on behalf of our Selling Shareholders) and the Sole
Overall Coordinator and the Joint Global Coordinators (for themselves and on behalf of the
Underwriters). Upon issue of such a notice, the number of Offer Shares offered in the Share
Offer and/or the revised Offer Price range will be final and conclusive and the Offer Price, if
agreed upon by the Sole Overall Coordinator and the Joint Global Coordinators (for themselves
and on behalf of the Underwriters) and our Company (for ourselves and on behalf of our Selling
Shareholders), will be fixed within such revised Offer Price range.
Prospective investors of the Offer Shares should be aware that the Offer Price to be
determined on the Price Determination Date may be, but is currently not expected to be, lower
than the indicative Offer Price range stated in this prospectus. In the event that there is a
reduction in the Offer Shares and/or indicative Offer Price range, if the applicants have already
submitted an application for the Public Offer Shares before the last day for lodging applications
under the Public Offer, they will be allowed to subsequently withdraw their applications.
However, if the Offer Price range is reduced, applicants will be notified that they are required to
confirm their applications. If applicants have been notified but have not confirmed their
applications in accordance with the procedure to be notified, all unconfirmed applications will
be deemed revoked. In the absence of any such notice so published, the Offer Price, if agreed
upon with our Company (for ourselves and on behalf of our Selling Shareholders) and the Sole
Overall Coordinator and the Joint Global Coordinators (for themselves and on behalf of the
Underwriters), will under no circumstances be set outside the Offer Price range as stated in this
prospectus.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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--- page 391 ---
If for any reason the Price Determination Date is changed, our Company will as soon as
practicable cause to be published on the website of the Stock Exchange at www.hkexnews.hk
and our Company’s website at www.gzshqj.com a notice of the change and if applicable the
revised date.
The Sole Overall Coordinator and the Joint Global Coordinators (for themselves and on
behalf of the Underwriters), may, where considered appropriate, based on the level of interest
expressed by prospective professional and institutional investors during the book-building
process, and with these consent of the Company, reduce the number of Offer Shares offered in
the Share Offer and/or the indicative Offer Price range stated below in this prospectus at any
time on or prior to the morning of the last day for lodging applications under the Public Offer.
In such a case, the Company will, 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 Public Offer, cause there to be posted on the website of the Hong
Kong Stock Exchange at www.hkexnews.hk and on the website of the Company at
www.gzshqj.com notices of the reduction. As soon as practicable of such reduction of the
number of Offer Shares and/or the indicative Offer Price range, the Company will also issue a
supplemental prospectus updating investors of such reduction together with an update of all
financial and other information in connection with such change and, where appropriate, extend
the period under which the Public Offer is open for acceptance, and give potential investors who
had applied for the Offer Shares the right to withdraw their applications.
Offer Price range
The Offer Price will not be more than HK$0.40 per Offer Share and is expected to be not
less than HK$0.32 per Offer Share. The Offer Price will fall within the indicative Offer Price
range as stated in this prospectus unless otherwise announced.
Price payable on application
Applicants under the Public Offer should pay, on application, the maximum Offer Price of
HK$0.40 for each Offer Share (plus brokerage of 1%, Stock Exchange trading fee of 0.00565%,
SFC transaction levy of 0.0027% and AFRC transaction levy of 0.00015%), amounting to a total
of HK$3,030.25 for each board lot of 7,500 Offer Shares. If the Offer Price, as finally
determined in the manner described above, is lower than the maximum Offer Price of HK$0.40
for each Offer Share, appropriate refund payments (including the related brokerage, the Stock
Exchange trading fee, the SFC transaction levy and the AFRC transaction levy attributable to the
surplus application monies, without any interest) will be made to applicants.
ANNOUNCEMENT OF OFFER PRICE AND BASIS OF ALLOCATION
Announcement of the final Offer Price, together with the level of indication of interest in
the Share Offer, the results of applications and the basis of allocation of the Public Offer Shares
are expected to be published on the website of the Stock Exchange at www.hkexnews.hk and
our Company’s website at www.gzshqj.com on Monday, 4 December 2023.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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--- page 392 ---
UNDERWRITING
The Public Offer is fully underwritten by the Public Offer Underwriters under the terms of
the Public Offer Underwriting Agreement and is subject to, among other conditions, us (for
ourselves and on behalf of the Selling Shareholders) and the Sole Overall Coordinator and the
Joint Global Coordinators (for themselves and on behalf of the Underwriters) agreeing on the
Offer Price on the Price Determination Date.
We expect to enter into the Placing Underwriting Agreement relating to the Placing on the
Price Determination Date.
Certain terms of the underwriting arrangements, the Public Offer Underwriting Agreement
and the Placing Underwriting Agreement, are summarised in the section headed “Underwriting”
of this prospectus.
SHARES WILL BE ELIGIBLE FOR CCASS
All necessary arrangements have been made enabling the Shares to be admitted into
CCASS.
If the Stock Exchange grants approval for the listing of, and permission to deal in, the
Shares and our 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 arrangement as such arrangements may affect their rights and interests.
DEALING ARRANGEMENTS
Assuming that the Public Offer becomes unconditional at or before 8:00 a.m. in Hong Kong
on Tuesday, 5 December 2023, it is expected that dealing in the Shares on the Stock Exchange
will commence at 9:00 a.m. on Tuesday, 5 December 2023. The Shares will be traded in board
lots of 7,500 Shares each. The stock code for the Shares is 2521.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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--- page 393 ---
IMPORTANT NOTICE TO INVESTORS OF PUBLIC OFFER SHARES:
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Public Offer. We will
not provide any printed copies of this document or printed copies of any application
forms to the public in relation to the Public Offer.
This document is available at the website of the Hong Kong Stock Exchange at
www.hkexnews.hk under the “HKEXnews > New Listings > New Listing Information”
section, and our website at www.gzshqj.com. If you require a printed copy of this
document, you may download and print from the website addresses above.
The contents of the electronic version of the document 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.
Set out below are procedures through which you can apply for the Public Offer Shares
electronically. We will not provide any physical channels to accept any application for the
Public Offer Shares by the public.
If you are an intermediary, broker or agent, please remind your customers, clients or
principals, as applicable, that this document is available online at the website addresses
above.
If you have any question about the application online via the HK eIPO White Form
Service for the Public Offer Shares, you may call the enquiry hotline of our Hong Kong
Branch Share Registrar, Tricor Investor Services Limited, at +852 3907 7333 during:
(i) 9:00 a.m. to 6:00 p.m. from Monday, 27 November 2023 to Wednesday, 29
November 2023; and
(ii) 9:00 a.m. to 12:00 noon on Thursday, 30 November 2023.
A. APPLICATION FOR PUBLIC OFFER SHARES
1. Who Can Apply
Y ou can apply for Public 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); and
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
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--- page 394 ---
 are outside the United States, and are not a U.S. person (as defined in Regulation
S).
Unless permitted by the Listing Rules, you cannot apply for any Public Offer Shares if
you or the person(s) for whose benefit you are applying for:
 are an existing beneficial owner of Shares in the Company and/or any its
subsidiaries;
 are a Director or chief executive officer of the Company and/or any of its
subsidiaries;
 are a close associate (as defined in the Listing Rules) of any of the above;
 have been allocated or have applied for or indicated an interest in any Placing
Shares or otherwise participate in the Placing.
2. Application Channels
The Public Offer period will begin at 9:00 a.m. on Monday, 27 November 2023
and end at 12:00 noon on Thursday, 30 November 2023 (Hong Kong time).
To apply for Public Offer Shares, you may use one of the following application
channels:
Application
Channel Platform Target Investors Application Time
HK eIPO
White Form
service
(1) the IPO App , which can be downloaded
by searching “ IPO App ” in App Store or
Google Play or downloaded at
www.hkeipo.hk/IPOApp or
www.tricorglobal.com/IPOApp
(2) the designated website www.hkeipo.hk
Enquiries: +852 3907 7333
Investors who would like to
receive a physical Share
certificate. Public Offer
Shares successfully applied
for will be allotted and
issued in your own name.
From 9:00 a.m. on Monday, 27
November 2023 to 11:30
a.m. on Thursday, 30
November 2023, Hong Kong
time.
The latest time for completing
full payment of application
monies will be 12:00 noon
on Thursday, 30 November
2023, Hong Kong time.
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
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--- page 395 ---
Application
Channel Platform Target Investors Application Time
HKSCC EIPO
channel
Y our broker or custodian who is a HKSCC
Participant will submit an EIPO application
on your behalf through HKSCC’s FINI
system in accordance with your instruction
Investors who would not like
to receive a physical Share
certificate. Public 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, as this may
vary by broker or 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 Public 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
HK eIPO White Form service to make an application for Public 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 given, 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 that 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 number will not
constitute an actual application.
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 Public 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 instructed and authorised HKSCC to cause
HKSCC Nominees (acting as nominee for the relevant HKSCC Participants) to apply for
Public Offer Shares on your behalf and to do on your behalf all the things stated in this
prospectus and any supplement to it.
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
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--- page 396 ---
For those applying through HKSCC EIPO channel, an actual application will be
deemed to have made for any application instructions given by you or for your benefit to
HKSCC (in which case an application will be made by HKSCC Nominees on your behalf)
provided such application instruction has not been withdrawn or otherwise invalidated
before the closing time of the 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 Public Offer Shares or for any
breach of the terms and conditions of this prospectus.
3. Information Required to Apply
Y ou must provide the following information with your application:
For Individual Applicants For Corporate Applicants
 Full name(s) as shown on your
identity document
 Identity document’s issuing country
or jurisdiction
 Identity document type, with order
of priority:
i. HKID card; or
ii. National identification
document; or
iii. Passport; and
 Identity document number
 Full name(s) as shown on your
identity document
 Identity document’s issuing country
or jurisdiction
 Identity document type, with order
of priority:
i. LEI registration document; or
ii. Certificate of incorporation; or
iii. Business registration
certificate; or
iv. Other equivalent document;
and
 Identity document number
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. Y ou are also required to
declare that the identity information provided by you follows the requirements 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.
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--- page 397 ---
2. The applicant’s full name as shown on their identity document must be used. 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 followed and where an individual applicant
has a valid HKID card, 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
practice.
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 over 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 issued 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 Sole Overall Coordinator and/or the Joint Global
Coordinators, as our agent, may accept it at our discretion and 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.
Note:
(1) Subject to change, if the Company’s Articles of Incorporation and applicable company law prescribe a
lower cap.
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4. Permitted Number of Public Offer Shares for Application
Board lot size : 7,500
Permitted number
of Public Offer
Shares for
application and
amount payable
on application/
successful
allotment
: Public 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$0.40 per Share.
If you are applying through the HKSCC EIPO channel,
you are required to pre-fund your application based on
the amount specified by your broker or custodian, as
determined based on the applicable laws and
regulations in Hong Kong.
By instructing your broker or custodian to apply for the
Public Offer Shares on your behalf through the HKSCC
EIPO Channel, you (and, if you are joint applicants,
each of you jointly and severally) are deemed to have
instructed and authorized HKSCC to cause HKSCC
Nominees (acting as nominee for the relevant HKSCC
Participants) to arrange payment of the final Offer
Price, brokerage, SFC transaction levy, the Stock
Exchange trading fee and the AFRC transaction levy by
debiting the relevant nominee bank account at the
Designated Bank for your broker or custodian.
If you are applying through the HK eIPO White Form
service, you may refer to the table below for the
amount payable for the number of Shares you have
selected. Y ou must pay the respective maximum amount
payable on application in full upon application for
Public Offer Shares.
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--- page 399 ---
No. of Public
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of Public
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of Public
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
No. of Public
Offer Shares
applied for
Maximum
Amount
payable (2) on
application/
successful
allotment
HK$ HK$ HK$ HK$
7,500 3,030.25 67,500 27,272.30 600,000 242,420.40 5,250,000 2,121,178.50
15,000 6,060.51 75,000 30,302.56 675,000 272,722.96 6,000,000 2,424,204.00
22,500 9,090.76 150,000 60,605.10 750,000 303,025.50 6,750,000 2,727,229.50
30,000 12,121.02 225,000 90,907.66 1,500,000 606,051.00 7,500,000 3,030,255.00
37,500 15,151.28 300,000 121,210.20 2,250,000 909,076.50 15,000,000 6,060,510.00
45,000 18,181.54 375,000 151,512.76 3,000,000 1,212,102.00 20,715,000
(1) 8,369,564.31
52,500 21,211.79 450,000 181,815.30 3,750,000 1,515,127.50
60,000 24,242.05 525,000 212,117.86 4,500,000 1,818,153.00
(1) Maximum number of Public Offer Shares you may apply for.
(2) The amount payable is inclusive of brokerage, SFC transaction levy, the Stock Exchange trading fee
and Accounting and Financial Reporting Council (“ 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 Share Registrar (for applications made through the application channel of the Hong Kong
Branch Share Registrar) 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
Y ou 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 in your application as
required under the paragraph headed “– A. Applications for Public Offer Shares – 3.
Information Required to Apply” in this section. If you are suspected of submitting or cause
to submit more than one application, all 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 for any Placing Shares.
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--- page 400 ---
6. Terms and Conditions of An Application
By applying for Public 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 documents and instruct and authorise us and/or
the Sole Overall Coordinator and/or the Joint Global Coordinators, as our agents,
to execute any documents for you and to do on your behalf all things necessary
to register any Public 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 Public 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 IPO App or 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 Public 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 be made)
and will not rely on any other information or representations;
(vi) agree that the Relevant Persons, the Hong Kong Branch Share Registrar and
HKSCC will not be liable for any information and representations not in this
prospectus and any supplement to it;
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--- page 401 ---
(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 Branch 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 paragraph
headed “– G. Personal Data – 3. Purposes and 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;
(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;
agree that once any application made by you or HKSCC Nominees on your
behalf is accepted, the application cannot be revoked, and that acceptance of the
application will be evidenced by the notification of the result of the ballot by the
Hong Kong Branch Share Registrar;
(x) confirm that you are aware of the situations specified in the paragraph headed
“– C. Circumstances In Which Y ou Will Not Be Allocated Public 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 any action arising from
your rights and obligations under the terms and conditions contained in this
prospectus;
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
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--- page 402 ---
(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 the
Company or any of its subsidiaries or any of their respective close associates;
and (b) you are not accustomed or will not be accustomed to taking instructions
from the Company, any of the directors, chief executives, substantial
shareholder(s) or existing shareholder(s) of the Company or any of its
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, the Sole Overall Coordinator and the Joint
Global Coordinators will rely on your declarations and representations in
deciding whether or not to allocate any Public Offer Shares to you and that you
may be prosecuted for making a false declaration;
(xvi) agree to accept Public 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 Hong Kong Share Registrar 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
and (2) you have due authority to give electronic application instructions on
behalf of that other person as its agent.
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
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--- page 403 ---
B. PUBLICATION OF RESULTS
Results of Allocation
Y ou can check whether you are successfully allocated any Public Offer Shares
through:
Platform Date/Time
Applying through the HK eIPO White Form service or HKSCC EIPO channel:
IPO APP
and
Website
from the “IPO Results” function in the IPO
App and the designated results of allocation
website at www.tricor.com.hk/ipo/result or
www.hkeipo.hk/IPOResult with a “search
by ID Number” 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 Public Offer
Shares conditionally allotted to them,
among other things, will be displayed on
the designated results of allocation website
at www.tricor.com.hk/ipo/result or
www.hkeipo.hk/IPOResult
24 hours, from 11:00 p.m. and Monday, 4
December 2023 to 12:00 midnight and
Sunday, 10 December 2023 (Hong Kong
time)
The Stock Exchange’s website at
www.hkexnews.hk and our website at
www.gzshqj.com which will provide links
to the above mentioned websites of the
Hong Kong Branch Share Registrar.
No later than 11:00 p.m. on Monday,
4 December, 2023 (Hong Kong time).
Telephone +852 3691 8488 – the allocation results
telephone enquiry line provided by the
Hong Kong Branch Share Registrar
between 9:00 a.m. and 6:00 p.m. from
Tuesday, 5 December 2023, to Friday, 8
December 2023 (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 Friday, 1 December 2023 (Hong Kong
time).
HKSCC Participants can log into FINI and review the allotment result from
6:00 p.m. on Friday, 1 December 2023 on a 24-hour basis and should report any
discrepancies on allotments to HKSCC as soon as practicable.
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--- page 404 ---
Allocation Announcement
We expect to announce the results of the final Offer Price, the level of indications of
interest in the Placing, the level of applications in the Public Offer and the basis of
allocations of Public Offer Shares on the Stock Exchange’s website at www.hkexnews.hk
and our website at www.gzshqj.com by no later than 11:00 p.m. on Monday, 4 December
2023 (Hong Kong time).
C. CIRCUMSTANCES IN WHICH YOU WILL NOT BE ALLOCATED PUBLIC OFFER
SHARES
Y ou should note the following situations in which Public 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:
Y our application or the application made by HKSCC Nominees 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 discretion to reject your application:
We, the Sole Overall Coordinator, the Joint Global Coordinators, the Hong Kong
Branch Share Registrar and their respective agents and nominees have full discretion to
reject or accept any application, or to accept only part of any application, without giving
any reasons.
3. If the allocation of Public Offer Shares is void:
The allocation of Public 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. Y ou may refer
to the paragraph headed “– A. Applications for Public Offer Shares – 5. Multiple
Applications Prohibited” in this section on what constitutes multiple applications;
 your application instruction is incomplete;
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
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--- page 405 ---
 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;
 we, the Sole Overall Coordinator or the Joint Global Coordinators 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 Participants and HKSCC, HKSCC
Participants will only be required to hold sufficient application funds on deposit with their
Designated Bank before balloting. After balloting of Public Offer Shares, the Receiving
Bank will collect the portion of these funds required to settle each HKSCC Participant’s
actual Public Offer Share allotment from their Designated Bank.
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 Public Offer Shares will be reallocated to the Placing. Public Offer Shares applied
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 Public Offer Shares due to the
money settlement failure by such HKSCC Participant. None of us, the Relevant Persons,
the Hong Kong Branch Share Registrar and HKSCC is or will be liable if Public Offer
Shares are not allocated to you due to the money settlement failure.
D. DESPATCH/COLLECTION OF SHARE CERTIFICATES AND REFUND OF
APPLICATION MONIES
Y ou will receive one Share certificate for all Public Offer Shares allotted to you under the
Public Offer (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.
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--- page 406 ---
Share certificates will only become valid at 8:00 a.m. on Tuesday, 5 December 2023 (Hong
Kong time), provided that the Share Offer has become unconditional and the right of termination
described in the section headed “Underwriting” 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.
The following sets out the relevant procedures and time:
HK eIPO White Form service HKSCC EIPO channel
Despatch/ collection of Share certificate 1
For application of
1,000,000 Public
Offer Shares or more
Collection in person at 17/F, Far East
Finance Centre, 16 Harcourt Road, Hong
Kong
Time: from 9:00 a.m. to 1:00 p.m. on
Tuesday, 5 December 2023 (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’s chop.
Both individuals and authorised
representatives must produce, at the time
of collection, evidence of identity
acceptable to the Hong Kong Branch
Share Registrar.
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
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
No action by you is required
1 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 the
Tuesday, 5 December 2023 rendering it impossible for the relevant share certificates to be dispatched to HKSCC
in a timely manner, the Company shall procure the Share Registrar to arrange for delivery of the supporting
documents and share certificates in accordance with the contingency arrangements as agreed between them. Y ou
may refer to “– E. Severe Weather Arrangements” in this section.
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
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--- page 407 ---
HK eIPO White Form service HKSCC EIPO channel
For application less
than 1,000,000 Public
Offer Shares
Y our Share certificate(s) will be sent to
the address specified in your application
instructions by ordinary post at your
own risk
Time: Monday, 4 December 2023
Refund mechanism for surplus application monies paid by you
Date Tuesday, 5 December 2023 Subject to the arrangement between you
and your broker or custodian
Responsible party Hong Kong Branch Share Registrar Y our broker or custodian
Application monies paid
through single bank
account
e-Auto Refund payment instructions to
your designated bank account
Y our 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 Thursday, 30 November 2023 if, there
is:
 a tropical cyclone warning signal number 8 or above;
 a black rainstorm warning; and/or
 an Extreme Conditions announcement,
(collectively, “ Severe Weather Signals ”),
in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Thursday, 30
November 2023.
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.
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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 mentioned in the section headed “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.qzshqj.com of the revised timetable.
If a Severe Weather Signal is hoisted on Monday, 4 December 2023, the 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
Tuesday, 5 December 2023.
If a Severe Weather Signal is hoisted on Monday, 4 December 2023:
 for physical share certificates of over 1,000,000 offer shares issued under your
own name, you may pick them up from the Share Registrar’s office after the
Severe Weather Signal is lowered or cancelled (e.g. on Tuesday, 5 December
2023).
 for physical share certificates of less than 1,000,000 offer shares issued under
your own name, despatch 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 Monday, 4 December 2023 or on Tuesday, 5 December 2023).
Prospective investors should be aware that if they choose to receive physical share
certificates issued in their own name, there may be a delay in receiving the share
certificates.
F. ADMISSION OF THE SHARES INTO CCASS
If the Stock Exchange grants the listing of, and 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 for deposit, clearance and settlement in
CCASS with effect from the date of commencement of dealings in the Shares or 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 enabling the Shares to be admitted into
CCASS.
Y ou should seek the advice of your broker or other professional advisor for details of the
settlement arrangement as such arrangements may affect your rights and interests.
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
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--- page 409 ---
G. PERSONAL DATA
The following Personal Information Collection Statement applies to any personal data
collected and held by the Company, the Hong Kong Branch Share Registrar, the receiving
bank(s) 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 include 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.
1. Personal Information Collection Statement
This Personal Information Collection Statement informs the applicant for, and holder
of, Public Offer Shares, of the policies and practices of the Company and the Hong Kong
Branch Share Registrar in relation to personal data and the Personal 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 holders of Public Offer Shares to ensure
that personal data supplied to the Company or its agents and the Hong Kong Branch Share
Registrar is accurate and up-to-date when applying for Public Offer Shares or transferring
Public Offer Shares into or out of their names or in procuring the services of the Hong
Kong Branch Share Registrar.
Failure to supply the requested data or supplying inaccurate data may result in your
application for Public Offer Shares being rejected, or in the delay or the inability of the
Company or the Hong Kong Branch Share Registrar to effect transfers or otherwise render
their services. It may also prevent or delay registration or transfers of Public Offer Shares
which you have successfully applied for and/or the despatch of Share certificate(s) to which
you are entitled.
It is important that applicants for and holders of Public Offer Shares inform the
Company and the Hong Kong Branch Share Registrar immediately of any inaccuracies in
the personal data supplied.
3. Purposes
Y our personal data may be used, held, processed, and/or stored (by whatever means)
for the following purposes:
 processing your application and refund cheque and 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 Public Offer Shares;
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
– 401 –


--- page 410 ---
 compliance with applicable laws and regulations 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 the Company;
 verifying identities of applicants for and holders of the Shares and identifying
any duplicate applications for the Shares;
 facilitating Public Offer Shares balloting;
 establishing benefit entitlements of holders of the Shares, such as dividends,
rights issues, bonus issues, etc.;
 distributing communications from the Company and its subsidiaries;
 compiling statistical information and profiles of the holder of the Shares;
 disclosing relevant information to facilitate claims on entitlements; and
 any other incidental or associated purposes relating to the above and/or to enable
the Company and the Hong Kong Branch Share Registrar to discharge 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 the Company and the Hong Kong Branch Share Registrar
relating to the applicants for and holders of Public Offer Shares will be kept confidential
but the Company and the Hong Kong Branch 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:
 the Company’s appointed agents such as financial advisers, receiving bank(s) 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 Branch Share Registrar for the purposes of
providing its services or facilities or performing its functions in accordance with
its rules or procedures and operating FINI and CCASS (including where
applicants for the Public Offer Shares request a deposit into CCASS);
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
– 402 –


--- page 411 ---
 any agents, contractors or third-party service providers who offer administrative,
telecommunications, computer, payment or other services to the Company or the
Hong Kong Branch Share Registrar in connection with their respective business
operation;
 the Stock Exchange, the SFC and any other statutory 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 Public Offer Shares have or
propose to have dealings, such as their bankers, solicitors, accountants or brokers
etc.
5. Retention of personal data
The Company and the Hong Kong Branch Share Registrar will keep the personal data
of the applicants and holders of Public Offer Shares for as long as necessary to fulfil the
purposes for which the personal data were collected. Personal data which is no longer
required will be destroyed or dealt with in accordance with the Personal Data (Privacy)
Ordinance (Chapter 486 of the Laws of Hong Kong).
6. Access to and correction of personal data
Applicants for and holders of Public Offer Shares have the right to ascertain whether
the Company or the Hong Kong Branch Share Registrar hold their personal data, to obtain
a copy of that data, and to correct any data that is inaccurate. The Company and the Hong
Kong Branch Share Registrar have the right to charge a reasonable fee for the processing of
such requests. All requests for access to data or correction of data should be addressed to
the Company and the Hong Kong Branch Share Registrar, at their registered address
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 Branch
Share Registrar for the attention of the privacy compliance officer.
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
– 403 –


--- page 412 ---
The following is the text of a report set out on pages I-1 to I-3, received from the
Company’ s reporting accountant, PricewaterhouseCoopers, Certified Public Accountants, Hong
Kong, for the purpose of incorporation in this prospectus. It is prepared and addressed to the
directors of the Company and to the Sponsor pursuant to the requirements of HKSIR 200,
Accountants’ Reports on Historical Financial Information in Investment Circulars issued by the
Hong Kong Institute of Certified Public Accountants.
ACCOUNTANT’S REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE
DIRECTORS OF SHENGHUI CLEANNESS GROUP HOLDINGS LIMITED AND CINDA
INTERNATIONAL CAPITAL LIMITED
Introduction
We report on the historical financial information of Shenghui Cleanness Group Holdings
Limited (the “Company”) and its subsidiaries (together, the “Group”) set out on pages I-4 to
I-67, which comprises the consolidated statements of financial position as at 31 December 2020,
2021 and 2022 and 30 June 2023, the statements of financial position of the Company as at 31
December 2021 and 2022 and 30 June 2023, and the consolidated statements of comprehensive
income, the consolidated statements of changes in equity and the consolidated statements of cash
flows for each of the years ended 31 December 2020, 2021 and 2022 and the six months ended
30 June 2023 (the “Track Record Period”) and material accounting policy information and other
explanatory information (together, the “Historical Financial Information”). The Historical
Financial Information set out on pages I-4 to I-67 forms an integral part of this report, which
has been prepared for inclusion in the prospectus of the Company dated 27 November 2023 (the
“Prospectus”) in connection with the initial listing of shares of the Company on the Main Board
of The Stock Exchange of Hong Kong Limited.
Directors’ responsibility for the Historical Financial Information
The directors of the Company are responsible for the preparation of Historical Financial
Information that gives a true and fair view in accordance with the basis of presentation and
preparation set out in Notes 1.3 and 2 to the Historical Financial Information, and for such
internal control as the directors determine is necessary to enable the preparation of Historical
Financial Information that is free from material misstatement, whether due to fraud or error.
Reporting accountant’s responsibility
Our responsibility is to express an opinion on the Historical Financial Information and to
report our opinion to you. We conducted 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 (“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.
  PricewaterhouseCoopers, 22/F Prince's Building, Central, Hong Kong SAR, China
  T: +852 2289 8888, F: +852 2810 9888, www.pwchk.com
APPENDIX I ACCOUNTANT’S REPORT
– I-1 –


--- page 413 ---
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 accountant’s judgement, including the assessment of risks of material misstatement of
the Historical Financial Information, whether due to fraud or error. In making those risk
assessments, the reporting accountant considers internal control relevant to the entity’s
preparation of Historical Financial Information that gives a true and fair view in accordance with
the basis of presentation and preparation set out in Notes 1.3 and 2 to the Historical Financial
Information in order to design procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Our
work also included evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the directors, 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
accountant’s report, a true and fair view of the financial position of the Company as at 31
December 2021 and 2022 and 30 June 2023 and the consolidated financial position of the Group
as at 31 December 2020, 2021 and 2022 and 30 June 2023 and of its consolidated financial
performance and its consolidated cash flows for the Track Record Period in accordance with the
basis of presentation and preparation set out in Notes 1.3 and 2 to the Historical Financial
Information.
Review of stub period comparative financial information
We have reviewed the stub period comparative financial information of the Group which
comprises the consolidated statement of comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the six months ended 30 June
2022 and other explanatory information (the “Stub Period Comparative Financial Information”).
The directors of the Company are responsible for the presentation and preparation of the Stub
Period Comparative Financial Information in accordance with the basis of presentation and
preparation set out in Notes 1.3 and 2 to the Historical Financial Information. Our responsibility
is to express a conclusion on the Stub Period Comparative Financial Information based on our
review. We conducted our review in accordance with 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 and 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 purposes of the accountant’s report, is not prepared, in all material respects, in accordance
with the basis of presentation and preparation set out in Notes 1.3 and 2 to the Historical
Financial Information.
APPENDIX I ACCOUNTANT’S REPORT
– I-2 –


--- page 414 ---
Report on matters under the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited (the “Listing Rules”) 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 13 to the Historical Financial Information which contains information
about the dividends paid by the companies now comprising the Group in respect of the Track
Record Period. No dividends have been paid by the Company since its date of incorporation in
respect of the Track Record Period.
No statutory financial statements for the Company
No statutory financial statements have been prepared for the Company since its date of
incorporation.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong
27 November 2023
APPENDIX I ACCOUNTANT’S REPORT
– I-3 –


--- page 415 ---
I HISTORICAL FINANCIAL INFORMATION OF THE GROUP
Preparation of Historical Financial Information
Set out below is the Historical Financial Information which forms an integral part of
this accountant’s report.
The consolidated financial statements of the Group for the Track Record Period, on
which the Historical Financial Information is based, were audited by
PricewaterhouseCoopers in accordance with Hong Kong Standards on Auditing issued by
the HKICPA (the “Underlying Financial Statements”).
The Historical Financial Information is presented in Renminbi (“RMB”) and all values
are rounded to the nearest thousand of RMB (“RMB’000”) except when otherwise
indicated.
APPENDIX I ACCOUNTANT’S REPORT
– I-4 –


--- page 416 ---
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
Notes RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Revenue 5 465,664 563,541 594,204 289,173 298,251
Cost of services 6 (385,746) (474,296) (499,795) (243,433) (251,074)
Gross profit 79,918 89,245 94,409 45,740 47,177
Selling and marketing
expenses 6 (3,111) (3,076) (3,983) (1,966) (2,730)
General and administrative
expenses 6 (33,682) (45,033) (51,060) (26,627) (24,042)
Impairment losses on financial
assets (4,580) (2,333) (4,185) (1,905) (5,016)
Other income, net 7 8,238 7,155 5,109 3,437 2,235
Other loss 8 (7,345) (3) – – –
Operating profit 39,438 45,955 40,290 18,679 17,624
Finance expenses, net 11 (1,172) (404) (422) (236) (197)
Share of net profit of
associates 18 236 – – – –
Profit before income tax 38,502 45,551 39,868 18,443 17,427
Income tax expenses 12 (7,190) (5,630) (5,479) (3,051) (2,119)
Profit and total
comprehensive income for
the year/period
attributable to owners of
the Company 31,312 39,921 34,389 15,392 15,308
Earnings per share
attributable to owners of
the Company (expressed in
RMB’000 per share)
– Basis and diluted 14 31.3 39.9 34.4 15.4 15.3
APPENDIX I ACCOUNTANT’S REPORT
– I-5 –


--- page 417 ---
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at 31 December
As at
30 June
2020 2021 2022 2023
Notes RMB’000 RMB’000 RMB’000 RMB’000
ASSETS
Non-current assets
Property, plant and equipment 15 14,817 15,741 14,477 15,106
Investment properties 16 7,532 7,015 6,498 6,239
Right-of-use assets 17 14 0–––
Investments in associates 18 ––––
Deferred income tax assets 19 3,806 4,336 4,965 5,717
Deposits 21 5,410 3,154 4,809 6,536
31,705 30,246 30,749 33,598
Current assets
Trade and other receivables
and prepayments 21 156,650 190,240 228,923 252,146
Financial assets at fair value
through profit or loss 22 ––––
Restricted bank deposits 23 – 5,388 1,780 1,453
Cash and cash equivalents 23 67,437 52,191 54,722 49,858
224,087 247,819 285,425 303,457
Total assets 255,792 278,065 316,174 337,055
EQUITY
Equity attributable to owners
of the Company
Share capital 24 ––––
Reserves 25 141,435 142,643 177,032 192,340
Total equity 141,435 142,643 177,032 192,340
APPENDIX I ACCOUNTANT’S REPORT
– I-6 –


--- page 418 ---
As at 31 December
As at
30 June
2020 2021 2022 2023
Notes RMB’000 RMB’000 RMB’000 RMB’000
LIABILITIES
Non-current liabilities
Lease liabilities 17 6,998 6,771 6,524 6,394
Current liabilities
Trade and other payables 26 89,392 98,735 111,755 117,963
Current income tax payable 17,252 19,238 20,187 19,674
Bank borrowings 27 – 10,010 – –
Lease liabilities 17 715 668 676 684
107,359 128,651 132,618 138,321
Total liabilities 114,357 135,422 139,142 144,715
Total equity and liabilities 255,792 278,065 316,174 337,055
APPENDIX I ACCOUNTANT’S REPORT
– I-7 –


--- page 419 ---
STATEMENTS OF FINANCIAL POSITION OF THE COMPANY
As at
31 December
2021
As at
31 December
2022
As at
30 June
2023
Notes RMB’000 RMB’000 RMB’000
ASSETS
Non-current assets
Investments in subsidiaries 31(a) 108,881 108,881 108,881
Current assets
Prepayment 31(b) 1,254 3,609 4,755
Total assets 110,135 112,490 113,636
EQUITY
Share capital 24 – – –
Reserves 31(d) 100,752 94,541 90,644
Total equity 100,752 94,541 90,644
Current liabilities
Other payables 31(c) 9,383 17,949 22,992
Total liabilities 9,383 17,949 22,992
Total equity and liabilities 110,135 112,490 113,636
APPENDIX I ACCOUNTANT’S REPORT
– I-8 –


--- page 420 ---
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to owners of the Company
Share capital Reserves Total
(Note 24) (Note 25)
RMB’000 RMB’000 RMB’000
At 1 January 2020 – 107,973 107,973
Comprehensive income
Profit for the year – 31,312 31,312
Total comprehensive income for the year – 31,312 31,312
Transaction with owners in their
capacity as owners:
Deemed contribution from Controlling
Shareholders – 2,150 2,150
Total transactions with owners – 2,150 2,150
Balance at 31 December 2020 – 141,435 141,435
At 1 January 2021 – 141,435 141,435
Comprehensive income
Profit for the year – 39,921 39,921
Total comprehensive income for the year – 39,921 39,921
Transaction with owners in their
capacity as owners:
Capital contribution from a shareholder
(Note 1.2(i)) – 247 247
Capital reduction of a subsidiary
(Note 1.2(ii)) – (12,320) (12,320)
Issuance of shares (Note 1.2(iv)) – 4,000 4,000
Deemed distribution to Controlling
Shareholders (Note 1.2(vii)) – (2,460) (2,460)
Dividend paid to Controlling Shareholders
(Note 13) – (28,180) (28,180)
Total transactions with owners – (38,713) (38,713)
Balance at 31 December 2021 – 142,643 142,643
APPENDIX I ACCOUNTANT’S REPORT
– I-9 –


--- page 421 ---
Attributable to owners of the Company
Share capital Reserves Total
(Note 24) (Note 25)
RMB’000 RMB’000 RMB’000
At 1 January 2022 – 142,643 142,643
Comprehensive income
Profit for the year – 34,389 34,389
Total comprehensive income for the year – 34,389 34,389
Balance at 31 December 2022 – 177,032 177,032
At 1 January 2022 – 142,643 142,643
Comprehensive income
Profit for the period – 15,392 15,392
Total comprehensive income for
the period – 15,392 15,392
Balance at 30 June 2022 (Unaudited) – 158,035 158,035
At 1 January 2023 – 177,032 177,032
Comprehensive income
Profit for the period – 15,308 15,308
Total comprehensive income for the
period – 15,308 15,308
Balance at 30 June 2023 – 192,340 192,340
APPENDIX I ACCOUNTANT’S REPORT
– I-10 –


--- page 422 ---
CONSOLIDATED STATEMENTS OF CASH FLOWS
Y ear ended 31 December
Six month ended
30 June
2020 2021 2022 2022 2023
Note RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Cash flows from operating
activities
Cash generated from/(used in)
operations 28(a) 28,364 19,101 10,938 (23,214) (1,179)
Income tax paid (6,337) (4,175) (5,159) (3,419) (3,384)
Net cash generated from/(used
in) operating activities 22,027 14,926 5,779 (26,633) (4,563)
Cash flows from investing
activities
Bank interest income received 134 92 153 109 72
Dividend income received 8 4––––
Purchases of property, plant and
equipment (4,331) (4,073) (1,938) (1,088) (2,253)
Acquisition of investments in
financial assets at fair value
through profit or loss (142,802) ––––
Disposal of financial assets at
fair value through profit or
loss 139,818 ––––
Decrease/(increase) in restricted
bank deposits 376 (5,388) 3,608 4,058 327
Advances to related
company/parties (726) (88) – – –
Repayment from Mr. Li 1,337 2,034 – – –
Payments for investments in
associates (220) ––––
Proceeds from disposal of
associates 90 5––––
Net cash (used in)/generated
from investing activities (5,425) (7,423) 1,823 3,079 (1,854)
APPENDIX I ACCOUNTANT’S REPORT
– I-11 –


--- page 423 ---
Y ear ended 31 December
Six month ended
30 June
2020 2021 2022 2022 2023
Note RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Cash flows from financing
activities
Proceeds from bank and other
borrowings 39,383 10,010 – – –
Repayments of bank and other
borrowings (44,383) – (10,010) (10,010) –
Bank and other borrowings
interest paid (848) (55) (148) (121) (53)
Listing expenses paid (677) (713) (1,738) (1,036) (366)
Disposal of Excluded Entities 2,100 ––––
Interest payments of lease
liabilities (458) (441) (427) (224) (216)
Principal repayments of lease
liabilities (489) (274) (239) (105) (122)
Dividend paid to Controlling
Shareholders 13 – (28,180) – – –
Capital reduction of a
subsidiary and return of
capital to Controlling
Shareholders 1.2 (ii) – (12,320) – – –
Capital contribution from a
shareholder 1.2 (i) – 24 7–––
Issuance of shares 1.2 (iv) – 4,000 – – –
Repayment to related
companies (23) (62) – – –
Advances from Controlling
Shareholders 180 5,039 7,491 4,967 2,310
Net cash (used in)/generated
from financing activities (5,215) (22,749) (5,071) (6,529) 1,553
Net increase/(decrease) in
cash and cash equivalents 11,387 (15,246) 2,531 (30,083) (4,864)
Cash and cash equivalents at
beginning of the year/period 56,050 67,437 52,191 52,191 54,722
Cash and cash equivalents at
end of the year/period 67,437 52,191 54,722 22,108 49,858
APPENDIX I ACCOUNTANT’S REPORT
– I-12 –


--- page 424 ---
II NOTES TO THE HISTORICAL FINANCIAL INFORMATION
1 GENERAL INFORMATION, REORGANISATION AND BASIS OF PRESENTATION
1.1 General information
The Company was incorporated in the Cayman Islands on 4 January 2021 as an exempted company with
limited liability under the Companies Act (Cap. 22, Act 3 of 1961, as consolidated and revised) of the Cayman
Islands. The address of the Company’s registered office is at the office of Conyers Trust Company (Cayman)
Limited, Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman, KY1-1111, Cayman Islands.
The Company is an investment holding company and its subsidiaries (collectively the “Group”) are
principally engaged in the provision of cleaning and maintenance services in the People’s Republic of China (the
“PRC”) (the “Listing Business”). Pursuant to the deed of controlling shareholders’ confirmation dated 16 March
2021 entered into between Mr. Li Chenghua (“Mr. Li”) and Mr. Chen Liming (“Mr. Chen”), they have reaffirmed
that they have been a group of the controlling shareholders (the “Controlling Shareholders”) since the
establishment of the companies now comprising the Group. They are acting in concert with each other and
manage the Listing Business collectively throughout the Track Record Period and will continue to act as such
upon listing.
1.2 History and reorganisation of the Group
Prior to the incorporation of the Company and the completion of the reorganisation as described below, the
Listing Business was operated through Guangzhou Shenghui Cleanness Services Co., Limited (“Guangzhou
Shenghui”) and its subsidiaries in the PRC during the Track Record Period.
Prior to the Reorganisation (as defined below), Guangzhou Shenghui and its subsidiaries were owned by
the Controlling Shareholders and are engaged in the provision of cleaning and maintenance services and the
provision of sports facilities. The sports facilities were provided by Guangzhou Pengsheng Sports Development
Co., Ltd. (“Guangzhou Pengsheng”), Guangzhou Shengfeng Agricultural Technology Co., Ltd. (“Guangzhou
Shengfeng”) and Guangzhou Mingyou Education Technology Co., Ltd. (“Guangzhou Mingyou”) which were
inactive and had not commenced business prior to the Reorganisation. Guangzhou Pengsheng, Guangzhou
Shengfeng and Guangzhou Mingyou are not considering as part of the Listing Business and collectively referred
to as the “Excluded Entities”. All Excluded Entities were disposed or deregistered during the year ended 31
December 2020, hence, they became the then related companies of the Group from 1 January 2021 onwards.
Reorganisation
In preparation for the initial listing of the shares of the Company on the Main Board of the Stock
Exchange of Hong Kong Limited, the Company and other companies now comprising the Group have
undergone a reorganisation (the “Reorganisation”) pursuant to which the Company has become the holding
company of the other companies now comprising the Group. The major steps which have been undertaken
to effect the Reorganisation were as follows:
(i) Capital contribution made by an independent pre-listing third party (“Pre-IPO Investor”)
Pursuant to a capital contribution agreement dated 28 January 2021, the Pre-IPO Investor
acquired 3% of the enlarged equity interest of Guangzhou Xinhui Technology Property Co., Ltd.
(“Guangzhou Xinhui”), a then subsidiary of Guangzhou Shenghui, at a consideration of
RMB247,423. Upon the completion of the aforesaid transaction, the registered capital of Guangzhou
Xinhui was increased from RMB8,000,000 to RMB8,247,423. Guangzhou Xinhui was converted into
a Sino-foreign equity joint venture, which is owned as to 97% by Guangzhou Shenghui and 3% by
the Pre-IPO Investor.
APPENDIX I ACCOUNTANT’S REPORT
– I-13 –


--- page 425 ---
(ii) Reduction of registered capital of Guangzhou Shenghui
On 24 February 2021, Guangzhou Shenghui reduced its registered capital from
RMB20,020,000 to RMB500,000 by a way of capital reduction in the aggregate amount of
RMB19,520,000 of its registered capital. Immediately after the reduction of registered capital,
Guangzhou Shenghui was owned as to 50% by Mr. Li and 50% by Mr. Chen. The Group paid a total
of RMB12,320,000 to Controlling Shareholders as result of its capital reduction on 24 February
2021.
(iii) Incorporation of the Company
On 4 January 2021, the Company was incorporated in the Cayman Islands with an authorised
share capital of Hong Kong Dollar (“HKD”) 380,000 divided into 38,000,000 ordinary shares of
HKD0.01 each. Upon its incorporation, one nil-paid ordinary share was issued to the initial
subscriber at par and was transferred to Prosperity Cleanness Investment Holdings Limited
(“Prosperity Cleanness”), a company incorporated in the BVI with limited liability and is
wholly-owned by Mr. Li, on the same day. Also, one nil-paid ordinary share was allotted and issued
to Sunrise Cleanness Investment Holdings Limited (“Sunrise Cleanness”), a company incorporated
in the BVI with limited liability and is wholly-owned by Mr. Chen, on the same day. Upon
completion of such transfer and allotment, the Company become owned as to 50% by Prosperity
Cleanness and as to 50% by Sunrise Cleanness.
(iv) Allotment and issuance of the Company’ s shares to shareholders
Pursuant to a subscription agreement dated 9 February 2021 and entered into, among others,
the Company, Prosperity Cleanness, Sunrise Cleanness and Dash Dazzling Investment Holdings
Limited (“Dash Dazzling”), a company incorporated in the BVI with limited liabilities and is
wholly-owned by the Pre-IPO Investor, in consideration of HKD5, HKD5 and RMB4,000,000
(equivalent to approximately HKD4,800,000) paid by Prosperity Cleanness, Sunrise Cleanness and
Dash Dazzling, respectively, the Company (a) allotted and issued 484 shares, 484 shares and 30
shares to Prosperity Cleanness, Sunrise Cleanness and Dash Dazzling, respectively; and (b) credited
as fully paid the nil-paid ordinary share held by Prosperity Cleanness, and the nil-paid ordinary
share held by Sunrise Cleanness. The consideration was settled in cash as at 10 February 2021.
Upon completion of the above allotments of shares, the Company was owned as to 48.5% by
Prosperity Cleanness, 48.5% by Sunrise Cleanness and 3% by Dash Dazzling.
(v) Acquisition of the entire equity interest in Guangzhou Xinhui by Shenghui Cleanness (HK)
Limited (“Shenghui Cleanness (HK)”)
On 9 February 2021, each of Guangzhou Shenghui and the Pre-IPO Investor entered into an
equity transfer agreement with Shenghui Cleanness (HK), pursuant to which each of Guangzhou
Shenghui and the Pre-IPO Investor transferred its/his entire equity interest in Guangzhou Xinhui to
Shenghui Cleanness (HK) at a respective nominal consideration of RMB1. Upon completion of the
aforesaid transfers, Guangzhou Xinhui is wholly-owned by Shenghui Cleanness (HK).
(vi) Increasing the registered capital of Guangzhou Shenghui
On 2 March 2021, Guangzhou Shenghui increased its registered capital from RMB500,000 to
RMB25,000,000 by way of capital contribution from Guangzhou Xinhui. Upon completion of the
said increase of registered capital, Guangzhou Shenghui was owned by Mr. Li, Mr. Chen and
Guangzhou Xinhui as to 1%, 1% and 98%, respectively.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 426 ---
(vii) Acquisition of the equity interest in Guangzhou Shenghui from Mr . Li and Mr . Chen
On 12 March 2021, Guangzhou Xinhui acquired the entire interest in Guangzhou Shenghui
held by Mr. Li and Mr. Chen at the consideration of RMB1,230,000 and RMB1,230,000,
respectively. Upon completion of the said transfer, Guangzhou Shenghui became a wholly-owned
subsidiary of Guangzhou Xinhui.
Upon completion of the Reorganisation, the Company became the holding company of the
companies now comprising the Group. The controlling shareholders remain as Mr. Li and Mr. Chen.
As at 31 December 2020, 2021 and 2022 and 30 June 2023 and the date of this report, the
Company had direct or indirect interests in the following principal subsidiaries:
Attribution equity interest of the Group
Company name
Date of
incorporation/
establishment
Country/
place of
incorporation/
establishment
Registered/
issued capital
As at 31 December
As at
30 June
2023
As at
the date
of this
report
Principal
activities/Place of
operations2020 2021 2022
Directly held by the
Company:
Shenghui Cleanness (BVI)
Limited ( ʺሾ૶ᆎ (᙮ၪ
ࢥ) ʮ̡ )
(notes 1,6)
18 January
2021
BVI USD1 N/A 100% 100% 100% 100% Investment holding in
BVI
Indirectly held by the
Company:
Shenghui Cleanness (HK)
Limited ( ʺሾ૶ᆎ (ಥ)Ϟ
ʮ̡ ) (notes 1,7)
27 January
2021
HK HKD1 N/A 100% 100% 100% 100% Investment holding in
Hong Kong
Guangzhou Shenghui
Cleanness Service Co.,
Ltd.) (ਕ
ʮ̡ ) (notes 1,2,5)
4 August
2000
PRC RMB25,000,000 100% 100% 100% 100% 100% Provision of cleaning
and maintenance
services in the PRC
Guangxi Shenghui Cleanness
Service Co., Ltd.) ( ᄿГʺ
ʮ̡ )
(notes 1,2,3)
7 June
2016
PRC RMB2,000,000 100% 100% 100% 100% 100% Provision of cleaning
and maintenance
services in the PRC
Guangzhou Xinhui
Technology & Property
Co., Ltd. (Ҧ
ʮ̡ )
(notes 1,2,4)
14 November
2002
PRC RMB8,000,000 100% 100% 100% 100% 100% Provision of cleaning
and maintenance
services in the PRC
Shenghui Cleanness (Beijing)
Limited ( ʺሾ૶ᆎ̏ԯ
ʮ̡ ) (notes 1, 2)
20 July
2023
PRC RMB5,000,000 N/A N/A N/A N/A 100% Provision of cleaning
and maintenance
services in the PRC
Notes:
(1) All subsidiaries are limited liability companies.
(2) The English names of the subsidiaries represent the best efforts made by the
management of the Company in translating their Chinese names when they do not have
official English names.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 427 ---
(3) No audited financial statements have been issued for this company for the years ended
31 December 2020, 2021 and 2022.
(4) The statutory financial statements of this company for the years ended 31 December
2020, 2021 and 2022 were audited byʮ̡ .
(5) The statutory financial statements of this company for the years ended 31 December
2020, 2021 and 2022 were audited byʮ̡ .
(6) No audited financial statements have been issued for these companies for the years
ended 31 December 2021 and 2022.
(7) The statutory financial statements of this company for the years ended 31 December
2021 and 2022 were audited by Fan Kwok Man Certified Public Accountant
(Practising).
1.3 Basis of presentation
Immediately prior to and after the Reorganisation, the Listing Business is conducted through Guangzhou
Shenghui and its subsidiaries and is controlled by the Controlling Shareholders. Pursuant to the Reorganisation,
the Listing Business is transferred to and held by the Company. The Company has not been involved in any other
business prior to the Reorganisation and does not meet the definition of a business. The Reorganisation is merely
a reorganisation of the Listing Business with no change in management of such business and the Controlling
Shareholders of the Listing Business remain the same.
Accordingly, the Group resulting from the Reorganisation is regarded as a continuation of the Listing
Business conducted through Guangzhou Shenghui and its subsidiaries. For the purpose of this report, the
Historical Financial Information has been prepared and presented as a continuation of the Listing Business, with
the assets and liabilities of the Group recognised and measured at the carrying amounts of the Listing Business
for all periods presented.
The Historical Financial Information has not included the financial information of the Excluded Entities
during the Track Record Period as it is not part of the Listing Business.
Inter-company transactions, balances and unrealised gains/losses on transactions between group companies
are eliminated on consolidation.
2 BASIS OF PREPARATION
The Historical Financial Information have been prepared in accordance with HKFRS issued by the Hong Kong
Institute of Certified Public Accountants (“HKICPA”). The Historical Financial Information has been prepared under
the historical cost convention, as modified by the revaluation of financial assets at fair value through profit or loss
which are measured at fair value.
The material accounting policies applied in preparation of the Historical Financial Information have been
consistently applied by the Group to all the years or periods presented throughout the Track Record Period, unless
otherwise stated.
Other than those material accounting policies information as disclosed elsewhere in this Historical Financial
Information, a summary of the other accounting policies information has been set out in Note 34.
The preparation of Historical Financial Information in conformity with HKFRS requires the use of certain critical
accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s
accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and
estimates are material to the Historical Financial Information are disclosed in Note 4.
APPENDIX I ACCOUNTANT’S REPORT
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New and revised standards adopted
(a) New and amended standards adopted by the Company
The Group has applied new and amended standards effective for the financial period beginning on 1
January 2023 consistently throughout the Track Record Period.
(b) New or amended standards and interpretation to existing standards that have been issued but are not
effective for the Track Record Period and have not been early adopted
HKICPA has issued the following new or amended standards and interpretation to existing standards which
are not yet effective and have not been early adopted by the Group:
Effective for
the financial year
beginning
on or after
Amendments to HKAS 1 Classification of Liabilities as Current or Non-Current 1 January 2024
Amendments to HKAS 1 Non-current Liabilities with Covenants 1 January 2024
Hong Kong
Interpretation 5
(2020)
Presentation of Financial Statements – Classification by
the Borrower of a Term Loan that Contain a
Repayment on Demand Clause
1 January 2024
Amendments to HKAS 7
and HKFRS 7
Supplier Finance Arrangements 1 January 2024
Amendments to
HKFRS 16
Lease Liabilities in a Sale and
Leaseback
1 January 2024
Amendments to
HKFRS 10 and HKAS
28
Sale or Contribution of Assets between an Investor and
its Associates or Joint V entures
To be determined
The Group has already commenced an assessment of the impact of these new or amended standards and
interpretation, certain of which are relevant to the Group’s operations. According to the preliminary assessment
made by the directors of the Company, no significant impact on the financial performance and position of the
Group is expected when they become effective.
3 FINANCIAL RISK MANAGEMENT
3.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: price risk, interest rate risk, credit risk and
liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effect on the Group’s financial performance.
(i) Price risk
The Group is exposed to price risk in relation to its investments in financial assets at fair value
through profit or loss. The management manages this exposure by maintaining a portfolio of investments
with difference risk and return profiles. All the investments in financial assets at fair value through profit
or loss were disposed during the year ended 31 December 2020. The directors of the Company consider
that the price risk is insignificant to the Group.
(ii) Interest rate risk
The Group’s interest rate risk arises primarily from bank borrowings which are at variable rates
expose the Group to cash flow interest rate risk. The Group is also exposed to cash flow interest rate risk
in relation to variable-rate restricted bank deposits and bank balances. Management monitors interest rate
exposure and will consider hedging significant interest rate exposure should the need arises.
APPENDIX I ACCOUNTANT’S REPORT
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--- page 429 ---
If interest rate risk has been 30 basis points increased/decreased, with all other variables held
constant, profit before tax for the years ended 31 December 2020, 2021 and 2022 and the six months
ended 30 June 2022 and 2023 would have been RMB201,000, RMB143,000, RMB170,000, RMB20,000
and RMB77,000 higher/lower, respectively, resulting from the changes in interest income on restricted
bank deposits and bank balances and finance expenses of bank borrowings.
(iii) Credit risk
The Group is exposed to credit risk in relation to its trade and other receivables including deposits,
restricted bank deposits and cash and cash equivalents. The carrying amounts of trade and other
receivables including deposits, restricted bank deposits and cash and cash equivalents represent the
Group’s maximum exposure to credit risk in relation to financial assets.
The Group expects that there is no significant credit risk associated with restricted bank deposits
and cash and cash equivalents since they are substantially deposited at state-owned banks and other
medium or large-sized listed banks, which the credit rating of these banks is high. Management does not
expect that there will be any significant losses from non-performance by these counterparties.
For trade receivables from customers, the Group has large number of customers and there was no
significant concentration of credit risk during Track Record Period. The Group has monitoring procedures
to ensure that follow-up action is taken to recover overdue debts. The Group applies the simplified
approach to provide for expected credit losses prescribed by HKFRS 9, which permits the use of the
lifetime expected loss provision for trade receivables.
Other receivables mainly included deposits, amounts due from Controlling Shareholders and related
companies/parties, advances to third parties and receivables from the provision of construction labor
service. The Group has assessed those receivables using 12 months expected losses method depending on
whether there has been a significant increase in credit risk since initial recognition. If a significant
increase in credit risk of a receivable has occurred since initial recognition, the impairment is measured as
lifetime expected credit loss.
The Group considers the probability of default upon initial recognition of assets and whether there
has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To
assess whether there is a significant increase in credit risk the Group compares the risk of a default
occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition.
It considers available forwarding-looking information. Especially the following indicators are incorporated:
 internal credit rating
 external credit rating
 actual or expected significant adverse changes in business, financial or economic conditions
that are expected to cause a significant change to the individual customers and customers’
ability to meet its obligations
 actual or expected significant changes in the operating results of individual customers
APPENDIX I ACCOUNTANT’S REPORT
– I-18 –


--- page 430 ---
A summary of the assumptions underpinning the Group’s expected credit loss model on financial
assets other than trade receivables is as follows:
Category Group definition of category
Basis for recognition of expected
credit loss provision
Performing Customers have a low risk of default
and a strong capacity to meet
contractual cash flows
12 months expected losses. Where
the expected lifetime of an asset is
less than 12 months, expected
losses are measured at its expected
lifetime (stage 1)
Underperforming Receivables for which there is a
significant increase in credit risk,
as significant increase in credit
risk is presumed if interest and/or
principal repayments are past due
over 180 days
Lifetime expected losses (stage 2)
Non-performing Interest and/or principal repayments
are over 365 days past due
Lifetime expected losses (stage 3)
Write-off Interest and/or principal repayments
are past due and there is no
reasonable expectation of recovery
Asset is written off
The tables below detail the credit risk exposures of the Group’s financial assets at amortised cost
other than trade receivables, which are subject to ECL assessments.
Gross carrying amount
Internal credit
rating
12-month or
lifetime ECL As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Restricted bank deposits Performing 12-month ECL – 5,388 1,780 1,453
Cash and cash equivalents Performing 12-month ECL 67,437 52,191 54,722 49,858
Other receivables except for amount due from a
related company/then related company
Performing 12-month ECL 25,599 27,745 25,102 23,410
Amount due from a related company/then related
company
Non-performing Lifetime ECL 7,136 111 – –
(i) For restricted bank deposits and cash and cash equivalents, the Group determines the expected
credit losses by referring to external credit rating of the related banks.
(ii) For other receivables including amount due from a related company/then related company, for
the purposes of internal credit risk management, the Group uses past due information to assess
whether credit risk has increased significantly since initial recognition.
The Group accounts for its credit risk by appropriately providing for expected credit losses on a
timely basis. In calculating the expected credit loss rates, the Group considers historical loss rates for each
category of receivables and adjusts for forward looking macroeconomic data.
APPENDIX I ACCOUNTANT’S REPORT
– I-19 –


--- page 431 ---
(a) Trade receivables
The Group has applied the simplified approach in HKFRS 9 to measure the expected credit
losses which uses a lifetime expected loss allowance for all trade receivables. Trade receivables
have been assessed for impairment on a collective group basis. In calculating the expected credit
loss rates of trade receivables, the Group considers historical loss rates based on customer’s
historical default rates, past collection information and aging profiles of trade receivables by using a
provision matrix and adjusts for forward looking macroeconomic data with the consideration on the
current economy and industry outlook.
The loss allowance provision for the trade receivable with shared credit risk characteristics
was determined as follows:
As at 31 December 2020
Current
Less that
60 days
61 to 180
days
181 to 365
days
1t o2
years
2t o3
years Total
Expected loss rate 0.5% 0.8% 1.1% 20.7% 60.6% 63.0%
Gross carrying amount (RMB’000) 100,346 28,132 5,008 2,346 2,137 646 138,615
Loss allowance provision (RMB’000) 501 225 55 486 1,295 407 2,969
As at 31 December 2021
Current
Less than
60 days
61–180
days
181 to 365
days
1t o2
years
2t o3
years Total
Expected loss rate 0.4% 1.4% 2.0% 11.5% 38.7% 43.6%
Gross carrying amount (RMB’000) 103,584 32,246 21,246 9,016 4,294 188 170,575
Loss allowance provision (RMB’000) 414 452 425 1,037 1,662 82 4,072
As at 31 December 2022
Current
Less than
60 days
61–180
days
181 to 365
days
1t o2
years
2t o3
years Total
Expected loss rate 0.6% 1.8% 2.6% 14.5% 31.1% 31.7%
Gross carrying amount (RMB’000) 127,226 40,411 26,140 11,473 5,203 3,633 214,086
Loss allowance provision (RMB’000) 763 727 680 1,664 1,618 1,133 6,585
As at 30 June 2023
Current
Less than
60 days
61–180
days
181 to 365
days
1t o2
years
2t o3
years Total
Expected loss rate 0.8% 2.0% 2.8% 14.4% 30.7% 32.9%
Gross carrying amount (RMB’000) 131,544 47,199 36,223 15,290 6,720 6,065 243,041
Loss allowance provision (RMB’000) 1,052 944 1,014 2,202 2,063 1,995 9,270
The higher expected loss rates for the time bands of 1 to 2 years and 2 to 3 years as at 31
December 2020 was mainly due to the late settlement of certain customers which caused the
increase in historical loss rates. The COVID-19 outbreak during the year ended 31 December 2020
also impact the macroeconomic and therefore leading to the higher expected loss rates. During the
year ended 31 December 2021, trade receivables were settled by the above-mentioned customers and
therefore, the expected loss rates for the time bands of 1 to 2 years and 2 to 3 years as at 31
December 2021 were decreased accordingly. The further decrease in expected loss rates for the time
bands of 1 to 2 years and 2 to 3 years as at 31 December 2022 was primarily due to the stabilisation
of real estate industry in the PRC and hence relatively more positive forward looking
macroeconomic data was applied in determining the expected loss rates. There is no significant
increase or decrease in expected loss rates for the time bands of 1 to 2 years and 2 to 3 years as at
30 June 2023.
APPENDIX I ACCOUNTANT’S REPORT
– I-20 –


--- page 432 ---
As at 31 December 2020, the loss allowance of individually impaired trade receivables is
determined as follows:
Individual
Trade
receivables
Expected
credit
loss rate
Loss
allowance Reason
RMB’000 RMB’000
Trade receivables 3,743 100% 3,743 The likelihood of
recovery
As at 31 December 2021, the loss allowance of individually impaired trade receivables is
determined as follows:
Individual
Trade
receivables
Expected
credit
loss rate
Loss
allowance Reason
RMB’000 RMB’000
Trade receivables 5,016 100% 5,016 The likelihood of
recovery
As at 31 December 2022, the loss allowance of individually impaired trade receivables is
determined as follows:
Individual
Trade
receivables
Expected
credit
loss rate
Loss
allowance Reason
RMB’000 RMB’000
Trade receivables 6,688 100% 6,688 The likelihood of
recovery
As at 30 June 2023, the loss allowance of individually impaired trade receivables is
determined as follows:
Individual
Trade
receivables
Expected
credit
loss rate
Loss
allowance Reason
RMB’000 RMB’000
Trade receivables 8,916 100% 8,916 The likelihood of
recovery
APPENDIX I ACCOUNTANT’S REPORT
– I-21 –


--- page 433 ---
The movements of loss allowances for trade receivables are as follows:
Y ear ended 31 December
Six month
ended
30 June 20232020 2021 2022
RMB’000 RMB’000 RMB’000 RMB’000
At beginning of the
year/period 4,799 6,712 9,088 13,273
Provision for loss
allowance
recognised 1,913 2,376 4,185 4,913
At end of the
year/period 6,712 9,088 13,273 18,186
(b) Other receivables
Other receivables mainly included deposits, amounts due from Controlling Shareholders and
related companies/parties and receivables from the provision of construction labor service. As at 31
December 2020, 2021 and 2022 and 30 June 2023, there were neither significant increase of credit
risk nor credit impaired for the balance of other receivables except for the deposits with internal
credit rating of underperforming and the amount due from a related company/then related company
with internal credit rating of non-performing. Management considered these receivables to be low
credit risk since the counterparties have strong financial capacity to meet their contractual cash flow
obligations in the near term. The expected credit losses on those other receivables are not
significant.
For the deposits which are the amount paid to customers for the guarantee of performance of
the provision of services, there were an increase of credit risk for the balance as at 31 December
2020 and 2021. Impairment loss of RMB985,000, RMB976,000 were recognised for the years ended
31 December 2020 and 2021 respectively. No impairment loss was recognised for the year ended 31
December 2022 and the six months ended 30 June 2022 and 2023.
The movements of loss allowances for deposits are as follows:
Y ear ended 31 December
Six months
ended
30 June 20232020 2021 2022
RMB’000 RMB’000 RMB’000 RMB’000
At beginning of the
year/period 2,253 3,238 4,214 4,214
Provision for loss
allowance recognised 985 976 – –
At end of the year/period 3,238 4,214 4,214 4,214
For the amount due from a related company/then related company with internal credit rating
of non-performing, a significant increase in its credit risk has occurred since initial recognition, the
impairment is measured as lifetime expected credit loss. Impairment loss of the amount due from a
related company/then related company of RMB1,682,000, nil, nil, nil and nil was recognised for the
years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023
respectively. Reversal of impairment loss of RMB1,198,000 was recognised for the year ended 31
December 2021. Details are set out in Note 7.
APPENDIX I ACCOUNTANT’S REPORT
– I-22 –


--- page 434 ---
The movements of loss allowances for amount due from a related company/then related
company are as follows:
Y ear ended 31 December
Six months
ended
30 June 20232020 2021 2022
RMB’000 RMB’000 RMB’000 RMB’000
At beginning of the
year/period 5,431 7,113 – –
Provision for loss
allowance 1,682 – – –
Reversal of impairment
losses – (1,198) – –
Bad debts written off – (5,915) – –
At end of the year/period 7,113 – – –
As at 31 December 2021 and 30 June 2023, there was an increase of credit risk of tendering
deposits. Impairment loss of RMB179,000 and RMB103,000 were recognised for the year ended 31
December 2021 and the six months ended 30 June 2023, respectively accordingly.
The movements of loss allowances for tendering deposits are as follows:
Y ear ended 31 December
Six months
ended
30 June 20232020 2021 2022
RMB’000 RMB’000 RMB’000 RMB’000
At beginning of the
year/period – – 179 179
Provision for loss
allowance – 179 – 103
At end of the year/period – 179 179 282
(iv) Liquidity risk
To manage the liquidity risk, the Group monitors and maintains an adequate level of cash and cash
equivalents determined by the management to finance the Group’s operations and mitigate the effects of
fluctuations in cash flows.
APPENDIX I ACCOUNTANT’S REPORT
– I-23 –


--- page 435 ---
The tables below analyse the Group’s financial liabilities into relevant maturity groups based on the
remaining period at the end of the reporting periods to the contractual maturity date.
On demand
or less than
1 year
Between
1 and 2
years
Between
2 and 5
years
Over
5 years
Total
undiscounted
cashflow
Carrying
amount
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 31 December 2020
Trade and other payables
(excluding payroll,
bonus and social
insurance payables and
other tax payables) 31,971 – – – 31,971 31,971
Lease liabilities 1,157 1,094 3,265 10,286 15,802 7,713
33,128 1,094 3,265 10,286 47,773 39,684
At 31 December 2021
Trade and other payables
(excluding payroll,
bonus and social
insurance payables and
other tax payables) 44,367 – – – 44,367 44,367
Lease liabilities 1,094 1,087 3,264 9,200 14,645 7,439
Bank borrowings 11,382 – – – 11,382 10,010
56,843 1,087 3,264 9,200 70,394 61,816
At 31 December 2022
Trade and other payables
(excluding payroll,
bonus and social
insurance payables and
other tax payables) 53,029 – – – 53,029 53,029
Lease liabilities 1,086 1,093 3,239 8,129 13,547 7,200
54,115 1,093 3,239 8,129 66,576 60,229
As 30 June 2023
Trade and other payables
(excluding payroll,
bonus and social
insurance payables and
other tax payables) 57,520 – – – 57,520 57,520
Lease liabilities 1,086 1,093 3,320 7,587 12,996 7,078
58,606 1,093 3,320 7,587 70,516 64,598
3.2 Fair value estimation
The carrying amounts of the Group’s financial assets and liabilities approximate their fair values due to the
short-term maturities of these assets and liabilities. Disclosure of financial assets at fair value through profit or
loss and bank borrowings is set out in Notes 22 and 27 respectively.
APPENDIX I ACCOUNTANT’S REPORT
– I-24 –


--- page 436 ---
3.3 Capital risk management
The Group’s objectives when managing capital is to safeguard the Group’s ability to continue as a going
concern in order to provide returns for shareholder and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.
The Group actively and regularly reviews and manages its capital structure to ensure optimal capital
structure and enhance shareholder value in the long term. The capital structure consists of total equity and
borrowings as shown in the consolidated statements of financial position. In order to maintain or adjust the
capital structure, the Group may adjust the amount of dividends paid to shareholder, return capital to owner, or
issue new shares.
The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by
total equity. Net debt is calculated as total borrowings (including bank borrowings and amounts due to
Controlling Shareholders and related companies under other payables as shown in the consolidated statements of
financial position) less cash and cash equivalents. Total equity represents the sum of share capital and reserves,
as disclosed in the consolidated statements of financial position.
As at 31 December 2020, 2021 and 2022 and 30 June 2023, the Group has a net cash position and hence
the gearing ratio has not been presented.
4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities within the next financial year or period are
addressed below.
4.1 Expected credit losses on receivables
The Group makes allowances on receivables based on assumptions about risk of default and expected loss
rates. The Group used judgement in making these assumptions and selecting the inputs to the impairment
calculation, based on the Group’s debtors’ credit history, existing market conditions as well as forward looking
estimates at the end of each reporting period.
Where the expectation is different from the original estimates, such differences will impact the carrying
amounts of trade and other receivables and the related loss allowances in the period in which such estimates are
changed. The details of the expected credit losses on receivables are set out in Note 3.1 (iii).
4.2 Current taxation and deferred taxation
The Group is subject to corporate income taxes in the PRC. Judgment is required in determining the
amount of the provision for taxation and the timing of payment of the related taxations. There are many
transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of
business. Where the final tax outcome of these matters is different from the amounts that were initially recorded,
such differences will impact the current income tax and deferred income tax provisions in the period in which
such determination is made.
5 REVENUE AND SEGMENT INFORMATION
Management has determined the operating segments based on the reports reviewed by CODM. The CODM, who
is responsible for allocating resources and assessing performance of the operating segment, has been identified as the
executive directors of the Company.
APPENDIX I ACCOUNTANT’S REPORT
– I-25 –


--- page 437 ---
During the Track Record Period, the Group is principally engaged in the provision of cleaning and maintenance
services in the PRC. CODM reviews the operating results of the business as one operating segment to make decisions
about resources to be allocated. Therefore, the CODM regards that there is only one identified segment, under the
requirement of HKFRS 8 “Operating Segments”, which is used to make strategic decisions. No geographical segment is
disclosed.
Revenue recognised during the Track Record Period are as follows:
Y ear ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Revenue from contracts with
customers recognised over
time
Cleaning and maintenance
services income 465,664 563,541 594,204 289,173 298,251
The Group offers comprehensive cleaning and maintenance services for office buildings, shopping malls, airport
and commercial and residential premises.
The major operating entities of the Group are domiciled in the PRC. Accordingly, all of the Group’s revenue
were derived in the PRC during the Track Record Period. None of the individual customer of the Group contributed
10% or more of the Group’s revenue for the Track Record Period.
As at 31 December 2020, 2021 and 2022 and 30 June 2023, all of the Group’s non-current assets were located in
the PRC or arisen from transactions as conducted in the PRC.
(a) Contract assets
As at the end of each of the Track Record Period, there were no significant contract assets recognised.
(b) Contract liabilities
As at the end of each of the Track Record Periods, there were no significant contract liabilities recognised
as no advance payments were made by customers.
(c) Unsatisfied performance obligations
For the provision of cleaning and maintenance services, the Group recognises revenue in the amount that
equals to the right to invoice which corresponds directly with the value to the customer of the Group’s
performance to date, on a regular basis. The Group has elected the practical expedient for not to disclose the
remaining performance obligations for these contracts.
(d) Assets recognised from incremental costs to obtain and fulfill a contract
During the Track Record Period, there were no significant incremental costs incurred to obtain and fulfill a
contract.
(e) Accounting policies for revenue recognition
Revenue is recognised when control over a service is transferred to the customer, at the amount of
promised consideration to which the Group is expected to be entitled, excluding those amounts collected on
behalf of third parties. Revenue excludes value added tax or other sales taxes and is after deduction of any trade
discounts.
APPENDIX I ACCOUNTANT’S REPORT
– I-26 –


--- page 438 ---
The revenue of the Group is arisen from the provision of cleaning and maintenance services. Depending on
the terms of the contract, control of the service may be transferred over time or at a point in time. Control of the
service is transferred over time if the Group’s performance:
 provides all of the benefits received and consumed simultaneously by the customer;
 creates or enhances an asset that the customer controls as the Group performs; or
 does not create an asset with an alternative use to the Group and the Group has an enforceable right
to payment for performance completed to date.
If control of the services transfers over time, revenue is recognised over the period of the contract by
reference to the progress towards complete satisfaction of that performance obligation. Otherwise, revenue is
recognised at a point in time when the customer obtains control of the service.
When either party to a contract has performed, the Group presents the contract in the consolidated
statements of financial position as a contract asset or a contract liability, depending on the relationship between
the Group’s performance and the customer’s payment.
A contract asset is the Group’s right to consideration in exchange for services that the Group has
transferred to a customer. Incremental costs incurred to obtain a contact, if recoverable, are capitalised and
presented as assets under “contract assets” and subsequently amortised when the related revenue is recognised.
If a customer pays consideration or the Group has a right to an amount of consideration that is
unconditional, before the services are provided to the customer, the Group presents the amount as a contract
liability when the payment is received or a receivable is recorded (whichever is earlier).
A receivable is recorded when the Group has an unconditional right to consideration. A right to
consideration is unconditional if only the passage of time is required before payment of that consideration is due.
APPENDIX I ACCOUNTANT’S REPORT
– I-27 –


--- page 439 ---
6 EXPENSES BY NATURE
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Employee benefit expenses
(Note 9) 232,098 284,804 324,061 157,017 165,985
Subcontracting labor costs 149,939 188,882 172,910 84,363 85,939
Cost of cleaning materials
consumed 14,112 19,407 20,028 9,959 8,545
Listing expenses 3,892 5,777 7,859 6,428 3,233
Insurance expenses 4,594 2,261 3,664 1,958 961
Depreciation 3,358 3,803 3,719 1,849 1,883
Taxes and surcharges 1,846 2,235 2,390 1,041 1,205
Uniform expenses 969 1,702 1,808 644 834
Marketing and entertainment
expenses 1,862 2,635 3,434 1,855 2,113
Motor vehicle expenses 981 1,702 1,640 752 812
Maintenance and utilities
expenses 2,531 1,653 2,113 1,049 1,008
Office and communication
expenses 1,851 1,958 2,118 922 1,136
Travelling expenses 694 1,174 1,706 1,284 976
Tendering expenses 611 433 549 111 617
Short-term lease expenses 769 967 2,643 1,264 1,379
Professional services fees 353 113 100 50 158
Other expenses 2,079 2,899 4,096 1,480 1,062
Total cost of services, selling
and marketing expenses and
general and administrative
expenses 422,539 522,405 554,838 272,026 277,846
APPENDIX I ACCOUNTANT’S REPORT
– I-28 –


--- page 440 ---
7 OTHER INCOME, NET
Y ear ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Rental income (Note i) 1,345 848 2,917 1,194 1,687
Penalty on late payment of
rental income (Note ii) 1,24 1––––
V alue-added tax refund 2,425 2,107 2,193 1,093 643
Government grant 172 37 777 768 –
Net income/(losses) from the
provision of construction
labor services 2,656 4,328 (822) 330 –
Dividend income from
financial assets at fair value
through profit or loss 8 4––––
Donation (130) – (50) (50) (70)
Others 445 (165) 94 102 (25)
8,238 7,155 5,109 3,437 2,235
Notes:
(i) Rental income arising from the investment properties and the leased shops is recognised on a straight-line
basis over the terms of the lease agreements. The rental income arising from the leased car park is
recognised over the lease period.
(ii) The penalty arising from the late payment of rental income represented an interest of 0.1% charged on the
outstanding rental income receivable from Guangzhou Pengsheng, one of the Excluded Entities. In
February 2021, the Group reached a commercial settlement with Guangzhou Pengsheng to settle the total
rental receivables at approximately RMB1,198,000 and all remaining of rental receivables and penalty on
late payment of rental income previously charged, with a total of RMB5,915,000 were waived and were
written off as bad debts during the year ended 31 December 2021.
8 OTHER LOSS
Y ear ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Fair value loss on financial
assets at fair value through
profit or loss (“FVTPL”) (7,114) ––––
Loss on disposal of
investments in associates,
net (174) ––––
Loss on disposal of property,
plant and equipment, net (57) (3) – – –
(7,345) (3) – – –
APPENDIX I ACCOUNTANT’S REPORT
– I-29 –


--- page 441 ---
9 EMPLOYEE BENEFIT EXPENSES
Y ear ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Salaries, wages and bonuses 222,339 269,636 308,245 149,489 158,123
Social insurance and housing
provident fund contribution 9,264 14,143 14,670 7,266 7,405
Other employee benefits 495 1,025 1,146 262 457
232,098 284,804 324,061 157,017 165,985
All employees of the Group participate in employee social insurance plans established in the PRC, which cover
pension, medical and other welfare benefits. The plans are organised and administered by the governmental authorities.
Except for the contributions made to these social insurance plans, the Group has no other material commitments owing
to the employees. According to the relevant regulations, the portion of premium and welfare benefit contributions that
should be borne by the companies within the Group as required by the above social insurance plans are principally
determined based on percentages of the basic salaries of employees, subject to certain ceilings imposed. These
contributions are expensed as incurred.
The Group received a partial exemption of the payment of social security and provident fund from February to
June 2020 as part of the social insurance relief policy rolled out by the local municipal governments during the
COVID-19 outbreak.
During the Track Record Period, no forfeited contributions were utilised by the Group to reduces its
contributions to the above-mentioned social insurance plans for the Track Record Period.
10 DIRECTORS’ EMOLUMENTS AND FIVE HIGHEST PAID INDIVIDUALS’ EMOLUMENTS
(a) Directors’ emoluments
(i) The remuneration of each director for the year ended 31 December 2020 is set out below:
Salary and
bonuses
Other
welfare
Social
insurance and
housing
provident fund
contribution Total
RMB’000 RMB’000 RMB’000 RMB’000
Executive directors:
Mr. Li 265 – 35 300
Mr. Chen 106 – 16 122
371 – 51 422
APPENDIX I ACCOUNTANT’S REPORT
– I-30 –


--- page 442 ---
(ii) The remuneration of each director for the year ended 31 December 2021 is set out below:
Salary and
bonuses
Other
welfare
Social
insurance and
housing
provident fund
contribution Total
RMB’000 RMB’000 RMB’000 RMB’000
Executive directors:
Mr. Li 294 – 56 350
Mr. Chen 157 – 28 185
451 – 84 535
(iii) The remuneration of each director for the year ended 31 December 2022 is set out below:
Salary and
bonuses
Other
welfare
Social
insurance and
housing
provident fund
contribution Total
RMB’000 RMB’000 RMB’000 RMB’000
Executive directors:
Mr. Li 333 – 67 400
Mr. Chen 187 – 33 220
520 – 100 620
(iv) The remuneration of each director for the six months ended 30 June 2022 (unaudited) is set out
below:
Salary and
bonuses
Other
welfare
Social
insurance and
housing
provident fund
contribution Total
RMB’000 RMB’000 RMB’000 RMB’000
Executive directors:
Mr. Li 135 – 34 169
Mr. Chen 64 – 17 81
199 – 51 250
APPENDIX I ACCOUNTANT’S REPORT
– I-31 –


--- page 443 ---
(v) The remuneration of each director for the six months ended 30 June 2023 is set out below:
Salary and
bonuses
Other
welfare
Social
insurance and
housing
provident fund
contribution Total
RMB’000 RMB’000 RMB’000 RMB’000
Executive directors:
Mr. Li 170 – 35 205
Mr. Chen 94 – 17 111
264 – 52 316
The remuneration shown above represents remuneration received by the directors in their capacity as
employee to the subsidiaries of the Group.
Notes:
For the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and
2023:
(1) No emoluments were paid by the Group to any of the directors, supervisors or senior
management as an inducement to join or upon joining the Group or as compensation for loss
of office.
(2) No emoluments, retirement benefits, payments or benefits in respect of termination of
directors’ services were paid or made, directly or indirectly, to the directors; nor are any
payable. No consideration was provided to or receivable by third parties for making available
directors’ services.
(3) Save as disclosed in Note 30 to the Historical Financial Information, there are no loans,
quasi-loans or other dealings in favour of directors, their controlled bodies corporate and
connected entities.
(4) Save as disclosed in Note 30 to the Historical Financial Information, no significant
transactions, arrangements and contracts in relation to the Group’s business to which the
Group was a party and in which a director of the Company had a material interest, whether
directly or indirectly, subsisted at the end of the respective year/period or at any time during
the respective year/period.
(5) None of the directors of the Company waived any emoluments.
Mr. Li and Mr. Chen were appointed as the Company’s executive directors on 4 January 2021 and 16
March 2021 respectively.
Ms. Chong Sze Pui Joanne, MH, Ms. Cheung Bo Man and Ms. Y au Yin Hung were appointed as the
Company’s independent non-executive directors on 14 November 2023. During the Track Record Period,
the independent non-executive directors have neither been appointed nor received any directors’
remuneration with the capacity as directors.
APPENDIX I ACCOUNTANT’S REPORT
– I-32 –


--- page 444 ---
(b) Five highest paid individuals’ emoluments
None of the directors is one of the five individuals whose emoluments were the highest in the Group
during the years ended 31 December 2020, 2021 and 2022 and the six months ended 30 June 2022 and 2023. The
emoluments payables to the five highest paid individuals for the Track Record Period are as follows:
Y ear ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Employees
– Basic salaries and
other allowances 1,729 1,749 1,830 910 935
– Discretionary bonuses 25 300 280 150 140
– Contribution to pension
scheme 318 348 398 197 210
2,072 2,397 2,508 1,257 1,285
The emoluments fell within the following bands:
Y ear ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
(Number of individuals) (Unaudited)
Nil–HKD1,000,000 55555
11 FINANCE INCOME/(EXPENSES), NET
Y ear ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Finance income
Bank interest income 134 92 153 109 72
Finance expenses
Interest expense on bank and
other borrowings (848) (55) (148) (121) (53)
Interest expense on lease
liabilities (458) (441) (427) (224) (216)
Finance expenses, net (1,172) (404) (422) (236) (197)
APPENDIX I ACCOUNTANT’S REPORT
– I-33 –


--- page 445 ---
12 INCOME TAX EXPENSES
Y ear ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Current income tax 6,618 6,160 6,108 3,337 2,871
Deferred income tax (Note 19) 572 (530) (629) (286) (752)
7,190 5,630 5,479 3,051 2,119
(a) Corporate income tax
Income tax provision of the Group in respect of operations in the PRC has been calculated at the
applicable tax rate 25% on the estimated assessable profits for the respective years/periods, based on the existing
legislation, interpretations and practices in respect thereof except for a subsidiary of the Group in the PRC which
are granted with tax concession and hence are taxed at preferential tax rates.
Guangzhou Shenghui has been qualified as a High and New Technology Enterprise and enjoyed a
preferential income tax rate of 15% since 2020, which is subject to review and renewal once every three years.
The High and New Technology Enterprise Certificate was obtained and be remained valid for 3 years from
December 2020 to December 2023. Guangzhou Shenghui has submitted an application for the renewal of the
High and New Technology Enterprise Certificate subsequently after 30 June 2023.
No provision for Hong Kong profits tax has been made as the Group had no estimated assessable profit
generated in Hong Kong during the Track Record Period.
The Company is incorporated in the Cayman Islands as an exempted company with limited liability under
the Companies Law of Cayman Islands and accordingly, is exempted from Cayman Islands income tax.
According to the policy promulgated by the State Bureau of the PRC, enterprises engaged in research and
development activities are entitled to claim an additional tax deduction amounting to maximin 75% of the
qualified research and development expenses incurred in determining its tax assessable profits for that year and
the additional tax deduction rate has been increased to 100% since year 2023 (the “Super Deduction”).
Guangzhou Shenghui is qualified to enjoy the Super Deduction during the Track Record Period. The research and
development expenditure of RMB14,260,000, RMB19,913,000 and RMB18,367,000, RMB8,694,000 and
RMB8,497,000 were recognised under general and administrative expenses for the years ended 31 December
2020, 2021 and 2022 and the six months ended 2022 and 2023 respectively.
APPENDIX I ACCOUNTANT’S REPORT
– I-34 –


--- page 446 ---
(b) The income tax expense for the Track Record Period can be reconciled to the profit before income
tax as follows:
Y ear ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Profit before income tax 38,502 45,551 39,868 18,443 17,427
Tax calculated at applicable
corporate income tax rate of
25% 9,626 11,388 9,967 4,611 4,357
Additional allowance under the
Super Deduction (2,674) (3,734) (3,736) (1,630) (2,124)
Preferential income tax rate
applicable to a subsidiary (2,312) (3,697) (3,635) (2,033) (1,451)
Effects of share of post-tax results
of associates (59) ––––
Tax losses not recognised 28 29 29 13 24
Expenses not deductible for
taxation purposes 2,581 1,644 2,854 2,090 1,313
7,190 5,630 5,479 3,051 2,119
As at 31 December 2020, 2021, 2022 and 30 June 2023, the Group did not recognise deferred income tax
assets in respect of tax losses of approximately RMB520,000, RMB634,000, RMB749,000 and RMB845,000,
respectively, that can be carried forward against future taxable income. Tax losses of group companies operated
in the PRC could only be carried forward for a maximum for five years from the year of incurrence.
13 DIVIDEND
On 6 January 2021, a dividend of RMB28,180,000 was declared and paid to the Controlling Shareholders by
Guangzhou Shenghui.
Saved as the abovementioned, no other dividend has been paid or declared by the companies now comprising the
Group to the equity holders of these companies during the Track Record Period.
APPENDIX I ACCOUNTANT’S REPORT
– I-35 –


--- page 447 ---
14 EARNINGS PER SHARE
(a) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to owners of the Company by the
weighted average number of ordinary shares in issue during the respective years/periods. In determining the
weighted average number of shares in issue during the years ended 31 December 2020, 2021 and 2022 and the
six months ended 30 June 2022 and 2023, the 1,000 shares issued during the year ended 31 December 2021 were
deemed to have been issued on 1 January 2020 as if the Company had been incorporated by then.
Y ear ended 31 December Six months ended 30 June
2020 2021 2022 2022 2023
(Unaudited)
Profit attributable to
owners of the
Company (RMB’000) 31,312 39,921 34,389 15,392 15,308
Weighted average
number of ordinary
shares in issue 1,000 1,000 1,000 1,000 1,000
Basic earnings per share
(RMB’000) 31.3 39.9 34.4 15.4 15.3
(b) Diluted earnings per share
Diluted earnings per share were the same as the basic earnings per share as there were no potentially
dilutive ordinary shares outstanding during the Track Record Period.
15 PROPERTY, PLANT AND EQUIPMENT
Building
Plant and
machinery
Motor
vehicles
Furniture,
fixtures,
and office
equipment Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Cost
At 1 January 2020 7,340 11,066 7,007 1,551 26,964
Additions – 3,651 504 176 4,331
Disposal – (1,151) (1,153) – (2,304)
At 31 December 2020 7,340 13,566 6,358 1,727 28,991
Additions 156 3,117 753 47 4,073
Disposal – – – (58) (58)
At 31 December 2021 7,496 16,683 7,111 1,716 33,006
Additions – 1,713 225 – 1,938
At 31 December 2022 7,496 18,396 7,336 1,716 34,944
Additions – 1,542 676 35 2,253
At 30 June 2023 7,496 19,938 8,012 1,751 37,197
APPENDIX I ACCOUNTANT’S REPORT
– I-36 –


--- page 448 ---
Building
Plant and
machinery
Motor
vehicles
Furniture,
fixtures,
and office
equipment Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Accumulated depreciation
At 1 January 2020 308 6,284 6,136 1,147 13,875
Charge for the year 348 1,689 341 168 2,546
Disposal – (1,151) (1,096) – (2,247)
At 31 December 2020 656 6,822 5,381 1,315 14,174
Charge for the year 349 2,164 442 191 3,146
Disposal – – – (55) (55)
At 31 December 2021 1,005 8,986 5,823 1,451 17,265
Charge for the year 356 2,391 326 129 3,202
At 31 December 2022 1,361 11,377 6,149 1,580 20,467
Charge for the period 178 1,229 184 33 1,624
At 30 June 2023 1,539 12,606 6,333 1,613 22,091
Net book amount
At 31 December 2020 6,684 6,744 977 412 14,817
At 31 December 2021 6,491 7,697 1,288 265 15,741
At 31 December 2022 6,135 7,019 1,187 136 14,477
At 30 June 2023 5,957 7,332 1,679 138 15,106
The Group had no property ownership certificates for the building with a net carrying amount of RMB6,389,000
as at 31 December 2020. The related property ownership certificates were obtained on 11 May 2021.
As at 31 December 2021, buildings with carrying amount of RMB6,220,000 were pledged to secure the bank
borrowing of the Group and the pledge was released after the bank borrowing was fully settled in March 2022 (Note
27).
Depreciation on property, plant and equipment is calculated using the straight-line method to allocate their cost
to their residual values over their estimated useful lives, as follows:
Building 20 years
Plant and machinery 3–10 years
Motor vehicles 4–5 years
Furniture, fixtures and office equipment 3 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting
period. See Note 34.7 for the other accounting policies relevant to property, plant and equipment.
APPENDIX I ACCOUNTANT’S REPORT
– I-37 –


--- page 449 ---
The deprecation expense for property, plant and equipment is charged to the consolidated statements of
comprehensive income as below:
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Cost of services 1,914 2,463 2,572 1,267 1,336
General and administrative
expenses 632 683 630 323 288
2,546 3,146 3,202 1,590 1,624
16 INVESTMENT PROPERTIES
Y ear ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Cost:
At beginning and end of the year/period 9,587 9,587 9,587 9,587
Accumulated depreciation:
At beginning of the year/period 1,538 2,055 2,572 3,089
Charge for the year/period 517 517 517 259
At end of the year/period 2,055 2,572 3,089 3,348
Net book value
At end of the year/period 7,532 7,015 6,498 6,239
The Group’s self-owned investment properties include land use rights and buildings which are situated in the
PRC with carrying amounts of RMB1,351,000, RMB1,240,000, RMB1,129,000 and RMB1,072,000 as at 31 December
2020, 2021 and 2022 and 30 June 2023 respectively. The fair value of the self-owned investment properties is
approximately RMB2,810,000, RMB3,050,000, RMB3,030,000 and RMB3,050,000 as at 31 December 2020, 2021 and
2022 and 30 June 2023 respectively.
APPENDIX I ACCOUNTANT’S REPORT
– I-38 –


--- page 450 ---
One of the investment properties was leased from an independent third party for 20 years and was sub-leased to
the related company/then related company of the Group for 8 years under operating leases with rentals payable on a
monthly basis. Details of the above-mentioned investment property and the related lease liabilities are as follows:
As at 31 December
As at
30 June
20232020 2021 2022
RMB’000 RMB’000 RMB’000 RMB’000
Carrying value 6,181 5,775 5,369 5,167
Fair value* 120 330 430 520
Lease liabilities arose from the leasing
arrangement 7,641 7,439 7,200 7,078
The fair value of the investment properties as at 31 December 2020, 2021 and 2022 and 30 June 2023 was
determined by reference to a valuation as carried out by Roma Appraisals Limited. Roma Appraisals Limited is an
independent firm of professional valuer not connected to the Group, who has appropriate qualifications and experience
in the valuation of investment properties in the relevant locations.
The fair value of the self-owned investment properties of the Group was derived by using direct comparison
approach. Direct comparison approach is based on assuming sales of the properties in its existing state by making
reference to comparable market transactions as available in the relevant market. Comparable properties with similar
sizes, characters and locations are analysed and weighed against all respective advantages and disadvantages of each
property in order to arrive at a fair comparison of value.
* The fair value of the leased investment property of the Group was derived by using income approach. It is
referred to the difference between the lease rent determined by the market and the rent agreed upon by the lessor and
the lessee in the lease period and arrived at the investment value for reference purpose. It is expected the investment
property will generate net rental income or cash inflows and therefore has no impairment indicator.
The fair value of the investment properties was in Level 3 of the fair value hierarchy as at 31 December 2020,
2021 and 2022 and 30 June 2023. There were no changes to the valuation technique during the Track Record Period.
Depreciation of investment properties is calculated using the straight-line method to allocate their costs over
their estimated useful lives of ranging from 13 years to 20 years. See Note 34.8 for the other accounting policies
relevant to investment properties.
Except for the depreciation of investment properties, no other direct operating expenses arising from investment
properties generating rental income are recognised for the years ended 31 December 2020, 2021 and 2022 and the six
months ended 30 June 2022 and 2023.
Depreciation of investment properties was charged to the “General and administrative expenses” in the
consolidated statements of comprehensive income.
APPENDIX I ACCOUNTANT’S REPORT
– I-39 –


--- page 451 ---
17 LEASES
As at 31 December
As at
30 June
20232020 2021 2022
RMB’000 RMB’000 RMB’000 RMB’000
(a) Right-of-use assets
– Leased building 3 7–––
– Leased machinery 10 3–––
1 4 0–––
Rental contracts are typically made for periods ranging from less than 12 months to 60 months. Payments
associated with short-term leases with a lease term of 12 months or less are recognised on a straight-line basis as an
expense in the consolidated statements of comprehensive income. There were no additions to right-of-use assets during
the Track Record Period.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. 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.
The total cash outflow of the lease contracts, including short term leases, are RMB1,716,000, RMB1,682,000,
RMB3,309,000, RMB1,593,000 and RMB1,717,000 for the years ended 31 December 2020, 2021 and 2022 and the six
months ended 30 June 2022 and 2023, respectively.
(b) Lease liabilities
The Group’s lease liabilities are primarily arisen from the lease-in of the properties for sub-lease purpose
as mentioned in Note 16.
A maturity analysis of lease liabilities is shown in the table below:
As at 31 December
As at
30 June
20232020 2021 2022
RMB’000 RMB’000 RMB’000 RMB’000
The present value of the maturity of
lease liabilities:
Within 1 year 715 668 676 684
Later than 1 year but not later than
2 years 628 636 659 667
Later than 2 years but not later than
5 years 1,737 1,787 1,823 1,846
Over 5 years 4,633 4,348 4,042 3,881
7,713 7,439 7,200 7,078
APPENDIX I ACCOUNTANT’S REPORT
– I-40 –


--- page 452 ---
Amounts recognised in the consolidated statements of comprehensive income:
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Depreciation charge of
right-of-use assets
(included in cost of
services and general
and administrative
expenses)
– Leased building 75 3 7–––
– Leased machinery 220 10 3–––
Interest expenses
(included in finance
cost) 458 441 427 224 216
Expenses relating to
short-term leases
(included in cost of
services and general
and administrative
expenses) 769 967 2,643 1,264 1,379
Interest expenses on lease liabilities is determined and recognised on the basis of the Group’s incremental
borrowing rate ranging from 5.8% to 6.3% per annum at initial recognition during the Track Record Period. The
Directors considered the Group’s incremental borrowing rate to be appropriate in view of the market environment
and economic conditions under which each leases operate. The carrying balances of the lease liabilities are
amortised to nil on the expiry dates of the leases.
18 INVESTMENTS IN ASSOCIATES
Y ear ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
At beginning of the year/period (Note) 1,22 2–––
Acquisition of associates 22 0–––
Share of net profit 23 6–––
Disposal of associates (1,678) – – –
At end of the year/period ––––
Note: The investment in associates as at 1 January 2020 comprised of the Group’s investments in the equity
interests in Guangzhou Pinwaipin Food Trading Co., Ltd. (ʮ̡ ), Jinan
Shenghui Cleanness Service Co., Ltd. (ʮ̡ ), Shaanxi Shenghui Cleanness Service
Co., Ltd. (ʮ̡ ) and Shandong Shenghui Cleanness Service Co., Ltd. (ʺሾ૶
ʮ̡ ) as to 40%, 40%, 25% and 40%, respectively.
APPENDIX I ACCOUNTANT’S REPORT
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All investments in associates were disposed during the year ended 31 December 2020 and hence, they
became the then related companies of the Group from 1 January 2021 onwards. Other than the disposal of
Guangzhou Pinwaipin Food Trading Co., Ltd. (ʮ̡ ) to Mr. Li at the
consideration of RMB500,000 with a minimal gain of approximately RMB1,000, the other associates were
disposed to the independent third parties with a loss in total of RMB175,000. The net loss on disposal of
investments in associates amounted to RMB174,000 was recognised in “other loss” in the consolidated
statements of comprehensive income for the year ended 31 December 2020.
19 DEFERRED INCOME TAX ASSETS
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets against current tax liabilities and when the deferred income taxes relate to the same taxation authority. The net
amounts are as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Deferred income tax assets 4,754 5,202 5,771 6,492
Deferred income tax liabilities (948) (866) (806) (775)
3,806 4,336 4,965 5,717
The movements in deferred income tax assets during the Track Record Period were as follows:
Allowance for
impairment of
receivables
Accrued
expenses Lease Total
RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2020 1,763 2,615 1,053 5,431
Charged to profit or loss (271) (301) (105) (677)
At 31 December 2020 1,492 2,314 948 4,754
Credited/(charged) to profit or loss 530 – (82) 448
At 31 December 2021 2,022 2,314 866 5,202
Credited/(charged) to profit or loss 629 – (60) 569
At 31 December 2022 2,651 2,314 806 5,771
Credited/(charged) to profit or loss 752 – (31) 721
At 30 June 2023 3,403 2,314 775 6,492
APPENDIX I ACCOUNTANT’S REPORT
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The movements in deferred income tax liabilities during the Track Record Period were as follows:
Lease Total
RMB’000 RMB’000
At 1 January 2020 1,053 1,053
Credited to profit or loss (105) (105)
At 31 December 2020 948 948
Credited to profit or loss (82) (82)
At 31 December 2021 866 866
Credited to profit or loss (60) (60)
At 31 December 2022 806 806
Credited to profit or loss (31) (31)
At 30 June 2023 775 775
Under the income tax laws in the PRC, withholding tax is imposed on dividend declared in respect of profit
earned by the PRC subsidiaries. As at 31 December 2020, 2021 and 2022 and 30 June 2023, the retained earnings of
the Group’s PRC subsidiaries not yet remitted to holding companies incorporated outside PRC, for which no deferred
income tax liability had been provided, were approximately RMB113,883,000, RMB125,624,000, RMB160,013,000 and
RMB175,321,000, respectively. Such earnings are expected to be retained by the PRC subsidiaries for reinvestment
purposes and would not be remitted to their overseas holding companies in the foreseeable future based on
management’s estimation of overseas funding requirements.
20 FINANCIAL INSTRUMENTS BY CATEGORY
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Financial assets
Financial assets at amortised cost:
Trade and other receivables, excluding
prepayments 158,030 189,966 228,210 252,685
Restricted bank deposits – 5,388 1,780 1,453
Cash and cash equivalents 67,437 52,191 54,722 49,858
225,467 247,545 284,712 303,996
Financial liabilities
Financial liabilities at amortised cost:
Trade and other payables, excluding
payroll, bonus and social insurance
payable and other tax payable 31,971 44,367 53,029 57,520
Lease liabilities 7,713 7,439 7,200 7,078
Bank borrowings – 10,010 – –
39,684 61,816 60,229 64,598
APPENDIX I ACCOUNTANT’S REPORT
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21 TRADE AND OTHER RECEIV ABLES AND PREPAYMENTS
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade receivables 142,358 175,591 220,774 251,957
Less: allowance for impairment (6,712) (9,088) (13,273) (18,186)
135,646 166,503 207,501 233,771
Deposits 14,760 16,089 14,971 13,489
Less: allowance for impairment (3,238) (4,214) (4,214) (4,214)
11,522 11,875 10,757 9,275
Less: deposits – non-current portion (5,410) (3,154) (4,809) (6,536)
Deposits – current portion 6,112 8,721 5,948 2,739
Other receivables
– Tendering deposits 5,044 2,051 3,174 4,464
Less: allowance for impairment – (179) (179) (282)
5,044 1,872 2,995 4,182
– Amounts due from related
companies/then related companies
(Note 30(b)) 7,136 111 – –
Less: allowance for impairment (7,113) – – –
2 3 1 1 1––
– Amounts due from Mr. Li
(Note 30(b)) 2,03 4–––
– Receivables from the provision of
construction labor service
(note a) 3,761 9,605 6,957 5,457
10,862 11,588 9,952 9,639
Prepayments on
– Utilities expenses 760 619 743 732
– Insurance expenses 2,071 1,555 1,170 510
– Deferred listing expenses (note b) 1,199 1,254 3,609 4,755
4,030 3,428 5,522 5,997
Trade and other receivables and
prepayment, net 156,650 190,240 228,923 252,146
Notes:
(a) Balance represented the amounts receivable arising from the provision of construction labor service and
the related income was recognised as other income (Note 7).
APPENDIX I ACCOUNTANT’S REPORT
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(b) Deferred listing expenses will be deducted from equity upon the issuance of new shares at the listing of
the Company.
(c) The carrying amounts of trade and other receivables are all denominated in RMB and approximate their
fair values.
(d) The aging analysis of the trade receivables based on invoice date was as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
0–60 days 104,346 134,254 154,862 163,734
61–180 days 25,132 24,591 28,698 36,031
181–365 days 4,008 9,616 26,245 35,763
1–2 years 4,986 3,084 7,289 10,123
2–3 years 2,079 3,118 2,149 3,420
3–4 years 1,807 928 1,531 2,886
142,358 175,591 220,774 251,957
(e) Impairment loss of the amount due from a related company/then related company of RMB1,682,000 were
recognised during the year ended 31 December 2020. No further provision was made for the years ended
31 December 2021 and 2022 and the six months ended 30 June 2022 and 2023. A reversal of impairment
loss of RMB1,198,000 was made for the year ended 31 December 2021. The reversal and the impairment
losses of financial assets for trade and other receivables of RMB3,531,000, were netted off and reflected
as a net impairment losses of RMB2,333,000 for the year ended 31 December 2021. The Group provided
expected credit losses prescribed by HKFRS 9. Further details are set out in Notes 3.1(iii) and 7(ii).
22 FINANCIAL ASSETS AT FAIR V ALUE THROUGH PROFIT OR LOSS
The Group did have certain investments in fund and wealth management products as of 1 January 2020 and
movements in these investments are as below:
Y ear ended 31 December
Six months
ended
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
At beginning of the year/period 4,13 0–––
Addition for the year/period 142,80 2–––
Changes in fair value for the
year/period (7,114) – – –
Disposal for the year/period (139,818) – – –
At end of the year/period ––––
The different levels of fair value measurement have been defined as follows:
– Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).
– Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).
APPENDIX I ACCOUNTANT’S REPORT
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– Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs)
(Level 3).
The investments in fund as at 1 January 2020 of RMB1,130,000 were financial instruments traded in active
markets and the fair value of which was determined based on quoted market prices. A market is regarded as active if
quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or
regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length
basis. The quoted market price used for this investment held by the Group was the current bid price. The instrument
was included in Level 1 of the fair value hierarchy. The investments were disposed during the year ended 31 December
2020.
As at 1 January 2020, the Group had also invested in a wealth management product as issued by bank in the PRC
with a fair value of RMB3,000,000 which expected investment income rates were ranging from 2% to 3% per annum.
The principals and returns on these wealth management product were not guaranteed, and therefore the Group
designated them as financial assets at fair value through profit or loss. The fair value was determined based on cash
flows discounted using the expected interest rate ranging from 2% to 3% per annum and was within Level 3 of the fair
value hierarchy which the estimation is based on unobservable inputs. The investment was disposed during the year
ended 31 December 2020.
During the year ended 31 December 2020, the Group acquired the investments in listed securities,
exchange-traded funds and open-ended funds which were traded in active markets. The fair value of the investments
was determined based on quoted market prices. The quoted market price used for these investments held by the Group
is the current bid price. The instrument is included in Level 1 of the fair value hierarchy. Part of the investments was
financing by other borrowings of RMB25,833,000 at the interest rate of 8.35% per annum. The other borrowings were
settled and the investments were disposed during the year ended 31 December 2020.
Realised and unrealised changes in fair value of these financial assets and disposal gain or loss are recognised in
“other loss” in the consolidated statements of comprehensive income (Note 8).
23 RESTRICTED BANK DEPOSITS AND CASH AND BANK BALANCES
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Restricted bank deposits – 5,388 1,780 1,453
Cash and cash equivalents
– Cash at banks and on hand 67,437 52,191 54,722 49,858
(a) All restricted bank deposits and cash and cash equivalents are mainly denominated in RMB throughout the
Track Record Period.
(b) Conversion of RMB into foreign currencies is subject to the Foreign Exchange Control in the PRC
throughout the Track Record Period.
(c) All bank balances carrying interest at variables rates with interests rates ranging from 0.20% to 0.35% per
annum throughout the Track Record Period.
(d) As at 31 December 2021 and 2022 and 30 June 2023, the restricted bank deposits of RMB1,328,000,
RMB1,780,000 and RMB1,453,000 respectively are held for the guarantee of the performance of the
Group’s provision of cleaning and maintenance services to customers.
APPENDIX I ACCOUNTANT’S REPORT
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(e) As at 31 December 2021, the restricted bank deposits of RMB4,060,000 were pledged to secure the bank
borrowing of the Group and the pledge was released after the related bank borrowings of RMB4,010,000
were fully settled in January 2022 (Note 27).
24 SHARE CAPITAL
Number of
ordinary shares
Nominal value
of shares
Equivalent
nominal value
of shares
HK$ RMB
Authorised
At 4 January 2021 (date of incorporation) and
31 December 2021 and 2022 and
30 June 2023 38,000,000 380,000 317,900
Issued and fully paid
2 share allotted and issued on the date of
incorporation 2 – –
998 shares allotted and issued in connection
with the Reorganisation (Note 1.2) 998 10 8
At 31 December 2021 and 2022 and
30 June 2023 1,000 10 8
25 RESERVES
Combined
capital *
Share
premium
Capital
reserves
(note c)
Retained
earnings
Statutory
reserves
(note d) Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2020 13,320 – (2,150) 85,111 11,692 107,973
Profit for the year – – – 31,312 – 31,312
Transfer from combined
capital to capital
reserves (note a) (500) – 50 0–––
Deemed contribution
from Controlling
Shareholders (note b) – – 2,150 – – 2,150
Appropriation of
statutory reserves – – – (2,540) 2,540 –
At 31 December 2020 12,820 – 500 113,883 14,232 141,435
APPENDIX I ACCOUNTANT’S REPORT
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Combined
capital *
Share
premium
Capital
reserves
(note c)
Retained
earnings
Statutory
reserves
(note d) Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
At 1 January 2021 12,820 – 500 113,883 14,232 141,435
Profit for the year – – – 39,921 – 39,921
Capital contribution from
a shareholder
(Note 1.2(i)) –– 2 4 7–– 2 4 7
Capital reduction of
a subsidiary
(Note 1.2(ii)) (12,320) –––– (12,320)
Issuance of shares
(Note 1.2(iv)) – 4,00 0––– 4,000
Transfer from combined
capital to capital
reserves (500) – 50 0–––
Deemed distribution to
Controlling
Shareholders
(Note 1.2(vii)) – – (2,460) – – (2,460)
Dividend paid to
Controlling
Shareholders (Note 13) – – – (28,180) – (28,180)
At 31 December 2021 – 4,000 (1,213) 125,624 14,232 142,643
At 1 January 2022 – 4,000 (1,213) 125,624 14,232 142,643
Profit for the year – – – 34,389 – 34,389
At 31 December 2022 – 4,000 (1,213) 160,013 14,232 177,032
At 1 January 2022
(Unaudited) – 4,000 (1,213) 125,624 14,232 142,643
Profit for the period – – – 15,392 – 15,392
At 30 June 2022 – 4,000 (1,213) 141,016 14,232 158,035
At 1 January 2023 – 4,000 (1,213) 160,013 14,232 177,032
Profit for the period – – – 15,308 – 15,308
At 30 June 2023 – 4,000 (1,213) 175,321 14,232 192,340
* Combined capital as at 31 December 2020 represents the combined capital of the companies now comprising
the Group after elimination of inter-company investments.
Notes:
(a) On 10 August 2020, Guangzhou Shenghui acquired Guangzhou Xinhui from Controlling Shareholders with
nil consideration. The share capital of Guangzhou Xinhui was transferred to capital reserves.
APPENDIX I ACCOUNTANT’S REPORT
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(b) As the Excluded Entities are not part of the Listing Business (Note 1.2), for the purpose of this Historical
Financial Information, the surplus or shortfall of the proceed of the disposal of the investments in
Excluded Entities over the investments in Excluded Entities are regarded as deemed
contribution/distribution from/to the Controlling Shareholders.
(c) The capital reserve represents the deemed contribution/distribution from/to Controlling Shareholders.
(d) In accordance with the relevant laws and regulations of the PRC and the Articles of Association of the
subsidiaries of the Group, when distributing the net profit of each year, the subsidiaries of the Group shall
reserve appropriate 10% of its profit after taxation (based on the local statutory financial statements) for
the statutory surplus reserve fund (except where the reserve balance has reached 50% of the Company’s
registered capital). As at 31 December 2021 and 2022 and 30 June 2023, the statutory reserve balances of
the PRC subsidiaries have already reached 50% of the registered capital of the respective PRC
subsidiaries.
26 TRADE AND OTHER PAYABLES
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Trade payables 28,482 32,672 31,511 30,818
Other payables
– Utility 182 388 388 533
– Listing expenses 2,810 3,611 5,959 8,688
– Amount due to Mr. Chen
(Note 30(b)) 180 1,405 1,405 1,405
– Amount due to Mr. Li (Note 30(b)) – 6,274 13,765 16,075
– Amount due to related companies/then
related companies (Note 30(b)) 317 17 1 1
– Payroll, bonus and social insurance
payables 53,779 49,755 52,006 52,912
– Other tax payable 3,642 4,613 6,720 7,531
60,910 66,063 80,244 87,145
Trade and other payables 89,392 98,735 111,755 117,963
APPENDIX I ACCOUNTANT’S REPORT
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The ageing analysis of trade payables based on the invoice date was as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
0–60 days 21,660 28,755 25,302 22,802
61–180 days 3,149 2,670 1,711 2,006
181–365 days 1,568 174 996 2,538
More than 1 year 2,105 1,073 3,502 3,472
28,482 32,672 31,511 30,818
The amounts due to Mr. Li, Mr. Chen and related companies/then related companies are unsecured, interest-free
and repayable on demand.
The carrying amounts of trade and other payables are denominated in RMB and are approximate their fair values.
27 BANK BORROWINGS
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Secured short-term bank borrowings due
within one year – 10,010 – –
The bank borrowings as at 31 December 2021 were all denominated in RMB and borne interests at the interest
rates ranging from 4.0% to 5.0% per annum and secured by the personal guarantee by the Controlling Shareholders.
As at 31 December 2021, buildings with carrying amount of RMB6,220,000 and the restricted bank deposits of
RMB4,060,000 were pledged to secure the bank borrowings of the Group.
The carrying amounts of the Group’s bank borrowings approximated their fair value as the impact of discounting
is not significant.
The pledge of restricted bank deposits of RMB4,060,000 was released after the related bank borrowings of
RMB4,010,000 were fully settled in January 2022. The pledge of buildings of RMB6,220,000 was also released after
the related bank borrowings of RMB6,000,000 were settled in March 2022. The personal guarantee by Controlling
Shareholders was released and no banking facilities were available to the Group as at 31 December 2022.
The Group has obtained banking facility of RMB20,000,000 which can be utilised by the Group during the
period from 10 March 2023 to 9 March 2024. The banking facility has not been utilised as at 30 June 2023.
APPENDIX I ACCOUNTANT’S REPORT
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28 NOTES TO CONSOLIDATED STATEMENTS OF CASH FLOWS
(a) Cash generated from operations
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Profit before income tax 38,502 45,551 39,868 18,443 17,427
Adjustments for
– Bank interest income (134) (92) (153) (109) (72)
– Dividend income (84) ––––
– Interest expenses 1,306 496 575 345 269
– Fair value losses on
financial assets at fair
value through profit or
loss 7,114 ––––
– Depreciation of property,
plant and equipment 2,546 3,146 3,202 1,590 1,624
– Depreciation of
right-of-use assets 295 14 0–––
– Depreciation of investment
properties 517 517 517 259 259
– Loss of disposal of
property, plant and
equipment 5 73–––
– Share of net profit of
associates (236) ––––
– Loss on disposal of
investments in
associates 17 4––––
– Impairment losses on
financial assets 4,580 3,531 4,185 1,905 5,016
– Reversal of impairment
losses on financial
assets – (1,198) – – –
Changes in working capital
– Trade and other receivables (41,304) (35,611) (44,525) (47,769) (29,966)
– Trade and other payables 15,031 2,618 7,269 2,122 4,264
Cash generated from/
(used in) operations 28,364 19,101 10,938 (23,214) (1,179)
APPENDIX I ACCOUNTANT’S REPORT
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(b) Reconciliation of liabilities from financing activities
This section sets out the movements in liabilities from financing activities:
Balances
with
Controlling
Shareholders
Balances
with related
companies
Bank
borrowings
Lease
liabilities Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
As at 1 January 2020 – 85 5,000 8,202 13,287
Cash flows 180 (23) (5,000) (947) (5,790)
Interest expenses – – – 458 458
As at 31 December 2020 and
1 January 2021 180 62 – 7,713 7,955
Cash flows 5,039 (62) 10,010 (715) 14,272
Interest expenses – – – 441 441
Deemed distribution to Controlling
Shareholders (Note 1.2(vii)) 2,46 0––– 2,460
As at 31 December 2021 and
1 January 2022 7,679 – 10,010 7,439 25,128
Cash flows 7,491 – (10,010) (666) (3,185)
Interest expenses – – – 427 427
As at 31 December 2022 and
1 January 2023 15,170 – – 7,200 22,370
Cash flows 2,310 – – (338) 1,972
Interest expenses – – – 216 216
As at 30 June 2023 17,480 – – 7,078 24,558
29 COMMITMENTS
The Group did not have any material capital commitments as at 31 December 2020, 2021 and 2022 and 30 June
2023.
The Group has future aggregate minimum lease receipts under non-cancellable operating leases in respect of
investment properties as follows:
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
No later than 1 year 891 848 848 2,288
Between 1 and 2 years 848 848 538 114
Between 2 and 3 years 848 538 – –
More than 3 years 53 8–––
3,125 2,234 1,386 2,402
APPENDIX I ACCOUNTANT’S REPORT
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30 RELATED PARTY TRANSACTIONS
The following transactions were carried out with related parties/companies:
(a) Transactions with related parties/companies
Related party transactions:
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
Notes RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Entity jointly controlled by
Controlling Shareholders
– Rental income* 7 1,15 4––––
– Late fee arising from
rental income* 7 1,24 1––––
– Travelling expenses 6 32 2 0–––
Entity controlled by Mr. Chen
– Short-term lease expenses 6 1 95–––
Controlling Shareholders
– Interest expenses 11 – 1 6–––
– Funds advance/repayment to
Controlling Shareholders 11,720 16,482 400 – –
– Funds advance from
Controlling Shareholders 13,237 23,555 7,891 4,967 2,310
The prices for the above service fees and other transactions were determined in accordance with the terms
mutually agreed by the contract parties.
* The related companies were disposed during the year ended 31 December 2020.
Leases
During the Track Record Period, the Group entered into lease agreements for leasing in land use
right and buildings with Guangzhou Pengsheng, the related company/then related company, which was
controlled by Controlling Shareholders. The leasing term was from 1 July 2016 to 30 June 2024. The total
contract amount was approximately RMB14,390,000. As at 31 December 2020, 2021 and 2022 and 30 June
2023, the carrying amount of the leased investment properties amounted to approximately RMB6,181,000,
RMB5,775,000, RMB5,369,000 and RMB5,167,000 and the related lease liabilities amounted to
approximately RMB7,641,000, RMB7,439,000, RMB7,200,000 and RMB7,078,000 respectively.
APPENDIX I ACCOUNTANT’S REPORT
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(b) Balances due from/(to) related parties/companies
As at 31 December
As at
30 June
2020 2021 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000
Entity jointly controlled by Controlling
Shareholders
Trade in nature and included in:
– Amounts due to related companies (5) (16) – –
Entity controlled by key management
of the Group
Trade in nature and included in:
– Amount due to related companies (247) – – –
Key management of the Group
Non-trade in nature and included in:
– Amounts due from/(to) Mr. Li 2,034 (6,274) (13,765) (16,075)
– Amounts due from related parties 7,13 6–––
Less: allowance for impairment (7,113) – – –
2 3–––
– Amounts due to Mr. Chen (180) (1,405) (1,405) (1,405)
Associates *
Trade in nature and included in:
– Amounts due to related companies (7) (1) (1) (1)
Non-trade in nature and included in:
– Amounts due to related companies (58) – – –
* The related companies were disposed during the year ended 31 December 2020.
Note: The balances with related parties/companies which are trade in nature mainly represent the
prepayment and trade payables for providing garbage collection and cleaning service to related
companies.
The balances with related parties/companies which are non-trade in nature mainly represent the
amount due from/(to) Mr. Li, the amount due to Mr. Chen and the amounts due from/(to) related
parties/companies.
The above amounts due from/(to) related companies/parties are unsecured, denominated in RMB,
interest-free and repayable on demand except for the funds advance to Mr. Li of RMB5,600,000
during the year ended 31 December 2020, which carried an interest of RMB12,600 and the funds
advance from Mr. Li of RMB11,750,000 during the year ended 31 December 2021 which carried an
interest rate of 0.36% per annum, which were both settled during the year ended 31 December 2021.
All the above balances will be waived before listing.
APPENDIX I ACCOUNTANT’S REPORT
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(c) Key management compensation
Key management includes directors and senior managements of the Group. The compensation paid or
payable to key management is shown below:
Y ear ended 31 December
Six months ended
30 June
2020 2021 2022 2022 2023
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(Unaudited)
Salaries, wages and
bonuses 1,315 1,694 1,480 1,007 1,076
Social insurance and
housing provident fund
contribution 245 273 273 191 210
1,560 1,967 1,753 1,198 1,286
31 NOTES TO THE STATEMENT OF FINANCIAL POSITION OF THE COMPANY
(a) Interests in subsidiaries
Interests in subsidiaries represents the deemed cost of investment in Guangzhou Xinhui amounting to
RMB108,881,000 (Note 1.2).
(b) Prepayment
The amount represents the deferred listing expenses to be deducted from equity upon the issuance of new
shares at the listing of the Company (Note 21(b)).
(c) Other payables
As at 31 December 2021 and 2022 and 30 June 2023, the amount mainly represents the listing expense
payable of approximately RMB3,611,000, RMB5,959,000 and RMB8,688,000 respectively, and the
amounts due to the Controlling Shareholders of RMB4,100,000, RMB11,990,000 and RMB14,300,000,
respectively, which are unsecured, interest-free, repayable on demand and will be waived before listing.
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(d) Movement of reserves of the Company
Share
premium
Other
reserves
(Note)
Accumulated
losses Total
RMB’000 RMB’000 RMB’000 RMB’000
At 4 January 2021 (date of
incorporation) ––––
Surplus arising on issue of share
in connection with the
Reorganisation – 108,881 – 108,881
Deemed distribution to
Controlling Shareholders
(Note 1.2(vii)) – (2,460) – (2,460)
Loss for the year – – (9,669) (9,669)
Issuance of shares (Note 1.2(iv)) 4,000 – – 4,000
At 31 December 2021 4,000 106,421 (9,669) 100,752
At 1 January 2022 4,000 106,421 (9,669) 100,752
Loss for the year – – (6,211) (6,211)
At 31 December 2022 4,000 106,421 (15,880) 94,541
At 1 January 2022 (Unaudited) 4,000 106,421 (9,669) 100,752
Loss for the period – – (6,838) (6,838)
At 30 June 2022 4,000 106,421 (16,507) 93,914
At 1 January 2023 4,000 106,421 (15,880) 94,541
Loss for the period – – (3,897) (3,897)
At 30 June 2023 4,000 106,421 (19,777) 90,644
Note: Other reserves of the Company represent the difference between the net asset value of the acquired
subsidiaries acquired by the Company over the nominal value of the share capital of the Company
issued in exchange thereof (Note 31(a)) and net off the deemed distribution to the Controlling
Shareholders of RMB2,460,000.
32 CONTINGENT LIABILITIES
The Group has no material contingent liabilities outstanding as at 31 December 2020, 2021 and 2022 and 30
June 2023.
33 SUBSEQUENT EVENTS
The Group does not have any material events after the Track Record Period which may require adjustments or
additional disclosure to this Historical Financial Information.
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34 SUMMARY OF OTHER ACCOUNTING POLICIES
34.1 Principles of consolidation and equity accounting
34.1.1 Subsidiaries
A subsidiary is an entity (including a structured entity) over which the Group has control. The
Group controls an entity when the Group is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the entity.
Subsidiaries are consolidated from the date on which control is transferred to the Group. They are
deconsolidated from the date that control ceases. Inter-company transactions, balances and unrealised gains
on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries, if any, are shown separately in the
consolidated statements of comprehensive income, consolidated statements of changes in equity and
consolidated statements of financial position respectively.
34.1.2 Associates
An associate is an entity over which the Group has significant influence but not control, generally
accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are
accounted for using the equity method of accounting after initially being recognised at cost.
34.1.3 Equity method
Under the equity method of accounting, interests in associates are initially recognised at cost and
adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses and movements
in other comprehensive income. When the Group’s share of losses in associates equals or exceeds its
interests in the associates (which includes any long-term interests that, in substance, form part of the
Group’s net investment in the associates), the Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the associates. Dividends received or receivable from
associates are recognised as a reduction in the carrying amount of the investment.
The Group determines at each reporting date whether there is any objective evidence that the
investment in the associates is impaired. If this is the case, the Group calculates the amount of impairment
as the difference between the recoverable amount of the associates and its carrying value and recognises
the amount adjacent to ‘share of net profit of associates’ in consolidated statements of comprehensive
income.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of
the Group’s interests in the associates. Unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the asset transferred. Accounting policies of the associates have
been changed where necessary to ensure consistency with the policies adopted by the Group.
34.1.4 Disposals of interest in subsidiaries and associates
When the Group ceases to consolidate or equity account for an investment because of a loss of
control or significant influence, any retained interest in the entity is re-measured to its fair value with the
change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the
purposes of subsequently accounting for the retained interest as an associate or financial asset. In addition,
any amounts previously recognised in other comprehensive income in respect of that entity are accounted
for as if the Group had directly disposed of the related assets or liabilities. It means the amounts
previously recognised in other comprehensive income are reclassified to profit or loss or transferred to
another category of equity as specified/permitted by applicable HKFRS.
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34.2 Business combinations
34.2.1 Non-common control business combinations
Acquisitions of businesses, other than business combination under common control, are accounted
for using the acquisition method. The consideration transferred in a business combination is measured at
fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the
Group, liabilities incurred by the Group to the former owners of the acquiree and the equity interests
issued by the Group in exchange for control of the acquiree. Acquisition-related costs are generally
recognised in profit or loss as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business
combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The
Group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis
either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net
identifiable assets.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any
non-controlling interests in the acquiree, if any, and the fair value of the acquirer’s previously held equity
interest in the acquiree (if any) over the net amount of the identifiable assets acquired and the liabilities
assumed as at acquisition date. If, after re-assessment, the net amount of the identifiable assets acquired
and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if
any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
Non-controlling interests that are present ownership interests and entitle their holders to a
proportionate share of the relevant subsidiary’s net assets in the event of liquidation may be initially
measured either at fair value or at the non-controlling interests’ proportionate share of the recognised
amounts of the acquiree’s identifiable net assets.
34.2.2 Merger accounting for business combination involving businesses under common control
The consolidated statements of comprehensive income includes the results of each of the combining
businesses from the earliest date presented or since the date when the combining businesses first came
under the common control, where this is a shorter period.
The comparative amounts in the Historical Financial Information are presented as if the Listing
Business had been consolidated at the beginning of the earliest reporting period or when they first came
under common control, whichever is shorter. The Historical Financial Information includes the entities that
were managed by management of the Listing Business during the years/periods presented. These activities
were consolidated with all intra-group balances and transactions eliminated within the Group.
34.3 Separate financial statements
Investments in subsidiaries are accounted for at cost less impairment. Cost also includes direct attributable
costs of investment. The results of the subsidiaries are accounted for by the Company on the basis of dividend
and receivable.
Impairment testing of the investments in the subsidiaries is required upon receiving dividends from these
investments if the dividend exceeds the total comprehensive income of the subsidiary in the year/period the
dividend is declared or if the carrying amount of the investment in the separate financial statements exceeds the
carrying amount in the Historical Financial Information of the investee’s net assets including goodwill.
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34.4 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker (“CODM”), who is responsible for allocating
resources and assessing performance of the operating segments, has been identified as the executive directors of
the Company that make strategic decisions.
34.5 Foreign currencies
(i) Functional and presentation currency
Items included in the financial statements of each of the group’s entities are measured using the
currency of the primary economic environment in which the entity operates (the “functional currency”).
The Historical Financial Information is presented in RMB, which is the Group and the Company’s
functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions or valuation where items are re-measured. Foreign exchange
gains and losses resulting from the settlement of such transactions and from the translation at year-end
exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit
or loss.
Foreign exchange gains and losses, if any, are presented in the consolidated statements of
comprehensive income within “General and administrative expenses”.
(iii) Group companies
The results and financial position of all the group entities (none of which has the currency of a
hyperinflationary economy) that have a functional currency different from the presentation currency are
translated into the presentation currency as follows:
(1) assets and liabilities for each statements of financial position presented are translated at the
closing rate at the date of that statements of financial position;
(2) income and expenses for each statements of comprehensive income are translated at average
exchange rates (unless this average is not a reasonable approximation of the cumulative effect
of the rates prevailing on the transaction dates, in which case income and expenses are
translated at the rate on the dates of the transactions); and
(3) all resulting exchange differences are recognised in other comprehensive income.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as
assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising
are recognised in other comprehensive income.
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34.6 Leases
The Group as a lessee
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the
leased asset is available for use by the Group. Assets and liabilities arising from a lease are initially
measured on a present value basis. Lease liabilities include the net present value of the following lease
payments:
 fixed payments (including in-substance fixed payments), less any lease incentives receivable;
 variable lease payments that are based on an index or a rate, initially measured using the
index or rate as at the commencement date;
 amounts expected to be payable by the Group under residual value guarantees;
 the exercise price of a purchase option if the Group is reasonably certain to exercise that
option; and
 payments of penalties for terminating the lease, if the lease term reflects the Group exercising
that option.
Payments associated with short-term leases are recognised on a straight-line basis as an expense in
the consolidated statements of comprehensive income. Short-term leases are leases with a lease term of 12
months or less.
Lease payments to be made under reasonably certain extension options are also included in the
measurement of the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be
readily determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing
rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to
obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar
terms, security and conditions.
The Group’s right-of-use assets consist of leases for building and machinery.
Right-of-use assets resulted from lease payments are stated at cost less accumulated depreciation and
accumulated impairment losses, if any. Cost represents consideration paid for the rights to use the assets
and other direct related costs from the date when the respective rights were granted. Depreciation of lease
payments is calculated on a straight-line basis over the lease terms as stated in the lease contracts and is
charged to profit or loss.
The Group as a lessor
Lease income from operating leases where the Group acts as the lessor is recognised on a
straight-line basis over the lease term. Initial direct costs incurred in obtaining the operating lease are
added to the carrying amount of the underlying asset and recognised as expenses over the lease term on
the same basis as lease income. The respective leased assets are included in the consolidated statements of
financial position based on their nature.
34.7 Property, plant and equipment
Property, plant and equipment are stated in the Historical Financial Information at historical cost less
subsequent accumulated depreciation and accumulated impairment losses, if any. Historical cost includes
expenditure that is directly attributable to the acquisition of the item.
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Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to the
Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is
derecognised. All other repairs and maintenance are charged to profit or loss during the financial period in which
they are incurred.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount (Note 34.9).
Gains and losses on disposal are determined by comparing the proceeds with the carrying amount and are
recognised within ‘other loss’ in the consolidated statements of comprehensive income.
34.8 Investment properties
Investment properties are interests in land and/or buildings in respect of which construction work and
development have been completed and which are held for long-term rental yields and are not occupied by the
Group. Investment properties are stated in the consolidated statements of financial position at cost less
accumulated depreciation and accumulated impairment, if any.
The gain or loss on disposal of an investment property is the difference between the net sales proceeds and
the carrying amount of the investment properties and is recognised in profit or loss.
34.9 Impairment of non-financial assets
Assets that have an indefinite useful life or intangible assets not ready to use are not subject to
amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. An impairment loss is recognised in profit or loss for the amount by which the carrying amount of
an asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs
to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash flows (cash generating units). Non-financial assets other than
goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
34.10 Financial assets
(i) Classification
The Group classifies its financial assets in the following measurement categories:
 those to be measured subsequently at fair value (either through other comprehensive income,
or through profit or loss), and
 those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the
contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or other
comprehensive income. For investments in debt instruments, this will depend on the business model in
which the investment is held. For investments in equity instruments, this will depend on whether the
Group has made an irrevocable election at the time of initial recognition to account for the equity
investment at fair value through other comprehensive income.
The Group reclassifies debt investments when and only when its business model for managing those
assets changes.
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(ii) Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which
the Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to
receive cash flows from the financial assets have expired or have been transferred and the Group has
transferred substantially all the risks and rewards of ownership.
(iii) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a
financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the
acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit
or loss are expensed in profit or loss.
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for
managing the asset and the cash flow characteristics of the asset. There are three measurement
categories into which the Group classifies its debt instruments:
 Amortised cost: Assets that are held for collection of contractual cash flows where
those cash flows represent solely payments of principal and interest are measured at
amortised cost. A gain or loss on a debt investment that is subsequently measured at
amortised cost and is not part of a hedging relationship is recognised in profit or loss
when the asset is derecognised or impaired. Interest income from these financial assets
is included in “other income, net” using the effective interest rate method.
 Fair value through other comprehensive income: Assets that are held for collection of
contractual cash flows and for selling the financial assets, where the assets’ cash flows
represent solely payments of principal and interest, are measured at fair value through
other comprehensive income (OCI). Movements in the carrying amount are taken
through OCI, except for the recognition of impairment gains or losses, interest revenue
and foreign exchange gains and losses which are recognised in profit or loss. When the
financial asset is derecognised, the cumulative gain or loss previously recognised in
OCI is reclassified from equity to profit or loss and recognised in “other loss”. Interest
income from these financial assets is included in “other income, net” using the effective
interest rate method.
 Fair value through profit or loss: Assets that do not meet the criteria for amortised cost
or financial assets at fair value through other comprehensive income are measured at
fair value through profit or loss. A gain or loss on a debt investment that is
subsequently measured at fair value through profit or loss and is not part of a hedging
relationship is recognised in profit or loss and presented net in “other loss” in the
period in which it arises. Dividend income from financial assets at fair value through
profit or loss is recognised in “other income, net” when the rights to receive payment
are established.
Equity instruments
The Group subsequently measures all equity investments at fair value through profit or
loss. Dividends from such investments were recognised in “other income, net” when the
Group’s right to receive payments is established.
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(iv) Impairment
The Group assesses on a forward-looking basis the expected credit losses associated with its debt
instruments carried at amortised cost and fair value through OCI. The impairment methodology applied
depends on whether there has been a significant increase in credit risk.
For trade receivables, the Group applies the simplified approach permitted by HKFRS 9, which
requires expected lifetime losses to be recognised from initial recognition of the receivables. Further
details are set out in Note 3.1 (iii).
34.11 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the consolidated statements of
financial position when there is a legally enforceable right to offset the recognised amounts and there is an
intention to settle on a net basis, or realise the assets and settle the liabilities simultaneously. The legally
enforceable right must not be contingent on future events and must be enforceable in the normal course of
business and in the event of default, insolvency or bankruptcy of the company or the counterparty.
34.12 Trade and other receivables
Trade receivables are amounts due from customer for services provided in the ordinary course of business.
Trade receivables are recognised initially at the amount of consideration that is unconditional unless they
contain significant financing components, when they are recognised at fair value. The Group holds the trade
receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at
amortised cost using the effective interest method. Further information about the Group’s accounting for trade
receivables and other receivables and a description of the Group’s impairment policies is set out in Note 21 and
Note 3.1 (iii) respectively.
If collection of trade and other receivables is expected in one year or less (or in the normal operating cycle
of the business if longer), they are classified as current assets. If not, they are presented as non-current assets.
34.13 Cash and cash equivalents
Cash and cash equivalents include cash on hand and at banks, deposits held at call with banks, other
short-term highly liquid investments with original maturities of three months or less.
34.14 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares
or options are shown in equity as a deduction, net of tax, from the proceeds.
34.15 Trade and other payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course
of business from suppliers. Trade and other payables are recognised initially at fair value and subsequently
measured at amortised cost using effective interest method. They are classified as current liabilities if payment is
due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented
as non-current liabilities.
34.16 Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are
subsequently carried at amortised cost. Any difference between the proceeds (net of transaction costs) and the
redemption value is recognised in profit or loss over the period of the borrowings using the effective interest
method.
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Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the
extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until
the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will
be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the
facility to which it relates.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer
settlement of the liability for at least 12 months after the end of the reporting period.
34.17 Borrowing costs
General and specific borrowing costs directly attributable to the acquisition, construction or production of
qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their
intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for
their intended use or sale.
Investment income earned on the temporary investment of specific borrowings pending their expenditure
on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
34.18 Contingent liabilities and contingent assets
A contingent liability is a possible obligation that arises from past events and whose existence will only be
confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the
control of the Group. It can also be a present obligation arising from past events that is not recognised because it
is not probable that an outflow of economic resources will be required or the amount of obligation cannot be
measured reliably.
A contingent liability is not recognised but is disclosed in the notes to the Historical Financial
Information. When a change in the probability of an outflow occurs so that the outflow is probable, it will then
be recognised as a provision.
A contingent asset is a probable asset that arises from past events and whose existence will be confirmed
only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of
the Group.
Contingent asset is not recognised but is disclosed in the notes to the Historical Financial Information
when an inflow of economic benefits is probable. When inflow is virtually certain, an asset is recognised.
34.19 Current and deferred income tax
The income tax expense or credit for the years is the tax payable on the current year’s taxable income
based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred income tax assets
and liabilities attributable to temporary differences and to unused tax losses. Current and deferred income tax is
recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in
equity, respectively.
(i) Current income tax
The current income tax charge is calculated on the basis of the tax laws enacted or substantively
enacted at the end of the reporting period in the PRC where the Group and its associates operate and
generate taxable income. Management periodically evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject to interpretation and establishes provisions where
appropriate on the basis of amounts expected to be paid to the tax authorities.
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(ii) Deferred income tax
Deferred income tax is provided in full, using the liability method, on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the Historical Financial
Information. However, the deferred income tax is not accounted for if it arises from initial recognition of
an asset or liability in a transaction other than a business combination that at the time of transaction
affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates and
laws that have been enacted or substantively enacted by the end of the reporting period and are expected
to apply when the related deferred income tax asset is realised or the deferred income tax liability is
settled.
Deferred income tax assets are recognised only if it is probable that future taxable amount will be
available to utilise those temporary differences and losses.
Deferred income tax liabilities and assets are not recognised for temporary differences between the
carrying amount and tax bases of investments in foreign operations where the companies are able to
control the timing of the reversal of the temporary differences and it is probable that the differences will
not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to
offset current tax assets against current tax liabilities and when the deferred income taxes assets and
liabilities relate to the same taxation authority. Current income tax assets and tax liabilities are offset
where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to
realise the asset and settle the liability simultaneously.
34.20 Employee benefits
(a) Pension obligations
The Group only operates defined contribution pension plans. In accordance with the rules and
regulations in the PRC, the PRC based employees of the Group participate in various defined contribution
retirement benefit plans organised by the relevant municipal and provincial governments in the PRC under
which the Group and the PRC based employees are required to make monthly contributions to these plans
calculated as a percentage of the employees’ salaries. The municipal and provincial governments undertake
to assume the retirement benefit obligations of all existing and future retired PRC based employees’
payable under the plans described above. Other than the monthly contributions, the Group has no further
obligation for the payment of retirement and other post-retirement benefits of its employees. The assets of
these plans are held separately from those of the Group in independently administrated funds managed by
the governments.
The Group’s contributions to the defined contribution retirement scheme are expensed as incurred.
(b) Housing funds, medical insurances and other social insurances
Employees of the Group in the PRC are entitled to participate in various government-supervised
housing funds, medical insurances and other social insurances. The Group contributes on a monthly basis
to these funds based on certain percentages of the salaries of the employees, subject to certain ceiling. The
Group’s liability in respect of these funds is limited to the contributions payable in each year.
Contributions to the housing funds, medical insurances and other social insurances are expensed as
incurred.
(c) Employee leave entitlements
Employee entitlements to annual leave are recognised when they accrue to employees. A provision is
made for the estimated liability for annual leave as a result of services rendered by employees up to the
end of the reporting period.
Employee entitlements to sick leave and maternity leave are not recognised until the time of leave.
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34.21 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past
events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has
been reliably estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the
likelihood of an outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the
obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks
specific to the obligation. The increase in the provisions due to passage of time is recognised as interest expense.
34.22 Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that
the grant will be received and the Group will comply with all attached conditions. Government grants relating to
costs are deferred and recognised in profit or loss over the period necessary to match them with the costs that
they are intended to compensate. Government grants relating to the purchase of assets are included in
non-current liabilities as deferred income and are credited to profit or loss on a straight-line basis over the
expected lives of the related assets.
34.23 Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in financial statements in
the period when the dividends are approved by the Company’s shareholders, where appropriate.
34.24 Related parties
(a) A person, or a close member of that person’s family, is related to the Group if that person:
(i) has control or joint control over the Group;
(ii) has significant influence over the Group; or
(iii) is a member of the key management personnel of the Group or the Company’s parent.
(b) An entity is related to the Group if any of the following conditions applies:
(i) The entity and the company are members of the same group (which means that each parent,
subsidiary and fellow subsidiary is related to the others).
(ii) One entity is an associate or a joint venture of the other entity (or an associate or a joint
venture of a member of a group of which the other entity is a member).
(iii) Both entities are joint ventures of the same third party.
(iv) One entity is a joint venture of a third entity and the other entity is an associate of the third
entity.
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(v) The entity is a post-employment benefit plan for the benefit of employees of either the Group
or an entity related to the Group.
(vi) The entity is controlled or jointly controlled by a person identified in (a) above.
(vii) A person identified in (a)(i) above has significant influence over the entity or is a member of
the key management personnel of the entity (or of a parent of the entity).
(viii) The entity, or any member of the company of which it is a part, provides key management
personnel services to the Company or to the Company’s parent.
Close members of the family of a person are those family members who may be expected to
influence, or be influenced by, that person in their dealings with the entity.
34.25 Interest income
Interest income is recognised on a time-proportion basis using the effective interest method.
34.26 Income from the provision of construction labor service
Income is recognised over time when the service is rendered to customers and stated net of the related
expenses as incurred.
III SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements have been prepared by the Company or any of the
companies now comprising the Group in respect of any period subsequent to 30 June 2023 and
up to the date of this report. Save as disclosed in Note 13 of this report, no dividend distribution
has been declared or made by the Company or any of the companies now comprising the Group
in respect of any period subsequent to 30 June 2023.
APPENDIX I ACCOUNTANT’S REPORT
– I-67 –


--- page 479 ---
The information set out in this Appendix II does not form part of the Accountant’ s Report
from PricewaterhouseCoopers, Certified Public Accountants, the reporting accountant of our
Company, as set out in Appendix I to this prospectus, and is included herein for illustrative
purpose only. The unaudited pro forma financial information should be read in conjunction with
the sections headed “Financial Information” and “Appendix I – Accountant’ s Report”.
UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET
TANGIBLE ASSETS
The following unaudited pro forma statement of adjusted consolidated net tangible assets of
our Group prepared in accordance with Rule 4.29 of the Listing Rules are set out below to
illustrate the effect of the Share Offer on the net tangible assets of our Group attributable to the
owners of the Company as at 30 June 2023 as if the Share Offer had taken place on 30 June
2023.
The unaudited pro forma adjusted consolidated net tangible assets has been prepared for
illustrative purposes only and because of its hypothetical nature, it may not give a true picture of
the consolidated net tangible assets of the Group as at 30 June 2023 or at any future dates
following the Share Offer.
Audited
consolidated
net tangible
assets
attributable
to owners of
the Company
as at 30 June
2023
(Note 1)
Estimated net
proceeds
from the
Share Offer
(Note 2)
Unaudited
pro forma
adjusted
consolidated
net tangible
assets
attributable
to owners of
the Company
as at 30 June
2023
Unaudited pro forma
adjusted consolidated net
tangible assets per Share
(Note s3&4 )
RMB’000 RMB’000 RMB’000 RMB HK$
Based on an Offer Price of
HK$0.32 per Share 192,340 86,436 278,776 0.17 0.19
Based on an Offer Price of
HK$0.40 per Share 192,340 111,275 303,615 0.19 0.21
Notes:
(1) The audited consolidated net tangible assets attributable to owners of the Company as at 30 June 2023 is
extracted from the Accountant’s Report set out in Appendix I to this prospectus, which is based on the
audited consolidated equity attributable to owners of the Company as at 30 June 2023 of approximately
RMB192,340,000.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-1 –


--- page 480 ---
(2) The estimated net proceeds from the Share Offer are based on 373,750,000 Shares and the indicative Offer
Price of HK$0.32 and HK$0.40 per Share after deduction of the estimated underwriting fees and other
related listing expenses payable by us (excluding listing expenses of RMB20,761,000 which has been
accounted for in the consolidated statements of comprehensive income up to 30 June 2023).
(3) The unaudited pro forma net tangible assets per Share is arrived at after the adjustments referred to in the
preceding paragraphs and on the basis that 1,625,000,000 Shares were in issue assuming that the Share
Offer has been completed on 30 June 2023 but takes no account of any Shares which may be issued upon
exercise of any options which may be granted under the Share Option Scheme, or any Shares which may
be allotted and issued or repurchased by the Company pursuant to the general mandates granted to the
Directors to allot and issue or repurchase Shares as described in the section headed “Share capital” of this
prospectus.
(4) The unaudited pro forma adjusted consolidated net tangible assets per Share is converted into Hong Kong
dollars at an exchange rate of RMB0.8933 to HK$1.00. No representation is made that Renminbi amounts
have been, could have been or may be converted into Hong Kong dollars, or vice versa, at that rate.
(5) No adjustment has been made to the unaudited pro forma adjusted consolidated net tangible assets to
reflect any trading results or other transactions of the Group entered into subsequent to 30 June 2023.
(6) As at 31 August 2023, the Group’s property interests were valued by Roma Appraisals Limited, an
independent property valuer, and the full text of the valuation report with regard to such property interests
is set out in Appendix III to this prospectus. The valuation surplus as at 31 August 2023, representing the
excess of market value of the Group’s property interests over its book value, was approximately
RMB2,017,000 and nil for property No. 1 and property No. 2, respectively. Such valuation surplus has not
been included in the Group’s consolidated financial statements as at 30 June 2023. The above adjustments
do not take into account the valuation surplus. Had the property interest for property No. 1 been stated at
such valuation, additional depreciation of RMB227,000 per annum would be charged against the
consolidated statement of comprehensive income.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-2 –


--- page 481 ---
The following is the text of a report received from PricewaterhouseCoopers, Certified
Public Accountants, Hong Kong, for the purpose of incorporation in this prospectus.
INDEPENDENT REPORTING ACCOUNTANT’S ASSURANCE REPORT ON THE
COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION
To the Directors of Shenghui Cleanness Group Holdings Limited
We have completed our assurance engagement to report on the compilation of unaudited
pro forma financial information of Shenghui Cleanness Group Holdings Limited (the
“Company ”) and its subsidiaries (collectively 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 net tangible assets of the
Group as at 30 June 2023, and related notes (the “ Unaudited Pro Forma Financial
Information ”) as set out on pages II-1 to II-2 of the Company’s prospectus dated 27 November
2023, in connection with the proposed initial public offering of the shares of the Company (the
“Prospectus ”). The applicable criteria on the basis of which the Directors have compiled the
Unaudited Pro Forma Financial Information are described on pages II-1 to II-2 of the
Prospectus.
The Unaudited Pro Forma Financial Information has been compiled by the Directors to
illustrate the impact of the proposed initial public offering on the Group’s financial position as
at 30 June 2023 as if the proposed initial public offering had taken place at 30 June 2023. As
part of this process, information about the Group’s financial position has been extracted by the
Directors from the Group’s financial information for the six months ended 30 June 2023, on
which an accountant’s report has been published.
Directors’ Responsibility 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 Governing 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 Information for Inclusion in Investment
Circulars, (“AG 7 ”) issued by the Hong Kong Institute of Certified Public Accountants
(“HKICPA ”).
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 due care, confidentiality and
professional behaviour.
  PricewaterhouseCoopers, 22/F Prince's Building, Central, Hong Kong SAR, China
  T: +852 2289 8888, F: +852 2810 9888, www.pwchk.com
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-3 –


--- page 482 ---
Our firm applies Hong Kong Standard on Quality Management (HKSQM) 1, Quality
Management for Firms that Perform Audits or Reviews of Financial 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 or procedures
regarding compliance with ethical requirements, professional standards and applicable legal and
regulatory requirements.
Reporting Accountant’s 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 and 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 accountant plans and performs procedures to obtain reasonable assurance about
whether the Directors have compiled the Unaudited Pro Forma Financial Information in
accordance with 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 a prospectus is solely
to illustrate the impact of a significant event or transaction on unadjusted financial information
of the entity 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 proposed initial public offering at 30 June 2023 would have been as
presented.
A reasonable assurance engagement to report on whether the unaudited pro forma financial
information has been properly 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 transaction, and to obtain
sufficient appropriate evidence about whether:
 The related pro forma adjustments give appropriate effect to those criteria; and
 The unaudited pro forma financial information reflects the proper application of those
adjustments to the unadjusted financial information.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-4 –


--- page 483 ---
The procedures selected depend on the reporting accountant’s judgment, having regard to
the reporting accountant’s understanding of the nature of the company, 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 Financial Information has been properly compiled by the
Directors on the basis stated;
(b) such basis is consistent with the 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.
PricewaterhouseCoopers
Certified Public Accountants
Hong Kong, 27 November 2023
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-5 –


--- page 484 ---
The following is the text of a valuation report prepared for the purpose of incorporation in
this prospectus received from Roma Appraisals Limited, an independent valuer , in connection
with its valuations as at 31 August 2023 of certain properties held and leased by the Group.
Rooms 1101– 4, 11/F Harcourt House
39 Gloucester Road, Wan Chai, Hong Kong
Tel (852) 2529 6878 Fax (852) 2529 6806
E-mail info@romagroup.com
http://www.romagroup.com
27 November 2023
Shenghui Cleanness Group Holdings Limited
3/F, Office Block
36 Xinguang Road
Xinzao Town
Panyu District
Guangzhou
the PRC
Dear Sir/Madam,
Re: Valuation of various properties interests situated in the People’s Republic of China
In accordance with your instructions for us to value certain properties held or leased by
Shenghui Cleanness Group Holdings Limited the (“ Company ”) and/or its subsidiaries (together
with the Company referred to as the “ Group ”) in the People’s Republic of China (the “ PRC ”),
we confirm that we have carried out inspections, made relevant enquiries and obtained such
further information as we consider necessary for the purpose of providing you with our opinion
of the market values of the properties as at 31 August 2023 (the “ Date of Valuation ”) for the
purpose of incorporation in the prospectus of the Company dated 27 November 2023.
BASIS OF V ALUATION
Our valuations of the properties are our opinion of the market values of the concerned
properties which we would define as intended to mean “the estimated amount for which an asset
or liability should exchange on the valuation date between a willing buyer and a willing seller in
an arm’s-length transaction, after proper marketing and where the parties had each acted
knowledgeably, prudently and without compulsion”.
Market value is understood as the value of an asset or liability estimated without regard to
costs of sale or purchase (or transaction) and without offset for any associated taxes or potential
taxes.
APPENDIX III PROPERTY V ALUATION REPORT
– III-1 –


--- page 485 ---
V ALUATION METHODOLOGY
For property No. 1, we have valued the properties by the direct comparison approach
assuming sale or asking prices of the properties in its existing state with the benefit of vacant
possession and by making reference to comparable sales transactions as available in the relevant
market. Comparison is based on the considerations realised on actual or asking transactions of
comparable properties. Comparable properties with similar sizes, characters and locations are
analysed and carefully weighed against all respective advantages and disadvantages of each
property in order to arrive at a fair comparison of value.
For property No. 2, we have attributed no commercial value to the property interests which
are leased by the Group. Due to the long term nature of the lease, we have considered and
capitalised the potential of profit rent which is the difference between the lease rent determined
by the market and the rent agreed upon by the lessor and the lessee in the lease period and
arrived at the investment value for reference purpose.
TITLE INVESTIGATION
For the properties in the PRC, we have been shown copies of extracts of various title
documents and have been advised by the Group that no further relevant documents have been
produced. Furthermore, due to the nature of the land registration system in the PRC, we have not
been able to examine the original documents to verify ownership or to ascertain the existence of
any amendment documents, which may not appear on the copies handed to us. We have relied on
the information given by the Group and advice given by its PRC legal advisors, China
Commercial Law Firm (הregarding the titles of the properties in the PRC.
We have also relied on the advice given by the Group that the Group has valid and
enforceable titles to the properties which are freely transferable, and have free and uninterrupted
right to use the same, for the whole of the unexpired term granted subject to the payment of
annual government rent/land use fees and all requisite land premium/purchase consideration
payable have been fully settled.
V ALUATION ASSUMPTIONS
Our valuations have been made on the assumption that the owners sell the properties in the
market in their existing states without the benefit of deferred term contracts, leasebacks, joint
ventures, management agreements or any similar arrangements which would serve to affect the
values of such properties. In addition, no account has been taken of any option or right of
pre-emption concerning or affecting the sale of the properties and no allowance has been made
for the properties to be sold in one lot or to a single purchaser.
APPENDIX III PROPERTY V ALUATION REPORT
– III-2 –


--- page 486 ---
SOURCE OF INFORMATION
In the course of our valuations, we have relied to a very considerable extent on the
information provided by the Group and have accepted advice given to us on such matters as
planning approvals or statutory notices, easements, tenure, identification of properties,
particulars of occupation, site/floor areas, ages of buildings and all other relevant matters which
can affect the values of the properties. All documents have been used for reference only.
We have no reason to doubt the truth and accuracy of the information provided to us. We
have also been advised that no material facts have been omitted from the information supplied.
We consider that we have been provided with sufficient information to reach an informed view,
and have no reason to suspect that any material information has been withheld.
V ALUATION CONSIDERATION
We have inspected the exterior and, where possible, the interior of certain properties. No
structural survey has been made in respect of the properties. However, in the course of our
inspections, we did not note any serious defects. We are not, however, able to report that the
properties are free from rot, infestation or any other structural defects. No tests were carried out
on any of the building services.
We have not carried out on-site measurement to verify the site/floor areas of the properties
under consideration but we have assumed that the site/floor areas shown on the documents
handed to us are correct. Except as otherwise stated, all dimensions, measurements and areas
included in the valuation certificates are based on information contained in the documents
provided to us by the Group and are therefore approximations.
No allowance has been made in our valuations for any charges, mortgages or amounts
owing on the properties 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 could affect their values.
Our valuation is prepared in compliance with the requirements set out in Chapter 5 and
Practice Note 12 of the Rules Governing the Listing of Securities on The Stock Exchange of
Hong Kong Limited, and in accordance with the RICS V aluation – Global Standards published
by the Royal Institution of Chartered Surveyors and the International V aluation Standards
published by the International V aluation Standards Council.
APPENDIX III PROPERTY V ALUATION REPORT
– III-3 –


--- page 487 ---
REMARKS
Unless otherwise stated, all monetary amounts stated in our valuations are in Renminbi
(RMB).
Our Summary of V alues and V aluation Certificates are attached.
Y ours faithfully,
For and on behalf of
Roma Appraisals Limited
Frank F Wong
BA (Business Admin in Acct/Econ) MSc (Real Est)
MRICS Registered V aluer MAusIMM ACIPHE
Director , Head of Property and Asset V aluation
Note: Mr. Frank F Wong is a Chartered Surveyor, Registered V aluer, Member of the Australasian Institute of Mining &
Metallurgy and Associate of Chartered Institute of Plumbing and Heating Engineering who has 24 years’
valuation, transaction advisory and project consultancy of properties experience in Hong Kong and 16 years’
experience in valuation of properties in the PRC as well as relevant experience in the Asia-Pacific region,
Australia and Oceania-Papua New Guinea, France, Germany, Czech Republic, Austria, Poland, United Kingdom,
Canada, United States, Abu Dhabi (UAE) and Jordan.
APPENDIX III PROPERTY V ALUATION REPORT
– III-4 –


--- page 488 ---
SUMMARY OF V ALUES
No. Property
Market Value
in Existing State
as at 31 August
2023
Property held by the Group for investment purpose in the PRC
1. Unit Nos.2101, 2102, 2106 and 2107,
No.81 Xian Lie Middle Road, Y uexiu District,
Guangzhou City, Guangdong province, the PRC
ᄿψ̹൳Ӹਜ΋डʕ༩ 81໮
2101, 2102, 2106 ʿ2107܃
RMB3,070,000
Property leased by the Group in the PRC
2. No.36 Xinguang Road, Xinzao Town,
Panyu District, Guangzhou City,
Guangdong province, the PRC
ਜอிᕄ
อᄿ༩ 36໮
No commercial
value
APPENDIX III PROPERTY V ALUATION REPORT
– III-5 –


--- page 489 ---
V ALUATION CERTIFICATE
Property held by the Group for investment purpose in the PRC
No. Property Description and Tenure
Particulars of
Occupancy
Market Value in
Existing State as at
31 August 2023
1. Unit Nos. 2101, 2102,
2106 and 2107, No. 81
Xian Lie Middle Road,
Y uexiu District,
Guangzhou City,
Guangdong province,
the PRC
ʕ਷
޲؇
ᄿψ̹
൳Ӹਜ΋डʕ༩ 81໮
2101, 2102, 2106 ʿ
2107܃
The property comprises 4 office
units on 21-storey and a carpark on
basement 1-storey, the office
building completed on 2011.
The property has a total gross floor
area (“ GFA”) of approximately
151.1013 sq.m..
The land use rights of the property
have been granted for a term of 50
years expiring on 30 August 2057
for office use.
The property is
subject to a tenancy,
the details please
refer to Note No. 2.
RMB3,070,000
Notes:
1. Pursuant to 4 Real Property Ownership Certificates, Y ue (2021) Guangzhou Real Estate Property Nos. 00017431,
00017434, 00017435 and 00017438 ( ຽ(2021) ᄿψ̹ʔਗପᛆୋ 00017431 ໮e 00017434 ໮e 00017435 ໮ʿ
00017438 ໮), issued by the Guangzhou Municipal Planning and Natural Resources Bureau ( ᄿψ̹஝ྌձІ್༟
๕҅), the property with a total GFA of approximately 151.1013 sq.m. is legally held by Guangzhou Shenghui
Cleaning Service Co., Ltd. (“ Guangzhou Shenghui ”) (ʮ̡ ).
2. Pursuant to a tenancy agreement made between Guangzhou Shenghui as lessor and Guangzhou Jianyin
Engineering Cost Consulting Co., Ltd. (“ Guangzhou Jianyin ”) (ʮ̡ ), an
independent third party, as lessee, Unit Nos.2101, 2102, 2106, 2107 of the property with a total GFA of
approximately 151.10 sq.m is leased, with a monthly rent of RMB20,000 for a term commencing from 1 January
2020 to expiring on 31 December 2024.
3. The site inspection was performed by Ms. Vinci Qijin Hou, MSc, with about 7 years property valuation
experience, in October 2020.
4. We have been provided with a legal opinion on the title to the property issued by the Group’s PRC legal
advisers, which contains, inter-alia , the following information:
a. Guangzhou Shenghui has obtained the title certificate of the property and is in possession of a proper legal
title to the property;
b. The tenancy mentioned above was registered on 11 December 2020 which was later than the required date.
As the Lease registration has been completed, there is no risk that Guangzhou Shenghui will receive a
penalty from the government.
APPENDIX III PROPERTY V ALUATION REPORT
– III-6 –


--- page 490 ---
V ALUATION CERTIFICATE
Property leased by the Group in the PRC
No. Property Description and Tenure
Particulars of
Occupancy
Market Value in
Existing State as at
31 March 2023
2. No.36 Xinguang Road,
Xinzao Town,
Panyu District,
Guangzhou City,
Guangdong province,
the PRC
ʕ਷
޲؇
ᄿψ̹
ਜอிᕄ
อᄿ༩ 36໮
The property comprises a parcel of
land with a total site area of
approximately 10,213.78 sq.m., and
2 industrial buildings and an office
building erected thereon completed
on 2010.
The property has a total gross floor
area (“ GFA”) of approximately
3,122.12 sq.m..
The land use rights of the property
have been granted for terms of 50
years commencing on 22 November
2002 for industrial and office uses.
The property is
subject to 2 tenancies,
the details, refer to
Note Nos. 2, 3 and 4.
No Commercial V alue
Notes:
1. Pursuant to 3 Real Estate Title Certificates, Y ue Fang Di Quan Zheng Sui Zi Di Nos.0210195531, 0210195532,
and 0210195527 (ήᛆᗇᐦοୋ 0210195531 ໮e0210195532 ໮ʿ0210195527 ໮) issued by the Guangzhou
City Land Resources and Housing Administration, the property with a total site area of approximately 10,213.78
sq.m. and a total GFA of 3,122.12 sq.m. is legally held by Guangzhou City Panyu District Xinzao Town Real
Estate Development Company (“ Xinzao Real Estate ”) (ήପක೯ʮ̡ ).
2. Pursuant to Land Use Right Lease Contract between Xinzao Real Estate, an independent third party, as lessor and
Guangzhou Shenghui Cleaning Service Co., Ltd. (“ Guangzhou Shenghui ”) (ʮ̡ )a s
lessee dated on 21 April 2016, the property with site area of approximately 10,213.78 sq.m. is leased for a term
of 20 years commencing on 1 April 2016 and expiring on 31 March 2036 with monthly rent of RMB51,068.90.
The rent free period is 6 months and rental to increase by 5% every 2 years.
3. Pursuant to Sub-Lease Tenancy Agreement between Guangzhou Shenghui as sub-lessor and Guangzhou
Pengsheng Sports Development Co., Ltd. (“ Guangzhou Pengsheng ”) (ʮ̡ ), which the
Group previously held a majority interest in prior to its disposal on October 2020 to an independent third party,
as sub-lessee dated on 23 June 2016, the property with site area of approximately 10,000 sq.m. is leased for a
term of 8 years commencing on 1 July 2016 and expiring on 30 June 2024 with monthly rent of RMB86,000. The
rent free period is 4 months and rental to increase by 10% every 2 years.
4. As per supplementary agreement signed by Guangzhou Shenghui and Guangzhou Pengsheng dated on 1 February
2021, to clarify the leasing area on 3rd floor of the office building of the property was excluded from the
Sub-Lease Tenancy Agreement. The leased portion of the property will be changed and excluded the office
building, industrial building No.1, road of the property and carpark space. The monthly rent is revised to
RMB51,600.
APPENDIX III PROPERTY V ALUATION REPORT
– III-7 –


--- page 491 ---
5. The site inspection was performed by Ms. Vinci Qijin Hou, MSc, with about 7 years property valuation
experience, in October 2020.
6. In the valuation of this property, we have attributed no commercial value to the property which are leased by the
Group. However, for reference purpose, we are of the opinion that the investment value as at the date of
valuation would be RMB530,000. This is assuming potential profit from the rent is capitalised which is the
difference between the lease rent paid and the sub-lease rent received over a long-term period of the lease.
7. We have been provided with a legal opinion on the title to the property issued by the Company’s PRC legal
advisors, which contains, inter-alia , the following information:
In respect of the Land Use Right Lease Contract entered into between Xinzao Real Estate and Guangzhou
Shenghui, except for the difference area issue as disclosed hereafter:
a. As per supplementary agreement signed by Xinzao Real Estate and Guangzhou Shenghui dated on 28 June
2017, Guangzhou Shenghui could redevelopment the dormitory building. Xinzao Real Estate issued the
Information Note (׼dated on 9 February 2021, which confirmed that the dormitory building was
not actually built.
b. Pursuant to Information Note mentioned above, Xinzao Real Estate confirmed they have noticed that
portion of the property is leased to Guangzhou Pengsheng and Guangzhou Pengsheng has changed the
usage of the property. Xinzao Real Estate will not pursue the legal responsibility against Guangzhou
Shenghui.
c. Pursuant to a building assessment report dated 15 June 2021, the buildings of workshop 1, workshop 2,
passageway of zinc shed, guard room, utility room and security room, located at No. 36, Xinguang Road,
Xinzao Town, Panyu District, Guangzhou, are generally in good condition and safe for operation.
d. The Land Use Right Lease Contract is lawful, enforceable and legally binding on the signing parties.
In respect of the Sub-Lease Tenancy Agreement entered into between Guangzhou Shenghui and Guangzhou
Pengsheng, except for the difference area issue as disclosed hereafter:
e. Guangzhou Pengsheng issued the Information Note (׼dated on 8 February 2021 that Guangzhou
Pengsheng will bear the liability caused by the change of usage from industrial to sport training.
APPENDIX III PROPERTY V ALUATION REPORT
– III-8 –


--- page 492 ---
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 Islands company law.
The Company was incorporated in the Cayman Islands as an exempted company with
limited liability on 4 January 2021 under the Companies Act. The Company’s constitutional
documents consist of its Memorandum of Association and its Articles of Association
Memorandum Articles of Association.
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 will not trade in the Cayman Islands with any person, firm or corporation
except in furtherance of the business of the Company carried on outside the Cayman
Islands.
(b) The Company may by special resolution alter its Memorandum with respect to any
objects, powers or other matters specified therein.
2. ARTICLES OF ASSOCIATION
The Articles were conditionally adopted on 14 November 2023 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) V ariation 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 meeting
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the provisions of the Articles relating to general meetings will mutatis mutandis apply,
but so that the necessary quorum (including at an adjourned or postponed 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 and at any adjourned or postponed
meeting two holders present in person or by proxy (whatever the number of shares
held by them) shall be a quorum. Every holder of shares of the class shall be entitled
to one vote for every such share held by him.
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 creation 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 by 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 and attach to such shares any
preferential, deferred, qualified or special rights, privileges, conditions or
restrictions as the Company in general meeting or as 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 clearing 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.
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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 (the
“Listing Rules ”) that are or shall be applicable to such listed shares. The register 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 Listing Rules that are or shall be applicable to
such listed shares.
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 transferee 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 any share on any branch register to the
principal 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 certificate(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
other 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 announcement or by electronic communication or by advertisement in any
newspaper or by any other means in accordance with the requirements of the Stock
Exchange, at such 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 thirty (30) days may be extended for a further period or
periods not exceeding thirty (30) days in respect of any year if approved by the
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.
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(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 requirements imposed from
time to time by the Stock Exchange.
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.
(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 instalments. 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 instalments 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 interest 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 not 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.
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A person whose shares have been forfeited shall cease to be a member in respect
of the forfeited shares but shall, notwithstanding, 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 number 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 three years. The
Directors to retire by rotation shall include any Director who wishes to retire 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-election or appointment but as between
persons who 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 existing board. Any Director 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;
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(cc) without special leave, he is absent 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 hold 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 may from time to time revoke such delegation or revoke the appointment of and
discharge any such committees either wholly or in part, and either as to persons or
purposes, but every committee 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 issue 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 securities or securities 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 Listing Rules 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.
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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 territory 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 Articles relating to the disposal of the
assets of the Company or any of its subsidiaries. The Directors 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.
(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 board 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 remuneration shall be in addition to or in substitution for
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any ordinary remuneration as a Director. An executive Director appointed to be a
managing director, joint managing director, deputy managing director or other
executive officer shall receive such remuneration and such other benefits and
allowances as the board may from time to time decide. Such remuneration may be
either in addition to or in lieu of his remuneration as a Director.
The board may establish or concur or join with other companies (being
subsidiary 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 agreements 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 become 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.
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 fund (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.
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(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 consideration 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 prohibited 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 officer 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 received 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 held or owned by the Company to be exercised in such manner in all
respects as it thinks fit, including 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.
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 contracting 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 Director 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
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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 associate(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 or 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 shares 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 interested 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
(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 Company or
any of its subsidiaries and does not provide in respect of any Director,
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;
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(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 or postpone 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 chairman of the
meeting shall have an additional or casting vote.
(d) Alterations to constitutional documents and the Company’s name
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.
(ii) V oting rights and right to demand a poll
Subject to any special rights or restrictions as to voting for the time being
attached to any shares, at any general meeting on a poll every member present in
person or by proxy or, in the case of a member being a corporation, by its duly
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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 instalments 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 to the vote of the meeting is to be
decided by way of a poll save that in the case of a physical meeting, 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 person (or being a corporation, is present by a duly authorised
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. V otes (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 thinks 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 present in
person at any such meeting if a person so 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 fit 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 Listing
Rules, 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 contravention of such requirement
or restriction shall not be counted.
(iii) Annual general meetings and extraordinary general meetings
The Company must hold an annual general meeting of the Company every
financial year and such general meeting must be held within six (6) months after the
end of the Company’s financial year unless a longer period would not infringe the
Listing Rules.
Extraordinary general meetings may be convened on the requisition of one or
more shareholders holding, at the date of deposit of the requisition, not less than
one-tenth of the paid up capital of the Company 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 convene a physical meeting at only one location which will be the Principal
Meeting Place (as defined below), and all reasonable expenses incurred by the
requisitionist(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 by means of 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 meeting shall constitute presence at such
meeting.
(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 (a) the
time and date of the meeting, (b) save for an electronic meeting, the place of the
meeting and if there is more than one meeting location as determined by the Board
pursuant to the Articles, the principal place of the meeting (the “ Principal Meeting
Place ”), (c) if the general meeting is to be a hybrid meeting or an electronic meeting,
the notice shall include a statement to that effect and with details of the electronic
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facilities for attendance and participation by electronic means at the meeting or where
such details will be made available by the Company prior to the meeting, and (d)
particulars of resolutions to be considered at the meeting.
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 entitled 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 given
or issued by the following means:
(aa) by serving it personally on the relevant person;
(bb) by sending it through the post to such member’s registered address;
(cc) by delivering or leaving it at such member’s registered address;
(dd) by placing an advertisement in newspapers or other publication and where
applicable, in accordance with the requirements of the Stock Exchange;
(ee) by sending or transmitting it as an electronic communication to the relevant
person at such electronic address as he may provide under the Articles,
subject to the Company complying with the Cayman Islands laws and any
other applicable laws, rules and regulations from time to time in force with
regard to any requirements for the obtaining of consent (or deemed consent)
from such person;
(ff) by publishing it on the Company’s website to which the relevant person may
have access, subject to the Company complying with the Cayman Islands
law and any other applicable laws, rules and regulations from time to time
in force with regard to any requirements for the obtaining of consent (or
deemed consent) from such person and/or for giving notification to any such
person stating that the notice, document or publication is available on the
Company’s computer network website; or
(gg) by sending or otherwise making it available to such person through such
other means to the extent permitted by and in accordance with the Cayman
Islands law and other applicable laws, rules and regulations.
APPENDIX IV SUMMARY OF THE CONSTITUTION OF THE COMPANY
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All business that is transacted at an extraordinary general meeting and at an
annual general meeting is deemed special, save that in the case of an annual general
meeting, each of the following business is deemed an ordinary business:
(aaa) the declaration and sanctioning of dividends;
(bbb) the consideration and adoption of the accounts and balance sheet and the
reports of the directors and the auditors;
(ccc) the election of directors in place of those retiring;
(ddd) the appointment of auditors and other officers; and
(eee) 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
authorised representative or proxy, and entitled to vote. In respect of a separate class
meeting (other than an adjourned or postponed meeting) convened to sanction the
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.
(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 of 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 proxy as such member could exercise as if it were an individual member.
V otes may be given either personally (or, in the case of a member being a corporation,
by its duly authorised representative) or by proxy.
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--- page 507 ---
(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 which such receipt and expenditure
take place, and of the property, assets, credits and liabilities of the Company and of all
other matters required by the Companies Act or necessary to give a true and fair view of
the Company’s affairs and to 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 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.
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 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 Listing Rules, the Company may send to such persons
summarised financial statements derived from the Company’s annual accounts and the
directors’ report instead provided that any such person may by notice in writing served on
the Company, demand that the Company sends to him, in addition to summarised financial
statements, a complete printed copy of the Company’s annual financial statement and the
directors’ report thereon.
At the annual general meeting or at a subsequent extraordinary general meeting in
each year, the members shall by ordinary resolution appoint an auditor to 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
remuneration of the auditors shall be fixed and approved by the Company by an ordinary
resolution passed at a in general meeting or in such manner as the members may by
ordinary resolution determine.
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The financial statements of the Company shall be audited by the auditor in accordance
with generally accepted auditing standards which may be those of a country or jurisdiction
other than the Cayman Islands. The auditor shall make a written 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 aside from profits which the
directors determine is no longer needed. With the sanction of an ordinary 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 the 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, the 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
shares credited as fully paid up in lieu of the whole or such part of the dividend as the
board may think fit.
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.
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--- page 509 ---
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 at 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.
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 year 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 forfeited 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 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 kept, unless the register is closed in accordance with the Articles.
(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 member of the
Company under Cayman Islands law, as summarised in paragraph 3(f) of this Appendix.
APPENDIX IV SUMMARY OF THE CONSTITUTION OF THE COMPANY
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--- page 510 ---
(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 specie 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 the
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 difference
between the subscription price and the par value of a share on any exercise of the warrants.
APPENDIX IV SUMMARY OF THE CONSTITUTION OF THE COMPANY
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--- page 511 ---
3. CAYMAN ISLANDS COMPANY LA W
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
of the acquisition or cancellation of shares in any other company and issued at a premium.
The Companies Act provides that the share premium 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.
No distribution or dividend may be paid to members 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, subject to confirmation by the Grand Court of the
Cayman Islands (the “ Court ”), 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, by
special resolution reduce its share capital in any way.
APPENDIX IV SUMMARY OF THE CONSTITUTION OF THE COMPANY
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--- page 512 ---
(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 discharging their duties of care and acting in
good faith, for 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 limited by guarantee and having a share
capital may, if so authorised by its articles of association, issue shares which are to be
redeemed or are liable to be redeemed at the option of the company or a shareholder and
the Companies Act expressly provides that it shall be lawful for the rights attaching to any
shares 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 would 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 treasury 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, notwithstanding 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’s articles of association
or the Companies Act.
APPENDIX IV SUMMARY OF THE CONSTITUTION OF THE COMPANY
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--- page 513 ---
A company is not prohibited from purchasing and may purchase its own warrants
subject to and in accordance with the terms 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 provision 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. Based 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 follow 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) having 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 examine 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 order regulating the conduct of
the company’s affairs in the future, (b) an order requiring the company 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
APPENDIX IV SUMMARY OF THE CONSTITUTION OF THE COMPANY
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--- page 514 ---
the shareholder 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.
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 secretary, 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 sales and purchases of goods by the 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.
APPENDIX IV SUMMARY OF THE CONSTITUTION OF THE COMPANY
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--- page 515 ---
(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 nature 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 14 January
2021.
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 likely to be material to the Company levied by
the 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 Islands on transfers of shares of Cayman
Islands companies except those which hold interests 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.
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--- page 516 ---
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 principal 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 members 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 required or permitted to be
kept. The company shall cause to be kept at the place where the company’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 Companies 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 register 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.
(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 the 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 Registrar within thirty (30) days of any change in such directors or officers.
(p) Beneficial Ownership Register
An exempted company is required to maintain a beneficial ownership register at its
registered office that records details of the persons who ultimately own or control, directly
or indirectly, 25% or more of the equity interests or voting rights of the company or have
rights to appoint or remove a majority of the directors of the company. The beneficial
ownership register is not a public document and is only accessible by a designated
competent authority of the Cayman Islands. Such requirement does not, however, apply to
an exempted company with its shares listed on an approved stock exchange, which includes
the Stock Exchange. Accordingly, for so long as the shares of the Company are listed on
the Stock Exchange, the Company is not required to maintain a beneficial ownership
register.
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--- page 517 ---
(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’s affairs in the 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 resolution or when the company in
general meeting resolves by ordinary resolution that it be wound up voluntarily because it
is unable to pay its debts as they fall due. 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.
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 office, 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 official
liquidator is appointed, 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.
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--- page 518 ---
(r) Reconstructions
There are statutory provisions which facilitate reconstructions and amalgamations
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 purpose 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 on 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.
(s) Take-overs
Where an offer is made by a company for the shares of another company and, within
four (4) months of the offer, the holders of not less than ninety per cent. (90%) of the
shares which are the subject of the offer accept, the offeror may at any time within two (2)
months after the expiration of the said four (4) months, 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 unlikely to do unless there is evidence of fraud or
bad faith or collusion as between the offeror and the holders of the shares who have
accepted the offer as a means of unfairly forcing out minority shareholders.
(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).
APPENDIX IV SUMMARY OF THE CONSTITUTION OF THE COMPANY
AND CAYMAN ISLANDS COMPANY LA W
– IV-27 –


--- page 519 ---
(u) Economic Substance Requirements
Pursuant to the International Tax Cooperation (Economic Substance) Act, 2018 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 aspects of Cayman Islands company
law. This letter, together with a copy of the Companies Act, is available on display as referred to
in the section headed “Documents delivered to the Registrar of Companies in Hong Kong and
available on display – Documents 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 THE COMPANY
AND CAYMAN ISLANDS COMPANY LA W
– IV-28 –


--- page 520 ---
A. FURTHER INFORMATION ABOUT OUR COMPANY
1. Incorporation
Our Company was incorporated in the Cayman Islands under the Companies Act as an
exempted company with limited liability on 4 January 2021. Our Company has established
a principal place of business in Hong Kong at 5/F, Gloucester Tower, The Landmark, 11
Pedder Street, Central, Hong Kong and was registered as a non-Hong Kong company in
Hong Kong under Part 16 of the Companies Ordinance on 9 February 2021. Mr. Li and Ms.
Law Kwok Wing have been appointed as authorised representatives of our Company for the
acceptance of service of process and notices on behalf of our Company in Hong Kong.
As our Company is incorporated in the Cayman Islands, it is subject to the Companies
Act and its constitution documents comprising the Memorandum of Association and the
Articles of Association. A summary of various parts of the constitution documents and
relevant aspects of the Companies Act is set out in Appendix IV to this prospectus.
2. Changes in share capital of our Company
The following changes in the share capital of our Company have taken place since the
date of incorporation of our Company up to the date of this prospectus:
(a) On 4 January 2021, our Company was incorporated in the Cayman Islands under
the Companies Act as an exempted company with limited liability with an
authorised share capital of HK$380,000 divided into 38,000,000 Shares. Upon
our incorporation, one nil-paid initial Subscriber Share was allotted and issued,
which was on the same day transferred to Prosperity Cleanness and one nil-paid
Share was allotted and issued to Sunrise Cleanness.
(b) On 14 November 2023, the authorised share capital of our Company increased
from HK$380,000 to HK$100,000,000 by the creation of an additional
9,962,000,000 new Shares pursuant to a resolution in writing passed by our then
Shareholders referred to in the paragraph headed “A. Further information about
our Company – 4. Written resolutions of our Shareholders” of this Appendix to
this prospectus.
Immediately following completion of the Share Offer and the Capitalisation Issue
(without taking into account of any Shares that may be allotted and issued pursuant to the
exercise of any options which may be granted under the Share Option Scheme), the
authorised share capital of our Company will be HK$100,000,000 divided into
10,000,000,000 Shares and the issued share capital of our Company will be HK$16,250,000
divided into 1,625,000,000 Shares, all fully paid or credited as fully paid, with
8,375,000,000 Shares remaining unissued.
APPENDIX V STATUTORY AND GENERAL INFORMATION
–V - 1–


--- page 521 ---
Other than pursuant to the general mandate to issue Shares referred to in the
paragraph headed “A. Further information about our Company - 4. Written resolutions of
our Shareholders” of this Appendix to this prospectus below and the exercise of any
options which may be granted under the Share Option Scheme, our Directors do not have
any present intention to issue any of the authorised but unissued share capital of our
Company and, without the prior approval of our Shareholders at general meeting, no issue
of Shares will be made which would effectively alter the control of our Company.
Save as disclosed in this prospectus, there has been no alteration in the share capital
of our Company since the date of its incorporation.
3. Changes in share capital of the subsidiaries of our Company
Our Company’s subsidiaries are referred to in the Accountants’ Report, the text of
which is set out in Appendix I to this prospectus.
Save as disclosed in the section headed “History, Reorganisation and Group structure”
of this prospectus, there has been no alteration in the share capital of any of the
subsidiaries of our Company within the two years immediately preceding the date of this
prospectus.
4. Written resolutions of our Shareholders
Pursuant to the written resolutions of our Shareholders passed on 14 November 2023,
among others,
(a) our Company approved and adopted the Articles, the terms of which are
summarised in Appendix IV to this prospectus;
(b) the authorised share capital of our Company increased from HK$380,000 to
HK$100,000,000 by the creation of additional 9,962,000,000 Shares of HK$0.01
each;
(c) conditional on (1) the Listing Committee granting the approval of the listing of,
and permission to deal in, our Shares in issue and Shares to be issued as
mentioned in this prospectus including any Shares that may be allotted and
issued pursuant to the exercise of any options which may be granted under the
Share Option Scheme; and (2) 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
(collectively the “ Conditions ”):
(i) the Share Offer was approved and our Directors were authorised to allot and
issue the Offer Shares pursuant to the Share Offer;
APPENDIX V STATUTORY AND GENERAL INFORMATION
–V - 2–


--- page 522 ---
(ii) the Share Option Scheme was approved and adopted and our Directors were
authorised subject to the terms and conditions of the Share Option Scheme,
to grant options to subscribe for Shares thereunder and to allot, issue and
deal with our Shares thereunder and to take all such steps as may be
necessary, desirable or expedient to carry into effect the Share Option
Scheme; and
(iii) conditional on the share premium account of our Company being credited as
a result of the Share Offer, our Directors were authorised to capitalise
HK$12,512,490 standing to the credit of our share premium account towards
paying up in full at par 1,251,249,000 Shares (including 40,625,000 Sale
Shares) for allotment and issue to holders of Shares whose names appeared
on the register of members of our Company at the close of business on 14
November 2023 (or as they may direct) in proportion as nearly as may be
without involving fractions to their then existing shareholdings in our
Company and our Shares to be allotted and issued pursuant to the resolution
shall rank pari passu in all respects with our existing issued Shares (other
than the Capitalisation Issue) and our Directors or any committee of our
Board were authorised to give effect to the Capitalisation Issue;
(d) conditional upon the fulfilment of the Conditions:
(i) a general unconditional mandate was given to our Directors to allot, issue
and deal with, otherwise than by way of rights issue, scrip dividend
schemes or similar arrangement providing for the allotment and issue of
Shares in lieu of the whole or part of a dividend on Shares in accordance
with the Articles, or the exercise of any subscription or conversion rights
attaching to any warrants or any securities which are convertible into Shares
or an issue of Shares pursuant to the exercise of options which may be
granted under the Share Option Scheme, Shares with an aggregate nominal
amount not exceeding 20% of the aggregate nominal amount of the share
capital of our Company in issue immediately upon completion of the Share
Offer and the Capitalisation Issue (without taking into account of any
Shares that may be allotted and issued upon the exercise of any options
which may be granted under the Share Option Scheme). Such mandate will
expire at the conclusion of the next annual general meeting of our
Company; or the expiration of the period within which the next annual
general meeting of our Company is required by the Articles or any
applicable law of the Cayman Islands to be held; or when revoked, varied or
renewed by an ordinary resolution of our Shareholders in a general meeting,
whichever occurs first;
(ii) a general unconditional mandate was given to our Directors authorising the
repurchase by our Company on the Stock Exchange, or on any other stock
exchange on which the securities of our Company may be listed and which
APPENDIX V STATUTORY AND GENERAL INFORMATION
–V - 3–


--- page 523 ---
is recognised by the SFC and the Stock Exchange for this purpose, in
accordance with all applicable laws and the requirements of the Listing
Rules (or of such other stock exchange), of Shares not exceeding 10% of
the aggregate nominal amount of the share capital of our Company in issue
and to be issued immediately upon completion of the Share Offer and the
Capitalisation Issue (without taking into account of any Shares that may be
allotted and issued upon the exercise of any options which may be granted
under the Share Option Scheme). Such mandate will expire at the
conclusion of the next annual general meeting of our Company; or the
expiration of the period within which the next annual general meeting of
our Company is required by the Articles or any applicable law of the
Cayman Islands to be held; or when revoked, varied or renewed by an
ordinary resolution of our Shareholders in a general meeting, whichever
occurs first; and
(iii) the general unconditional mandate as mentioned in sub-paragraph (d)(i)
above was extended by the addition to the aggregate nominal amount of the
share capital of our Company which may be allotted or agreed to be allotted
by our Directors pursuant to such general mandate of an amount
representing the aggregate nominal amount of the share capital of our
Company repurchased by our Company pursuant to the mandate to
repurchase Shares referred to in sub-paragraph (d)(ii) above, provided that
such extended amount shall not exceed 10% of the aggregate nominal value
of the share capital of our Company in issue immediately following
completion of the Capitalisation Issue and the Share Offer but taking no
account of any Shares that may be issued upon the exercise of any options
which may be granted under the Share Option Scheme.
5. Corporate reorganisation
The companies comprising our Group underwent our Reorganisation in preparation for
Listing. For information relating to our Reorganisation, please refer to the paragraph
headed “History, Reorganisation and Group structure – Reorganisation” in this prospectus.
6. Repurchase by our Company of our own securities
This paragraph contains information required by the Stock Exchange to be included in
this prospectus concerning the repurchase by our Company of our own securities.
(a) Provisions of the Listing Rules
The Listing Rules permit companies with a primary listing on the Stock
Exchange to purchase their shares on the Stock Exchange subject to certain
restrictions.
APPENDIX V STATUTORY AND GENERAL INFORMATION
–V - 4–


--- page 524 ---
(i) Shareholders’ approval
The Listing Rules provide that all proposed repurchases of shares (which
must be fully paid) by a company with a primary listing on the Stock Exchange
must be approved in advance by an ordinary resolution, either by way of general
mandate or by specific approval of a specific transaction.
Note: Pursuant to the written resolutions of our Shareholders passed on 14 November 2023, a
repurchase mandate (the “ Repurchase Mandate ”) was given to our Directors
authorising our Directors to exercise all powers of our Company to purchase our Shares
as described above in the paragraph headed “A. Further information about our Company
– 4. Written resolutions of our Shareholders” of this Appendix to this prospectus.
(ii) Source of funds
Repurchases must be funded out of funds legally available for the purpose
in accordance with the Articles and the laws of the Cayman Islands. Our
Company may not repurchase our own shares 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.
Any repurchases by our Company may be made out of profits or out of the
proceeds of a fresh issue of Shares made for the purpose of the repurchase or, if
authorised by the Articles and subject to the Companies Act, out of capital and,
in the case of any premium payable on the repurchase, out of profits of our
Company or out of our share premium account before or at the time our Shares
are repurchased or, if authorised by the Articles and subject to the Companies
Act, out of capital.
(iii) Connected parties
The Listing Rules prohibit our Company from knowingly repurchasing our
Shares on the Stock Exchange from a “core connected person”, which includes a
Director, chief executive or substantial Shareholder of our Company or any of
the subsidiaries or a close associate of any of them and a core connected person
shall not knowingly sell our Shares to our Company.
(b) Reasons for repurchase
Our Directors believe that it is in the best interests of our Company and our
Shareholders for our Directors to have a general authority from our Shareholders to
enable our Company to repurchase our Shares in the market. Such repurchases may,
depending on the market conditions and funding arrangements at the time, lead to an
enhancement of our net asset value and/or earnings per Share and will only be made
when our Directors believe that such repurchases will benefit our Company and
Shareholders.
APPENDIX V STATUTORY AND GENERAL INFORMATION
–V - 5–


--- page 525 ---
(c) Exercise of the Repurchase Mandate
Exercise in full of the Repurchase Mandate, on the basis of 1,625,000,000 Shares
in issue after completion of the Capitalisation Issue and the Share Offer (taking no
account of any Shares that may be allotted and issued pursuant to the exercise of any
options which may be granted under the Share Option Scheme), could accordingly
result in up to 162,500,000 Shares being repurchased by our Company during the
period in which the Repurchase Mandate remains in force.
(d) Funding of repurchase
In repurchasing Shares, our Company may only apply funds legally available for
such purpose in accordance with the Articles, the Listing Rules and the applicable
laws of the Cayman Islands.
Our Directors do not propose to exercise the Repurchase Mandate to such extent
as would, in the circumstances, have a material adverse effect on the working capital
requirements of our Company or the gearing levels which in the opinion of our
Directors are from time to time appropriate for our Company.
(e) General
None of our Directors or, to the best of their knowledge having made all
reasonable enquiries, any of their close associates (as defined in the Listing Rules),
has any present intention if the Repurchase Mandate is exercised to sell any Shares to
our Company.
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
Listing Rules and the applicable laws of the Cayman Islands.
If as a result of a repurchase of Shares pursuant to the Repurchase Mandate, a
Shareholder’s proportionate interest in the voting rights of our Company increases,
such increase will be treated as an acquisition for the purposes of the Takeovers Code.
Accordingly, a Shareholder or a group of Shareholders acting in concert, depending on
the level of increase of the Shareholders’ interest, could obtain or consolidate control
of our Company and may become obliged to make a mandatory offer in accordance
with Rule 26 of the Takeovers Code as a result of any such increase. Our Directors are
not aware of any consequence that would arise under the Takeovers Code as a result
of a repurchase pursuant to the Repurchase Mandate.
Our Directors will not exercise the Repurchase 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).
APPENDIX V STATUTORY AND GENERAL INFORMATION
–V - 6–


--- page 526 ---
No core connected person (as defined in the Listing Rules) of our Company has
notified us that he has a present intention to sell Shares to us, or has undertaken not to
do so, if the Repurchase Mandate is exercised.
B. FURTHER INFORMATION ABOUT THE BUSINESS OF OUR GROUP
1. Summary of material contracts
The following contracts (not being contracts entered into in the ordinary course of
business) have been entered into by the members of our Group within the two years
immediately preceding the date of this prospectus and are or may be material in relation to
the business of our Company taken as a whole:
(a) The Deed of Indemnity dated 14 November 2023 and entered into by our
Controlling Shareholders in favour of our Company (for itself and as trustee for
each of its subsidiaries), particulars of which are set out in the paragraph headed
“F. Other information – 1. Tax and other indemnities” in Appendix V to this
prospectus;
(b) the Deed of Non-Competition dated 14 November 2023 and entered into by our
Controlling Shareholders in favour of our Company (for itself and as trustee for
each of its subsidiaries), particulars of which are set out in the paragraph headed
“Relationship with our Controlling Shareholders – Non-competition
undertakings” of this prospectus; and
(c) the Public Offer Underwriting Agreement in relation to the Public Offer of
41,437,500 Shares (subject to reallocation) in the issued share capital of
Shenghui Cleanness Group Holdings Limitedʮ̡ dated
24 November 2023 entered into among our Company, Mr. Li and Mr. Chen (as
executive Directors), our Controlling Shareholders, the Sole Sponsor, the Sole
Overall Coordinator, the Joint Global Coordinators, the Joint Bookrunners, the
Joint Lead Managers and the Public Offer Underwriters relating to the Public
Offer.
C. INTELLECTUAL PROPERTY RIGHTS OF OUR GROUP
1. Trademark
As at the Latest Practicable Date, our Group was the registered owner of the following
trademarks which we believe are material to our business:
No. Trademark
Name of
registered
owner Class
(Note)
Registration
number Expiry date
Place of
registration
1.
Guangzhou
Shenghui
37 6900795 6 June 2030 PRC
APPENDIX V STATUTORY AND GENERAL INFORMATION
–V - 7–


--- page 527 ---
No. Trademark
Name of
registered
owner Class
(Note)
Registration
number Expiry date
Place of
registration
2. ʺሾ Guangzhou
Shenghui
37 13122840 6 January
2025
PRC
3.
 Guangzhou
Shenghui
37 305481649 16 December
2030
Hong Kong
4.
 Guangzhou
Shenghui
37 305481658 16 December
2030
Hong Kong
As at the Latest Practicable Date, our Group has applied for the registration of the
following trademarks which we believe are material to our business:
No. Trademark
Name of
applicant Class (Note)
Application
number
Application
date
Place of
application
1.
Guangzhou
Shenghui
42 74539450 13 October
2023
PRC
2.
 Guangzhou
Shenghui
37 74495005 11 October
2023
PRC
Note: Class 37 – construction services; installation and repair services; mining extraction, oil and gas
drilling
Class 42 – scientific and technological services and research and design relating thereto; industrial
analysis, industrial research and industrial design services; quality control and authentication
services; design and development of computer hardware and software
2. Patent
As at the Latest Practicable Date, our Group had registered the following patents in
the PRC which we believe are material to our business:
No. Patent description
Name of the
registered
owner
Registration
number Effective period
1. A type of multi-functional
warning sign*
ɓ၇ε̌ঐᙆͪ೐
Guangzhou
Shenghui
ZL 2019 2
0874221.X
11 June 2019 to
10 June 2029
APPENDIX V STATUTORY AND GENERAL INFORMATION
–V - 8–


--- page 528 ---
No. Patent description
Name of the
registered
owner
Registration
number Effective period
2. Electric duster*
ཥਗৰྡྷ⣬
Guangzhou
Shenghui
ZL 2019 2
0874194.6
11 June 2019 to
10 June 2029
3. Front-mounted vacuum
cleaner of a floor
scrubber machine*
ໄіྡྷኜ
Guangzhou
Shenghui
ZL 2019 2
0883053.0
11 June 2019 to
10 June 2029
4. Escalator sweeping device*
૶ધༀໄ
Guangzhou
Shenghui
ZL 2019 2
0883083.1
11 June 2019 to
10 June 2029
5. Marble descaling wipes
ৰᙔᅯ˪
Guangzhou
Shenghui
ZL 2019 2
0979885.2
26 June 2019 to
25 June 2029
6. Water wiper*
પ˥ՒՈ
Guangzhou
Shenghui
ZL 2019 2
0876247.8
11 June 2019 to
10 June 2029
7. Pipe-cleaning duster*
ɓ၇၍༸૶ᆎ⣬
Guangzhou
Shenghui
ZL 2019 2
0874223.9
11 June 2019 to
10 June 2029
8. Hose reel*
˥၍ϗ՜ኜ
Guangzhou
Shenghui
ZL 2019 2
0883055.X
11 June 2019 to
10 June 2029
9. Duster cloth drying rack
with dehydrator*
ྡྷપ̺૭᛼
ݖ
Guangzhou
Shenghui
ZL 2019 2
0979911.1
26 June 2019 to
25 June 2029
10. Marble reconditioning
machine*
ዚ
Guangzhou
Shenghui
ZL 2019 2
0874286.4
11 June 2019 to
10 June 2029
11. Dustproofing device for
angle grinder*
ԣྡྷༀໄ
Guangzhou
Shenghui
ZL 2019 2
0876140.3
11 June 2019 to
10 June 2029
12. Portable high pressure
water gun*
ᙳό৷Ꮐ˥࿻
Guangzhou
Shenghui
ZL 2019 2
0883052.6
11 June 2019 to
10 June 2029
APPENDIX V STATUTORY AND GENERAL INFORMATION
–V - 9–


--- page 529 ---
No. Patent description
Name of the
registered
owner
Registration
number Effective period
13. Sprinkler mounting device*
τༀༀໄ
Guangzhou
Shenghui
ZL 2019 2
0979883.3
26 June 2019 to
25 June 2029
14. Mobile squeegee*
ਗՒ˥ኜ
Guangzhou
Shenghui
ZL 2019 2
0979881.4
26 June 2019 to
25 June 2029
15. Multi-functional chandelier
cleaner*
ኜ
Guangzhou
Shenghui
ZL 2019 2
0981117.0
26 June 2019 to
25 June 2029
16. Water suction device with
absorbent squeegee*
ٙ
і˥ኜ
Guangzhou
Shenghui
ZL 2019 2
0981419.8
26 June 2019 to
25 June 2029
17. Multi-functional sweeping
device*
૶ધༀໄ
Guangzhou
Shenghui
ZL 2019 2
0981420.0
26 June 2019 to
25 June 2029
18. Dust pusher*
ྡྷપኜ
Guangzhou
Shenghui
ZL 2019 2
0990330.8
26 June 2019 to
25 June 2029
19. Automatic umbrella
dehydrator*
௮ৰ˥ኜ
Guangzhou
Shenghui
ZL 2019 2
0979915.X
26 June 2019 to
25 June 2029
20. Cleaning robot*
ᆎዚኜɛ
Guangzhou
Shenghui
ZL 2017 1
0688747.4
13 August 2017 to
12 August 2037
21. Umbrella dehydrating
device*
௮୭˥ༀໄ
Guangzhou
Shenghui
ZL 2019 2
0885353.2
11 June 2019 to
10 June 2029
22. Cleaning and maintenance
device for marble
surface*
૶ᆎቮᚐ
ஈଣༀໄ
Guangzhou
Shenghui
ZL202023350595.3 31 December 2020
to 30 December
2030
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-10 –


--- page 530 ---
No. Patent description
Name of the
registered
owner
Registration
number Effective period
23. Dustproofing cleaning
device with absorbent*
͜
૶ᆎༀໄ
Guangzhou
Shenghui
ZL202023351324.X 31 December 2020
to 30 December
2030
24. Intelligent automatic floor
scrubbing device*
ήༀໄ
Guangzhou
Shenghui
ZL202023349490.6 31 December 2020
to 30 December
2030
25. A type of premium electric
dust pusher*
ɓ၇৷ॴཥਗྡྷપༀໄ
Guangzhou
Shenghui
ZL202023351379.0 31 December 2020
to 30 December
2030
26. Dust removal device for
ceiling of high-rise
building*
ৰྡྷ
ༀໄ
Guangzhou
Shenghui
ZL202023349488.9 31 December 2020
to 30 December
2030
27. Three-in-one carpet
automatic extraction and
cleaning device*
ݹפ
ༀໄ
Guangzhou
Shenghui
ZL202023351286.8 31 December 2020
to 30 December
2030
28. Automatic cleaning device
for the interior of smart
elevators*
Іਗʷᅽρ౽ঐཥ૒͜
ʫ௅૶ᆎༀໄ
Guangzhou
Shenghui
ZL202121544138.X 7 July 2021 to
6 July 2031
29. A type of leaf sweeper*
ዓ໢૶ધԓ
Guangzhou
Shenghui
ZL202121552792.5 7 July 2021 to
6 July 2031
30. Smart cleaning device for
glass*
ༀໄ
Guangzhou
Shenghui
ZL202121541808.2 7 July 2021 to
6 July 2031
APPENDIX V STATUTORY AND GENERAL INFORMATION
–V - 1 1–


--- page 531 ---
No. Patent description
Name of the
registered
owner
Registration
number Effective period
31. Cleaning device for the
exterior of high-rise
building*
ༀໄ
Guangzhou
Shenghui
ZL202121545015.8 7 July 2021 to
6 July 2031
32. V acuum cleaner for dirt*
іྡྷ
ༀໄ
Guangzhou
Shenghui
ZL202121544042.3 7 July 2021 to
6 July 2031
33. High cleanliness ultrasonic
cleaner*
૶
ᆎዚ
Guangzhou
Shenghui
ZL202222233731.3 24 August 2022 to
23 August 2032
34. Smart detection and
cleaning equipment for
glass curtain wall stains*
ᆨ࿇ᐍϮဌ౽ঐ
ண௪
Guangzhou
Shenghui
ZL202110716452.X 28 June 2021 to
27 June 2041
35. Efficient washing and
grinding device for
roadside rocks*
͂
ጋༀໄ
Guangzhou
Shenghui
ZL202222238746.9 24 August 2022 to
23 August 2032
36. Anti-pollution storage
device for high-rise
building cleaning*
ٙ
Ꮇπༀໄ
Guangzhou
Shenghui
ZL202223604419.7 29 December 2022
to 28 December
2032
* English translation of its Chinese counterpart is for reference only
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-12 –


--- page 532 ---
As at the Latest Practicable Date, our Group has applied for the registration of the
following patents which we believe are material to our business:
Name of patent
Name of
applicant
Application
number Application Date
1. Small-sized multipurpose
cleaning and waste
transfer equipment*
ε̌ঐ૶ધᔷ
༶չѫண௪
Guangzhou
Shenghui
202222238749.2 24 August 2022
2. Smart building dust-free
purification device*
ɓ၇౽ঐᅽρೌྡྷଋʷ
ༀໄ
Guangzhou
Shenghui
202222233688.0 24 August 2022
3. Airbag-type exterior glass
curtain wall cleaning
device*
ᆨ࿇ᐍ
ኜ
Guangzhou
Shenghui
202222233732.8 24 August 2022
4. Dry and wet waste sorting
processor and its
processing method*
ɓ၇৻᐀չѫʱᗳஈଣ
ج
Guangzhou
Shenghui
202211476544.6 23 November
2022
5. Brushless high-pressure
water washing sweeper*
ધ
ԓ
Guangzhou
Shenghui
202223478106.1 26 December 2022
6. Waste treatment recycling
and reuse system*
չѫஈଣΫϗΎл͜ӻ
୕
Guangzhou
Shenghui
202223477247.1 26 December 2022
7. High-pressure spray
mechanism of a
sweeping vehicle*
৷Ꮐᄝધ
ዚ࿴
Guangzhou
Shenghui
202223527732.5 26 December 2022
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-13 –


--- page 533 ---
Name of patent
Name of
applicant
Application
number Application Date
8. High-altitude intelligent
cleaning equipment*
౽ঐ૶ᆎༀໄ
Guangzhou
Shenghui
202223599785.8 29 December 2022
* English translation of its Chinese counterpart is for reference only.
3. Copyright
As at the Latest Practicable Date, our Group had the following copyrights which we
believe are material to our business:
No. Copyright description
Name of
registered
owner
Registration
number Effective period
1. Shenghui’s system software
for automatic glass curtain
wall cleaning
ᆨ࿇ᐍ૶
ӻ୕ழ΁
Guangzhou
Shenghui
2019SR0526885 7 October 2016 to
31 December
2066
2. Shenghui’s system software
for ultrafine marble
surface maintenance
ቮᚐ
ஈଣӻ୕ழ΁
Guangzhou
Shenghui
2019SR0522708 31 January 2017 to
31 December
2067
3. Shenghui’s software for
detecting and analysing
dust in high level of lobby
ʺሾɽੀ৷ЗϲྡྷᏨ಻ʱ
ழ΁
Guangzhou
Shenghui
2019SR0535734 1 February 2018 to
31 December
2068
4. Shenghui’s intelligent
high-rise-building-cleaning
information processing
software
ཀ
ஈଣழ΁
Guangzhou
Shenghui
2019SR0526349 16 December 2016
to 31 December
2066
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-14 –


--- page 534 ---
No. Copyright description
Name of
registered
owner
Registration
number Effective period
5. Shenghui’s architectural
glass cleaning and
maintenance software
ᆨ૶ᆎ
ၪᚐ၍ଣழ΁
Guangzhou
Shenghui
2019SR0526285 30 November 2017
to 31 December
2067
6. Shenghui’s garbage removal
and maintenance software
ʺሾչѫ૶༶ၪᚐ၍ଣ
ழ΁
Guangzhou
Shenghui
2019SR0532878 9 October 2018 to
31 December
2068
7. Shenghui’s fully automated
cleaning quality inspection
and evaluation system
software
ʺሾΌІਗ૶ᆎሯඎᏨ಻
൙Пӻ୕ழ΁
Guangzhou
Shenghui
2019SR0540616 19 June 2018 to 31
December 2068
8. Shenghui’s photometric
inspection software for
marble surface cleaning
૶ᆎ
Ꮸ಻ழ΁
Guangzhou
Shenghui
2019SR0526279 15 August 2017 to
31 December
2067
9. Shenghui’s cleaning and
disinfection evaluation
software for central air
conditioning
ݭ
൙Пழ΁
Guangzhou
Shenghui
2019SR0522861 3 April 2017 to
31 December
2067
10. Shenghui’s automated
control software for floor
cleaning equipment
ண௪
છՓழ΁
Guangzhou
Shenghui
2019SR0529667 22 December 2018
to 31 December
2068
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-15 –


--- page 535 ---
4. Domain name
As at the Latest Practicable Date, our Group had registered the following domain
name which we believe is material to our business:
Domain name Registrant
Registration
date Expiry date
www.gzshqj.com Guangzhou
Shenghui
16 January 2014 16 January 2028
D. DISCLOSURE OF INTERESTS
1. Interests and short positions of our Directors and chief executive in the shares,
underlying shares and debentures of our Company and its associated corporations
Immediately following completion of the Share Offer and the Capitalisation Issue,
without taking no account of Shares that may be allotted and issued pursuant to the
exercise of any options which may be granted under the Share Option Scheme, the interests
and short positions of our Directors or chief executive of our Company in the shares,
underlying shares and debentures of our Company or any of the associated 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
any interests which they are taken or deemed to have under such provisions of the SFO) or
will be required, pursuant to section 352 of the SFO, to be entered in the register as
referred to therein, or will be required, or pursuant to the Model Code for Securities
Transactions by Directors of Listed Companies in the Listing Rules, to be notified to our
Company and the Stock Exchange, in each case once our Shares are listed on the Stock
Exchange, will be as follows:
(a) Long position in our Shares
Name of Substantial
Shareholders
Capacity/
Nature of
interest
Number of
Shares
(Note 1)
Percentage of
shareholding
interests in our
Company
Mr. Li
(Notes 2 and 3) Interest of
controlled
corporation
1,173,087,500 (L) 72.19%
APPENDIX V STATUTORY AND GENERAL INFORMATION
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--- page 536 ---
Name of Substantial
Shareholders
Capacity/
Nature of
interest
Number of
Shares
(Note 1)
Percentage of
shareholding
interests in our
Company
Mr. Chen
(Notes 2 and 4) Interest of
controlled
corporation
1,173,087,500 (L) 72.19%
Notes:
1. The letter “L” denotes the entity/person’s long interest in our Shares.
2. On 16 March 2021, Mr. Li and Mr. Chen executed the Controlling Shareholders’
Confirmation, pursuant to which Mr. Li and Mr. Chen confirmed that they have been a group
of controlling shareholders, details of which are set out in the section headed “Relationship
with our Controlling Shareholders” of this prospectus. Accordingly, each of our Controlling
Shareholders, i.e. Mr. Li, Prosperity Cleanness (being wholly owned by Mr. Li), Mr. Chen and
Sunrise Cleanness (being wholly owned by Mr. Chen) is deemed to be interested in 72.19% of
the issued share capital of our Company.
3. Shares in which Mr. Li is interested consist of (i) 586,543,750 Shares held by Prosperity
Cleanness, a company he wholly owned, and Mr. Li is therefore deemed to be interested in all
the Shares held by Prosperity Cleanness by virtue of the SFO; and (ii) 586,543,750 Shares in
which Mr. Li is deemed to be interested as a result of the Controlling Shareholders’
Confirmation.
4. Shares in which Mr. Chen is interested consist of (i) 586,543,750 Shares held by Sunrise
Cleanness, a company he wholly owned, and is therefore deemed to be interested in all the
Shares held by Sunrise Cleanness by virtue of the SFO; and (ii) 586,543,750 Shares in which
Mr. Chen is deemed to be interested as a result of the Controlling Shareholders’ Confirmation.
(b) Long position in the ordinary shares of associated corporation
Name of
Director
Name of
associated
corporation
Percentage of
interest in the
associated
corporation
held by our
Director
Nature of
interest
No. of Shares
held by the
associated
corporation (Note)
Percentage of
shareholding
interests in our
Company
Mr. Li Prosperity
Cleanness
100% Beneficial owner 1,173,087,500 (L) 72.19%
Mr. Chen Sunrise
Cleanness
100% Beneficial owner 1,173,087,500 (L) 72.19%
Note: The letter “L” denotes the entity/person’s long interest in our Shares.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-17 –


--- page 537 ---
2. Interests and short positions of Substantial Shareholders in our Shares, and
underlying Shares of our Company
So far as our Directors are aware and save as disclosed in this prospectus,
immediately following completion of the Capitalisation Issue and the Share Offer (without
taking into account any Shares which may be allotted and issued pursuant to the exercise of
any options that may be granted under the Share Option Scheme), the following
persons/entities will have interests or short positions in our Shares or underlying Shares
which would be required to be disclosed to us and the Stock Exchange under the provisions
of Division 2 and 3 of Part XV of the SFO, or are 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:
Name of Substantial
Shareholders
Capacity/
Nature of interest
Number of
Shares
(Note 1)
Percentage of
shareholding
interests in our
Company
Prosperity Cleanness
(Notes 2 and 3)
Beneficial owner 1,173,087,500 (L) 72.19%
Mr. Li (Notes 2 and 3) Interest of
controlled
corporation
1,173,087,500 (L) 72.19%
Ms. Tang Y ongzhen
(ޜ)
“(Ms. Tang ”)
(Note 4)
Interest of spouse 1,173,087,500 (L) 72.19%
Sunrise Cleanness
(Notes 2 and 5)
Beneficial owner 1,173,087,500 (L) 72.19%
Mr. Chen
(Notes 2 and 5)
Interest of
controlled
corporation
1,173,087,500 (L) 72.19%
Notes:
1. The letter “L” denotes the entity/person’s long interest in our Shares.
2. On 16 March 2021, Mr. Li and Mr. Chen executed the Controlling Shareholders’ Confirmation,
pursuant to which Mr. Li and Mr. Chen confirmed that they have been a group of controlling
shareholders, details of which are set out in the section headed “Relationship with our Controlling
Shareholders” of this prospectus. Accordingly, each of our Controlling Shareholders, i.e. Mr. Li,
Prosperity Cleanness (being wholly owned by Mr. Li), Mr. Chen and Sunrise Cleanness (being
wholly owned by Mr. Chen) is deemed to be interested in 72.19% of the issued share capital of our
Company.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-18 –


--- page 538 ---
3. Shares in which Mr. Li is interested consist of (i) 586,543,750 Shares held by Prosperity Cleanness,
a company he wholly owned, and Mr. Li is therefore deemed to be interested in all the Shares held
by Prosperity Cleanness by virtue of the SFO; and (ii) 586,543,750 Shares in which Mr. Li is
deemed to be interested as a result of the Controlling Shareholders’ Confirmation.
4. Ms. Tang is the spouse of Mr. Li and is therefore deemed to be interested in all the Shares held or
interested in by Mr. Li by virtue of the SFO.
5. Shares in which Mr. Chen is interested consist of (i) 586,543,750 Shares held by Sunrise Cleanness,
a company he wholly owned, and is therefore deemed to be interested in all the Shares held by
Sunrise Cleanness by virtue of the SFO; and (ii) 586,543,750 Shares in which Mr. Chen is deemed
to be interested as a result of the Controlling Shareholders’ Confirmation.
3. Particulars of service agreements and letters of appointment
Each of our executive Directors has entered into a service agreement with our
Company. The terms and conditions of each of such service agreements are similar in all
material aspects and are briefly described as follows:
(a) Each service agreement is for an initial fixed term of three years commencing
from the Listing Date and shall continue thereafter until it is terminated by either
party by giving not less than three months’ notice in writing at any time after
such initial fixed term to the other, provided that our Company may terminate the
agreement by giving to our executive Director not less than three months’ prior
notice in writing at any time after the date of the agreement. The appointment
shall terminate automatically in the event of our executive Director ceasing to be
a director for whatever reason.
(b) Under the arrangements currently proposed, conditional upon Listing, the annual
basic remuneration (excluding payment pursuant to any discretionary benefits or
bonus, granting of share options or other fringe benefits) payable by our Group
to each of Mr. Li and Mr. Chen will be approximately HK$900,000 and
HK$600,000 respectively.
(c) Each of our executive Directors may be entitled to, if so recommended by our
remuneration committee and approved by our Board at its absolute discretion, a
discretionary bonus, the amount of which is determined with reference to the
operating results of our Group and the performance of our executive Director.
Each of our independent non-executive Directors has entered into a letter of
appointment with our Company under which each of them is appointed for a period of one
year commencing from the Listing Date. The annual director’s fee payable to each of Ms.
Chong Sze Pui Joanne, MH, Ms. Cheung Bo Man and Ms. Y au Yin Hung under their
respective letter of appointment shall be HK$120,000. Save for the annual director’s fees
mentioned above, none of our independent non-executive Directors is expected to receive
any other remuneration for holding her office as an independent non-executive Director.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-19 –


--- page 539 ---
Save as disclosed above, none of our Directors has or is proposed to have any service
agreement or letter of appointment with our Company or any of its subsidiaries (other than
contracts expiring or determinable by the employer within one year without payment of
compensation other than statutory compensation).
4. Remuneration of Directors
During the Track Record Period, our Directors confirmed that our remuneration policy
for our Directors and senior management member of the subsidiaries were based on their
experience, level of responsibility and general market conditions. Any discretionary bonus
was linked to the business performance of our Group and the individual performance of
such Directors and senior management member. Our Company intends to adopt the same
remuneration policy after Listing, subject to the review by and the recommendations of our
remuneration committee.
For each of the years ended 31 December 2020, 2021, 2022 and the six months ended
30 June 2023, the aggregate amount of fees, salaries, allowances, discretionary payments,
bonuses and contribution to pension schemes paid by our Company to our Directors were
approximately RMB0.4 million, RMB0.5 million, RMB0.6 million and RMB0.3 million,
respectively.
Further information in respect of emoluments of our Directors is set out in Appendix I
to this prospectus. It is expected that the aggregate emoluments (excluding payment
pursuant to any discretionary bonus or granting of share options) payable by our Group to
our Directors (including our independent non-executive Directors) for the year ending 31
December 2023 will be approximately RMB0.6 million.
Save as disclosed in Appendix I to this prospectus, none of our Directors received any
remuneration or benefits in kind from our Group during the Track Record Period.
5. Disclaimers
Save as disclosed in this prospectus:
(a) so far as our Directors are aware, none of our Directors or chief executive has
any interest or short position in the shares, underlying shares or debentures of
our Company or any of its associated corporations (within the meaning of Part
XV of the SFO) immediately following the completion of the Share Offer and
assuming that the options which may be granted under the Share Option Scheme
are not exercised, which will have to be notified to our Company and the Stock
Exchange under Divisions 7 and 8 of Part XV of the SFO (including interests and
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-20 –


--- page 540 ---
short positions which he/she will be taken or deemed to have under the SFO)
once our Shares are listed, or which will be required, pursuant to section 352 of
the SFO, to be entered in the register referred to therein once our Shares are
listed, or which will be required, pursuant to the Listing Rules relating to
securities transactions by our Directors to be notified to our Company and the
Stock Exchange, once our Shares are listed;
(b) so far as our Directors are aware, none of our Directors and experts referred to
under the paragraph headed “F. Other information – 6. Qualifications of experts”
of this Appendix to this prospectus has any direct or indirect interest in the
promotion of our Company, or in any assets which have within the two years
immediately preceding the date of this prospectus been acquired or disposed of
by or leased to any member of our Group, or are proposed to be acquired or
disposed of by or leased to any member of our Group;
(c) none of our Directors and experts referred to under the paragraph headed “F.
Other information – 6. Qualifications of experts” of this Appendix to this
prospectus 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 taken as a whole;
(d) none of our Directors has any existing or proposed service agreements with any
member of our Group, excluding agreements which are determinable by the
employer within one year without payment of compensation other than statutory
compensation;
(e) taking no account of any Shares which may be allotted and issued pursuant to the
exercise of any options which may be granted under the Share Option Scheme,
our Directors are not aware of any person, not being a Director of our Company,
who will, immediately following completion of the Share Offer and the
Capitalisation Issue, be interested in or has short positions in the Shares or
underlying Shares of our Company which have to be notified to our Company
and the Stock Exchange under Divisions 2 and 3 of Part XV of the SFO once our
Shares are listed, or who is, 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;
(f) none of the experts referred to under the paragraph headed “F. Other information
– 6. Qualifications of experts” of this Appendix has any shareholding in any
member of our Group or the right, whether legally enforceable or not, to
subscribe for or to nominate persons to subscribe for securities in any member of
our Group; and
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-21 –


--- page 541 ---
(g) none of our Directors, their associates or any Shareholder of our Company
(which to the knowledge of our Directors owns more than 5% of our issued share
capital) has any interest in our five largest suppliers for each year during the
Track Record Period and five largest customers for each year during the Track
Record Period.
6. Agency fees or commissions received
Information on the agency fees or commissions received by the Underwriters is set out
in section headed “Underwriting” in this prospectus.
Save as disclosed herein and in the section headed “Directors and senior management”
and the accountants’ report of our Group set out in Appendix I to this prospectus, none of
the Directors, or the experts named in the paragraph headed “F. Other information – 6.
Qualifications of experts” in this Appendix to this prospectus had received any agency fee,
commissions, discounts, brokerages or other special terms in connection with the issue or
sale of any capital of any member of our Group from our Group within the two years
immediately preceding the date of this prospectus.
7. Related party transactions
For details of the related party transactions of our Group entered into within two years
immediately preceding the date of this prospectus, please refer to the Accountants’ Report
set out in Appendix I to this prospectus and the section headed “Connected Transactions” in
this prospectus.
E. SHARE OPTION SCHEME
1. Definitions
For the purpose of this section, the following expressions have the meanings set out
below unless the context requires otherwise:
“Adoption Date” 14 November 2023, the date on which the Share
Option Scheme is conditionally adopted by our
Shareholders by way of written resolutions
“Board” our board of Directors
“Business Day” any day on which the Stock Exchange is open
for the business of dealings in securities
“Exercise Price” the price per Share at which a grantee may
subscribe for our Shares on the exercise of an
Option as described in paragraph (c)
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-22 –


--- page 542 ---
“Group” our Company and its subsidiaries
“Offer Date” the date on which an Option is offered to a
Participant
“Option” an option to subscribe for Shares granted
pursuant to the Share Option Scheme and for
the time being subsisting
“Scheme Period” the period of ten years commencing on the
Adoption Date and expiring at the close of
business on the business day immediately
preceding the tenth anniversary thereof, unless
terminated earlier in accordance with the terms
of the Share Option Scheme
2. Summary of terms
The following is a summary of the principal terms of the rules of the Share Option
Scheme conditionally adopted by the written resolutions of our then Shareholders passed on
14 November 2023:
(a) Purpose of the Share Option Scheme
The purpose of the Share Option Scheme is to attract and retain the best
available personnel, to provide additional incentive to employees, directors, advisers,
consultants, distributors, contractors, suppliers, agents and service providers of our
Group and to promote the success of the business of our Group.
(b) Who may join and basis of eligibility
Our Board may, at its absolute discretion, invite any person belonging to any of
the following classes of participants (“ Participants ”) to take up Options to subscribe
for Shares:
(a) any director and employee of our Company or any of its subsidiaries
(including persons who are granted Options as an inducement to enter into
employment contracts with the Company or any of its subsidiaries)
(“Employee Participant(s) ”);
(b) any director and employee of the holding companies, fellow subsidiaries or
associated companies of our Company (“ Related Entity Participant(s) ”);
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-23 –


--- page 543 ---
(c) any person who provides services to our Group on a continuing and
recurring basis in its ordinary and usual course of business which are in the
interests of the long-term growth of our Group, including but not limited to
person(s) who work for the Company as independent contractors (including
advisers, consultants, distributors, contractors, suppliers, agents and service
providers of any member of our Group) where the continuity and frequency
of their services are akin to those of employees, but excluding (i) placing
agents or financial advisers providing advisory services for fundraising,
mergers or acquisitions; and (ii) professional service providers such as
auditors or valuers who provide assurance, or are required to perform their
services with impartiality and objectivity (“ Service Provider(s) ”).
The basis of eligibility of any Participant to the grant of any Option shall be
determined by our Board from time to time on the basis of his or her contribution or
potential contribution to the development and growth of our Group.
In assessing whether Options are to be granted to any Participant, our Board
shall take into account various factors, including but not limited to, the nature and
extent of contributions provided by such Participant to our Group, the special skills or
technical knowledge possessed by them which is beneficial to the continuing
development of our Group, the positive impacts which such Participant has brought to
our Group’s business and development and whether granting Options to such
Participant is an appropriate incentive to motivate such Participant to continue to
contribute towards the betterment of our Group.
In assessing the eligibility of an Employee Participant, our Board will consider
all relevant factors as appropriate, including, among others:
(i) his/her skills, knowledge, experience, expertise and other relevant personal
qualities;
(ii) his/her performance, time commitment, responsibilities or employment
conditions and the prevailing market practice and industry standard;
(iii) his/her contribution made or expected to be made to the growth of our
Group; and
(iv) his/her educational and professional qualifications, and knowledge in the
industry.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-24 –


--- page 544 ---
In assessing the eligibility of a Related Entity Participant, our Board will
consider all relevant factors as appropriate, including, among others:
(i) the positive impacts brought by, or expected from, the Related Entity
Participant on our Group’s business development in terms of an increase in
turnover or profits and/or an addition of expertise to our Group;
(ii) the period of engagement or employment of the Related Entity Participant
by our Group;
(iii) whether the Related Entity Participant has referred or introduced
opportunities to our Group which have materialised into further business
relationships;
(iv) whether the Related Entity Participant has assisted our Group in tapping
into new markets and/or increased its market share; and
(v) the materiality and nature of the business relation of holding companies,
fellow subsidiaries or associated companies with our Group and the Related
Entity Participant’s contribution in such holding companies, fellow
subsidiaries or associated companies of our Group which may benefit the
core business of our Group through a collaborative relationship.
Amongst the Service Providers eligible for the granting of the Options:
(i) advisers and consultants are those who would play significant roles in our
Group’s business development by contributing their specialised skills and
knowledge in the business activities of our Group on a continuing and
recurring basis. Such advisers and consultants would possess industry-
specific knowledge or expertise or valuable experience or deep
understanding or insight in the business of our Group. Their continuing and
recurring engagement and cooperation with our Group would benefit our
Group with frequent and successive strategic advice and guidance in its
ordinary and usual course of business, which are substantively comparable
to contributions of highly-skilled or executive employees of our Group; and
(ii) distributors, contractors, suppliers and agents are to directly contribute to
the long-term growth of our Group’s business by taking roles or providing
services that are in a continuing and recurring nature in its ordinary and
usual course of business. The works of distributors, contractors, suppliers
and agents are closely connected with various areas of our Group’s day-to-
day operations, including sales, procurement, marketing, manufacturing and
development of construction equipment, and their performances will
contribute to the operating performance and financial results of our Group.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-25 –


--- page 545 ---
In assessing the eligibility of a Service Provider, our Board will consider all
relevant factors as appropriate, including, among others:
(i) in respect of advisers and consultants:
A. the expertise, professional qualifications and industry experience of the
Service Provider;
B. the performance of the Service Provider and track record, including
whether the Service Provider has a proven track record of delivering
quality services;
C. the prevailing market fees chargeable by other services providers;
D. our Group’s period of engagement of or collaboration with the Service
Provider; and
E. the Service Provider’s actual or potential contribution to our Group in
terms of a reduction in costs or an increase in turnover or profit;
(ii) in respect of distributors, contractors, suppliers and agents:
A. the scale of the Service Provider’s business dealings with our Group in
terms of purchases or sales attributable to him;
B. the ability of the Service Provider to maintain the quality of services;
C. the performance of the Service Provider(s) and track record, including
whether the Service Provider has a proven track record of delivering
quality services;
D. the benefits and strategic value brought by the Service Provider to our
Group’s development and future prospects in terms of the profits and/
or income attributable to the Service Provider’s collaboration with our
Group;
E. the scale of the Service Provider’s collaboration with our Group and
the length of business relationships between the Service Provider and
our Group; and
F. the business opportunities and external connections that the Service
Provider has introduced or will potentially introduce to our Group.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-26 –


--- page 546 ---
(c) Exercise Price
The Exercise Price shall be a price solely determined by our Board and notified
to a Participant and shall be at least the higher of: (i) the closing price of our Shares
as stated in the Stock Exchange’s daily quotations sheet on the Offer Date, which must
be a Business Day; (ii) the average of the closing prices of our Shares as stated in the
Stock Exchange’s daily quotations sheets for the five Business Days immediately
preceding the Offer Date; and (iii) the nominal value of our Shares on the Offer Date,
provided that in the event of fractional prices, the Exercise Price per Share shall be
rounded upwards to the nearest whole cent. For the purpose of calculating the
Exercise Price where our Company has been listed on the Stock Exchange for less
than five Business Days, the new issue price shall be used as the closing price for any
Business Day falling within the period before listing.
(d) Grant of Options and acceptance of offers
An offer of the grant of Options must be accepted within five Business Days
inclusive of the Offer Date. The amount payable by the grantee of an Option to our
Company on acceptance of the offer of the grant of an Option is HK$1.
(e) Maximum number of Shares available for subscription
(i) The total number of Shares which may be issued in respect of all options
(including the Options) and awards to be granted under the Share Option
Scheme and any other share option scheme(s) and share award scheme(s) of
our Company shall not exceed 10 % of the total number of Shares in issue
as at the Listing Date (the “ Scheme Mandate Limit ”). Therefore, it is
expected that our Company may grant Options in respect of up to
162,500,000 Shares (or such numbers of Shares as shall result from a
sub-division or a consolidation of such 162,500,000 Shares from time to
time) to the participants under the Share Option Scheme.
(ii) Subject to sub-paragraph (i) above, the total number of Shares which may
be issued in respect of all options (including the Options) or awards to be
granted to the Service Provider(s) under the Share Option Scheme and any
other share option scheme(s) and share award scheme(s) of our Company
shall not exceed 1% of the total number of Shares in issue as at the Listing
Date (the “ Service Provider Sublimit ”). The Service Provider Sublimit
shall be within the Scheme Mandate Limit.
(iii) For the avoidance of doubt, our Shares underlying any options (including
the Options) granted under the Share Option Scheme or any other share
option scheme(s) of our Company which have been cancelled will be
counted for the purpose of calculating the Scheme Mandate Limit and the
Service Provider Sublimit. Where our Company has reissued such cancelled
APPENDIX V STATUTORY AND GENERAL INFORMATION
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--- page 547 ---
options, our Shares underlying both the cancelled options and the re-issued
options will be counted as part of the total number of Shares subject to sub-
paragraphs (i) and (ii) above. The options (including the Options) or awards
lapsed in accordance with the terms of the Share Option Scheme or (as the
case may be) any other share option scheme(s) or share award scheme(s) of
our Company will, however, not be regarded as utilised for the purpose of
calculating the Scheme Mandate Limit and the Service Provider Sublimit.
(iv) The Scheme Mandate Limit (and the Service Provider Sublimit) as
mentioned above may be refreshed at any time by approval of our
Shareholders in general meeting after three years from the Adoption Date or
the date of Shareholders’ approval for the last refreshment, provided that:
a. the total number of the Shares which may be issued in respect of all
options (including the Options) or awards to be granted under the
Share Option Scheme and any other share option scheme(s) and share
award scheme(s) of our Company under the Scheme Mandate Limit as
refreshed (the “ New Scheme Mandate Limit ”) shall not exceed 10%
(and the Service Provider Sublimit as refreshed (the “ New Service
Provider Sublimit ”) shall not exceed 1%) of the Shares in issue as at
the date of our Shareholders’ approval of the New Scheme Mandate
Limit and the New Service Provider Sublimit. Our Company shall send
a circular to our Shareholders containing the number of options
(Including the Options) and awards that were already granted under the
Scheme Mandate Limit and the Service Provider Sublimit, and the
reason for the refreshment;
b. any refreshment to the Scheme Mandate Limit (and the Service
Provider Sublimit) within any three-year period shall be approved by
our Shareholders subject to the following provisions:
(A) any controlling shareholders and their associates (or if there is no
controlling shareholder, Directors (excluding independent
non-executive Directors) and the chief executive of our Company
and their respective associates) shall abstain from voting in
favour of the relevant resolution at the general meeting; and
(B) our Company shall comply with the requirements under Rules
13.39(6) and (7), 13.40, 13.41 and 13.42 of the Listing Rules; and
c. the requirements under sub-paragraph b above do not apply if the
refreshment is made immediately after an issue of securities by our
Company to our Shareholders on a pro rata basis as set out in Rule
13.36(2)(a) of the Listing Rules such that the unused part of the
Scheme Mandate Limit (as a percentage of the total number of Shares
in issue) upon refreshment is the same as the unused part of the
Scheme Mandate Limit immediately before the issue of securities,
rounded to the nearest whole Share.
APPENDIX V STATUTORY AND GENERAL INFORMATION
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--- page 548 ---
(v) Our Company may seek separate approval by our Shareholders in general
meeting for granting options (including the Options) or awards under the
Share Option Scheme or any other share option scheme(s) or share award
scheme(s) of our Company beyond the Scheme Mandate Limit or, if
applicable, the New Scheme Mandate Limit, provided the options (including
the Options) or awards in excess of the Scheme Mandate Limit or, if
applicable, the New Scheme Mandate Limit, are granted only to the
Participants specifically identified by our Company before such approval is
sought. Our Company shall send a circular to our Shareholders containing
the name of each specified Participant who may be granted such options
(including the Options) or awards, the number and terms of the options
(including the Options) or awards to be granted to each Participant, and the
purpose of granting options (including the Options) or awards to the
specified Participants with an explanation as to how the terms of the options
(including the Options) or awards serve such purpose. The number and
terms of the options (including the Options) and awards to be granted shall
be fixed before our Shareholders’ approval.
(f) Limit on granting options or awards to individual Participant
(i) The total number of our Shares issued and to be issued in respect of all
options (including the Options) and awards granted to each Participant
(excluding any options (including the Options) or awards lapsed in
accordance with the terms of the relevant schemes) under the Share Option
Scheme and any other share option scheme(s) and share award scheme(s) of
our Company in any 12-month period up to and including the date of grant
shall not exceed 1% of the Shares in issue (the “ 1% Individual Limit ”).
(ii) Where any grant of the Options to a Participant would result in our Shares
issued and to be issued in respect of all options (including the Options) and
awards granted and to be granted to such Participant (excluding any options
(including the Options) or awards lapsed in accordance with the terms of
the relevant schemes) in the 12-month period up to and including the date
of such grant representing in aggregate over the 1% Individual Limit, such
grant shall be separately approved by our Shareholders in general meeting
with such Participant and his/her close associates (or associates if the
Participant is a connected person), abstaining from voting. Our Company
shall send a circular to our Shareholders disclosing the identity of the
Participant, the number and terms of Options to be granted (and the options
or awards previously granted to such Participant in the 12-month period),
the purpose of granting the Options to such Participant and an explanation
as to how the terms of the Options serve such purpose. The number and
terms (including the Exercise Price) of Options to be granted to such
Participant shall be fixed before our Shareholders’ approval.
APPENDIX V STATUTORY AND GENERAL INFORMATION
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--- page 549 ---
(g) Grant of Options to a Director, chief executive of our Company or Substantial
Shareholder or any of their respective associates
(i) Any grant of the Options to a Director, or a chief executive of our Company
or Substantial Shareholder, or any of their respective associates shall be
approved by our independent non-executive Directors (excluding any
independent non-executive Director who is the proposed grantee of the
Option).
(ii) Where any grant of the Options to an independent non-executive Director or
a Substantial Shareholder, or any of their respective associates, would result
in the Shares issued and to be issued in respect of all options (including the
Options) and awards granted under the Share Option Scheme and any other
share option scheme(s) and share award scheme(s) of our Company
(excluding any options (including the Options) or awards lapsed in
accordance with the terms of the relevant schemes) to such person in the
12-month period up to and including the date of such grant representing in
aggregate over 0.1% of our Shares in issue, such further grant of the
Options shall be subject to:
(a) the issue of a circular by our Company to our Shareholders; and
(b) the approval by our Shareholders in general meeting at which the
proposed grantee, his/her associates and all core connected persons (as
defined in the Listing Rules) of our Company shall abstain from voting
in favour at such general meeting, and in accordance with the
requirements under Rules 13.40, 13.41 and 13.42 of the Listing Rules.
(iii) The circular to be issued by our Company to our Shareholders pursuant to
sub-paragraph (ii)(a) above shall contain the following information:
(a) details of the number and terms of the Options to be granted to each
Participant, which shall be fixed before the Shareholders’ meeting
(which shall include the information required under Rules 17.03(5) to
17.03(10) and Rule 17.03(19) of the Listing Rules);
(b) the views of the independent non-executive Directors (excluding any
independent non-executive Director who is the proposed grantee of the
Options) as to whether the terms of the grant are fair and reasonable
and whether such grant is in the interests of our Company and
Shareholders as a whole, and their recommendation to the independent
Shareholders as to voting;
APPENDIX V STATUTORY AND GENERAL INFORMATION
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--- page 550 ---
(c) the information required under Rule 17.02(c) of the Listing Rules; and
(d) the information required under Rule 2.17 of the Listing Rules.
(iv) Any change in the terms of the Options granted to a Participant who is a
Director, or a chief executive of the Company or Substantial Shareholder, or
any of their respective associates, shall be approved by our Shareholders in
the manner as set out in Rule 17.04(4) of the Listing Rules if the initial
grant of the Options requires such approval (except where the changes take
effect automatically under the existing terms of the Share Option Scheme).
For the avoidance of doubt, the requirements for the grant to a director or
chief executive of our Company set out in Rule 17.04 of the Listing Rules
do not apply where the Participant is only a proposed director or chief
executive of our Company.
(h) Restrictions on the times of grant of Options
(i) Our Company may not grant any Options after any inside information has
come to its knowledge until (and including) the trading day after such inside
information has been announced pursuant to the requirements of the Listing
Rules and the SFO. In particular, no Option may be granted during the
period commencing one month immediately preceding the earlier of:
(a) the date of the meeting of our Board (such date to be first notified to
the Stock Exchange in accordance with the Listing Rules) for the
approval of our Company’s results for any year, half-year, quarterly or
other interim period (whether or not required under the Listing Rules);
and
(b) the last day on which our Company shall publish an announcement of
our Company’s results for any year or half-year under the Listing
Rules, or quarterly or other interim period (whether or not required
under the Listing Rules),
and ending on the date of the results announcement, and no Option may be
granted during any period of delay in publishing a results announcement.
APPENDIX V STATUTORY AND GENERAL INFORMATION
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--- page 551 ---
(ii) Further to the restrictions in sub-paragraph (i) above, no Option may be
granted to a Director on any day on which financial results of our Company
are published and:
(a) during the period of 60 days immediately preceding the publication
date of the annual results or, if shorter, the period from the end of the
relevant financial year up to the publication date of the results; and
(b) during the period of 30 days immediately preceding the publication
date of the quarterly results (if any) and half-year results or, if shorter,
the period from the end of the relevant quarterly or half-year period up
to the publication date of the results.
(i) Time of exercise of Option
An Option may be exercised in accordance with the terms of the Share Option
Scheme at any time during a period as our Board may determine which shall not
exceed 10 years from the date of grant subject to the provisions of early termination
thereof (the “ Option Period ”).
(j) V esting period
The vesting period for the Options shall not be less than 12 months from the
Offer Date, provided that where the Participant is:
(i) an Employee Participant who is a director or senior manager of our
Company and specifically identified by our Board, the remuneration
committee of our Board shall; or
(ii) an Employee Participant other than a director and senior manager of our
Company and specifically identified by our Board, our Board shall
have the authority to determine a shorter vesting period under the following specific
circumstances:
(a) grants of the Options in compensatory nature to a new Employee Participant
to replace his/her share options or awards forfeited when leaving his/her
previous employer;
(b) grants of the Options to an Employee Participant whose employment is
terminated due to death or disability or occurrence of any out-of-control
event;
(c) grants of the Options with performance-based vesting conditions in lieu of
time-based vesting criteria;
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-32 –


--- page 552 ---
(d) grants of the Options that are made in batches during a year for
administrative and compliance reasons, which include the Options that
should have been granted earlier if not for such administrative or
compliance reasons but had to wait for a subsequent batch. In such case, the
vesting period may be shorter to reflect the time from which the Options
would have been granted;
(e) grants of the Options with a mixed or accelerated vesting schedule such as
where the Options may vest evenly over a period of 12 months; and
(f) grants of the Options with a total vesting and holding period of more than
12 months.
(k) Performance target and clawback mechanism
(i) Unless our Board otherwise determines and states in the offer to a grantee,
no performance target is attached to the Options. The description (which
may be qualitative) of the performance targets, if any, attached to the
Options may include a general description of the target levels and
performance related measures and the method for assessing how they are
satisfied.
(ii) The performance target, if any, shall be assessed in accordance with one or
more of the following performance measure(s) (the “ Performance
Measure(s) ”), or derivations of such Performance Measure(s) that may be
related to the individual grantee or our Group as a whole or to a subsidiary,
division, department, region, function or business unit of our Company or
the relevant Related Entity Participant or the relevant Service Provider
including but not limited to: cash flow, earnings, earnings per share, market
value or economic value added, profits, return on assets, return on equity,
return on investment, sales, revenue, share price, total shareholder return,
customer satisfaction metrics, operating results and such other goal as our
Board may determine from time to time.
(iii) Each Performance Measure may be assessed either annually or cumulatively
over a period of years, on an absolute basis or relative to a pre-established
target, to previous years’ results or to a designated comparison group, in
each case as specified by our Board (or, in case the grantee is a director or
senior manager of our Company, the remuneration committee of our Board)
in its sole discretion. Our Board may, in its sole discretion, amend or adjust
the Performance Measures and establish any special rules and conditions to
which the Performance Measures shall be subject at any time.
APPENDIX V STATUTORY AND GENERAL INFORMATION
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--- page 553 ---
(iv) Notwithstanding the terms and conditions of the Share Option Scheme, our
Board may provide in the notice of offer that any Option prior to it being
exercised may be subject to clawback or a longer vesting period if any of
the events stated in sub-paragraph (v) below shall occur.
(v) If any of the following events shall occur during an Option Period:
(i) there being a material misstatement in the audited financial statements
of our Company that requires a restatement;
(ii) the grantee being guilty of fraud, gross negligence or persistent or
serious or wilful misconduct, regardless of whether there is any
accounting restatement or a material error in calculating or determining
the performance metrics or other criteria; and
(iii) if the grant or exercise of any Option is linked to any performance
targets and our Board is of the opinion that there occur any
circumstances that show or lead to any of the prescribed performance
targets having been assessed or calculated in a materially inaccurate
manner,
our Board may (but is not obliged to) by notice in writing to the grantee
concerned (aa) claw back such number of the Options (to the extent not being
exercised) granted as our Board may consider appropriate; or (bb) extend the
vesting period (regardless of whether the initial vesting date has occurred) in
relation to all or any of the Options (to the extent not being exercised) to such
longer period as our Board may consider appropriate. The Options that are
clawed back pursuant to this paragraph (k) shall be regarded as cancelled and the
Options so cancelled shall be regarded as utilised for the purpose of calculating
the Scheme Mandate Limit.
(l) Ranking of Shares
Our Shares to be allotted upon the exercise of an Option will be subject to all the
provisions of the Articles for the time being in force and will rank pari passu in all
respects with our fully paid Shares in issue on the date of allotment and accordingly
will entitle the holders to participate in all dividends or other distributions paid or
made after the date of allotment other than any dividend or other distribution
previously declared or recommended or resolved to be paid or made with respect to a
record date which shall be on or before the date of allotment, save that our Shares
allotted upon the exercise of any Option shall not carry any voting rights until the
name of the grantee has been duly entered on the register of members of our Company
as the holder thereof.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-34 –


--- page 554 ---
(m) Transferability of Option
An Option shall be personal to the grantee and shall not be transferrable or
assignable, save where applicable under the Listing Rules, when the Stock Exchange
has granted a waiver to the grantee to allow the transfer of his/her Option to a vehicle
(such as a trust or a private company) for the benefit of the grantee and any family
members of such grantee (e.g. for estate planning or tax planning purposes) that would
continue to meet the purpose of the Share Option Scheme and comply with other
requirements under the Listing Rules and where such waiver is granted, the Stock
Exchange shall require our Company to disclose the beneficiaries of the trust or the
ultimate beneficial owners of the transferee vehicle, no grantee shall in any way sell,
transfer, charge, mortgage, encumber or create any interest (legal or beneficial) in
favour of any third party over or in relation to any Option. Any breach of the
foregoing by a grantee shall entitle our Company to cancel, revoke or terminate any
Option granted to such grantee to the extent not already exercised.
(n) Rights on cessation of employment by death
In the event that the grantee (being an individual) dies before exercising the
Option in full, his/her legal personal representative(s) may exercise the Option up to
the grantee’s entitlement (to the extent which has become exercisable and not already
exercised) within a period of 12 months following his/her death, provided that where
any of the events set out in (r), (s) and (t) below occurs prior to his/her death or
within such 12-month period following his/her death, then his/her legal personal
representative(s) may so exercise the Option within such of the various periods
respectively set out in such paragraphs instead of the period referred to in this
paragraph and provided further that if within a period of three years prior to the
grantee’s death, the grantee had committed any of the acts as specified in paragraph
(u)(4) below which would have entitled our Company to terminate his/her employment
prior to his/her death, our Board may in its absolute discretion at any time resolve to
forthwith terminate the Option of the grantee (to the extent not already lapsed or
exercised) by serving written notice to his/her legal personal representatives and the
Option (to the extent not already exercised) shall lapse on the date of the relevant
Board resolution.
(o) Rights on cessation of employment by dismissal
In the event that the grantee is an employee of our Group when an offer is made
to him/her and he/she subsequently ceases to be an employee of our Group by reason
of a termination of his/her employment on one or more of the grounds specified in
paragraph (u)(4) below, his/her Option shall lapse automatically (to the extent not
already exercised) on the date of cessation of his/her employment with our Group and
in the event the grantee has exercised the Option in whole or in part, but Shares have
not been allotted to him/her, the grantee shall, unless our Board determines otherwise,
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-35 –


--- page 555 ---
be deemed not to have so exercised such Option and our Company shall refund to the
grantee the subscription price in respect of the purported exercise of such Option
without interest.
(p) Rights on cessation of employment for other reasons
In the event that the grantee is an employee of our Group when an offer is made
to him/her and he/she subsequently ceases to be an employee of our Group for any
reason other than (i) his/her death or (ii) the termination of his/her employment on
one or more of the grounds specified in paragraph (u)(4) below, the Option (to the
extent not already lapsed or exercised) shall lapse on the expiry of three months after
the date of cessation of such employment.
(q) Reorganisation of capital structure
In the event of any alteration in the capital structure of our Company whilst any
Option remains exercisable, whether by way of capitalisation of profits or reserves,
rights issue, open offer, consolidation, subdivision or reduction of the share capital of
our Company (other than an issue of Shares as consideration in respect of a
transaction to which any member of our Group is a party), such corresponding
adjustments (if any) shall be made in the number of our Shares subject to the Option
so far as unexercised; and/or the Exercise Price of any unexercised Option, as the
auditors shall certify in writing or independent financial adviser to our Company shall
confirm in writing (as the case may be) to our Board to be in their opinion fair and
reasonable and in compliance with the relevant provisions of the Listing Rules (or any
guideline or supplemental guideline issued by the Stock Exchange from time to time)
(no such certification or confirmation is required in case of adjustment made on a
capitalisation issue), provided that any such adjustments shall give a grantee the same
proportion of the issued share capital of our Company, rounded to the nearest whole
Share, as (but in any event shall not be greater than) that to which he/she/it was
previously entitled and the subscription price payable by a grantee on the full exercise
of any Option shall remain as nearly as possible the same (but shall not be greater
than, except upon any consolidation of the Shares pursuant to this paragraph (q)) as it
was before such event, but no adjustment shall be made to the effect of which would
be to enable a Share to be issued at less than its nominal value.
(r) Rights on a general offer
In the event of a general offer or partial offer (whether by way of takeover offer
or share repurchase offer or scheme of arrangement or otherwise in like manner) being
made to all our Shareholders (or all such holders other than the offeror and/or any
persons controlled by the offeror and/or any person acting in association or concert
with the offeror), our Company shall use its best endeavours to procure that an
appropriate offer is extended to all the grantee (on comparable terms, mutatis
mutandis , and assuming that they will become, by exercise in full of the Options
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-36 –


--- page 556 ---
granted to them, as Shareholders). If such offer becoming or being declared
unconditional, the grantee shall, notwithstanding any terms on which his/her Options
were granted, be entitled to exercise the Option in full (to the extent not already
lapsed or exercised) at any time within one month after the date on which the offer
becomes or is declared unconditional.
(s) Rights on winding-up
In the event a notice is given by our Company to our members to convene a
general meeting for the purposes of considering, and if thought fit, approving a
resolution to voluntarily wind-up our Company, our Company shall on the same date
as or soon after it despatches such notice to each member of our Group give notice
thereof to all grantees and thereupon, each grantee shall be entitled to exercise all or
any of his/her Options (to the extent not already lapsed or exercised) at any time not
later than two Business Days prior to the proposed general meeting of our Company
by giving notice in writing to our Company, accompanied by a remittance for the full
amount of the subscription price in respect of which the notice is given whereupon our
Company shall as soon as possible and, in any event, no later than the Business Day
immediately prior to the date of the proposed general meeting referred to above, allot
the relevant Shares to the grantee credited as fully paid.
(t) Rights on compromise or arrangement
In the event of a compromise or arrangement between our Company and our
Shareholders and/or the creditors of our Company being proposed in connection with a
scheme for the reconstruction of our Company or its amalgamation with any other
company or companies pursuant to the Companies Act, our Company shall give notice
thereof to all the grantees on the same day as it gives notice of the meeting to our
Shareholders and/or the creditors to consider such a compromise or arrangement and
the Options (to the extent not already lapsed or exercised) shall become exercisable in
whole or in part on such date not later than two Business Days prior to the date of the
general meeting directed to be convened by the court for the purposes of considering
such compromise or arrangement (the “Suspension Date”), by giving notice in writing
to our Company accompanied by a remittance for the full amount of the subscription
price in respect of which the notice is given whereupon our Company shall as soon as
practicable and, in any event, no later than 3:00 p.m. on the Business Day
immediately prior to the date of the proposed general meeting, allot and issue the
relevant Shares to the grantee credited as fully paid. With effect from the Suspension
Date, the rights of all grantees to exercise their respective Options shall forthwith be
suspended. Upon such compromise or arrangement becoming effective, all Options
shall, to the extent that they have not been exercised, lapse and determine. Our Board
shall endeavour to procure that our Shares issued as a result of the exercise of Options
hereunder shall for the purposes of such compromise or arrangement form part of the
issued share capital of our Company on the effective date thereof and that such Shares
shall in all respects be subject to such compromise or arrangement. If for any reason
APPENDIX V STATUTORY AND GENERAL INFORMATION
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--- page 557 ---
such compromise or arrangement is not approved by the court (whether upon the terms
presented to the court or upon any other terms as may be approved by such court), the
rights of grantees to exercise their respective Options shall with effect from the date
of the making of the order by the court be restored in full but only up to the extent
not already exercised and shall thereupon become exercisable (but subject to the other
terms of the Share Option Scheme) as if such compromise or arrangement had not
been proposed by our Company and no claim shall lie against our Company or any of
our officers for any loss or damage sustained by any grantee as a result of such
proposal, unless any such loss or damage shall have been caused by the act involving
fraud, gross negligence or wilful misconduct on the part of our Company or any of our
officers.
(u) Lapse of Option
An Option shall lapse automatically and not be exercisable (to the extent not
already exercised) on the earliest of:
(1) the expiry of the Option Period;
(2) the expiry of any of the periods upon the occurrence of the relevant event
referred to in paragraphs (n), (p), (r), (s) or (t) above;
(3) subject to paragraph (s) above, the date of the commencement of the
winding-up of our Company;
(4) in respect of a grantee who is an employee of our Group when an offer is
made to him/her, the date on which the grantee ceases to be an employee of
our Group by reason of a termination of his/her employment on any one or
more of the grounds that he/she has been guilty of fraud, gross negligent, or
wilful or serious misconduct, or has committed any act of bankruptcy or has
become insolvent or has made any arrangement or composition with his/her
creditors generally, or has been convicted of any criminal offence involving
his/her integrity or honesty or bringing our Group into disrepute or (if so
determined by our Board) on any other ground on which an employer would
be entitled to terminate his/her employment summarily pursuant to any
applicable laws or the grantee’s employment or service contract with our
Group;
(5) in respect of a grantee other than an employee of our Group, the date of on
which our Board shall at its absolute discretion determine that: (i) the
grantee or his/her/its associate has committed any breach of any contract
entered into between the grantee or his/her/its associate on the one part and
any member of our Group on the other part; (ii) the grantee has committed
any act of bankruptcy or has become insolvent or is subject to any winding-
up, liquidation or analogous proceedings or has made any arrangement or
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-38 –


--- page 558 ---
composition with his/her/its creditors generally; (iii) the grantee could no
longer make any contribution to the growth and development of any member
of our Group by reason of the cessation of its relations with our Group or
by any other reason whatsoever; or (iv) the grantee has been convicted of
any criminal offence involving his/her/its integrity or honesty or bringing
our Group into disrepute; and
(6) the date on which our Board exercises our Company’s right to cancel,
revoke or terminate the Option on the ground that the grantee commits a
breach of paragraph (m) in respect of that or any other Option.
(v) Cancellation of Options granted
Any cancellation of the Options granted but not exercised may be effected on
such terms as may be agreed with the relevant grantee, as our Board may in its
absolute discretion sees fit and in manner that complies with all applicable legal
requirements for such cancellation. Where our Company cancels the Options and
makes a new grant to the same grantee, such new grant may only be made under the
Share Option Scheme with available Scheme Mandate Limit and Service Provider
Sublimit or the limits approved by our Shareholders pursuant to paragraphs (e)(iv) and
(v). The Options cancelled will be regarded as utilised for the purpose of calculating
the Scheme Mandate Limit (and the Service Provider Sublimit).
(w) Period of the Share Option Scheme
The Share Option Scheme will remain in force for a period of 10 years
commencing on the date on the Adoption Date and shall expire at the close of
business on the Business Day immediately preceding the tenth anniversary thereof.
(x) Alteration of the Share Option Scheme
(i) Subject to sub-paragraphs (ii) to (iv) below, the Share Option Scheme may
be altered in any respect by resolution of our Board except that:
(a) any alterations to the terms and conditions of the Share Option Scheme
which are of a material nature; and
(b) any alterations to the provisions of the Share Option Scheme relating
to the matters governed by Rule 17.03 of the Listing Rules to the
advantage of Participants,
which shall be approved by a resolution of our Shareholders in general meeting.
APPENDIX V STATUTORY AND GENERAL INFORMATION
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--- page 559 ---
(ii) Any change to the terms of the Options granted to a Participant shall be
approved by our Board, the remuneration committee of our Board, the
independent non-executive Directors and/or our Shareholders (as the case
may be) if the initial grant of the Options was approved by our Board, the
remuneration committee of our Board, the independent non-executive
Directors and/or our Shareholders (as the case may be), unless the
alterations take effect automatically under the existing terms of the Share
Option Scheme.
(iii) Any change to the authority of the Directors or the administrators of the
Share Option Scheme to alter the terms of the Share Option Scheme, shall
be approved by our Shareholders in general meeting.
(iv) The amended terms of the Share Option Scheme and/or the Options pursuant
to this paragraph (x) shall still comply with the relevant requirements of
Chapter 17 of the Listing Rules.
(y) Termination
(i) Our Company, by resolution in general meeting, or our Board may at any
time terminate the operation of the Share Option Scheme and in such event
no further Options will be offered but Options granted prior to such
termination shall continue to be valid and exercisable in accordance with
the provisions of the Share Option Scheme.
(ii) Details of the Options granted, including Options exercised or outstanding
under the Share Option Scheme shall be disclosed in the circular to our
Shareholders seeking approval of the first new scheme to be established or
refreshment of Scheme Mandate Limit under any other existing scheme after
such termination.
(z) Conditions of the Share Option Scheme
The Share Option Scheme is conditional upon the Listing Committee granting the
listing of, and permission to deal in, any Shares to be issued pursuant to the exercise
of any Options and commencement of dealings in our Shares on the Stock Exchange.
3. Present status of the Share Option Scheme
Application has been made to the Listing Committee for the listing of and permission
to deal in the Shares which fall to be issued pursuant to the exercise of Options which may
be granted under the Share Option Scheme.
As at the date of this prospectus, no Option has been granted or agreed to be granted
under the Share Option Scheme.
APPENDIX V STATUTORY AND GENERAL INFORMATION
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F. OTHER INFORMATION
1. Tax and other indemnities
Our Controlling Shareholders have entered into a Deed of Indemnity in favour of our
Company (for itself and as trustee for each of its subsidiaries) pursuant to which our
Controlling Shareholders have agreed to jointly and severally indemnify and at all times
keep each member of our Group fully and effectively indemnified against, among others,
the followings:
(a) the amount of any and all taxation paid or required to be paid by any of the
members of our Group resulting from or by reference to any income, profits,
gains, transactions, events, matters or things earned, accrued, received or entered
into (or deemed to be so earned, accrued, received or entered into) or occurring
on or before the Listing Date; and
(b) all losses, payments, charges, settlement payment, costs (including legal costs
and other professional costs on a full indemnity basis), liability, damages,
charges, fees, fines or expenses which any of the members of our Group may
incur or suffer, accrue, directly or indirectly, from any act of the members of our
Group arising from and/or in connection with any non-compliance, failure, delay
or defect of corporate or regulatory compliance on the part of any or all members
of our Group of any provision of, the Companies Ordinance or any other
applicable laws in the world of any of the members of our Group on or before
the Listing and/or as a result of and/or in relation to all litigations, arbitrations,
claims (including counter-claims), actions, complaints, demands, judgments
and/or legal proceedings by or against any of the members of our Group which
were issued, accrued and/or arising from any act of any member of our Group at
any time on or before the Listing Date;
Our Controlling Shareholders will, however, not be liable under the Deed of
Indemnity to the extent that, among others:
(a) provision, reserve or allowance has been made for such taxation or liability for
such taxation in the audited accounts of our Group for each of the years ended 31
December 2020, 2021, 2022 and six months ended 30 June 2023; or
(b) the taxation or liability for such taxation falling on any member of our Group on
or after the Listing Date except such taxation or liability would not have arisen
but for any act or omission of, or transaction voluntarily effected by our
Company or any member of our Group (whether alone or in conjunction with
APPENDIX V STATUTORY AND GENERAL INFORMATION
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--- page 561 ---
some other act, omission or transaction, whenever occurring) without the prior
written consent or agreement of our Controlling Shareholders other than any such
act, omission or transaction:
(i) carried out or effected in the ordinary course of business or in the ordinary
course of acquiring and disposing of capital assets on or before the Listing
Date; or
(ii) carried out, made or entered into pursuant to a legally binding commitment
created on or before the Listing Date; or
(iii) consisting of any member of our Group ceasing, or being deemed to cease,
to be a member of our Group for the purposes of any matter of taxation on
or before the Listing Date; or
(c) the taxation or liability for such taxation arises or is incurred or is increased by
an increase in rates of taxation or other penalties as a result of any retrospective
change in law or practice coming into force after the date of the Deed of
Indemnity or any retrospective increase in tax rates coming into force after the
date of the Deed of Indemnity; or
(d) any provision or reserve made for taxation in the audited accounts of our Group
for each of the years ended 31 December 2020, 2021, 2022 and six months ended
30 June 2023 which is finally established to be an over-provision or an excessive
reserve as certified by a firm of accountants acceptable to our Company, then our
Controlling Shareholders’ liability (if any) in respect of such taxation shall be
reduced by an amount not exceeding such over-provision or excessive reserve; or
(e) for which any member of our Group is liable in respect of or in consequence of
any event occurring or income, profits or gain earned, accrued or received or
alleged to have been earned, accrued or received or transactions entered into in
the ordinary course of business on in the ordinary course of acquiring and
disposing of capital assets after the Listing Date.
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, to the best knowledge of our Directors, there is no
current material litigation or any pending or threatened litigation or arbitration proceedings
against any member of our Group that could have a material adverse effect on our financial
condition or results of operation.
APPENDIX V STATUTORY AND GENERAL INFORMATION
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--- page 562 ---
3. The Sole Sponsor
The Sole Sponsor has made an application on behalf of our Company to the Stock
Exchange for listing of, and permission to deal in, our Shares in issue and to be issued as
mentioned herein and any Shares which may fall to be allotted and issued pursuant to the
exercise of any options which may be granted under the Share Option Scheme on the Stock
Exchange.
The Sole Sponsor has confirmed to the Stock Exchange that it satisfies the
independence test as stipulated under Rule 3A.07 of the Listing Rules.
The fees of the Sole Sponsor are HK$4.4 million and are payable by our Company.
4. Preliminary expenses
The preliminary expenses relating to the incorporation of our Company are
approximately US$5,400 and are payable by our Company.
There is no annual cost of compliance with applicable rules and regulations during the
Track Record Period.
5. Promoter
Our Company has no promoter for the purpose of the Listing Rules.
6. Qualifications of experts
The followings are the respective qualifications of the experts who have given their
opinion or advice which is contained in this prospectus:
Name Qualification
Cinda International Capital Limited A corporation licensed under the SFO to carry
on Type 1 (dealing in securities) and Type 6
(advising on corporate finance) regulated
activities
PricewaterhouseCoopers Certified Public Accountants under Professional
Accountants Ordinance (Cap. 50) and
Registered Public Interest Entity Auditor under
Accounting and Financial Reporting Council
Ordinance (Cap. 588)
Conyers Dill & Pearman Legal advisers of our Company as to the laws
of the Cayman Islands
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-43 –


--- page 563 ---
Name Qualification
China Commercial Law Firm Legal advisers of our Company as to the laws
of the PRC
Frost & Sullivan (Beijing) Inc.,
Shanghai Branch Co.
Industry consultant
Roma Appraisals Limited Property valuer
None of the experts has any shareholding in any member of our Group or the right
(whether legally enforceable or not) to subscribe for or to nominate persons to subscribe
for securities in any member of our Group.
7. Consents of experts
Each of the parties listed in the paragraph headed “F. Other information – 6.
Qualifications of experts” of this Appendix to this prospectus has given and has not
withdrawn its written consent to the issue of this prospectus with the inclusion of its letter,
report, memorandum, valuation certificate, opinion and/or references to its name (as the
case may be), all of which are dated the date of this prospectus, in the form and context in
which they respectively appear in this prospectus.
8. Binding effect
This prospectus shall have the effect, if an application is made in pursuance hereof, 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.
9. Share Registrars
The register of members of our Company will be maintained in the Cayman Islands by
Conyers Trust Company (Cayman) Limited and a branch register of members of our
Company will be maintained in Hong Kong by Tricor Investor Services Limited. Save
where our Directors otherwise agree, all transfers and other documents of title to our
Shares must be lodged for registration with, and registered by, our branch share registrar in
Hong Kong and may not be lodged in the Cayman Islands.
10. No material adverse change
Our Directors confirm that there has been no material adverse change in our financial
prospects of our Company or its subsidiaries since 30 June 2023 (being the date to which
the latest audited financial statements of our Company were made up) and up to the date of
this prospectus.
APPENDIX V STATUTORY AND GENERAL INFORMATION
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--- page 564 ---
11. Particulars of our Selling Shareholders
The particulars of our Selling Shareholders are set out as follows:
Name: Prosperity Cleanness Sunrise Cleanness
Registered address: Commerce House
Wickhams Cay 1
P .O. Box 3140
Road Town, Tortola
BVI VG1110
Commerce House
Wickhams Cay 1
P .O. Box 3140
Road Town, Tortola
BVI VG1110
Description: An investment holding
company incorporated in
the BVI with limited
liability
An investment holding
company incorporated in
the BVI with limited
liability
Sale Shares: 20,312,500 Shares 20,312,500 Shares
Interest of our
Directors in the
Sale Shares:
Prosperity Cleanness is
wholly-owned by Mr. Li,
being an executive Director
and one of our Controlling
Shareholders
Sunrise Cleanness is
wholly-owned by Mr. Chen,
being an executive Director
and one of our Controlling
Shareholders
12. Miscellaneous
Save as disclosed herein:
(a) within the two years immediately preceding the date of this prospectus:
(i) no share or loan capital of our Company or any of its subsidiaries has been
issued, agree to be issued or is proposed to be issued fully or partly paid
either for cash or for a consideration other than cash;
(ii) no commission, discount, brokerage or other special term has been granted
in connection with the issue or sale of any share or loan capital of our
Company or any of its subsidiaries;
(iii) no commission has been paid or payable (except to sub-underwriter) for
subscribing or agreeing to subscribe, or procuring or agreeing to procure
subscriptions, for any Shares; and
(iv) no founder, management or deferred share of our Company has been issued
or agreed to be issued;
APPENDIX V STATUTORY AND GENERAL INFORMATION
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--- page 565 ---
(b) no share, warrant or loan capital of our Company or any of its subsidiaries is
under option or is agreed conditionally or unconditionally to be put under option;
(c) all necessary arrangements have been made enabling our Shares to be admitted
into CCASS;
(d) our Directors confirm that none of them shall be required to hold any Share by
way of qualification and none of them has any interest in the promotion of our
Company;
(e) there has not been any interruption in the business of our Group which may have
or have had a significant effect on the financial position of our Group in the 12
months immediately preceding the date of this prospectus;
(f) none of the equity and debt securities of our Company is listed or dealt with in
any other stock exchange nor is any listing or permission to deal being or
proposed to be sought; and
(g) our Company has no outstanding convertible debt securities.
13. Bilingual Prospectus
The English language and Chinese language versions of this prospectus are being
published separately, in reliance upon the exemption provided in section 4 of the
Companies Ordinance (Exemption of Companies and Prospectuses from Compliance with
Provisions) Notice (Chapter 32L of the Laws of Hong Kong). In case of any discrepancies
between the English language version and the Chinese language version, the English
language version shall prevail.
APPENDIX V STATUTORY AND GENERAL INFORMATION
– V-46 –


--- page 566 ---
1. DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES IN HONG
KONG
The documents attached to the copy of this prospectus delivered to the Registrar of
Companies in Hong Kong for registration were:
(a) the written consents referred to in the paragraph headed “F. Other information – 7.
Consents of experts” in Appendix V to this prospectus;
(b) a copy of each of the material contracts referred to in the paragraph headed “B.
Further information about the business of our Group – 1. Summary of material
contracts” in Appendix V to this prospectus; and
(c) the statement of particulars of our Selling Shareholders as set out in the paragraph
headed “F. Other information – 11. Particulars of our Selling Shareholders” in
Appendix V to this prospectus.
2. DOCUMENTS A V AILABLE ON DISPLAY
Copies of the following documents will be published on the websites of the Stock
Exchange at www.hkexnews.hk and our Company at www.gzshqj.com for 14 days from the date
of this prospectus (both days inclusive):
(a) the Memorandum and Articles of Association;
(b) the accountant’s report of our Group from PricewaterhouseCoopers, the text of which
is set out in Appendix I to this prospectus;
(c) the audited consolidated financial statements of our Group for the years ended 31
December 2020, 2021 and 2022 and the six months ended 30 June 2023;
(d) the report on unaudited pro forma financial information of our Group from
PricewaterhouseCoopers, the text of which is set out in Appendix II to this prospectus;
(e) the summary of valuations and valuation report relating to certain property interests of
our Group prepared by Roma Appraisals Limited, the texts of which are set out in
Appendix III to this prospectus;
(f) the rules of the Share Option Scheme;
(g) the letter of advice prepared by Conyers Dill & Pearman summarising certain aspects
of Cayman Islands company law referred to in Appendix IV to this prospectus;
(h) the Cayman Companies Act;
APPENDIX VI DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES IN HONG KONG AND A V AILABLE ON DISPLAY
– VI-1 –


--- page 567 ---
(i) the material contracts referred to in the paragraph headed “B. Further information
about the business of our Group – 1. Summary of material contracts” in Appendix V
to this prospectus;
(j) the written consents referred to in the paragraph headed “F. Other information – 7.
Consents of experts” in Appendix V to this prospectus;
(k) the service agreements and letters of appointment referred to in the paragraph headed
“D. Disclosure of interests – 3. Particulars of service agreements and letters of
appointment” in Appendix V to this prospectus;
(l) the legal opinion issued by China Commercial Law Firm, the legal advisers to our
Company as to the laws of the PRC;
(m) the Industry Report prepared by Frost & Sullivan (Beijing) Inc., Shanghai Branch Co.
referred to in the section headed “Industry overview” of this prospectus; and
(n) the statement of particulars of our Selling Shareholders as set out in the paragraph
headed “F. Other information – 11. Particulars of our Selling Shareholders” in
Appendix V to this prospectus.
APPENDIX VI DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES IN HONG KONG AND A V AILABLE ON DISPLAY
– VI-2 –


--- page 568 ---
SHARE
OFFER
LOGO
Joint Bookrunners and Joint Lead Managers
Sole Sponsor
Shenghui Cleanness Group Holdings Limited
(Incorporated in the Cayman Islands with limited liability)
Stock Code: [•]
升輝清潔集團控股有限公司
Shenghui Cleanness Group Holdings Limited
升輝清潔集團控股有限公司
