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--- page 2 ---
If you are in any doubt about any of the contents of this prospectus, you should obtain independent professional advice.
UBoT Holding Limited
ʮ̡
(Incorporated in the Cayman Islands with limited liability)
LISTING ON GEM OF
THE STOCK EXCHANGE OF HONG KONG LIMITED
BY W AY OF SHARE OFFER
Number of Offer Shares
under the Share Offer
: 125,000,000 Shares (subject to the Offer Size
Adjustment Option)
Number of Public Offer Shares : 12,500,000 Shares (subject to reallocation)
Number of Placing Shares : 112,500,000 Shares (subject to reallocation
and the Offer Size Adjustment Option)
Offer Price : Not more than HK$0.60 per Offer Share and
expected to be not less than HK$0.50 per
Offer Share (payable in full on
application, subject to refund, plus
brokerage fee of 1.00%, SFC transaction
levy of 0.0027%, AFRC transaction levy of
0.00015% and Stock Exchange trading fee
of 0.00565%)
Nominal value : HK$0.001 per Share
Stock code : 8529
Sole Sponsor
Overall Coordinator
Joint Global Coordinators
Joint Bookrunners and Joint Lead Managers
Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited take no responsibility 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 and Available for Inspection” in Appendix V
to this prospectus, has been registered with the Registrar of Companies 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 Registrar of Companies in Hong Kong and the Securities and Futures Commission of Hong Kong take no responsibility as to the contents of this
prospectus or any of the other documents referred to above.
The Offer Price is currently expected to be fixed by an agreement between our Company and the Overall Coordinator (for itself and on behalf of the Underwriters) on the Price Determination
Date, which is expected to be on or Thursday, 30 May 2024. If our Company and the Overall Coordinator (for itself and on behalf of the Underwriters) are unable to reach an agreement on the
Offer Price, the Share Offer will not become unconditional and will lapse immediately. In such case, an announcement will be made immediately by our Company on the Stock Exchange’s website
at www.hkexnews.hk and our Company’s website at www.ubot.com.hk. The Offer Price is expected to be not more than HK$0.60 per Offer Share and not less than HK$0.50 per Offer Share,
unless otherwise announced together with brokerage of 1%, SFC transaction levy of 0.0027%, AFRC transaction levy of 0.00015% and Stock Exchange trading fee of 0.00565%, subject to refund
if the Offer Price should be lower than HK$0.60 (the maximum of the Offer Price). The Overall Coordinator (for itself and on behalf of the Underwriters), with the consent of our Company, may
extend or reduce the indicative Offer Price range stated in this prospectus at any time prior to the morning of the last day for lodging applications under the Public Offer should they consider it
appropriate (for instance, if the level of interest is below the indicative Offer Price range). If this occurs, a notice of 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.ubot.com.hk not later than the morning of the last day for lodging applications under the Public Offer. Further
details are set out in the sections headed “Structure and Conditions of the Share Offer” and “How to apply for the Public Offer shares” in this prospectus.
Prior to making an investment decision, prospective investors should consider carefully all of the information set out in this prospectus, including but not limited to the risk factors set
out in the section headed “Risk Factors” in this prospectus.
Prospective investors of the Offer Shares should note that the obligations of the Underwriters under the Underwriting Agreement to procure subscribers for or themselves to subscribe for the Offer
Shares are subject to the termination by Overall Coordinator (for itself and on behalf of the Underwriters) upon the occurrence of any of the events set out under the paragraph headed
“Underwriting – Grounds for Termination” in this prospectus, at any time prior to 8:00 a.m. (Hong Kong time) on the Listing Date. Should the Overall Coordinator (for itself and on behalf of the
Underwriters) terminate the Underwriting Agreement, the Share Offer will not proceed and will lapse.
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 offered, sold, pledged or transferred within
the United States or to, or for the account or benefit of U.S. persons, except in transactions exempt from, or not subject to, the registration requirements of the U.S. Securities Act. The Offer
Shares are being offered and sold outside the United States in offshore transactions in reliance on Regulation S under the U.S. Securities Act.
ATTENTION
We have adopted a fully electronic application process for the Share Offer. We will not provide printed copies of this prospectus to the public in relation to the Share Offer. This
prospectus is available at the website of the Stock Exchange at www.hkexnews.hk and the website of our Company at www.ubot.com.hk. If you require a printed copy of this
prospectus, you may download and print from the website addresses above.
IMPORTANT
24 May 2024


--- page 3 ---
IMPORTANT NOTICE TO INVESTORS OF PUBLIC OFFER SHARES
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Public Offer and below are
the procedures for application.
This prospectus is available at the website of the Stock Exchange at www.hkexnews.hk
under the “HKEXnews > New Listings > New Listing Information ” section, and our website
at www.ubot.com.hk.
To apply for Public Offer Shares, you may use one of the following application channels:
Application Channel Platform Target Investors Application Time
eWhite Form service www.ewhiteform.com.hk
Enquiries: +852 2153 1688
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 Friday, 24
May 2024 to 11:30 a.m. on
Wednesday, 29 May 2024,
Hong Kong time.
The latest time for completing
full payment of application
monies will be 12:00 noon on
Wednesday, 29 May 2024,
Hong Kong time.
HKSCC EIPO Channel Your broker or custodian who
is a HKSCC Participant will
submit an EIPO application
on your behalf through
HKSCC’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.
We will not provide any physical channels to accept any application for the Public Offer Shares
by the public. The contents of this prospectus are identical to the prospectus as registered with
the Registrar of Companies in Hong Kong pursuant to Section 342C of the Companies (Winding
Up and Miscellaneous Provisions) Ordinance.
If you are an intermediary, broker or agent, please remind your customers, clients or principals,
as
applicable, that this prospectus is available online at the website addresses above.
Please refer to the section headed “How to apply for the Public Offer Shares” in this prospectus
for
further details of the procedures through which you can apply for the Public Offer Shares
electronically.
IMPORTANT


--- page 4 ---
Your application through the eWhite Form service or the HKSCC EIPO channel must be for a
minimum of 5,000 Offer Shares and in one of the numbers set out in the table. You are required
to pay the amount next to the number you select.
NUMBER OF SHARES THAT MAY BE APPLIED FOR AND PAYMENTS
(HK$0.60 per Offer Share)
No. of Offer
Shares
applied for
Amount
payable on
application/
successful
allotment
No. of Offer
Shares
applied for
Amount
payable on
application /
successful
allotment
No. of Offer
Shares
applied for
Amount
payable on
application/
successful
allotment
HK$ HK$ HK$
5,000 3,030.25 150,000 90,907.66 2,000,000 1,212,102.00
10,000 6,060.51 200,000 121,210.20 2,500,000 1,515,127.50
15,000 9,090.76 250,000 151,512.76 3,000,000 1,818,153.00
20,000 12,121.02 300,000 181,815.30 4,000,000 2,424,204.00
25,000 15,151.28 350,000 212,117.86 5,000,000 3,030,255.00
30,000 18,181.54 400,000 242,420.40 6,250,000 3,787,818.76
35,000 21,211.79 450,000 272,722.96 7,500,000 4,545,382.50
40,000 24,242.05 500,000 303,025.50 8,750,000 5,302,946.26
45,000 27,272.30 750,000 454,538.26 10,000,000 6,060,510.00
50,000 30,302.56 1,000,000 606,051.00 11,250,000 6,818,073.76
75,000 45,453.83 1,250,000 757,563.76 12,500,000
(1) 7,575,637.50
100,000 60,605.10 1,500,000 909,076.50
(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 AFRC
transaction levy. If your application is successful, brokerage will be paid to the Exchange Participants (as defined
in the GEM Listing Rules) or to the eWhite Form Service Provider (for applications made through the
application channel of the eWhite Form Service Provider) 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.
No application for any other number of the Public Offer Shares will be considered and any such
application is liable to be rejected.
IMPORTANT


--- page 5 ---
GEM has been positioned as a market designed to accommodate small and mid-sized
companies to which a higher investment risk may be attached than other companies listed on
the Stock Exchange. Prospective investors should be aware of the potential risks of investing
in such companies and should make the decision to invest only after due and careful
consideration.
Given that companies listed on GEM are generally small and mid-sized companies, there
is a risk that securities traded on GEM may be more susceptible to high market volatility than
securities traded on the Main Board of the Stock Exchange and no assurance is given that
there will be a liquid market in the securities traded on GEM.
CHARACTERISTICS OF GEM
–i–


--- page 6 ---
If there is any change in the following expected timetable of the Share Offer , we will
issue an announcement in Hong Kong to be published on the Stock Exchange’ s website at
www.hkexnews.hk and our Company’ s website at www.ubot.com.hk .
Date and time (Note 1)
Share Offer commences ......................................... 9:00 a.m. on Friday,
24 May 2024
Latest time for completing electronic applications under
the eWhite Form service through the designated website
at www.ewhiteform.com.hk (Notes 2 to 3) ...................1 1:30 a.m. on Wednesday,
29 May 2024
Application lists open (Note 3) ..............................1 1:45 a.m. on Wednesday,
29 May 2024
Latest time to (a) give electronic application instructions to
HKSCC and (b) complete payment of eWhite Form
applications by effecting PPS payment transfer(s) (Note 4) ...... 12:00 noon on Wednesday,
29 May 2024
If you are instructing your broker or custodian who is a HKSCC Participant to give electronic
application instructions through 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 close (Note 3) .............................. 12:00 noon on Wednesday,
29 May 2024
Expected Price Determination Date (Note 5) .....................o no r before 12:00 noon
Thursday, 30 May 2024
(1) Announcement of the final Offer Price, the level of
indication of interest in the Placing, the level of
applications in the Public Offer and basis of allocation of
the Public Offer Shares under the Public Offer will be
published on the Stock Exchange’s website at
www.hkexnews.hk and our Company’s website at
www.ubot.com.hk on or before .............................1 1:00 p.m. on Friday,
31 May 2024
EXPECTED TIMETABLE
–i i–


--- page 7 ---
Date and time (Note 1)
(2) The results of allocations in the Share Offer (with
successful applicants’ identification document numbers,
where appropriate) will be available through a variety of
channels, as described in the section headed “How to Apply
for the Public Offer Shares – B. Publication of results” in
this prospectus from ......................................1 1:00 p.m. on Friday,
31 May 2024
(3) A full announcement of the Public Offer containing (1) and
(2) above will be published on the Stock Exchange’s
website at www.hkexnews.hk and our Company’s website at
www.ubot.com.hk ........................................1 1:00 p.m. on Friday,
31 May 2024
Results of allocations in the Public offer will be available at
www.ewhiteform.com.hk/results with a “search by ID”
function on ................................................1 1:00 p.m. on Friday,
31 May 2024 to
12:00 midnight on
Friday, 7 June 2024
Despatch/collection of Share certificates or deposit of Shares
certificates into CCASS in respect of wholly or partially
successful applications pursuant to the Share Offer on or
before (Notes6&8 ) ......................................... Friday, 31 May 2024
e-Refund payment instructions/refund cheques in respect of
wholly or partially successful applications if the final Offer
Price is less than the maximum Offer Price initially paid on
application (if applicable) or wholly or partially unsuccessful
applications pursuant to the Share Offer on or before ( Notes 7
&8 ) ..................................................... Monday, 3 June 2024
Dealings in the Shares on GEM expected
to commence at 9:00 a.m. on .................................. Monday, 3 June 2024
EXPECTED TIMETABLE
– iii –


--- page 8 ---
The application for the Public Offer Shares will commence on Friday, 24 May 2024
through Wednesday, 29 May 2024. The application monies (including brokerage, SFC
transaction levy, Stock Exchange trading fee and AFRC transaction levy) will be held by the
receiving bank on behalf of our Company and the refund monies, if any, will be returned to
the applicant(s) without interest on Monday, 3 June 2024. Investors should be aware that the
dealings in Shares on the Stock Exchange are expected to commence on Monday, 3 June
2024.
Notes:
1. In this prospectus, unless otherwise stated, all times and dates refer to Hong Kong local times and dates. If there
is any change to the above expected timetable, our Company will make an appropriate announcement to inform
investors accordingly.
2. You will not be permitted to submit your application through the designated website at www.ewhiteform.com.hk
after 11:30 a.m. on the last day for submitting applications. If you have already submitted your application and
obtained an application reference number from the designated website prior to 11:30 a.m., you will be permitted
to continue the application process (by completing payment of the 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 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 Wednesday, 29 May 2024, the application list will not
open on that day. For further details, please see the section headed “How to apply for the Public Offer Shares –
E. Severe weather arrangement” in this prospectus.
4. Applicants who apply for Public Offer Shares by giving electronic application instructions to HKSCC should
refer to the section headed “How to apply for the Public Offer Shares – A. Application for Public Offer Shares –
2. Application channels” in this prospectus.
5. The Price Determination Date is expected to be on or about Thursday, 30 May 2024, by agreement between the
Overall Coordinator (for itself and on behalf of the Underwriters) and the Company. If the Overall Coordinator
(for itself and on behalf of the Underwriters) and our Company are unable to reach an agreement on the Offer
Price on the Price Determination Date, the Share Offer will not become unconditional and will lapse.
6. Share certificates for the Public Offer Shares are expected to be issued on or before Friday, 31 May 2024 but
will only become valid evidence of title at 8:00 a.m. on Monday, 3 June 2024 provided that (a) the Share Offer
has become unconditional in all respects; and (b) the Public Offer Underwriting Agreement has not been
terminated in accordance with its terms. Investors who trade Shares on the basis of publicly available allocation
details before the receipt of share certificates or before the share certificates becoming valid evidence of title do
so entirely at their own risk.
7. e-Refund payment instruments/refund cheques will be issued in respect of wholly or partially unsuccessful
applications and in respect of successful applications in the event that the final Offer Price is less than the initial
price per Offer Share payable on application.
8. Applicant who applied for Public Offer Shares through the HKSCC EIPO channel should refer to the section
headed “How to apply for the Public Offer Shares – D. Despatch of Share certificates and refund of application
monies – Personal Collection” in this prospectus for details.
Applicants who applied through the eWhite Form service and paid their applications monies through single bank
account may have refund monies (if any) despatched to their application payment bank account, in the form of
e-Refund payment instructions. Applicants who apply through the eWhite Form service and paid their
application monies through multiple bank accounts may have refund monies (if any) despatched to the address as
EXPECTED TIMETABLE
–i v–


--- page 9 ---
specified in their application instructions to the eWhite Form Service Provider, in the form of refund cheques,
by ordinary post at their own risk.
Further information is set out in the sections “How to apply for the Public Offer Shares – D. Despatch of Share
certificates and refund of application monies”.
The above expected timetable is a summary only. For details of the structure of the Share
Offer, including the conditions of the Share Offer, please refer to the sections headed “Structure
and conditions of the Share Offer” and “How to apply for the Public Offer Shares” in this
prospectus.
EXPECTED TIMETABLE
–v–


--- page 10 ---
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 or invitation in any other
jurisdiction or in any other circumstances. No action has been taken to permit a Share Offer
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, the Sole Sponsor , the 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 nor contained in this prospectus must not be
relied on by you as having been authorised by our Company, the Sole Sponsor , the Overall
Coordinator , the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers,
the Underwriters, any of their respective directors, officers, employees, advisers, agents,
representatives or affiliates of any of them or any other persons or parties involved in the
Share Offer .
The contents of our Company’ s website at www.ubot.com.hk do not form part of this
prospectus.
Page
CHARACTERISTICS OF GEM .......................................... i
EXPECTED TIMETABLE ............................................... i i
CONTENTS ........................................................... v i
SUMMARY ........................................................... 1
DEFINITIONS ........................................................ 2 7
GLOSSARY OF TECHNICAL TERMS ..................................... 4 0
FORW ARD-LOOKING STATEMENTS ..................................... 4 6
RISK FACTORS ....................................................... 4 8
INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER ....... 7 5
CONTENTS
–v i–


--- page 11 ---
Page
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER ............. 8 0
CORPORATE INFORMATION ........................................... 8 7
INDUSTRY OVERVIEW ................................................ 8 9
REGULATORY OVERVIEW ............................................. 1 1 3
HISTORY, DEVELOPMENT AND REORGANISATION ...................... 1 4 3
BUSINESS ............................................................ 1 6 2
RELATIONSHIP WITH CONTROLLING SHAREHOLDERS .................. 2 9 4
CONNECTED TRANSACTIONS .......................................... 3 0 2
DIRECTORS AND SENIOR MANAGEMENT ............................... 3 0 9
SUBSTANTIAL SHAREHOLDERS ........................................ 3 2 8
SHARE CAPITAL ..................................................... 3 3 0
FINANCIAL INFORMATION ............................................ 3 3 3
FUTURE PLANS AND USE OF PROCEEDS ................................ 3 9 7
UNDERWRITING ...................................................... 4 1 0
STRUCTURE AND CONDITIONS OF THE SHARE OFFER .................. 4 2 1
HOW TO APPLY FOR THE PUBLIC OFFER SHARES ....................... 4 3 0
APPENDIX I — ACCOUNTANTS’ REPORT ........................... I - 1
APPENDIX II — UNAUDITED PRO FORMA
FINANCIAL INFORMATION ....................... II-1
APPENDIX III — SUMMARY OF THE CONSTITUTION OF
THE COMPANY AND THE CAYMAN ISLANDS
COMPANY LA W .................................. III-1
CONTENTS
– vii –


--- page 12 ---
Page
APPENDIX IV — STATUTORY AND GENERAL INFORMATION .......... I V - 1
APPENDIX V — DOCUMENTS DELIVERED TO
THE REGISTRAR OF COMPANIES AND
A V AILABLE ON DISPLAY ......................... V - 1
CONTENTS
– viii –


--- page 13 ---
This summary aims to give you an overview of the information contained in this
prospectus and should be read in conjunction with the full text of this prospectus. As it is a
summary, it does not contain all the information that may be important to you. You should
read the whole prospectus, including our financial statements and the accompanying notes,
before you decide to invest in the Offer Shares. Some of the particular risks in investing in
the Offer Shares are set out in the section headed “Risk Factors” in this prospectus. You
should read that section carefully before you invest in the Offer Shares. V arious expressions
used in this section are defined or explained in “Definitions” and “Glossary of Technical
Terms” in this prospectus.
OVERVIEW
Established in 2005, we are a back-end semiconductor transport media manufacturer
engaging in precision manufacturing on engineering plastics casings, in which we derived our
revenue principally from the sales of tray and tray related products during the Track Record
Period. Other than specialising in the design, development, manufacture and sales of tray and
tray related products, we have also included carrier tape in our product categories since 2019. In
addition to back-end semiconductor transport media, we are also provider of
Micro-Electro-Mechanical-System (MEMS) and sensor packaging. According to the F&S Report,
the market share of tray and tray related products was 31.3%, 31.8% and 31.7% in the back-end
semiconductor transport media industry for the year ended 31 December 2021, 2022 and 2023
respectively. Among all the tray and tray related products manufacturers in the back-end
semiconductor transport media industry, we ranked the third in the globe in 2023 in terms of
sales revenue, with a market share of approximately 8.4%.
Our back-end semiconductor transport media products, namely (i) tray and tray related
products, which are containers which store semiconductor components during their production
and delivery processes using mainly precision engineering plastics, and (ii) carrier tape, are
mainly used for the protection of semiconductor devices, including power discrete
semiconductor device, optoelectronic, IC and sensors, etc. Our tray and carrier tape with pockets
formed in the tray or tape surface are designed for housing, safe handling, transport and storing
different semiconductor devices, including power discrete semiconductor device, optoelectronic,
IC and sensors and are ESD protective and highly thermal resistant. Our MEMS and sensor
packaging provides an encasement designed to promote the electrical contacts that deliver
signals to the circuit board of an electronic device and also to protect the MEMS and sensors
from potentially damaging external elements and the corrosive effects of age. Supported by our
R&D and material engineering department and sales and marketing personnel and customizable
manufacturing platform and design enablement services, we are able to cater a great variety of
customer-specific requests and ease up the timely completion of complex designs that are
optimized in terms of cost and performance. During the Track Record Period, we had developed
a diversified product portfolio of over 1,500 product specifications in various dimensions with
different thermal, mechanical and physical properties metrics, which satisfy our customers’
specifications and required quality standards.
The value chain of the semiconductor and integrated circuit industry is comprised of
industry players in the upstream, midstream and downstream.
SUMMARY
–1–


--- page 14 ---
Set out below is an illustration of the value chain of the semiconductor industry:
Value chain of semiconductor industry
IC Assembly, Packaging &
Testing (Back-end functions)
Upstream
Midstream
Electronics Production
Automotive Consumer
Electronics
Industrial and
Construction
Aerospace and
Defence
Communications and
Networking
Downstream
IC/Wafer Manufacturing
(Front-end/Foundries)
Chemical
Research and
Development
Draft, advance and
streamline technology
throughout the
supply chain
Design (Fabless)
IP
Design/
IC ODM
IC
Design
Fabless – Foundry model
Integrated Device Manufacturer (IDM) model
Integrated Complete Process: Design, IC/Wafer Manufacturing, IC Assembly, Packaging, Testing
Distributors and Sales Channels
Transport media, Equipment manufacturers, Raw materials suppliers
Production Process
and Testing Facility
(Turnkey Solution)
Circuit
Board
IC
Lead
Frame
IC
Module
Photo
mask
Production
Process and
Testing
Facility
Our Group is a supplier for upstream back-end functions of the semiconductor and
integrated circuit industry (i.e. assembly, packaging and testing). For more details on the
functions and value of back-end semiconductor transport media manufacturers, please refer to
the section headed “Industry Overview – Global Semiconductor And Integrated Circuit (IC)
Industry Overview – Value Chain” in this prospectus.
We set up two production factories in Dongguan, the PRC. As at the Latest Practicable
Date, we had four production facilities, in which two of them are responsible for the
manufacturing of tray and tray related products and each of the rest is responsible for production
of carrier tape and MEMS and sensor packaging. According to the F&S Report, the global
market size of back-end semiconductor transport media industry and MEMS and sensor
packaging industry will respectively increase at a CAGR of 7.8% and 5.2% from approximately
US$854.6 million and US$6.9 billion in 2024 to approximately US$1,156.1 million and US$8.5
billion in 2028, respectively. In order to capture the market growth for both back-end
semiconductor transport media industry and MEMS and sensor packaging industry, we plan to
increase our production capacities and capabilities by upgrading our production facilities in the
PRC, in particular, purchasing automated machines and implementing production in the
Philippines for carrier tape.
OUR PRODUCTS AND BUSINESS MODEL
Our products can be generally classified into three categories: (i) tray and tray related
products; (ii) MEMS and sensor packaging; and (iii) carrier tape. All of our products are RoHS
and REACH compliant to satisfy the required industry standards. For details of our products,
please refer to “Business – Our Products” in this prospectus.
SUMMARY
–2–


--- page 15 ---
The following photos show samples of products of our Group:
Our tray and tray related products
Bakeable JEDEC tray with pocket size of 55mm x 55mm for
holding BGA device
(Note: The semiconductor devices placed on our tray product above are not
our Group’ s product and are shown for illustration purpose only )
Our MEMS and sensor packaging
(1) Flow sensor module
  The flow sensor module is used for measuring
flow of gas or liquid.
 Application in process control and monitoring, oil
and gas leak detection, HV AC and air control
system, CPAP and respiratory devices and liquid
dispensing systems.
(2) Semi-hermetic sensor
packaging (ERAQFN)
 Semi-hermetic sensor packaging (ERAQFN) is an
encasement to protect sensor performing functions
of gas detection and concentration measurement,
flame detection and motion detection from
corrosion and/or physical damage.
 Application in gas sensing, flame detection, food
and oil analysis, motion detection and gesture
recognition.
SUMMARY
–3–


--- page 16 ---
(3) Custom-design Casing for
SiP (System-in-Package)
 Custom-design Casing for SiP
(System-in-Package) uses Liquid-Crystal-Polymer
material and is an encasement to absorb radio
frequency and protect IC devices from physical
damage.
 Application in Radio Frequency/Microwave device
for 5G Infrastructure equipment installation
deployment.
Our carrier tape products
Carrier tape with different width
Carrier tape with width of 16mm
containing our MEMS and sensor
packaging product for
illustration purpose
SUMMARY
–4–


--- page 17 ---
The following sets forth a breakdown of our revenue by our product categories during the
Track Record Period:
Y ear ended 31 December
2021 2022 2023
Revenue % of total Revenue % of total Revenue % of total
HK$’000 % HK$’000 % HK$’000 %
Product category
Tray and tray related 195,429 96.3 246,954 95.9 172,250 91.2
MEMS and sensor
packaging 7,152 3.5 10,092 3.9 16,508 8.7
Carrier tape 367 0.2 519 0.2 211 0.1
Total 202,948 100.0 257,565 100.0 188,969 100.0
Please refer to the section headed “Financial Information – Selected line items in the
consolidated statements of profit or loss and other comprehensive income – Revenue” in this
prospectus for further details.
The following table sets forth the breakdown of our gross profit and gross profit margin by
our product categories during the Track Record Period:
Y ear ended 31 December
2021 2022 2023
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
HK$’000 % HK$’000 % HK$’000 %
Product category
Tray and tray related 84,284 43.1 96,622 39.1 63,431 36.8
MEMS and sensor
packaging 2,276 31.8 5,051 50.0 8,466 51.3
Carrier tape 116 31.6 205 39.5 83 39.3
Total 86,676 42.7 101,878 39.6 71,980 38.1
SUMMARY
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--- page 18 ---
The table below sets forth the breakdown of our revenue by geographical location during
the Track Record Period:
Y ear ended 31 December
2021 2022 2023
Revenue % of total Revenue % of total Revenue % of total
HK$’000 % HK$’000 % HK$’000 %
Southeast Asia 72,219 35.6 91,694 35.6 69,152 36.6
Singapore 11,994 5.9 13,003 5.0 7,054 3.7
Malaysia 20,330 10.0 21,497 8.3 19,893 10.5
Indonesia 811 0.4 1,184 0.5 33 0.0 (Note)
Philippines 25,909 12.8 40,600 15.8 23,017 12.2
Thailand 13,175 6.5 15,410 6.0 19,155 10.2
PRC 55,495 27.3 62,647 24.3 49,342 26.1
Taiwan 39,195 19.3 59,159 23.0 33,982 18.0
The United States 16,782 8.3 20,059 7.8 4,906 2.6
Europe 3,433 1.7 8,248 3.2 14,027 7.4
Hong Kong, Korea and
Japan 15,824 7.8 15,758 6.1 17,560 9.3
Total 202,948 100.0 257,565 100.0 188,969 100.0
Note: The percentage is minimal and represents less than 0.1% of our total revenue.
The following sets forth a breakdown of our gross profit and gross profit margin by
geographical location during the Track Record Period:
Y ear ended 31 December
2021 2022 2023
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
HK$’000 % HK$’000 % HK$’000 %
Geographical location
Southeast Asia 31,695 43.9 39,150 42.7 26,609 38.5
Singapore 5,677 47.3 5,208 40.1 2,806 39.8
Malaysia 7,622 37.5 6,630 30.8 6,416 32.3
Indonesia 217 26.7 180 15.1 6 19.8
Philippines 13,200 50.9 22,823 56.2 11,855 51.5
Thailand 4,979 37.8 4,309 28.0 5,526 28.8
PRC 23,436 42.2 20,213 32.3 14,104 28.6
Taiwan 17,002 43.4 23,733 40.1 13,488 39.7
The United States 6,324 37.7 8,476 42.3 2,532 51.6
Europe 1,281 37.3 4,035 48.9 6,880 49.0
Hong Kong, Korea and
Japan 6,938 43.8 6,271 39.8 8,367 47.6
Total 86,676 42.7 101,878 39.6 71,980 38.1
SUMMARY
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--- page 19 ---
Please refer to the paragraph headed “Financial Information – Selected line items in the
consolidated statements of profit or loss and other comprehensive income – Gross profit and
gross profit margin” for further details.
The following diagram illustrates the business model of our operations:
Procurement of
materials
Production planning
and scheduling Mass production Quality control
& assurance
Placing of purchase orders by customers
Procurement, Planning, Production and Quality Control
Packaging and delivery
Please refer to the paragraph headed “Business – Research and development” for further details.
Provision of after-sales
technical support
and services
Delivery and after-sales services
Sales approach
customers
Sales receives
product specification
from customers
Selection of product
specifications from
existing product
portfolio(1)
Provision of
quotation
and proposal
to customer
Fabrication
and/or
delivery of
sample
product
to customers
Receipt
of customers’
approval
and
qualifications
No approval
or
qualification
by customers
Design and develop
customised products
R&D and material
engineering department
reviews customers’
specification/comments
for product modification
R&D
initiatives
R&D initiatives
New product inquiries
R&D and material
engineering department
reviews customers’
specification and
discusses with customers
for recommendations
Sales receives
inquiry from existing
customers for
their qualified products
Existing qualified product inquiries
Provision of
quotation and preliminary
production schedule
to customers
R&D, sales and qualification
(1): Our existing product portfolio consists of (i) new product specifications developed from our R&D projects; and
(ii) the specifications of products that we have developed for our customers. As at the Latest Practicable Date,
our product portfolio consisted of over 1,500 product specifications, with approximately 800 new product
specifications that are designed and developed by our R&D department based on JEDEC industry standards and
are recommended to all of our customers, and approximately 700 product specifications developed specifically
for our customers, which are developed and designed by our R&D department with the assistance of our
customers, customised to their specific requirements and are not generally recommended to other customers of
our Group.
For details of our business model, please refer to the section headed “Business – Our
business model” in this prospectus.
SUMMARY
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--- page 20 ---
Our production facilities and utilisation rates
As at the Latest Practicable Date, we operated two production factories, our Shatian
Production Factory and Houjie Production Factory, with four production facilities in total, and
two of them are responsible for the production of tray and tray related products and each of the
rest is responsible for the production of carrier tape and MEMS and sensor packaging,
respectively. For details of our production factories, please refer to the section headed “Business
– Production – Our production factories” in this prospectus.
For the year ended 31 December 2021, 2022 and 2023, our utilisation rate of tray and tray
related products of our Shatian Production Factory were 95.4%, 89.1% and 65.2% and our
utilisation rate of tray and tray related products of our Houjie Production Factory were 89.5%,
101.9% and 76.5% respectively. The fluctuation of the overall utilisation rate of tray and tray
related products was primarily due to the changes in production level as a result of the
fluctuation of purchase orders from our customers, which was generally in line with the
fluctuation in our revenue. The decrease in utilisation rate of tray and tray related products of
our Shatian Production Factory in 2022 was primarily because part of our production was moved
to our Houjie Production Factory for its automation facilities for cost-saving purpose while the
overall utilisation rate of tray and tray related products for our Shatian Production Factory and
Houjie Production Factory increased from 94.2% in FY2021 to 95.5% in FY2022. The general
decrease in utilisation rates of our production facilities for tray and tray related products for the
year ended 31 December 2023 was primarily due to the decrease in sales orders received in the
year as a result of a temporary slowdown of the semiconductor industry in 2023.
For our carrier tape products, our utilisation rate was 10.0%, 17.2% and 17.3% for the year
ended 31 December 2021, 2022 and 2023, respectively. Since carrier tape is a new product only
introduced by us in 2019, the utilisation rate remains relatively low. Nonetheless, we foresee that
there will be more customers for carrier tape in the future.
The utilisation rate of our MEMS and sensor packaging (flow sensor module) of our
Shatian Production Factory for the year ended 31 December 2021, 2022 and 2023 were 89.2%,
97.1% and 82.3%, respectively. The fluctuation of the utilisation rate was primarily because the
changes of production level as a result of the fluctuation in customer demands for the product.
The utilisation rate of MEMS and sensor packaging (ERAQFN) of our Shatian Production
Factory for the year ended 31 December 2021, 2022 and 2023 were 37.7%, 102.5% and 102.5%,
respectively. The increase to over 100% during FY2022 and FY2023 was because it had operated
longer than our assumption for maximum production capacity to meet the increased demand
from our customers for the product.
Each of the utilisation rate of our production facilities is calculated by dividing the actual
production volume by the relevant maximum production capacity presented in percentage level.
For details, please refer to the section headed “Business – Production capacity and utilisation” in
this prospectus.
Our customers
We generally do not enter into long-term framework agreements with our customers in
respect of their purchase and our sales are concluded on an order-by-order basis which is in line
with industry practice. With over 15 years of development, we have established a broad
customer base including some of the international IDM, fabless-foundry semiconductor
companies and IC assembly and packaging test house, such as STMicroelectronics. For IDM,
SUMMARY
–8–


--- page 21 ---
each of them carries out all or most of the stages of production including design, manufacturing,
and assembly, testing and packaging, while some production procedures of IDM may also be
subcontracted to other contract manufacturers. For fabless-foundry semiconductor companies,
production is split by (i) design; (ii) IC/Wafer Manufacturing; and (iii) IC Assembly, Packaging
& Testing. The table below sets forth the breakdown of customer profile in terms of revenue
during the Track Record Period:
Y ear ended 31 December
2021 2022 2023
Revenue % of total Revenue % of total Revenue % of total
HK$’000 % HK$’000 % HK$’000 %
Fabless – foundry
semiconductor
companies 1,581 0.8 2,433 0.9 1,610 0.9
IDM companies 75,669 37.3 97,681 37.9 67,153 35.5
IC assembly and
packaging test houses 125,698 61.9 157,451 61.2 120,206 63.6
Total 202,948 100.0 257,565 100.0 188,969 100.0
To serve our customers in a close manner, we set up our headquarters in Hong Kong and
maintain four offices in Hong Kong, Dongguan, the PRC, Shanghai, the PRC and Singapore and
eight sales points around the world in which we engaged sales representative, which are located
in (i) Shanghai, the PRC, (ii) Taipei, Taiwan, (iii) Kaohsiung, Taiwan, (iv) Seoul, Korea, (v)
Melaka, Malaysia, (vi) Italy, Europe, (vii) Arizona, the United States; and (viii) the Philippines.
As we have developed an established clientele worldwide in the back-end semiconductor
transport media industry, we intend to continue to work closely with our global customers and to
leverage our scale and technology leadership to further address opportunities in the fast growing
semiconductor industry, especially in the PRC.
During the Track Record Period, our five largest customers in each year have purchased
products from our Group for over 10 years. To the best knowledge of our Directors, none of our
Directors or their associates or any Shareholder who owns more than 5% of the issued share
capital of our Company has any interest in any of the top five customers of our Group in each
year during the Track Record Period.
During the Track Record Period, our five largest customers in each year accounted for
approximately 60.9%, 58.4% and 54.9% of our total revenue for the years ended 31 December
2021, 2022 and 2023, respectively, while our largest customer in each year accounted for
approximately 20.6%, 18.9% and 16.7% of our total revenue for the respective year. For details
of our customers, please refer to the section headed “Business – Customers – Major customers”
in this prospectus.
Our suppliers
We believe our success is largely driven by our ability to tailor customers’ need in our
production by providing extensive product portfolio with good quality. As such, stable supply of
good quality products with reasonable price is one of the key emphasis of our Group in selecting
suppliers in order to accommodate our production with flexibility. The significant plastic
materials for our business comprise of raw plastic materials, recycled plastic materials and
re-compound plastic materials. During the Track Record Period and up to the Latest Practicable
SUMMARY
–9–


--- page 22 ---
Date, we did not experience any material lack of capacity, supply shortages, delays or
disruptions in our operations relating to our suppliers, or any material product claims
attributable to our suppliers.
To the best knowledge of our Directors, none of our Directors or their associates or any
Shareholder who owns more than 5% of the issued share capital of our Company had any
interest in any of the top five suppliers of our Group in each year during the Track Record
Period.
Our five largest suppliers in each year accounted for approximately 55.2%, 56.2% and
55.5% of our total purchases for each of the years ended 31 December 2021, 2022 and 2023,
respectively, while our largest supplier in each year accounted for approximately 15.9%, 18.5%
and 15.3% of our total purchases for each of the respective periods. For details of our suppliers,
please refer to the section headed “Business – Procurement and Suppliers – Major suppliers” in
this prospectus.
Competitive strengths and business strategies
We believe the following competitive strengths contribute to our success: (i) our business is
semiconductor industry driven and we will be benefited from the long-term growth of the global
semiconductor industry; (ii) our established position in the back-end semiconductor transport
media industry allows us to further pursue opportunities in sales of carrier tape and other new
products in the long-term growth of the semiconductor industry in the PRC and overseas
markets; (iii) vertically integrated business model with R&D and product development
capabilities and self-operated production factories enable us to offer a comprehensive product
portfolio to our customers; (iv) established broad and solid relationship with major international
customers from the semiconductor industry and strong reputation with proven track record; (v)
our established worldwide sales network with in-depth market penetration supported by our sales
and marketing personnel in our office and different sales points; and (vi) experienced
management team and sales and production staff with in-depth industry knowledge.
Further to our vision of sustainable growth and success, we intend to adopt the following
strategies: (i) increasing our production capacity and capabilities by promoting automation of
our production process, upgrading our production facilities and acquiring requisite machineries,
which include upgrading our production facilities in the PRC and implementing production in
the Philippines for carrier tape; (ii) intensifying our sales and marketing efforts in the global
market including the PRC market; (iii) improving efficiency and achieve cost reductions by
purchasing ERP system and upgrading the information system; and (iv) further strengthening our
research and development capabilities to expand our product offering, raw materials and
production technologies.
SHAREHOLDERS’ INFORMATION
Immediately after completion of the Share Offer and the Capitalisation Issue (without
taking into account any Shares which may be allotted and issued by our Company pursuant to
the exercise of the Offer Size Adjustment Option and the exercise of any options which may be
granted under the Share Option Scheme), 38.625% and 31.5% of the issued share capital of our
Company will be owned by Sino Success (which is wholly-owned by Mr. Tong) and Busy Trade
(which is owned as to 70.2% by Mr. Tang, 5.0% by Ms. Tang, 12.4% by Mr. CL Tang, and
12.4% by Mr. CM Tang, respectively). In view of the above, Sino Success, Mr. Tong, Busy
Trade, Mr. Tang, Ms. Tang, Mr. CL Tang and Mr. CM Tang are a group of controlling
shareholders of our Company under the GEM Listing Rules.
SUMMARY
–1 0–


--- page 23 ---
Save as disclosed above, there is no other person who will, immediately following
completion of the Share Offer and the Capitalisation Issue (without taking into account any
Shares which may be allotted and issued by our Company pursuant to the exercise of the Offer
Size Adjustment Option and the exercise of any options which may be granted under the Share
Option Scheme), be entitled to exercise of or control the exercise of 30% or more of the voting
power at the general meetings of our Company.
On 25 March 2022, Mr. Tong and Busy Trade have entered into the Acting in Concert
Confirmation to acknowledge and confirm, among others, that they are parties acting in concert
in respect of UBoT Inc. (HK) during the Track Record Period up to and including the date of the
Acting in Concert Confirmation. Pursuant to the Acting in Concert Confirmation, they further
acknowledged, confirmed and agreed that for so long as (i) Busy Trade remains interested (either
directly or indirectly) in the share capital of UBoT Inc. (HK); and (ii) Mr. Tong remains
interested (either directly or indirectly) in the share capital of UBoT Inc. (HK) and/or the key
management member of UBoT Inc. (HK), they shall continue to act in concert for UBoT Inc.
(HK). To translate the Agreed Arrangements (as defined hereinafter) in UBoT Inc. (HK) into the
control of our Company after the Reorganisation, on 15 September 2023, each of Mr. Tong, Sino
Success, Busy Trade, Mr. Tang, Ms. Tang, Mr. CL Tang and Mr. CM Tang entered into the Listco
Concert Deed in respect of the exercise of their respective powers as shareholders of our
Company and to consolidate their control over our Group. Please refer to the section headed
“Relationship with Controlling Shareholders – Controlling shareholders” in this prospectus for
further details.
Further, during the Track Record Period, our Group has entered into transactions with
certain connected persons of which they will continue and constitute connected transactions
under the GEM Listing Rules upon Listing, all of which are fully exempt from the reporting,
announcement, annual review, circular and the independent shareholders’ approval requirements
under the GEM Listing Rules. Such connected persons include Chengtian Zhiye and Dongguan
Baihui. As at the Latest Practicable Date, Chengtian Zhiye was owned as to 30% by Dongguan
Baihui, a limited liability company established in the PRC. As at the Latest Practicable Date,
Dongguan Baihui was wholly-owned by Cansum Industries Limited, a company incorporated in
Hong Kong with limited liability and indirectly and non-wholly owned by Tang’s Family, and
therefore, both Chengtian Zhiye and Dongguan Baihui are associates of each member of Tang’s
family and connected persons of our Company. Accordingly, each of Chengtian Zhiye and
Dongguan Baihui will become our connected persons upon Listing under Chapter 20 of the GEM
Listing Rules. Please refer to the section headed “Connected Transactions – (I) Connected
transactions” and “Connected Transactions – (II) Fully exempt continuing connected
transactions” in this prospectus for further details.
PRE-IPO INVESTMENT
On 21 March 2022, due to the personal financial reason, Mr. Zuo realised his investment in
UBoT Inc. (HK) by transferring all the 1,700,000 shares, representing 5% of the total
shareholding of UBoT Inc. (HK) to Mr. Tong at the total consideration of HK$1,000,000.
Completion of the said transfer took place on the same date and immediately thereafter, UBoT
Inc. (HK) was owned by Mr. Tong, Busy Trade, Mr. Chan, Ms. Wong, Mr. Shek and Mr. Tam as
to 51.5%, 42.0%, 2.0%, 1.5%, 1.5% and 1.5%, respectively. For details of the said pre-IPO
investment, please refer to the section headed “History, Development and Reorganisation –
Corporate History – UBoT Inc. (HK)” in this prospectus.
KEY OPERATIONAL AND FINANCIAL DATA
The table below set out, for the years indicated, our consolidated statements of profit or
loss and other comprehensive income, the details of which are set forth in Appendix I to this
prospectus, and these should be read in conjunction with the financial statements in Appendix I
to this prospectus, including the related notes.
SUMMARY
–1 1–


--- page 24 ---
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Y ear ended 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Revenue 202,948 257,565 188,969
Cost of sales (116,272) (155,687) (116,989)
Gross profit 86,676 101,878 71,980
Other income 74 947 145
Other gains and losses 1,070 (5,967) (2,174)
(Provision for) reversal of impairment
losses on financial assets (76) (354) 493
Administrative expenses (23,827) (26,091) (27,640)
Selling and distribution expenses (22,742) (25,074) (21,282)
Research and development expenses (4,104) (4,270) (4,822)
Finance costs (3,209) (4,096) (4,784)
Listing expenses (2,018) (9,975) (5,260)
Profit before taxation 31,844 26,998 6,656
Income tax expense (5,448) (5,200) (1,618)
Profit for the year 26,396 21,798 5,038
Non-IFRS Measures
Adjusted profit for the year
In addition to the IFRS measures in our consolidated financial information, we also use the
non-IFRS financial measure of adjusted profit for the year (Non-IFRS measures), to evaluate our
operating performance. We believe that this non-IFRS measure provides useful information to
investors in understanding and evaluating our consolidated results of operations in the same
manner as our management by eliminating potential impacts of the listing expenses relating to
the Share Offer and in comparing financial results across accounting periods and to those of our
peer companies. The following table sets forth the reconciliation between the profit for the year
and the adjusted profit for the year (Non-IFRS measures) for the year indicated:
Y ear ended 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Profit for the year 26,396 21,798 5,038
Listing expenses 2,018 9,975 5,260
Adjusted profit for the year
(Non-IFRS measures) (1) 28,414 31,773 10,298
Note:
(1) Adjusted profit for the year (Non-IFRS measures) is calculated by profit for the year excluding listing
expenses. The term adjusted profit for the year (Non-IFRS measures) is not defined under IFRS.
SUMMARY
–1 2–


--- page 25 ---
Our adjusted profit for the year (Non-IFRS measures) increased by approximately 11.8%
from approximately HK$28.4 million for the year ended 31 December 2021 to approximately
HK$31.8 million for the year ended 31 December 2022. Such increase was in line with our
increase with our gross profit and gross profit margin as mentioned above. For the year ended 31
December 2023, our adjusted profit for the year (Non-IFRS measures) decreased by
approximately 67.6% from approximately HK$31.8 million for the year ended 31 December
2022 to approximately HK$10.3 million for the year ended 31 December 2023 as a result of our
decrease in sales as a result of the temporary slowdown in the semiconductor industry in 2023
due to factors such as geopolitical tensions and the global macroeconomic downturn.
Please refer to the section headed “Financial Information – Results of Operations –
Non-IFRS Measures” in this prospectus for more details.
During the Track Record Period, our revenue was mainly generated from sales of tray and
tray related products. Our total revenue amounted to approximately HK$202.9 million,
HK$257.6 million and HK$189.0 million for the year ended 31 December 2021, 2022 and 2023.
The overall sales volume of tray and tray related products increased by approximately 15.9%
from approximately 24.5 million for the year ended 31 December 2021 to approximately 28.4
million for the year ended 31 December 2022. The sales volume of tray and tray related products
decreased by approximately 26.4% from approximately 28.4 million for the year ended 31
December 2022 to approximately 20.9 million for the year ended 31 December 2023. The
average selling price of tray and tray related products increased from approximately HK$7.99
for the year ended 31 December 2021 to approximately HK$8.71 for the year ended 31
December 2022 and decreased to approximately HK$8.25 for the year ended 31 December 2023.
The increase in the revenue from approximately HK$202.9 million for the year ended 31
December 2021 to approximately HK$257.6 million for the year ended 31 December 2022 was
mainly attributable to the increase in the revenue generated from the PRC market with
significant increase in sales volume and slight increase in average selling price for tray and tray
related products. The decrease in the revenue generated in the year ended 31 December 2023 as
compared to that in the year ended 31 December 2022 was primarily because of the decrease in
sales volume of our tray and tray related products in the PRC, Taiwan and the United States as a
result of the temporary slowdown in the semiconductor industry in 2023 due to factors such as
the decrease in customer demand due to the geopolitical tensions and the global macroeconomic
downturn. For details, please refer to the section headed “Business – Development of the trade
war and its impact on our business operation”. In particular, the market size of the global
semiconductor industry decreased by approximately 8.1% in 2023. During the Track Record
Period, the sales volume for tray and tray related products in the PRC had increased by
approximately 12.7% from approximately 7.1 million for the year ended 31 December 2021 to
approximately 8.0 million for the year ended 31 December 2022 and decreased by approximately
16.3% to approximately 6.7 million for the year ended 31 December 2023. The average selling
price of tray and tray related products in the PRC has also slightly increased from RMB6.51
(approximately HK$7.83 at the then prevailing exchange rate) for the year ended 31 December
2021 to RMB6.77 (approximately HK$7.83 at the then prevailing exchange rate) for the year
ended 31 December 2022 while we recorded an a slightly lower average selling price in the PRC
of RMB6.63 (approximately HK$7.30 at the then prevailing exchange rate) for the year ended 31
December 2023, which was maintained at a lower level than that in the overseas countries at
HK$8.06, HK$9.03 and HK$8.70 for the respective years given the competition in price in the
PRC as a market strategy to maintain our market presence in the PRC. The increase in the
average selling price of tray and tray related products in the year ended 31 December 2022 was
because we sold more customised products in the year with higher average unit price which were
also more sought-after along with the market growth while the decrease in the average selling
SUMMARY
–1 3–


--- page 26 ---
price of tray and tray-related products in the year ended 31 December 2023 was because less
customers requested our customised products with higher average unit price in the year as a
result of market downturn and lukewarm market sentiments.
For the years ended 31 December 2021, 2022 and 2023, our gross profit was approximately
HK$86.7 million, HK$101.9 million and HK$72.0 million, respectively. Gross profit from the
sale of tray and tray related products accounted for approximately HK$84.3 million and
HK$96.6 million for the years ended 31 December 2021 and 2022, respectively, and such
increase was due to revenue generated from tray and tray related product increased and
economies of scale were achieved as labour cost and manufacturing overhead remained
relatively stable. Gross profit from the sale of tray and tray related products accounted for
approximately HK$63.4 million for the year ended 31 December 2023. The decrease was in line
with our decrease in sales volume of tray and tray related products. Gross profit from the sale of
MEMS and sensor packaging accounted for approximately HK$2.3 million, HK$5.1 million and
HK$8.5 million, for the years ended 31 December 2021, 2022 and 2023, respectively. Since the
nature of our MEMS and sensor packaging is tailor-made to and dependent on the type of
MEMS and sensor of our customer, the gross profit margin of our MEMS and sensor packaging
varies in accordance with the business need of our customers. Gross profit from the sale of
carrier tape accounted for HK$116,000, HK$205,000 and HK$83,000 for the years ended 31
December 2021, 2022 and 2023, respectively. The gross profit margin of our Group remained
stable during the Track Record Period.
As a result of the foregoing, our profit for the year decreased by approximately 17.4% from
approximately HK$26.4 million for the year ended 31 December 2021 to approximately
HK$21.8 million for the year ended 31 December 2022. For the year ended 31 December 2023,
our profit for the year decreased by approximately 76.9% as compared to the year ended 31
December 2022 to approximately HK$5.0 million for the year ended 31 December 2023. Our net
profit margin decreased from 13.0% for the year ended 31 December 2021 to approximately
8.5% for the year ended 31 December 2022, and decreased to 2.7% for the year ended 31
December 2023 as compared to the year ended 31 December 2022. Our Directors are of the view
that the decrease in profitability in the year ended 31 December 2023 was because our operating
expenses remained at similar level at approximately HK$53.7 million as compared to that of
approximately HK$55.4 million in the year ended 31 December 2022, when our revenue
decreased for approximately HK$68.6 million or approximately 26.6% and our gross profit
decreased for approximately HK$29.9 million or approximately 29.7% during the corresponding
periods. Our Directors are of the view that the temporary slowdown in demand in the year ended
31 December 2023 due to factors such as geopolitical tensions and the global macroeconomic
downturn will not carry long term effect that necessitates adjustments in our operating scale and
product development plans and that our continuous input is beneficial for our Group and
Shareholders as a whole in the long term. For further details, please refer to the section headed
“Financial Information – Historical Financials” in this prospectus.
Please refer to the section headed “Financial Information – Selected line items in the
consolidated statements of profit or loss and other comprehensive income” in this prospectus for
more details.
SUMMARY
–1 4–


--- page 27 ---
SELECTED ITEMS OF CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Total non-current assets 67,284 70,239 66,497
Total non-current liabilities 24,255 21,147 14,879
Total current assets 152,193 149,574 138,444
Inventories 60,113 60,701 65,588
Trade and other receivables, deposits and
prepayments 63,215 63,320 51,717
Financial assets at fair value through
profit or loss 12,968 13,335 13,748
Amount due from a director 10,620 6,318 6,318
Total current liabilities 163,872 142,875 128,685
Trade and other payables 75,648 52,741 55,828
Income tax provision 20,927 25,390 14,171
Bank overdrafts 3,261 – 2,932
Bank Borrowings 53,599 57,680 48,064
Net current (liabilities) assets (11,679) 6,699 9,759
Net Assets 31,350 55,791 61,377
Our net current liabilities position as at 31 December 2021 was partly because we have
used short-term bank loans and other borrowings to finance our capital expenditure and in
particular, HK$12.6 million of bank borrowings would be practically repaid over one year after
31 December 2021, based on the repayment schedule which has been classified as current
liabilities as they had a repayment on demand clause. The level of our net current liabilities as at
31 December 2021 was also subject to the effect of income tax provision of approximately
HK$20.9 million as at 31 December 2021 in relation to the historical Offshore Profits Claim
made before the Withdrawal. The decrease in net current liabilities from 31 December 2021 to
the net current asset position as at 31 December 2022 and 31 December 2023 was primarily due
to the decrease in trade and other payables. Please refer to the section headed “Financial
Information – Net current assets and current liabilities” in this prospectus for further details.
Our net assets increased from approximately HK$31.4 million as at 31 December 2021 to
approximately HK$55.8 million as at 31 December 2022, which was mainly attributable to (i)
our profit for the year of approximately HK$21.8 million for the year ended 31 December 2022;
and (ii) our other comprehensive income of HK$2.6 million.
SUMMARY
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Our net assets further increased from approximately HK$55.8 million as at 31 December
2022 to approximately HK$61.4 million as at 31 December 2023, which was mainly attributable
to (i) our profit for the year of approximately HK$5.0 million for the year ended 31 December
2023; and (ii) our other comprehensive income for the year of approximately HK$0.5 million.
Our net current assets increased from approximately HK$9.8 million as at 31 December
2023 to HK$12.7 million (unaudited) as at 31 March 2024, which was primarily due to the
decrease in income tax provisions of approximately HK$4.4 million.
For details, please refer to the consolidated statements of changes in equity included in the
Accountants’ Report of our Group set out in Appendix I to this prospectus.
SELECTED ITEMS OF CONSOLIDATED STATEMENTS OF CASH FLOWS
Y ear ended 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Operating cash flow before movement in
working capital 47,973 47,278 28,515
Net cash from operating activities 8,186 34,312 27,780
Net cash used in investing activities (7,819) (14,208) (14,134)
Net cash used in financing activities (5,432) (13,187) (21,364)
Net (decrease) increase in cash and cash
equivalents (5,065) 6,917 (7,718)
Effect of foreign exchange rate changes (616) (79) (41)
Cash and cash equivalent at the beginning
of the year 4,743 (938) 5,900
Cash and cash equivalent at the end of the
year (938) 5,900 (1,859)
For the year ended 31 December 2021, 2022 and 2023, we had net cash from operating
activities of approximately HK$8.2 million, HK$34.3 million and HK$27.8 million respectively.
During the Track Record Period, the cash inflows from our operating activities were primarily
derived from the payments made by our customers for our products, while cash outflows for our
operating activities were primarily attributable to (i) the purchase of raw materials from our
suppliers and the increase in finished goods for coping with the demand from customers; (ii) the
settlement of listing expenses; (iii) the settlement of our rental expenses; (iv) the payment of our
staff costs; and (v) payments for other working capital needs.
Our Group recorded a negative cash and cash equivalent of approximately HK$0.9 million
as at 31 December 2021 mainly due to the non-recurring cash outflow due to the application for
Listing in the amount of approximately HK$0.4 million and expansion plan in the amount of
approximately HK$6.0 million and a negative cash and cash equivalent of approximately
HK$1.9 million for the year ended 31 December 2023 mainly due to a non-recurring cash
outflow resulting from the tax payment associated with the Withdrawal in the amount of
approximately HK$5.3 million, while we recorded a positive cash and cash equivalent of
approximately HK$5.9 million as at 31 December 2022.
SUMMARY
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The net cash from operating activities has increased from approximately HK$8.2 million
for the year ended 31 December 2021 to approximately HK$34.3 million for the year ended 31
December 2022. This represents our profit before tax of approximately HK$27.0 million,
adjusted mainly by (i) depreciation of property, plant and equipment of approximately HK$8.9
million; (ii) depreciation of right-of-use asset of approximately HK$6.9 million; (iii) finance
cost of approximately HK$4.1 million; (iv) changes in working capital items that positively
affected the operating cash flows, including the decrease in inventories of approximately HK$2.9
million and the decrease in trade and other receivables, deposits and prepayments of
approximately HK$1.5 million; (v) changes in working capital items that negatively affected the
operating cash flows, including the decrease in trade and other payables of approximately
HK$15.3 million; and (vi) income tax paid of approximately HK$1.8 million.
For the year ended 31 December 2023, we had net cash from operating activities of
approximately HK$27.8 million. This represents our profit before tax of approximately HK$6.7
million, adjusted mainly by (i) depreciation of property, plant and equipment of approximately
HK$10.8 million; (ii) depreciation of right-of-use asset of approximately HK$6.5 million; (iii)
finance cost of approximately HK$4.9 million; (iv) changes in working capital items that
positively affected the operating cash flows, including the increase in trade and other payables
of approximately HK$4.4 million and the decrease in trade and other receivables, deposits and
prepayments of approximately HK$6.2 million; (v) changes in working capital items that
negatively affected the operating cash flows, including the increase in inventories of
approximately HK$4.6 million; and (vi) Hong Kong profit tax paid of approximately HK$6.7
million. For details, please refer to the section headed “Financial Information – Liquidity and
Financial Resources – Cash flow of our Group” in this prospectus.
KEY FINANCIAL RATIOS
The following table sets forth the key financial ratios of our Group during the Track
Record Period:
For the year ended/
as at 31 December
2021 2022 2023
Current ratio 0.9 1.1 1.1
Quick ratio 0.6 0.6 0.6
Gearing ratio 1.7 1.0 0.8
Return on equity 84.2% 39.1% 8.2%
Return on assets 12.0% 9.9% 2.5%
Interest coverage 10.9 times 7.6 times 2.4 times
Gross profit margin 42.7% 39.6% 38.1%
Net profit margin 13.0% 8.5% 2.7%
Our gross profit margin amounted to 42.7% for the year ended 31 December 2021, and
decreased to 39.6% for the year ended 31 December 2022. Our gross profit margin remained
stable at 38.1% for the year ended 31 December 2023. For a discussion of the factors affecting
our gross profit margin, please refer to the paragraph headed “Financial Information – Year to
year comparison of results of operations – Gross profit and gross profit margin” in this
prospectus.
Our net profit margin amounted to 13.0% for the year ended 31 December 2021, and
decreased to 8.5% for the year ended 31 December 2022. Our net profit margin increased from
8.5% for the year ended 31 December 2022 to 2.7% for the year ended 31 December 2023. The
SUMMARY
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decrease in net profit margin was primarily due to the effect of the one-off listing expenses
which was recognised during the year ended 31 December 2022. For a discussion of the factors
affecting our net profit margin, please refer to the section headed “Financial Information – Year
to year comparison of results of operations – Profit for the year” in this prospectus.
Our gearing ratio was approximately 1.7, 1.0 and 0.8 as at 31 December 2021, 31
December 2022 and 31 December 2023, respectively. Our current ratio was 0.9, 1.1 and 1.1 as at
31 December 2021, 31 December 2022 and 31 December 2023, respectively.
For details, please refer to the section headed “Financial Information – Key financial
ratios” in this prospectus.
RECENT DEVELOPMENTS AND NO MATERIAL ADVERSE CHANGE
Recent development of our business
Subsequent to the Track Record Period and up to the Latest Practicable Date, we continued
our focus on the design, development, manufacture and sales of tray and tray related products.
We also developed carrier tape which was included in our product category since 2019. In
addition to the back-end semiconductor transport media, we continued to be provider of MEMS
and sensor packaging. Our business model, revenue structure, cost structure, and the industry,
market and regulatory environment in which we operate remained substantially unchanged since
31 December 2023 and up to the Latest Practicable Date.
Subsequent to the Track Record Period and up to 31 March 2024, we have received backlog
orders for tray and tray related products of approximately 1.8 million pieces, which represented
an increase of approximately 5.9% as compared to the backlog orders for tray and tray related
products of approximately 1.7 million pieces as at 31 December 2023. Our Directors believe that
the financial performance is expected not to be further deteriorated in the second quarter of 2024
as compared to that in the first quarter of 2024. Further, we received orders for 23 additional
customised products in the first quarter of 2024, which increased at a higher rate than that in the
second half of 2023, indicating comparatively higher market interests in customised products in
2024. Based on our recent development, our Directors also believe that the risk of the
substantial deterioration in the overall financial performance of our Group is remote.
Nonetheless, our Directors expect that we will record a decrease in net profit for the year
ending 31 December 2024 as compared to that of the year ended 31 December 2023, primarily
because of one-off factors which consist of (i) the expected increase in other expenses due to the
surcharge of the tax installment payment after the Withdrawal, amounted to approximately
HK$2.1 million for the year ending 31 December 2024; and (ii) the listing expenses expected to
be incurred after Listing of approximately HK$8.0 million for the year ending 31 December
2024.
Our Directors confirm that, up to the date of this prospectus, there has been no material
adverse change to our financial, operational and/or trading position since 31 December 2023,
being the date to which our most recent audited consolidated financial information were
prepared, and since that date, there has been no event up to the Latest Practicable Date that
would materially affect the information shown in our audited consolidated financial information
included in the Accountants’ Report of our Group set out in Appendix I to this prospectus.
SUMMARY
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Recent regulatory development
On 17 February 2023, the CSRC promulgated Overseas Listing Measures and the Notice on
the Administrative Filing Arrangement Concerning Overseas Offering and Listing by Domestic
Companies ( ), which require indirect
overseas offering and listing by PRC domestic companies to be subject to the CSRC’s filing
requirement starting from 31 March 2023. The Overseas Listing Measures will comprehensively
improve and reform the existing regulatory regime for overseas offering and listing by PRC
domestic companies and will regulate both direct and indirect overseas offering and listing by
PRC domestic companies. Please refer to “Regulatory Overview – PRC Laws and Regulations –
XI. The PRC Laws and Regulations Relating to Overseas Listing” for more details.
According to the Overseas Listing Measures, a PRC domestic company that seeks to offer
or list securities in an overseas market, either directly or indirectly, are subject to completion of
filing procedures with and reporting of relevant information to the CSRC. As advised by our
PRC Legal Advisers, our Group submitted the filing documents to the CSRC pursuant to the
requirements of Overseas Listing Measures in September 2023. As confirmed by our PRC Legal
Advisers, after review of the filing documents submitted, the CSRC formed the view and
advised us that we do not fall under the requirements under section 15 of the Overseas Listing
Measures, and we are not under the scope of the CSRC filing requirement on 5 December 2023.
OFFER STATISTICS
Based on the low end of
the indicative Offer
Price of HK$0.50 and
assuming the Offer Size
Adjustment Option is
not exercised
Based on the high-end
of the indicative Office
Price of HK$0.60 and
assuming the Offer Size
Adjustment Option is
not exercised
Market capitalisation of our Shares at
Listing
(Note 1) HK$250,000,000 HK$300,000,000
Unaudited pro forma adjusted
consolidated net tangible asset per
Share (Note 2) HK$0.21 HK$0.23
Notes:
(1) The calculation of market capitalisation is based on 500,000,000 Shares expected to be issued and outstanding
following the completion of the Capitalisation Issue and the Share Offer, assuming that the Offer Size
Adjustment Option is not exercised.
(2) The unaudited pro forma adjusted consolidated net tangible assets attributable to owners of the Company have
not taken into account the interim dividends of (1) HK$11,220,000 declared conditionally by UBoT Inc. (HK) on
31 March 2022 and (2) HK$8,160,000 declared conditionally by the Company on 15 March 2024. Both dividends
would become unconditional upon Listing. Had these conditional interim dividends been taken into account, the
unaudited pro forma adjusted consolidated net tangible assets attributable to owners of our Group as at 31
December 2023 would be decreased by HK$19,380,000, and the unaudited pro forma adjusted consolidated net
tangible assets attributable to owners of our Group per Share would be HK$0.17 per Share (based on an Offer
Price of HK$0.50 per Offer Share) or HK$0.19 per Share (based on an Offer Price of HK$0.60 per Offer Share).
SUMMARY
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DIVIDENDS AND DIVIDEND POLICY
No dividend has been paid or declared by the Company since its incorporation until 15
March 2024. During the Track Record Period, our Group had declared dividends as follows:
(a) On 31 March 2022, UBoT Inc. (HK) conditionally declared an interim dividend of
HK$0.33 per share of UBoT Inc. (HK) amounting in the aggregate of HK$11,220,000.
The dividend payable to one of the ultimate Controlling Shareholders, Mr. Tong, will
be settled through partially offsetting the amount due from Mr. Tong in the amount of
HK$5,778,000 as per the unaudited management account as at 28 February 2022. Such
dividend would become unconditional upon Listing and the dividends declared to the
other shareholders in the amount of HK$5,442,000 will be settled by cash (using our
Group’s internally generated funds before Listing).
(b) On 15 March 2024, UBoT Inc. (HK) conditionally declared an interim dividend of
HK$0.24 per share of UBoT Inc. (HK) amounting in the aggregate of HK$8,160,000
to its sole shareholder, namely Abundant Wealth. On 15 March 2024, Abundant Wealth
conditionally declared an interim dividend of HK$8,160 per share of Abundant Wealth
amounting in the aggregate of HK$8,160,000 to its sole shareholder, i.e. our Company.
On 15 March 2024, the Company declared conditionally an interim dividend of
HK$4,080 per Share amounting in the aggregate of HK$8,160,000 to its shareholders.
Part of the dividend payable to Sino Success, one of the ultimate Controlling
Shareholders and wholly owned company of Mr. Tong, will be settled by offsetting the
amount due from Mr. Tong in the amount of HK$540,000 as per the unaudited
management account as at 31 December 2023. Save for the said HK$540,000, all the
other dividends declared to shall be payable to the shareholders of the Company will
be settled by cash (using our Group’s internally generated funds before Listing). Such
dividend would become unconditional upon Listing.
In determining the amount of the above interim dividend, our Directors have taken into
account the level of our Group’s retained earnings, the expected cash flow and our Group’s
assets and liabilities and consider that the amount of the above interim dividend represents a fair
and reasonable return to our Controlling Shareholders. Save as the above, our Group did not
declare and pay any dividends to the then shareholders during the years ended 31 December
2021, 2022 and 2023.
Our Company does not have a formal dividend policy or fixed dividend distribution ratio.
The decision to declare or pay dividend in the future as well as the amount of any dividend will
be contingent upon several factors, including the result of our operation, cash flow, financial
condition and other relevant factors as deemed by our Board.
LISTING EXPENSES
Based on the mid-point of the Offer Price stated in this prospectus and assuming that the
Offer Size Adjustment Option is not exercised, the total estimated listing expenses in connection
with the Share Offer are expected to be approximately HK$37.4 million or 54.4% of the gross
proceeds from the Share Offer, among which, approximately HK$12.2 million is directly
attributable to the issue of new Shares and will be charged to equity upon completion of the
listing, and approximately HK$8.0 million has been charged or is expected to be charged to our
consolidated statements of profit and loss and other comprehensive income. Our listing expenses
are categorized into underwriting-related expenses, which consists of underwriting fee and
commission (including SFC transaction levy, Stock Exchange trading fee and AFRC transaction
SUMMARY
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levy) of approximately HK$5.2 million and non-underwriting-related expenses of approximately
HK$32.2 million. The non-underwriting-related expenses can be further classified into (i) fees
and expenses for legal advisors and reporting accountants of approximately HK$18.0 million;
and (ii) other fees and expenses of approximately HK$14.2 million. During the Track Record
Period, we incurred listing expenses of HK$2.0 million, HK$10.0 million and HK$5.3 million
respectively.
USE OF PROCEEDS
Assuming an Offer Price of HK$0.55 per Offer Share, being the mid-point of the Offer
Price range between HK$0.50 and HK$0.60 and assuming the Offer Size Adjustment Option is
not exercised, we estimate to receive net proceeds from the Share Offer of approximately
HK$31.4 million, after deducting the estimated underwriting fee and other related expenses
payable by us in connection with the Listing.
We intend to use the net proceeds from the Share Offer as follows:
 approximately HK$24.5 million (or approximately 78.2% of the total net proceeds)
will be used for increasing our production capacity and capabilities, out of which:
(i) approximately HK$21.4 million (or approximately 68.4% of the total net
proceeds will be used for upgrading our production facilities in the PRC; and
(ii) approximately HK$3.1 million (or approximately 9.8% of the total net proceeds
will be used for implementing production in the Philippines for carrier tape;
 approximately HK$1.9 million (or approximately 6.2% of the total net proceeds) will
be used for intensifying our sales and marketing efforts in the global market including
PRC market;
 approximately HK$1.3 million (or approximately 4.2% of the total net proceeds) will
be used for purchasing ERP system and upgrading the information system in support
of the ERP system;
 approximately HK$1.0 million (or approximately 3.1% of the total net proceeds) will
be used for the strengthening our R&D and material engineering capabilities; and
 approximately HK$2.6 million (or approximately 8.3% of the total net proceeds) with
be used for general working capital.
For more details, please see the section headed “Future plans and use of proceeds” of this
prospectus.
SUMMARY
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RISK FACTORS
We believe that there are certain risks and uncertainties involved in our business
operations, some of which are beyond our control, that may materially and adversely affect our
Group’s business, financial conditions and results of operations. We have categorised four risks
into: (i) risks relating to our business and our industry; (ii) risks relating to the jurisdictions in
which our business operates; (iii) risks relating to the Share Offer; and (iv) risks relating to the
statements made in this prospectus. Some of these risks are summarised as follows:
 The demand for our products is highly dependent on the performance of the
semiconductor industry and the demand for the products of our customers are subject
to cyclical changes.
 The trade war between the United States and the PRC may adversely affect our
business, financial conditions and results of operation.
 Our financial results may be subject to tax risks relating to our transfer pricing
arrangement.
 We recorded net current liabilities and negative cash and cash equivalent as at 31
December 2021 and negative cash and cash equivalent as at 31 December 2023.
 Fluctuation in the supply volume or increase in the price of the raw materials may
have a negative impact on our business.
 The outbreak of epidemic disease may affect the operation of our production factories
and supply of raw materials and have a material adverse effect on our business, results
of operation, financial condition and prospects.
 Technological advancement or other changes in the semiconductor industry could
render our products less competitive or obsolete, which negatively impacts our
business, financial condition and results of operations.
 Global financial crisis and economic downturn could adversely affect our business,
liquidity, financial condition, results of operations and prospects.
 Adverse changes in economic, political and legal environment of Hong Kong, the PRC
and the Philippines could materially and adversely affect our business, financial
conditions, results of operations and prospects.
These risks are not the only significant risks that may affect the value of our Shares. You
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” in this
prospectus in deciding whether to invest in our Shares.
NON-COMPLIANCE AND LITIGATION
During the Track Record Period, there were instances where we did not fully comply with
the laws and regulations in which we have operations. For a discussion of our non-compliance
with respect to social insurance fund and housing provident fund contributions, see “Business –
Legal compliance, licences and permits – Legal compliance” for further details. We are not
aware of any material non-compliance or systemic non-compliance with the applicable laws and
SUMMARY
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regulations during the Track Record Period and up to the Latest Practicable Date that could have
a material adverse effect on our business, prospects, financial conditions or results of operations.
As at the Latest Practicable Date, our Directors were not aware of any current or pending
litigation, claim of arbitration against our Group which could have a material adverse effect on
our financial condition or results of operations. Please refer to the section headed “Business –
Litigation and potential claims” in this prospectus for further details.
HISTORICAL OFFSHORE PROFITS CLAIM, DEPRECIATION ALLOW ANCE AND THE
WITHDRA W AL
UBoT Inc. (HK) had claimed its entire trading profits derived from its business operations
as offshore in nature and not subject to profits tax in Hong Kong for the years of assessment
2008/09 to 2021/22, which had been challenged by the IRD. UBoT Inc. (HK) had also included
depreciation allowance in its profits tax return on the basis that its capital expenditure on
machinery or plant which is essential to the production of its assessable profits. Meanwhile, our
Directors considered, and the Tax Consultant concurred, that UBoT Inc. (HK), as a legal entity
on its own, was not chargeable to any overseas tax on the basis that UBoT Inc. (HK) should not
constitute a permanent establishment (“ PE”) in any overseas jurisdictions where the other
subsidiaries of our Group and the sales representatives operated, including the PRC and
Singapore of our Group.
As advised by our Tax Consultant, UBoT Inc. (HK) had grounds to claim its trading profits
for the Track Record Period as offshore sourced and not subject to profits tax, which is subject
to the review and agreement of the IRD. However, for the purpose of reducing the amount of
time, manpower and resources and to expedite the finalization of the matter, UBoT Inc. (HK)
formally withdrew the Offshore Profits Claim with the IRD in July 2023. The IRD indicated that
the Offshore Profits Claim had been fully and conclusively resolved after the Withdrawal. As a
result of the Withdrawal, the IRD had revisited the tax position of UBoT Inc. (HK) for all the
relevant years of assessment and issued revised profits tax assessments which represented the
final amount of the profit tax payable to the IRD. As at the Latest Practicable Date, based on the
verbal confirmation from the IRD and the views of the Tax Consultant and the Hong Kong Legal
Counsel, our Directors confirm that the Offshore Profits Claim had been completely resolved
and there should not be any tax-related matters, including additional tax assessment and/or any
penalties or investigations, arising from or associated with the Offshore Profits Claim. In
addition, any penalty of our Group in relation to the Offshore Profits Claim in excess of the
income tax provisions made as at 31 December 2023, if incurred, will be fully indemnified by
our Controlling Shareholders. To better manage the liquidity position of UBoT Inc. (HK), UBoT
Inc. (HK) applied for, and the IRD approved settlement of the outstanding tax payment by
instalments in twelve months. As at the Latest Practicable Date, UBoT Inc. (HK) had made
payment in the total amount of HK$13,620,000 with further instalments in the total amount of
approximately HK$11,070,000 to be settled on a monthly basis, which will be completed by end
of October 2024 (together with the applicable surcharge under the instalment plan).
With (i) the background of the Offshore Profits Claim, (ii) the support of our Tax
Consultant’s opinion and the Hong Kong Legal Counsel’s opinion on the grounds and legitimacy
of the Offshore Profits Claim and (iii) the view of the Hong Kong Legal Counsel that the
making of Offshore Profits Claim in the profits tax return shall in no way be seen as tax
evasion, our Directors are of the view, and the Sole Sponsor concurred, that the Offshore Profits
Claim would not constitute tax evasion pursuant to applicable tax laws and regulations and will
not affect the suitability of our Directors to act as directors of a listed issuer under Rules 5.01
SUMMARY
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and 5.02 of the GEM Listing Rules, and the suitability for listing of our Company under
Rule 11.06 of the GEM Listing Rules.
For details, please refer to the paragraphs headed “Business – Historical Offshore Profits
Claim and depreciation allowance” and “Financial Information – Historical Offshore Profits
Claim and relevant tax provisions made” in this prospectus.
IMPACT OF OUTBREAK OF COVID-19 ON OUR BUSINESS
The outbreak of COVID-19 pandemic emerged in late 2019 has expanded within Hong
Kong, the PRC and around the globe, including Dongguan in the PRC where our productions are
situated. While we are in normal business operations, we have experienced certain disruptions in
our operations as a result of the government-imposed suspensions due to the COVID-19
outbreak. Due to the outbreak of Omicron in Dongguan in March 2022, production activities of
our two production factories were restricted to a maximum of 50% from 15 March 2022 to 21
March 2022 in districts affected by COVID-19 in Dongguan. The shipping and freight-outbound
fees of our Group for delivering the products to the overseas warehouse or customers directly
have also increased due to COVID-19.
However, COVID-19 did not have significant actual adverse impacts on the operation of
our Group as the daily operations of the two production factories of our Group were not affected
save as disclosed above, and there was no issue of shortage of labour. Our Group increased the
inventory level for raw materials to ensure stable supply of our products in case of any
disruption in the production activities.
At this point, we cannot accurately predict what continuous effects the COVID-19
pandemic would have on our business, which will depend on, among other factors, frequency,
duration and extent of outbreaks of COVID-19, the appearance of new variants with different
characteristics, the effectiveness of efforts to contain or treat cases, and future actions that may
be taken in response to these developments. For further details, please refer to the paragraph
headed “Risk Factors – Risks Related to Our Business and Industry – The outbreak of epidemic
disease may have a material adverse effect on our business, results of operation, financial
condition and prospects” in this prospectus.
IMPACT OF TRADE W AR ON OUR BUSINESS
The trade war between the United States and the PRC has commenced since July 2018 and
has brought certain negative impacts to the semiconductor industry which may indirectly affect
our business, given that we mainly serve customers from the semiconductor industry and that
our business is semiconductor industry driven.
Since the commencement of the trade war, the semiconductor industry in the PRC has been
affected by incidents such as (i) the imposition of tariffs by the United States to the PRC, (ii)
actions of the United States and the PRC against the imports from each other to minimise the
transfer of intellectual property and technology and (iii) the accelerated shift of electronics and
semiconductor devices production from the PRC to other Asian countries to ensure stable supply
chain with lower labour costs and to reduce uncertainty on PRC enterprises arising from the
trade war. Whilst our products are not subject to additional tariff or trade restriction and are not
the primary target and direct focus of trade restrictions, our products are in complementary
demand of semiconductor devices such that our business was indirectly affected by the
fluctuation in demand of semiconductor devices. In particular, the demand for our products was
SUMMARY
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adversely affected by the CAC’s ban on operators of key infrastructure in the PRC to procure
semiconductors from one of our major customers based in the United States in 2023.
For further details, please refer to the paragraphs headed “Risk Factors – Risks Related to
Our Business and Industry – Trade war between the United States and the PRC may adversely
affect our business, financial conditions and results of operation” and “Business – Impact of
Trade War on our business” in this prospectus.
BUSINESS SUSTAINABILITY
Despite our overall growth in revenue and expansion in scale since our inception, we had
experienced fluctuation in market conditions due to the dynamic nature of the semiconductor
industry, given that our products are in complementary demand of semiconductor devices. For
the year ended 31 December 2023, our Group recorded a drop in revenue of approximately
26.6% as compared to the year ended 31 December 2022. Our Directors are of the view that
such decrease was primarily due to the slowdown in the semiconductor industry in the year
ended 31 December 2023, which was a short-term adjustment of the semiconductor industry due
to factors such as geopolitical tensions and the global macroeconomic downturn and is not
expected to be long-term in nature. According to Frost & Sullivan, heightened geopolitical
tensions disrupted supply chains and international collaborations and continued to impact the
industry in 2023. During the year ended 31 December 2023, the CAC’s ban on operators of key
infrastructure in the PRC to procure semiconductors from one of our major customers based in
the United States had contributed to our deteriorated financial performance in the year. For
details, please refer to the section headed “Business – Development of the trade war and its
impact on our business operation – Recent policies and restrictions imposed by the United States
and the PRC – Ban on U.S. semiconductor manufacturer imposed by the PRC”. Additionally, the
global macro-economy experienced a short-term slowdown, resulting in reduced consumer
spending and weakened business confidence. In particular, the market size of the global
semiconductor industry decreased by approximately 8.1% in 2023. Please refer to the section
headed “Industry Overview – Global Market Size of Semiconductor Industry” in this prospectus
for more details.
Our Directors consider that the impact from the short-term adjustment of the semiconductor
industry in 2023 due to factors such as geopolitical tensions and the global macroeconomic
downturn is not expected to be substantial over the long term, considering (i) the long-term
growth of the semiconductor industry; (ii) the high consumer demand; and (iii) the emphasis on
security of supply chain and supportive policies in favour of the development of semiconductor
devices in the PRC.
Our Directors consider the drop in revenue profitability for the year ended 31 December
2023 does not cast doubt on the business sustainability of our Group because (i) our financial
performance had been coinciding with market performance and fluctuations and we eventually
achieved long-term growth leveraging our resilience and the adaptability of our management; (ii)
our diversified customers base can reduce the influence caused by isolated event beyond our
control; (iii) there was no structural factor such as substitutes for our products that would impair
the demand for our products; and (iv) there was no termination of business relationship with
customers during the Track Record Period. Our Directors also believe that the risk of the
substantial deterioration in financial performance of our Group is remote because (i) we received
more backlog orders as at 31 March 2024 than that as at 31 December 2023 that the financial
performance is expected not to be further deteriorated in the second quarter of 2024 as compared
to that in the first quarter of 2024, and (ii) we received more orders more customised products in
the first quarter of 2024 and thus noted comparatively higher market interests in customised
products in 2024.
SUMMARY
–2 5–


--- page 38 ---
Our Group has been taking various measures to capture the growth of the market and
increase our profitability, including (i) actively widen our customer base by continuing our sales
and marketing efforts, (ii) enhance our production efficiency by promoting automation of our
production process; and (iii) expand our product offerings by taking research and development
initiatives. We have also implemented additional measures to navigate the cyclical downturn of
the semiconductor industry, including (i) dedicated staff to actively monitor changes in
international regulations in relation to the semiconductor industry, allowing us to proactively
adapt our operations in response to the evolving regulatory requirements; and (ii) strengthened
our efforts in collecting market information on the demand and supply dynamics within the
semiconductor industry, ensuring alignment with market trends and customer demands. We also
intend to strengthen our collaborations with key suppliers for more favourable price
arrangements and implement operational efficiency initiatives to optimize resources allocation
and minimise cost.
For further details, please refer to the section headed “Business – Business Sustainability”
in this prospectus.
SUMMARY
–2 6–


--- page 39 ---
In this prospectus, unless the context otherwise requires, the following expressions shall
have the following meanings.
“Abundant Wealth” Abundant Wealth Group Limited (ʮ̡), a
company incorporated in the BVI with limited liability on
26 November 2021, and a direct wholly-owned subsidiary
of our Company upon completion of the Reorganisation
“Accountants’ Report” the accountants’ report of our Group prepared by Moore
CPA Limited as contained in Appendix I to this prospectus
“acting in concert” has the meaning as ascribed to it in the Takeovers Code
“Acting in Concert Confirmation” the deed of confirmation dated 25 March 2022 executed
by Mr. Tong and Busy Trade, in relation to their
confirmation of the existence of certain acting in concert
arrangements in UBoT Inc. (HK). For details, please refer
to the section headed “History, Development and
Reorganisation – Parties acting in concert” in this
prospectus
“AFRC transaction levy” a levy of 0.00015% (rounded to the nearest cent) is
charged per side of the consideration of a transaction, and
the amount is collected for the Accounting and Financial
Reporting Council
“Articles” or “Articles of
Association”
the amended and restated articles of association of our
Company conditionally approved and adopted on 20 May
2024, which will take effect on the Listing Date, a
summary of which is set out in Appendix III to this
prospectus, and as amended from time to time
“associates” has the meaning ascribed to it under the GEM Listing
Rules
“Board” the board of Directors
“business day(s)” a day (excluding Saturday, Sunday or public or statutory
holiday in Hong Kong and any day on which a tropical
cyclone warning No. 8 or above is not lowered at or
before 12:00 noon or on which a “black” rainstorm
warning signal is hoisted or remains in effect between
9:00 a.m. and 12:00 noon and is not discontinued at or
before 12:00 noon) on which licensed banks in Hong
Kong are generally open for business in Hong Kong
throughout their normal business hours
DEFINITIONS
–2 7–


--- page 40 ---
“Busy Trade” Busy Trade Limited (ʮ̡), a company
incorporated in Hong Kong with limited liability on 8
December 2005, which is one of our Controlling
Shareholders and wholly-owned by Tang’s Family, among
which, 70.2% is owned by Mr. Tang, 5% is owned by Ms.
Tang, 12.4% is owned by Mr. CL Tang and 12.4% is
owned by Mr. CM Tang
“BVI” the British Virgin Islands
“Capital Market Intermediaries”
or “capital market
intermediary(ies)” or “CMI(s)”
the capital market intermediaries participating in the Share
Offer and has the meaning ascribed thereto under the
GEM Listing Rules
“CAC” the Cyberspace Administration of China
“Capitalisation Issue” the issue of 374,998,000 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 paragraph headed “A. Further information about our
Group – 3. Resolutions passed at the Shareholders’
extraordinary general meeting held on 20 May 2024”
under the section headed “Statutory and general
information” in Appendix IV to this prospectus
“CCASS” the Central Clearing and Settlement System established
and operated by HKSCC
“China” or the “PRC” the People’s Republic of China, excluding, for the
purposes of this prospectus, Hong Kong, the Macau
Special Administrative Region of the People’s Republic of
China and Taiwan
“close associate(s)” has the meaning ascribed to it under the GEM Listing
Rules
“Companies Act” the Companies Act, Cap. 22 (As Revised) of the Cayman
Islands
“Companies Ordinance” the Companies Ordinance (Chapter 622 of the Laws of
Hong Kong), as amended, supplemented or otherwise
modified from time to time
DEFINITIONS
–2 8–


--- page 41 ---
“Companies (Winding Up and
Miscellaneous Provisions)
Ordinance”
the Companies (Winding Up and Miscellaneous
Provisions) Ordinance (Chapter 32 of the Laws of Hong
Kong), as amended, supplemented or otherwise modified
from time to time
“Company” or “our Company” UBoT Holding Limitedʮ̡, a company
incorporated in the Cayman Islands as an exempted
company with limited liability on 7 February 2022 and
registered as a non-Hong Kong company under Part 16 of
the Companies Ordinance on 22 March 2022
“connected person(s)” has the meaning ascribed to it under the GEM Listing
Rules
“connected transaction(s)” has the meaning ascribed to it under the GEM Listing
Rules
“Controlling Shareholder(s)” has the meaning ascribed to it under the GEM Listing
Rules, and unless the context otherwise requires, refers to
Sino Success, Mr. Tong, Busy Trade, Mr. Tang, Ms. Tang,
Mr. CL Tang and Mr. CM Tang
“core connected person(s)” has the meaning ascribed to it under the GEM Listing
Rules
“COVID-19” the novel coronavirus (2019-nCOV)
“CSRC” China Securities Regulatory Commission
“Deed of Indemnity” the deed of indemnity dated 20 May 2024 executed by our
Controlling Shareholders in favour of our Company (for
ourselves and as trustee for each of our subsidiaries),
regarding certain tax and other indemnities, further
particulars of which are set out in the paragraph headed
“E. Other information – 1. Tax and other indemnities” in
Appendix IV to this prospectus
DEFINITIONS
–2 9–


--- page 42 ---
“Deed of non-competition” the deed of non-competition undertaking dated 20 May
2024 entered into by our Controlling Shareholders and
executive Directors (as covenantors) in favour of our
Company (for ourselves and for the benefit of each of our
subsidiaries) regarding certain non-competition
undertakings as further described in the section headed
“Relationship with Controlling Shareholders” in this
prospectus
“Director(s)” director(s) of our Company
“eWhite Form” the application for Public Offer Shares to be issued in the
applicant’s own name by submitting application online
through the designated website at www.ewhiteform.com.hk
“eWhite Form Service Provider” the eWhite Form Service Provider designated by our
Company, as specified on the designated website of
eWhite Form at www.ewhiteform.com.hk
“Frost & Sullivan” Frost & Sullivan Limited, an independent market research
and consulting company, and an Independent Third Party
“F&S Report” the industry report commissioned by our Company and
prepared by Frost & Sullivan, a summary of which is set
forth in the section headed “Industry Overview” in this
prospectus
“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 on the Stock Exchange
“FY2021” the year ended 31 December 2021
“FY2022” the year ended 31 December 2022
“FY2023” the year ended 31 December 2023
“GEM” GEM operated by the Stock Exchange
“GEM Listing Rules” the Rules Governing the Listing of Securities on GEM, as
amended, supplemented or otherwise modified from time
to time
DEFINITIONS
–3 0–


--- page 43 ---
“Group”, “we”, “our”, “us” or
“our Group”
our Company and our subsidiaries or, where the context
so requires in respect of the period before our Company
became the holding company of our present subsidiaries,
the present subsidiaries of our Company and the
businesses operated by such subsidiaries or their
predecessors (as the case may be)
“HKSCC” Hong Kong Securities Clearing Company Limited
“HKSCC EIPO channel” 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, instructing your broker
or custodian who is a HKSCC Participant to submit an
EIPO application on your behalf through FINI in
accordance with your instruction
“HKSCC Nominees” HKSCC Nominees Limited, a wholly-owned subsidiary of
HKSCC
“HKSCC Participant” a participant admitted to participate in CCASS as a direct
clearing participant, a general clearing participant or a
custodian participant
“HKSCC Operational Procedures” the operational procedures of the HKSCC, containing the
practices, procedures and administrative or other
requirements relating to HKSCC’s services and the
operations and functions of the systems established,
operated and/or otherwise provided by or through HKSCC
(including FINI and CCASS) as from time to time in force
“Hong Kong” or “HK” or
“HKSAR”
the Hong Kong Special Administrative Region of the PRC
“Hong Kong Branch Share
Registrar”
Boardroom Share Registrars (HK) Limited
“Hong Kong dollars”, “HK
dollars”, “HKD” or “HK$”
Hong Kong dollar(s), the lawful currency of Hong Kong
“Hong Kong Legal Counsel” Mr. Lawrence Man, a barrister-at-law of Hong Kong and
legal counsel as to Hong Kong laws in relation to certain
tax issues
DEFINITIONS
–3 1–


--- page 44 ---
“Houjie Production Factory” our production factory located at Block C, Baishantou
Area, Huangang Village, Houjie Town, Dongguan,
Guangdong Province, the PRC
“Independent Third Party(ies)” person(s) or entity(ies) that is or are not connected
person(s) within the meaning of the GEM Listing Rules
“IRD” the Inland Revenue Department of Hong Kong
“Joint Bookrunners” the joint bookrunners as named in the section headed
“Directors and Parties involved in the Share Offer” in this
prospectus
“Joint Global Coordinators” the joint global coordinators as named in the section
headed “Directors and Parties involved in the Share
Offer” in this prospectus
“Joint Lead Managers” the joint lead managers as named in the section headed
“Directors and Parties involved in the Share Offer” in this
prospectus
“Latest Practicable Date” 15 May 2024, being the latest practicable date for the
purpose of ascertaining certain information in this
prospectus
“Listco Concert Deed” the deed of confirmation dated 15 September 2023
executed by Mr. Tong, Sino Success, Busy Trade, Mr.
Tang, Ms. Tang, Mr. CL Tang and Mr. CM Tang, in
respect of the exercise of their respective powers as
shareholders of our Company and to consolidate their
control over our Group. For details, please refer to the
section headed “History, Development and Reorganisation
– Parties acting in concert” in this prospectus
“Listing” the listing of the Shares on GEM
“Listing Committee” the listing committee of the Stock Exchange
“Listing Date” Monday, 3 June 2024, the date on which dealings in the
Shares on GEM first commence, which is expected to be
on the listing committee of the Hong Kong Stock
Exchange
“Listing Division” the listing department of the Stock Exchange
DEFINITIONS
–3 2–


--- page 45 ---
“m” metre
“Memorandum” or
“Memorandum of Association”
the amended and restated memorandum of association of
our Company conditionally approved and adopted on 20
May 2024, which will take effect on the Listing Date, a
summary of which is set out in Appendix III to this
prospectus, as amended from time to time
“Mr. Chan” Mr. Chan Kai Leung (ڥbeing an executive
Director and one of our Shareholders
“Mr. CL Tang” Mr. Tang Chak Leung ( ቎ዣԄ), being one of our
Controlling Shareholders and brother of Mr. Tang, Ms.
Tang and Mr. CM Tang
“Mr. CM Tang” Mr. Tang Chak Man ( ቎ዣ͏), being one of our
Controlling Shareholders and brother of Mr. Tang, Ms.
Tang and Mr. CL Tang
“Mr. Shek” Mr. Shek Kam Pun ( ͩᎀⅳ), being an executive Director
and one of our Shareholders
“Mr. Tam” Mr. Tam Ming Wa (ശ), being an executive Director
and one of our Shareholders
“Mr. Tang” Mr. Tang Ming (׼being one of our Controlling
Shareholders, and brother of Ms. Tang, Mr. CL Tang and
Mr. CM Tang
“Mr. Tong” Mr. Tong Yuen To ( ಷჃᏹ), being an executive Director,
our chief executive officer, chairman of our Board, and
one of our Controlling Shareholders
“Mr. Zuo” Mr. Zuo Yi ( ̸ᆇ), being one of the shareholders of UBoT
Inc. (HK) prior to the Reorganisation
“Ms. Tang” Ms. Tang Wai Ling (ޛbeing one of our Controlling
Shareholders, and the sister of Mr. Tang, Mr. CL Tang and
Mr. CM Tang
“Ms. Wong” Ms. Wong Yin Mei ( රዲᑢ), being one of our
Shareholders
DEFINITIONS
–3 3–


--- page 46 ---
“NASDAQ” The National Association of Securities Dealers Automated
Quotations Stock Market, which is an American Stock
Exchange based in New York City
“NYSE” The New York Stock Exchange
“Offer Price” the final offer price per Offer Share (exclusive of
brokerage fee of 1.0%, SFC transaction levy of 0.0027%,
AFRC transaction levy of 0.00015% and Stock Exchange
trading fee of 0.00565%) of not more than HK$0.60 and
is currently expected to be not less than HK$0.50, to be
agreed upon by us, and the Overall Coordinator (for itself
and on behalf of the Underwriters) on or before the Price
Determination Date
“Offer Share(s)” the Public Offer Share(s) and the Placing Share(s)
together, whether relevant, with any additional Share(s)
issued pursuant to the Offer Size Adjustment Option
“Offer Size Adjustment Option” the option granted by our Company to the Placing
Underwriters, exercisable by the Overall Coordinator (for
itself and on behalf of the Placing Underwriters), at its
sole and absolute discretion, to require our Company to
allot and issue up to an aggregate of 18,750,000 additional
Offer Shares, representing up to 15% of the initial number
of the Offer Shares under the Share Offer, at the Offer
Price subject to the terms of the Placing Underwriting
Agreement
“Offshore Profits Claim” the offshore profits claim lodged by UBoT Inc. (HK) in
relation to the locality of its trading profits with the IRD,
details of which are set out in the paragraphs headed
“Business – Historical Offshore Profits Claim” in this
prospectus
“Overall Coordinator” has the meaning given to it in the GEM Listing Rules and,
unless the context requires otherwise, refers to the overall
coordinator named in the section headed “Directors and
Parties Involved in the Share Offer” in this prospectus
“Overseas Listing Measures” The Trial Administrative Measures of Overseas Securities
Offering and Listing by Domestic Companies ( ྤʫΆุ
 )
DEFINITIONS
–3 4–


--- page 47 ---
“Placing” the conditional placing of the Placing Shares by the
Placing Underwriters on behalf of our Company with
professional, institutional and other investors in Hong
Kong for cash at the Offer Price, as further described in
the section headed “Structure and conditions of the Share
Offer” in this prospectus
“Placing Share(s)” the 112,500,000 new Shares being offered by our
Company for subscription at the Offer Price under the
Placing, subject to reallocation and the Offer Size
Adjustment Option as described in the section headed
“Structure and conditions of the Share Offer” in this
prospectus
“Placing Underwriters” the underwriters of the Placing Shares who are expected
to enter into the Placing Underwriting Agreement to
underwrite the Placing Shares
“Placing Underwriting Agreement” the conditional placing underwriting agreement expected
to be entered into on or about the Price Determination
Date by, among others, our Company, the Controlling
Shareholders, the executive Directors, the Sole Sponsor,
the Overall Coordinator, the Joint Global Coordinators,
the Joint Bookrunners, the Joint Lead Managers and the
Placing Underwriters in respect of the Placing
“PRC” or “China” the People’s Republic of China, which for the purpose of
this prospectus, excludes Hong Kong, the Macau Special
Administrative Region of the PRC and Taiwan
“PRC Legal Advisers” King & Wood Mallesons, our legal advisers as to PRC
laws in relation to the Share Offer
“Price Determination Agreement” the agreement to be entered into by the Overall
Coordinator (for itself and on behalf of the Underwriters)
and our Company on the Price Determination Date to
record and fix the Offer Price
“Price Determination Date” the date expected to be no later than Thursday, 30 May
2024, on which the Offer Price is fixed for the purpose of
the Share Offer
DEFINITIONS
–3 5–


--- page 48 ---
“Public Offer” the offer of the Public Offer Shares for subscription by
the public in Hong Kong (subject to reallocation as
described in the section headed “Structure and conditions
of the Share Offer”) at the Offer Price (plus brokerage of
1%, SFC transaction levy of 0.0027%, AFRC transaction
levy of 0.00015% and Stock Exchange trading fee of
0.00565%) on the terms and subject to the conditions
described in this prospectus, as further described in the
section headed “Structure and conditions of the Share
Offer – The Public Offer”
“Public Offer Shares” 12,500,000 new Shares being initially offered by us for
subscription pursuant to the Public Offer, subject to
reallocation as described in “Structure and conditions of
the Share Offer – The Public Offer – Reallocation” in this
prospectus
“Public Offer Underwriter(s)” the underwriter(s) listed in “Underwriting – Underwriters
– Public Offer Underwriters” in this prospectus, being the
underwriters of the Public Offer
“Public Offer Underwriting
Agreement”
the underwriting agreement dated 23 May 2024 in relation
to the Public Offer and entered into by, among others, the
Company, the Controlling Shareholders, the executive
Directors, the Sole Sponsor, the Overall Coordinator, the
Joint Global Coordinators, the Joint Bookrunners, the
Joint Lead Managers and the Public Offer Underwriters
“Renminbi” or “RMB” Renminbi, the lawful currency of the PRC
“Regulation S” Regulation S under the U.S. Securities Act
“Reorganisation” the corporate reorganisation of our Group in the
preparation for the Listing, details of which are set out in
the section headed “History, development and
Reorganisation – Reorganisation” in this prospectus
“Repurchase Mandate” the general unconditional mandate granted to our
Directors by the Shareholders in relation to the repurchase
of our Shares, further information on which is set forth in
the paragraph headed “A Further information about our
Group – 6. Repurchase by our Company of its own
securities” in Appendix IV to this prospectus
“Securities and Futures
Commission” or “SFC”
the Securities and Futures Commission of Hong Kong
DEFINITIONS
–3 6–


--- page 49 ---
“SFO” the Securities and Futures Ordinance (Chapter 571 of the
Laws of Hong Kong) as amended, supplemented or
otherwise modified from time to time
“Share(s)” ordinary share(s) with nominal value of HK$0.001 in the
share capital of our Company
“Share Offer” the Public Offer and the Placing
“Share Option Scheme” the share option scheme conditionally approved and
adopted by our Company on 20 May 2024, the principal
terms of which are set out in the paragraph headed “D.
Share Option Scheme” in Appendix IV to this prospectus
“Shareholder(s)” holder(s) of the issued Share(s)
“Shatian Production Factory” our production factory located at Block no. 1 and no. 3,
No. 17 Chengtian Road, Shatian Town, Dongguan,
Guangdong Province, the PRC
“Shatian Warehouse” our warehouse nearby our Shatian Production Factory
located at Zone A, B and C, Mincheng Road, Mintian
Village, Dongguan, Guangdong Province, the PRC
“Singapore” the Republic of Singapore
“Singapore dollars” or “S$” Singapore dollars, the lawful currency of Singapore
“Sino Key” Sino Key Enterprises Limited (ʮ̡), a
company incorporated in the BVI with limited liability on
17 November 2021, and a direct wholly-owned subsidiary
of our Company upon completion of the Reorganisation
“Sino Success” Sino Success Ventures Limited, a company incorporated in
the BVI with limited liability on 2 December 2021 and
wholly-owned by Mr. Tong, and one of our Controlling
Shareholders upon completion of the Reorganisation
“Sole Sponsor” Yue Xiu Capital Limited, a licensed corporation to carry
on type 6 (advising on corporate finance) regulated
activity under the SFO, being the sponsor of the Share
Offer
“sq. m.” square metre(s)
DEFINITIONS
–3 7–


--- page 50 ---
“Stock Exchange” The Stock Exchange of Hong Kong Limited
“subsidiary(ies)” has the meaning ascribed to it under the GEM Listing
Rules
“Substantial Shareholder(s)” has the meaning ascribed to it under the GEM Listing
Rules
“Tang’s Family” collectively, Mr. Tang, Mr. CL Tang, Mr. CM Tang and
Ms. Tang
“Takeovers Code” the Codes on Takeovers and Mergers and Share
Buy-backs, as amended, supplemented or otherwise
modified from time to time
“Tax Consultant” SHINEWING Tax and Business Advisory Limited, an
independent tax consultant we engaged on certain tax
issues
“Track Record Period” the three financial years ended 31 December 2023
“TWSE” The Taiwan Stock Exchange
“UBoT Electronic Packing” Dongguan UBoT Electronic Packing Products Co., Ltd.*
(ʮ̡ ) (formerly known as
Dongguan UBoT Precision Packing Technology Co., Ltd.*
(ʮ̡ )), a limited liability
company established in the PRC on 25 December 2019,
and an indirect wholly-owned subsidiary of our Company
upon completion of the Reorganisation
“UBoT Enterprise” Dongguan UBoT Enterprise Co., Ltd.* (ࠢ
ʮ̡), a limited liability company established in the PRC
on 14 April 2010, and an indirect wholly-owned
subsidiary of our Company upon completion of the
Reorganisation
“UBoT Group” UBoT Inc. (HK) and its subsidiaries prior to the
Reorganisation
“UBoT Inc. (HK)” UBoT Incorporated Limited (ʮ̡), a
company incorporated in Hong Kong with limited liability
on 28 November 2005, and an indirect wholly-owned
subsidiary of our Company upon completion of the
Reorganisation
DEFINITIONS
–3 8–


--- page 51 ---
“UBoT Inc. (SG)” UBoT Incorporated Pte. Limited, a company incorporated
in Singapore with limited liability on 18 January 2008,
and an indirect wholly-owned subsidiary of our Company
upon completion of the Reorganisation
“UBoT Shanghai” Shanghai UBoT Marketing and Promotion Co., Ltd.* (ɪ
ʮ̡ ), a limited liability company
established in the PRC on 20 December 2023, and an
indirect wholly-owned subsidiary of our Company
“UBOTIC” UBOTIC Company Limited (ʮ̡), a
company incorporated in Hong Kong with limited liability
on 11 August 2009, and an indirect wholly-owned
subsidiary of our Company upon completion of the
Reorganisation
“UBOTIC IP” UBOTIC Intellectual Property Company Limited (Ꮄ௹௴
ʮ̡), a company incorporated in Hong
Kong with limited liability on 1 December 2009, and an
indirect wholly-owned subsidiary of our Company upon
completion of the Reorganisation
“UBOTIC MEMS” Dongguan UBOTIC MEMS Co., Ltd.* (୷Ꮄ௹௴อฆዚ
ʮ̡), a limited liability company established
in the PRC on 2 August 2012, and an indirect
wholly-owned subsidiary of our Company upon
completion of the Reorganisation
“Underwriter(s)” the Public Offer Underwriter(s) and the Placing
Underwriter(s)
“Underwriting Agreements” the Public Offer Underwriting Agreement and the Placing
Underwriting Agreement
“US dollar(s)” or “US$” or
“USD”
United States dollar(s), the lawful currency of the USA
“USA” or “United States” the United States of America
“Withdrawal” the withdrawal of the Offshore Profits Claim by UBoT
Inc. (HK) with the IRD, details of which are set out in the
paragraphs headed “Business – Historical Offshore Profits
Claim” in this prospectus
“%” per cent.
* The English transliteration of the Chinese names in this prospectus, where indicated, is included for information
only, and should not be regarded as the official English names of such Chinese names
DEFINITIONS
–3 9–


--- page 52 ---
This glossary contains explanations of certain terms, definitions and abbreviations used in
this prospectus in connection with our Group and our business. The terms and their meanings
may not correspond to standard industry meaning or usage of those terms.
“ABS” acrylonitrile butadiene styrene, a common thermoplastic
polymer which provides favorable mechanical properties
such as impact resistance, toughness and rigidity when
compared with other common polymers
“ASIC” Application Specific Integrated Circuit. A proprietary
integrated circuit designed and manufactured to meet a
customer’s specific functional requirements
“ASTM” acronym of American Society for Testing and Materials,
the international standards organization that develops and
publishes voluntary consensus technical standards for a
wide range of materials, products, systems and services,
and is widely applied in the semiconductor industry
“back-end semiconductor transport
media”
the carrier or casings for transporting and containing
semiconductor components during all stages of the
manufacturing process, typically made by using precision
engineering plastics. For example, during component-
assembly operations, transport and storage from the
manufacturing plant to the board-assembly site, and when
feeding components to automatic-placement machines for
surface mounting on board assemblies
“BGA” acronym of Ball Grid Array family of IC packaging design
using substrate as interconnect structure and solder balls
as external connection
“bonded warehouse” domestic warehouses in overseas regions in which
dutiable goods are stored without payment of duty
“Carrier tapes” tape with sequential individual cavities that hold
individual components, and a cover tape that seals the
carrier tape to retain the components in the cavities. They
provide mechanical protection during handling and storage
and are commonly used for feeding components to
automatic-placement machines for surface mounting on
board assemblies
“CAGR” compound annual growth rate, a method of assessing the
average growth of a value over time
GLOSSARY OF TECHNICAL TERMS
–4 0–


--- page 53 ---
“Cleanroom” an environment, typically used in manufacturing or
scientific research, with a low level of environmental
pollutants such as dust, airborne microbes, aerosol
particles, and chemical vapours
“CPAP” acronym of Continuous Positive Airway Pressure, a form
of positive airway pressure ventilation in which a constant
level of pressure greater than atmospheric pressure is
continuously applied to the upper respiratory tract of a
person
“DFN” acronym of Dual-Flat-Non-Leaded, or “Dual-Flat-No-Lead”, an
IC packaging design structure which has external signal
connection at two peripheral bottom sides of the package
structure
“die” one individual chip cut from a wafer before being
packaged
“EIA” The Electronic Industries Alliance, and EIA standard
provides guidance on component marking, data modelling,
colour coding and packaging materials for electronic
component and systems and was developed in accordance
with, and accredited by, the American National Standards
Institute
“EMC” acronym of Epoxy Molding Compound, which is a
material widely accepted by the semiconductor industry
used to encapsulate the delicate and fragile wire-bonded
silicon die structure to protect the IC from harmful factors
in external environment
“EMI” acronym of Electromagnetic Interference, which is a key
consideration of any electronic devices and electrical
equipment design engineer to avoid disturbances and
disruption during normal usage
“engineering plastics” engineering plastics are a kind of innovative plastic-based
material used in the industrial applications. They are
engineered with extreme accuracy and attention to detail,
allowing for precise and intricate designs to be created
and offer a wide range of properties, such as high
strength, heat resistance, high durability, high malleability
and chemical resistance
GLOSSARY OF TECHNICAL TERMS
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“engineering plastics casings” engineering plastics casings are casing and packaging
products manufactured using engineering plastics designed
to meet the needs of a wide range of industries and
applications such as housing and protecting semiconductor
devices
“epoxy” resin comprising two co-reactant hardeners often used for
electrical components and structural adhesives
“ERAQFN” acronym of Enhanced-Ring-Air-Cavity Quad Flat
Non-lead, a patented MEMS and sensor packaging design
“ERP” enterprise resource planning, a business process
management software that allows an organization to use a
system of integrated applications to manage the business
and automate back-office functions relating to technology,
services, and human resources
“ESD” electro static discharge
“fabless foundry” operating model in the semiconductor industry that
production is split by (i) design; (ii) IC/wafer
manufacturing; and (iii) IC assembly, packaging and
testing
“GFA” Gross Floor Area
“HV AC” acronym of Heating, Ventilation and Air Conditioning, the
use of various technologies to control the temperature,
humidity, and purity of the air in an enclosed space
“IC” acronym for integrated circuit, a semiconductor device
that combines a number of transistors and electronic
circuits onto a piece of silicone
“IDM” integrated device manufacturer
“IoT” acronym of Internet of Things, refers to a network of
physical devices, vehicles, appliances and other physical
objects that are embedded with sensors, software and
network connectivity that allows them to collect and share
data
GLOSSARY OF TECHNICAL TERMS
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“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
“ISO 9001” an internationally recognised standard set by ISO 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
“ISO 14001” an internationally recognised standard set by ISO for
implementing an environment management system, which
assist a company to continually improve its ability to
efficiently identify, minimize, prevent and manage
environmental impacts
“ISO 45001” an internationally recognised standard set by ISO for
occupational health and safety management system, which
helps a company to manage occupational health and safety
risks and improve performance through the
implementation of policies and objectives
“JEDEC” The Joint Electron Device Engineering Council, and
JEDEC standard is an open industry standard and was
primarily established to provide recognised technical
standards and allow interoperability between different
electrical components
“LCP-CNT” LCP is the acronym of Liquid Crystal Polymer and CNT
is the acronym of Carbon Nanotube. LCP-CNT means
Liquid Crystal Polymer material embedded with Carbon
Nanotube as ingredient
“MEMS” Micro-Electro-Mechanical-System, a miniaturized mechanical
and electro-mechanical elements (i.e. devices and
structures) that are made using the techniques of
microfabrication and photolithography process. It is a
manufacturing technology and a paradigm for designing
and creating complex mechanical devices and systems
GLOSSARY OF TECHNICAL TERMS
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“MPPO” modified PPO, a engineering thermoplastic blending PPO
with various other engineering thermoplastic that produce
materials with a wide range of physical and mechanical
properties, heat resistance and flame retardancy
“OEM” original equipment manufacturer
“PCB” printed circuit board, an non-conductive board base on
which electronic components are mounted through the
application of SMT and are connected by conductive
traces to form a working circuit or assembly
“PPO” polyphenylene oxide, a high temperature thermoplastic
that offers high heat resistance, dimensional stability and
accuracy and favorable mechanical properties, such as
impact resistance, toughness and rigidity
“QFN” acronym of Quad-Flat-Non-Leaded, or Quad-Flat-No-Lead,
an IC packaging design structure which has external
signal connection at all four peripheral bottom sides of the
package structure
“R&D” acronym for research and development, a scientific work
towards developing particular technologies
“REACH” Regulation concerning the Registration, Evaluation,
Authorisation and Restriction of Chemicals, a European
Union regulation dating from 18 December 2006, which
addresses the production and use of chemical substances,
and their potential impacts on both human health and the
environment
“RoHS” the Restriction of Hazardous Substances Directive
2002/95/EC, short for Directive on the restriction of the
use of certain hazardous substances in electrical and
electronic equipment, was adopted in February 2003 by
the European Union
“SMT” acronym for surface-mount technology, a method for
constructing electronic circuits in which the components
are mounted directly onto the surface of printed circuit
boards
“tray and tray related products” plastic containers for transporting back-end semiconductors
that are conform to JEDEC standards
GLOSSARY OF TECHNICAL TERMS
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“WLCSP” acronym of Wafer Level Chip Scale Package, a very thin
and tiny IC packaging structure usually without the
protection of Epoxy Molding Compound encapsulation,
very popular in mobile devices application
GLOSSARY OF TECHNICAL TERMS
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This prospectus contains, and the documents incorporated by reference herein may contain,
forward-looking statements representing our goals, belief, expectations or intentions for the
future, and actual results or outcomes may differ materially from those expressed or implied.
Such forward-looking statements are subject to certain risks, uncertainties and assumptions.
Forward-looking statements typically can be identified by the use of words such as “aim”,
“anticipate”, “believe”, “can”, “consider”, “continue”, “could”, “estimate”, “expect”, “forecast”,
“intend”, “may”, “might”, “ought to”, “plan”, “potential”, “project”, “propose”, “seek”,
“should”, “will”, “would” and other similar terms. Even though these statements have been made
by our Directors after due and careful consideration and on bases and assumptions fair and
reasonable at the time, they nevertheless involve known and unknown risks, uncertainties and
other factors which may cause our Company’s actual results, performance or achievements to be
materially different from any future results, performance or achievements expressed or implied
by the forward-looking statements.
These forward-looking statements include, but not limited to, statements relating to:
 our business and operating strategies and the various measures we use to implement
such strategies;
 our dividend distribution plans;
 our planned use of proceeds;
 our operations, business and financial prospects, including development plans for our
business and future cashflows;
 our capital commitment plans;
 our future debt levels and capital needs;
 the future developments and competitive environment of the industry and markets in
which we operate;
 the regulatory environment as well as the general industry outlook for the industry
which we operate in;
 relationships with parties we contract and collaborate with to conduct our business;
 risks identified under the section headed “Risk factors” in this prospectus;
 general economic trends; and
 other statements in this prospectus that are not historical facts.
FORW ARD-LOOKING STATEMENTS
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Such statements reflect the current views of our management with respect to future events
and are subject to certain risks, uncertainties and assumptions, including the risk factors
described in this prospectus. Please refer to the sections headed “Risk factors”, “Business” and
“Financial information” in this prospectus for more details.
Should one or more of these risks or uncertainties materialise, or should the underlying
assumptions prove to be incorrect, our financial condition may be adversely affected and may
vary materially from the goals we have expressed or implied in these forward-looking
statements. Since we operate in an evolving environment where new risks and uncertainties may
emerge from time to time, you should not rely upon forward-looking statements as predictions of
future events.
Except as required by applicable laws and regulations, including the GEM Listing Rules,
we undertake no obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise. Accordingly, investors should not
place undue reliance on any forward-looking information.
In this prospectus, statements of or references to our intentions or those of our Directors
are made as at the date of this prospectus. Any such intentions may change in light of future
developments.
FORW ARD-LOOKING STATEMENTS
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Potential investors should carefully consider all of the information set out in this
prospectus and, in particular , the following risks and special considerations associated with
an investment in the Offer Shares. 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.
We believe that there are certain risks and uncertainties involved in our business
operations, some of which are beyond our control, that may materially and adversely affect our
Group’s business, financial conditions and results of operations. We have categorised four risks
into: (i) risks relating to our business and our industry; (ii) risks relating to the jurisdictions in
which our business operates; (iii) risks relating to the Share Offer; and (iv) risks relating to the
statements made in this prospectus. These risks are summarised as follows:
RISKS RELATING TO OUR BUSINESS AND OUR INDUSTRY
The demand for our products is highly dependent on the performance of the semiconductor
industry and the demand for the products of our customers are subject to cyclical changes.
As a supplier of back-end semiconductor transport media and service provider of MEMS
and sensor packaging, we mainly serve customers from the semiconductor industry. As at 31
December 2023, we had over 300 customers, the majority of our revenue was generated from
fabless-foundry semiconductor companies, IDM companies and IC assembly and packaging test
companies. Therefore, the demand for our products is highly dependent on the performance of
the semiconductor industry and the demand for the products of our customers. The demand for
our customer’s products is in turn highly dependent on the performance of consumers electronics
and smart modules industry, telecommunications industry and automotive electronics industry.
Therefore, the semiconductor industry is subject to cyclical changes and the demand for our
products is also affected by such changes. As a result, the demand for the products of our
customers is subject to various factors, including but not limited to the rapid technological
development, constantly changing industry standards across different countries in which they
operate, the R&D capability of our customers, the ability of our customers to the market trends
of the industry of their customers and the ability of our customers to retain skilled personnel for
R&D for their products. We experienced a temporary slowdown in the semiconductor industry in
2023 due to factors such as geopolitical tensions and the global macroeconomic downturn and
recorded a decrease of approximately 8.1% in the global market size of the semiconductor
industry and therefore our sales volume of tray and tray related products was adversely affected,
which directly affected our results of operations for the period. There is no assurance that we
will not experience the slowdown in growth in the semiconductor industry in the future and our
business, financial condition and results of operation may be affected.
According to the F&S Report, the semiconductor industry is competitive and industry
standards are constantly changing. We are unable to guarantee the performance of our major
customers, their ability to retain skilled personnel for R&D development, the demand for their
products and their ability to comply with the constantly changing industry standards. If our
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customers are unable to maintain the competitiveness or keep abreast of the technological
development in the industry, the demand for their products will deteriorate, which in turn will
reduce the demand for our products. Our business operation and financial conditions will then be
adversely affected. In addition, we are also unable to guarantee the market trend of the
industries, which the demand for our customers’ products is highly dependent on, such as
consumers and electronics and smart modules industry, telecommunications industry and
automotive electronics industry, will not be adversely changed in the future. If the performance
of such industries deteriorates, the demand for our customers’ products will be negatively
affected, which will in turn adversely affect the demand for our products, our financial
performance and business prospects.
Trade war between the United States and the PRC may adversely affect our business,
financial conditions and results of operation.
During the Track Record Period, approximately 8.3%, 7.8% and 2.6% of our total revenue
was derived from the United States, respectively while all of our products are manufactured in
the PRC while that from our PRC customers amounted to approximately 27.3%, 24.3% and
26.4% of our total revenue. Hence, any trade restriction, trade barriers or policies such as new
duties, tariffs, ban, quota fees or restrictions imposed by the United States against the PRC
could affect the price and competitiveness of our products. During the Track Record Period and
as at the Latest Practicable Date, our products sold to the United States are not subject to
additional import tariffs and trade restrictions as a result of the trade war between the United
States and the PRC. In addition, our products delivered outside the United States at the request
of our customers from the United States are also not subject to existing tariff and trade
restrictions. However, we cannot guarantee that the measures will remain the same in the future.
In case additional import tariffs and trade restrictions are imposed on our products sold to the
United States in the future or delivered outside the United States at the request of our customers
from the United States, our business and financial conditions may be adversely affected.
The trade war has also led to constraints in material sourcing from suppliers and increase
of raw material costs. According to the F&S Report, with the fear of the shortage of raw
materials imported from the United States, there was a competition among the plastic
manufacturers and material suppliers in the PRC for available raw materials. Any escalation in
trade war may have a negative impact on the global economic conditions which may materially
affect our material supply.
While the demand for our products is highly dependent on the performance of the
semiconductor industry and the ordering pattern and the demand for the products of our
customers, in the event that the products of our customers are also subject to the additional
import tariffs, prohibition orders and sanctions as a result of the trade war between the United
States and the PRC, the demand of our products may decrease and our business, financial
conditions and results of operation may be materially impacted. During the Track Record Period,
the CAC requested operators of key infrastructure in the PRC to stop buying products from one
of our major customers on the basis that its products carry serious network security risks. While
we maintained our business relationship with such major customer after the procurement ban
RISK FACTORS
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was imposed against it, our revenue attributable to such major customer decreased by
approximately 69.5% for the year ended 31 December 2023 as compared to the year ended 31
December 2022. During the Track Record Period, the PRC has also imposed measures against
the United States by banning procurement from certain semiconductor manufacturers in the
United States. If additional customers in the United States are subject to such ban, their business
may be adversely affected and in turn reduce demand for our products. On the other hand, the
United States also expanded entity list which contains entities that are subject to license
requirement for twenty-eight entities that are located in China. If the scope of the entity list is
expanded to our PRC customers, it could have a material adverse effect on our revenue. If all of
our PRC customers cease to purchase from us, our revenue is expected to decrease by
approximately 25% based on the historical revenue contribution of our customers headquartered
in the PRC. For details, please refer to the paragraphs headed “Business – Impact of Trade War
on our business” in this prospectus.
In addition, the United States or other countries that our products are sold to may introduce
more favourable trade policies to countries other than the PRC, such as Vietnam and the
Philippines; in the premises, our competitors located in these countries may offer terms more
favourable than ours to our customers, causing our customers to shift their purchases from us to
our competitors in these countries. In such circumstances, it could have a material adverse effect
on our business, results of operations and financial conditions.
Our financial results may be subject to tax risks relating to our transfer pricing
arrangement.
During the Track Record Period, there were intra-group transactions among our
wholly-owned subsidiaries in Hong Kong, the PRC and Singapore, including UBoT Enterprise,
UBoT Inc. (SG) and UBoT Inc. (HK). The intra-group transactions with transfer pricing
exposure include (i) sales of finished goods from UBoT Enterprise to UBoT Inc. (HK); and (ii)
provision of marketing service by UBoT Inc. (SG) to UBoT Inc. (HK). For further details
regarding our transfer pricing arrangement, please refer to the paragraph headed “Business –
Transfer Pricing Arrangement” in this prospectus. We cannot assure you that the relevant tax
authorities in Hong Kong, the PRC and Singapore would not challenge the transfer pricing
arrangement of our Group. If any regulatory tax authority determines that our transfer pricing
arrangements do not comply with the relevant transfer pricing laws and regulations, we may face
adverse tax consequences, such as the payment of outstanding tax, statutory interest or tax
penalty. Such adverse tax consequences could result in a higher overall tax liability for our
Group and may adversely affect our business, financial condition and results of operation.
We recorded net current liabilities and negative cash and cash equivalent as at 31
December 2021 and negative cash and cash equivalent as at 31 December 2023.
We recorded a negative cash and cash equivalent of approximately HK$0.9 million as at 31
December 2021 mainly due to the non-recurring cash outflow due to the application for Listing
in the amount of approximately HK$0.4 million and expansion plan in the amount of
approximately HK$6.0 million and a negative cash and cash equivalent of approximately
RISK FACTORS
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HK$1.9 million for the year ended 31 December 2023 mainly due to a non-recurring cash
outflow as a result of the tax payment associated with the Withdrawal in the amount of
approximately HK$5.3 million. Further, as at 31 December 2021, we recorded net current
liabilities in the amount of approximately HK$11.7 million, mainly because we used short-term
bank loans and other borrowings, finance our general working capital needs and capital
expenditure and in particular, HK$12.6 million of bank borrowings would be practically repaid
over 1 year after 31 December 2021, respectively, based on the repayment schedule which has
been classified as current liabilities as they had a repayment on demand clause. The level of our
net current liabilities was also subject to the effect of income tax provision of HK$20.9 million
in relation to the historical Offshore Profits Claim made before the Withdrawal as at 31
December 2021. For further information, please refer to the sections headed “Financial
Information – Liquidity and Financial Resources – Cash flow of our Group” and “Financial
Information – Net current assets and current liabilities” in this prospectus.
There is no assurance that we will not experience liquidity problems in the future and we
cannot guarantee that we will be able to maintain a positive cash and cash equivalents position
in the future. If we fail to generate sufficient revenue from our operations, or if we fail to
maintain sufficient cash and financing, we may not have sufficient cash flows to fund our
business, operations and capital expenditure and our business and financial position will be
adversely affected.
Technological advancement or other changes in the semiconductor industry could render
our products less competitive or obsolete, which negatively impacts our business, financial
condition and results of operations.
Our product are mainly used during the production process and delivery process of
semiconductor devices which may be used for consumer electronic products such as tablets,
smartwatches and televisions and automotive electronics and medical electronics. Different types
of consumer electronic products, automotive electronics and medical electronics apply
semiconductor with unique specifications in terms of the size, thickness, humidity and
electrostatic protection. As a result, the technological upgrades and developments of our
products follow closely with those semiconductor devices which are subject to cyclical changes,
rapid technological developments as well as evolving consumers’ needs and the specifications
and requirement of our customers. Our competitive position will depend on a significant extent
on our ability to develop packaging materials that are comparable to or better than those
produced by our competitors. For the year ended 31 December 2021, 2022 and 2023, research
and development expenses in the amount of approximately HK$4.1 million, HK$4.3 million and
HK$4.8 million, respectively, were allocated to retaining engineers and engaging engineering
consultants. As the research and development process of new products and technologies is
complex, time-consuming and costly, we could experience delays in completing the development
and introduction of new and enhanced products in the future. Our research and development
efforts may not yield the benefits we target to achieve at all after our dedication of time and
resources into the process. Should we fail to maintain our research and development speed and
quality or fail to upgrade our manufacturing techniques and capabilities in order to keep up with
upcoming technological trends and the research and development processes of our competitors,
RISK FACTORS
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the current technologies we use may become outdated and this in turn renders our products
uncompetitive.
As a result, the failure to anticipate technological developments and market trends of
electronic products in a timely manner, or at all, may result in obsolescence to our products at
sudden and unpredictable intervals.
If we fail to introduce new product designs and technologies that will satisfy our
customers’ and the market’s needs, we may be unable to compete effectively in the market and
our business and results of operations could be materially and adversely affected.
Fluctuation in the supply volume or increase in the price of the raw materials may have a
negative impact on our business.
For each of the year ended 31 December 2021, 2022 and 2023, our cost of raw materials
amounted to approximately HK$55.2 million, HK$73.6 million and HK$49.5 million,
respectively, accounted for approximately 47.5%, 47.3% and 41.8% of our cost of sales.
Therefore, any significant fluctuations in the cost of raw materials may materially affect our
financial performance. However, the cost of raw material is dependent on a variety of factors,
such as the market demand for the raw materials in our industry and other industries, overall
economic outlook and regulatory policies regarding such raw materials. Raw materials essential
for our production, such as ABS and PPO, which are engineering plastics are also used for other
industries such as automotive industry. According to the F&S Report, the price of ABS has
increased at a CAGR of 5.4% from 2019 to 2023. The demand for our raw materials in the
industry in which we operate and other industries are beyond our control and we cannot assure
the cost of raw materials will remain stable.
We will continue our efforts to pass our material cost increases on to our customers by
determining the selling price of our products on a cost-plus basis, with reference to the costs of
the raw materials, the expected margins etc. However, market pressures may limit our ability to
do so, and may prevent us from doing so in the future. Even when we are able to pass price
increases on to our customers, in some cases, there is a time-lag before we are able to do so
effectively due to the time gap between the time we obtain quotation or purchase the raw
materials and the time we produce and deliver the products to our customers. Our inability to
pass on or any delay in passing on price increases to our customers could adversely affect our
operating margins and cash flow, resulting in a lower operating income and profitability. In
addition, our R&D and material engineering team, would conduct cost analysis on formula in
order to achieve cost efficiency on our raw material. However, such cost analysis on formula
will be subject to a number of factors, for example, the demand of such material in the market
and in other industries, which is beyond our control. We cannot guarantee that the cost analysis
on the formula conducted by our R&D and material engineering team will be accurate. In the
even that there are fluctuations in our material prices and we cannot optimise cost efficiency,
there may be a material adverse effect on our business, operating results and financial
conditions, or significant fluctuations in our operating results from period to period. We cannot
assure you that fluctuations in our material prices will not have a material adverse effect on our
RISK FACTORS
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business, operating results and financial condition, or cause significant fluctuations in our
operating results from period to period.
In addition, if the demand for our raw materials such as ABS and PPO are heavily required
by other industries in the future due to technological development, we may not be able to secure
stable supply of raw materials for our production. For each of the year ended
31 December 2021, 2022 and 2023, we purchased raw materials from four and five suppliers out
of the five largest suppliers in each year and we have established business relationship with such
suppliers ranging from one to over 10 years. In the event that our major suppliers of raw
materials cannot satisfy the demand for their customers’ orders, there may be shortage of supply
of raw materials to us and our production schedule may be affected and additional time and
costs will be required for us to establish relationship with new suppliers of raw materials.
The outbreak of epidemic disease may have a material adverse effect on our business,
results of operation, financial condition and prospects.
The outbreak of COVID-19 emerged in late 2019 has expanded within Hong Kong, the
PRC and around the globe, including Dongguan in the PRC where our productions are situated.
On 11 March 2020, the COVID-19 outbreak was declared a pandemic by the World Health
Organisation. Variants of COVID-19 such as Delta and Omicron have emerged since the
outbreak of COVID-19.
In response to the outbreak of COVID-19, various areas with confirmed cases of
COVID-19 in the PRC were locked down. Residents’ movements across and within provinces,
cities, countries or any designated regions are restricted. Our Shatian Production Factory and
Houjie Production Factory are situated at Dongguan in the PRC, which was one of the areas in
the PRC encountered with COVID-19 outbreak. Due to the outbreak of Omicron in Dongguan in
March 2022, production activities of our two production factories were restricted to a maximum
of 50% from 15 March 2022 to 21 March 2022 in districts affected by COVID-19 in Dongguan.
Although the PRC government gradually eased restrictive measures on business and social
activities in December 2022, and re-opened the borders in January 2023, our business operations
may be disrupted if any of our employees is suspected of having these or any other epidemic
disease, since it may lead to increased sick leave in our production factories.
As for Hong Kong, various social distancing regulations and measures have been
implemented in Hong Kong from time to time under the Prevention and Control of Disease
(Prohibition of Group Gathering) Regulation (Chapter 599G of the Laws of Hong Kong) and
special work arranging for government employees was implemented from time to time for both
public and private sectors. Due to the outbreak of Omicron in Hong Kong in December 2021, the
Hong Kong government has tightened social distancing measures in Hong Kong in February
2022. For example, group gatherings of more than two persons in the public places was
prohibited. Multi-household gatherings at private premises involving more than two households
were also prohibited. Certain premises such as fitness centres, religious premises and hair salons
were closed. Hours for catering business for serving food and drinks for consumption at the
premises are also restricted. Although the Hong Kong government lifted social distancing
RISK FACTORS
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restrictions in March 2023, we cannot assure you if there will be any lockdown and tightened
measures in Hong Kong if there is any outbreak of epidemic diseases. In that case, our staff in
Hong Kong may not be able communicate face-to-face with our staff, customers, suppliers and
our clients in a timely manner and our operation may be adversely affected.
In addition, the outbreak of COVID-19 and tightening measures implemented adversely
affected the supply chain of our products as suppliers of raw materials may have to temporarily
suspend the operation of their production plants or factories. As a result, our cost for purchase
of raw materials increased. If any disruption in the supply chain occurs again due to any
outbreak of epidemic disease and that we are unable to find similar supplies at similar prices
within a reasonable time, our production schedule may be affected, which will in turn delay the
delivery of products to our customers. Under such circumstances, our customers’ loyalty and
confidence may be reduced and they may bring civil claims against us. In such event, we may
incur substantial amount of litigation cost and utilize our internal resources that adversely affect
our financial conditions and results of operations. In addition, in the event there are
transportation bans or restrictions following the escalation of the spread of any epidemic disease,
our logistics expenses may increase.
Health safety risks during the occurrence of the COVID-19 may also lead to labour
shortage, increase in wages of the workers, and interruption of our business operation, affecting
our profit margin as a result. If there is any future outbreak of epidemic disease, tougher
draconian measures may be implemented by the local government. If lockdown is imposed in the
districts near our production factories in Dongguan, our workers living in the neighbourhood
may not be able to go to work. As at 31 December 2023, over 25% of our employees came from
provinces outside Guangdong Province including Hunan Province, Sichuan Province, Guangxi
Province, etc. We cannot assure you that if there is any future outbreak of epidemic disease, our
employees with their home towns outside Guangdong province would not be subject to any
travel restriction which restricts them from reporting to work to our production factories in
Dongguan.
Our success depends on our ability to maintain our quality control standard. Failure to
maintain product quality of our products may adversely affect our customers’ satisfaction.
As our products are mainly used during the production process and delivery process of
semiconductor devices which may be used for consumer electronic products such as tablets,
smartwatches and televisions and automotive electronics and medical electronics, in order to
protect the semiconductor devices, our Directors consider that our success depends on our ability
to maintain our quality control standard since our products have to be produced precisely in
accordance with our customers’ specifications, which may include size, material to be used and
applicable industry standards. Therefore, the scope of our quality control measure covers a
substantial part of our production process, starting from procurement of raw materials to
packaging. For further details about our quality control during the production process, please
refer to the section headed “Business – Quality control” in this prospectus.
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If we are unable to maintain our quality control standard, our customers may return or
request for refund. In the event our customers cannot spot the defects during their inspection
process, when our products are used during the production process and delivery process of
semiconductor devices of our customers, our products may not be able to protect the
semiconductor devices and it may even scratch, damage or destroy the semiconductor devices.
Under such circumstances, our customers may claim against us or even initiate litigation against
us, which will bring a negative impact on our relationship with our customers, our reputation
and business prospects.
We rely on our major customers and this may expose us to risks relating to fluctuations or
decline in our revenue.
Our sales to our five largest customers in each year accounted for 60.9%, 58.4% and 54.9%
of our total revenue for FY2021, FY2022 and FY2023, respectively. During the same periods,
sales to our largest customer accounted for 20.6%, 18.9% and 16.7% of our total revenue,
respectively.
Given that our Group is not the exclusive supplier to our five largest customers in each
year and we do not have long-term purchase commitment from our customers and our sales with
them are concluded on an order-by-order basis, there is no assurance that our business
relationship with our major customers will continue in the future. Our customers are not
obligated to continue placing orders with us at the similar level as they have previously done or
at all. Our major customers, including our five largest customers, could cancel, reduce or defer
future orders or cease to place orders with us, at their discretion. In the event that any of our
existing major customers significantly reduces their orders placed with us or terminates their
business with us, we may not be able to maintain the same sales volume with the remaining
customers or attract new customers with the ability or willingness to contribute to the same
amount of sales and comparable terms as our major customers have been contributing, which
may adversely affect our business and profitability.
There are a number of factors, other than our performance, that could cause the loss of one
or more of our major customers or a substantial reduction in purchase orders from one of these
customers such factors increase but not limited to the financial and operational success of our
customers and acceptance of their products by their customers. The loss of any one of these
customers, a decrease in the volume of sales to any of these customers or a decrease in the
margins at which we sell our products to any of these customers could adversely affect our
growth and profitability.
Loss of key management team and key engineers may materially affect out operations.
Our experienced and professional management team, as described in the section headed
“Directors and Senior Management” in this prospectus has been crucial to our success in our
business performance. Having joined our Group for over 15 years, our executive Directors
played an important role in the daily operation of our Group including overseeing our daily
operation, planning and formulating our business strategies and driving our business growth. We
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expect that our management team will continue to play an important role in our future growth
and success. In particular, Mr. Tong, our executive Director and one of our Controlling
Shareholders, has more than 28 years of experience in the semiconductor transport media
industry and MEMS and sensor packaging industry. Our other executive Directors also have a
range of 25 to 35 years of experience in financial management, sales or manufacture aspects.
However, there is no assurance that we will be able to continue to attract and retain our key
management team and key personnel. If any of our executive Directors terminates his service
agreement with us and we are unable to find a suitable replacement in a timely manner or at all,
our business operations and implementation of our future plans may be adversely affected.
In addition, our success also lies in our expertise of research and development, material
engineering and product development. Mr. Loh Chong Hou, Mr. Kwan Kin Pui and Dr. Wang
Huimin, who are part of our senior management members and responsible for product
development and research and development, also have over 20 years of experience in their
expertise in the semiconductor industry. If we are unable to retain them or find suitable
replacements at reasonable costs and in a timely manner should they resign, the progress and
results of our product development and research and development which will lead to failure to
fulfil customers’ orders and our business and results of operation may be adversely affected.
Any operational disruption and machinery breakdown in our production factories, on
which we rely for our production process, may have a negative impact on our inventory
level control and production schedule and may also adversely affect customers’ demand and
satisfaction.
We rely on our own production factories, namely our Shatian Production Factory and
Houjie Production Factory, the machineries and equipment therein for our production,
processing, inventory storage and business operations. Our machineries may break down in the
course of ordinary use. Our manufacturing, production or processing activities may be disrupted
by disrupting incidents or catastrophic events, including natural disasters, fire, technical or
mechanical difficulty, power shortages or failures, explosions, strikes and outbreaks of
epidemics. Instability or shortage of electricity supply may bring our production and processing
into a halt at our production factories or even prevent us from meeting customers’ order in time.
In March 2021, a fire accident caused by short circuit occurred in our Shatian Warehouse but
there were no casualties. Due to such fire accident, our Group recorded a loss of inventories in
the amount of approximately HK$7.7 million for the year ended 31 December 2021. Our Shatian
Warehouse has also suspended its operation since the fire accident. In the last quarter of 2021,
there was shortage of electricity supply in certain areas in Guangdong Province and generators
were used in our Shatian Production Factory and Houjie Production Factory due to shortage of
electricity, which resulted in higher cost of electricity during such period.
We cannot guarantee that in the event of disruption or machinery breakdown, we can
maintain our production volume and our stock level is sufficient to meet the existing demands of
our customers. Nor could we guarantee that we can always secure alternative facilities or power
supply in a time and cost-effective manner and bring the impacts on our business operations by
such disruption or machinery breakdown under control. We also rely on the services for third
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party logistics providers to deliver our products to our customers. Therefore, any interruption in,
or prolonged suspension of operation of our major production lines arising from unexpected or
catastrophic events causing major manufacturing disruptions, or any delay or disruption in the
delivery of our products may pose a significant impact on the stable supply of our product
offering, which in turn may adversely affect our business operations, as well as our ability to
satisfy customers’ demand. In addition, with the outbreak of the contagious COVID-19 since late
December 2019, business operations in the PRC, including that of the manufacturing industry
and factories, have been considerably disrupted. For details regarding the risk relating to
epidemic disease, please refer to the paragraph headed “Risk Factors – Risks relating to our
business and our industry – The outbreak of epidemic disease may have a material adverse effect
on our business, results of operation, financial condition and prospects” in this prospectus.
Should we fail to bring the impacts of such disruption or machinery breakdown on our business
operations under control, our business, financial condition and results of operations may be
adversely affected.
Our production and procurement plans are determined based on the purchase estimates
and management experience. Any material shortfall in their actual purchase volume could
materially and adversely affect our business and financial conditions.
Our production and procurement plans in respect of raw materials are determined based on
the purchase estimates by our customers and management experience. We may misallocate
resources and order raw materials in excess if there are material discrepancies between the
estimated customers’ purchase and their actual purchase volume. Furthermore, if our anticipated
order levels do not materialise, our production plans such as the expansion of our production
bases may result in over-capacity. Should such unfavourable situations materialise, our business,
financial conditions and results of operations could be materially and adversely affected.
There is no assurance that we can make accurate forecast on inventory needs.
To ensure adequate inventory supply, we need to forecast inventory needs and place orders
with our suppliers before purchase orders are placed by our customers. If we fail to accurately
forecast demand, we may experience excess inventory levels or a shortage of products. Factors
that could affect our ability to accurately forecast demand for our products include (i) changes in
customers’ demands; (ii) lack of acceptance of our new products; (iii) changes in the competitive
landscape of the industry; (iv) changes in technology; (v) changes in general market conditions;
(vi) deteriorating market conditions or consumers’ confidence in future economic conditions; and
(vii) terrorism or acts of war, or the threat thereof.
Inventory levels in excess of demand may result in inventory write-downs or write-offs and
the sale of excess inventory at discounted prices, which would have an adverse effect on our
profitability. In addition, if we underestimate the demand for our products, we may not be able
to produce a sufficient number of products to meet such unanticipated demand, and this could
result in delays in the delivery of our products and damage to our reputation and customer
relationships.
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The difficulty in forecasting demand also makes it difficult to estimate our future results of
operations and financial conditions from period to period. A failure to accurately predict the
level of demand for our products could materially and adversely affect our business, financial
conditions and results of operations.
Our performance may be adversely affected and may be exposed to claims, litigation and
disputes in respect of lack of ability to protect know-how, confidential information and
trade secrets from unauthorised copying, use or disclosure.
Our product design and material formulae, which comprise precise mix of raw materials,
dictate the properties of our products and design the structural features of our products in order
to achieve the desired features as requested by our customers, are crucial to our operation. We
strive to keep our product design and formulae confidential. If unauthorised disclosure of our
confidential information and trade secrets occurs through security breach, cyber-attack,
malicious software or by any other means, it could materially and adversely affect our business,
financial conditions and results of operations. In addition, our employees may be susceptible to
phishing, keyloggers and other similar efforts by third parties by which such parties may be able
to gain access to the confidential information about our know-how, confidential information and
trade secrets, which in turn negatively impacts our marketing efforts and decreases the impact of
our product launches. Our competitors could acquire confidential information about our current
and future products through such disclosures and copy such products’ functionality and design,
which could harm our competitive position.
In addition, as we supply back-end semiconductor transport media products to our
customers which are fabless-foundry semiconductor companies, IDM companies and IC
assembly and packaging test companies, we may obtain confidential information, such as trade
secrets, know-how, proprietary, technical, operating, financial information, from our customers
during our course of business relationship with them. During the Track Record Period, we
entered into non-disclosure agreements with some of our customers. In the case we cannot
properly protect the confidential information of our customers or if we breach the non-disclosure
agreements, we may be subject to claims and litigation initiated by our customers which may
adversely affect our business relationship with our customers, our reputation, our business
prospects and financial conditions.
Moreover, any of our employees may, intentionally or unintentionally, disclose our
proprietary information, and we may not be aware of, or able to obtain, adequate remedies for
such breaches. Our engineers are requested to sign a non-disclosure agreement with us. During
the Track Record Period, we entered into non-disclosure agreements with approximately 20 of
our customers. However, we cannot guarantee their compliance with such agreement and the
disclosure and/or misappropriation of such information is difficult to detect. As such,
misappropriation claims can be difficult, expensive and time-consuming, with no guarantee of
success or adequate remedies. Such disclosures could lead to a loss of trade secret protection,
which could materially and adversely affect our business, competitive position, financial
conditions and results of operations.
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Our plan to increase our production capacity could contribute to the fluctuations of our
financial results and our plan to implement production in the Philippines may not achieve
timely profitability as anticipated, or at all, and there is no assurance that our business
strategy and future plans will be implemented successfully.
We intend to increase our production capacity and capabilities by promoting automation in
our PRC production facilities and implementing production in the Philippines. Such expansion
plan may place a substantial burden on our technical, managerial, operational and financial
resources, and involve risks such as:
 our actual production volume may vary depending on the demand and sales orders of
our products to be received from our customers, which in turn may be affected by
market trends, customers’ preferences as well as other factors which are beyond our
control. The demand for our products as well as the sales orders to be received and
the revenue and profits to be generated may not increase as planned while we increase
our production capacity;
 our operating costs are expected to increase upon the implementation of the upgrade
and expansion plan, such as repair and maintenance costs, annual depreciation
expenses and staff costs. An increase in the aforementioned costs would negatively
impact our profitability, thus our return on assets and return on equity would be
adversely affected;
 we cannot assure you that our upgrade and expansion plans will be successfully
implemented within budget and without delays. Any unanticipated increase in
expenditure on the expansion could materially and adversely affect our financial
conditions and results of operations. Any failure or delay in implementing any part of
these plans may result in a lack of production capacity to support our growth and
market expansion, which in turn could materially and adversely affect our business,
financial conditions and results of operations;
 there is no assurance that we can obtain all requisite certificates, approvals, licences
and permits for our expansion plans as scheduled, or at all. Any delay or failure in
obtaining the requisite certificates, approvals, licences and permits may result in delay
or suspension of our expansion plans; and
 in particular, we have no experience in implementing production in the Philippines.
There is no assurance that we can effectively apply our experience gained in our
operation in the PRC to implement production in the Philippines due to differences in
economic, political and legal environment.
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We may need additional funding to meet future business requirements and upgrade and
expansion plans, which we may not be able to obtain on acceptable terms, or at all.
We may need additional capital to fund our capital expenditure associated with our upgrade
and expansion plans. We generally incur a material amount of capital expenditure to upgrade our
production facilities in the PRC and implement production in the Philippines for carrier tape,
typically consisting of investments for acquisition of automated machinery and equipment.
Please refer to the section headed “Business – Business Strategies – Increase our production
capacity and capabilities by promoting automation of our production process, upgrading our
production facilities and acquiring requisite machineries” in this prospectus for further details.
In addition, our investment costs could be affected by many factors, such as the general
economy, industry performance, cost of machineries and cost of construction. There is no
assurance that we will generate sufficient cash flow from our operating activities for our
intended expansion plans. In the event that we do not have sufficient cash flow, we will need to
obtain alternative financing. We cannot assure you that we will be able to obtain adequate
financing on acceptable terms, or at all. Our ability to obtain additional capital on acceptable
terms will be subject to uncertainties, such as (i) investor perceptions of securities of companies
engaged in the industry; (ii) conditions in capital and financial markets in which we may seek to
raise funds; (iii) our future cash flows, financial conditions and results of operations; and (iv)
economic, political and other conditions in the PRC, the Philippines, and the rest of the world.
Owing to the above, we may be required to scale down our planned capital expenditures,
which may adversely affect our ability to achieve economies of scale and implement our upgrade
and expansion plans. If we raise additional funds by borrowing, our interest and debt repayment
obligations will increase. The terms of any future debt facilities may also impose restrictive
covenants that may restrict our business operations, or result in dilution of shareholding of the
Shareholders in the case of equity financing. If we fail to raise additional funds in a timely
manner and on terms that are favourable to us, or at all, our business prospects, financial
conditions and results of operations may be materially and adversely affected.
Failure to adopt acceptable labour practices, labour shortage and labour disruption in our
production facilities and increase in labour cost may adversely affect our business, financial
conditions and results of operation.
As at the Latest Practicable Date, our production factories are located in the PRC and over
90% of our employees are based in the PRC. The violation of labour or other laws, or the
divergence of our labour practices from those generally accepted as ethical and legal in the
countries corresponding to our production facilities could damage our reputation or disrupt the
delivery of our products. In addition, we may experience disagreements with unions or labour
disputes. Such disagreements or labour disputes could lead to work slowdowns or stoppages and
make it difficult or impossible for us to meet scheduled delivery times for product deliveries to
our customers, which could result in loss of business.
Our business requires a substantial number of personnel for production process. As at the
Latest Practicable Date, employees responsible for production process in the PRC accounted for
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a majority of our employees. If we fail to retain stable labour, there may be disruption to our
operation, in particular the production process of our products. In addition, the average monthly
salary of our employees responsible for production process in the PRC amounted to
approximately RMB5,900, RMB6,200 and RMB6,300 for each of the year ended 31 December
2021, 2022 and 2023, respectively. According to the F&S Report, the monthly salary of
production and equipment operators in the manufacturing industry in the PRC has increased at a
CAGR of 7.1% from 2019 to 2023 and is expected to increase at a CAGR at 6.4% from 2024 to
2028. Therefore, we expect our labour costs will continue to increase. If we are unable to offer a
competitive package or remuneration to our staff compared to our competitors, we may lose our
staff to our competitors and our business and the financial conditions and results of operations
may be materially and adversely affected.
We outsource the delivery and storage of our products to logistics providers and bonded
warehouse services providers, respectively, and our customers may claim us for the loss or
damage to our products during delivery and storage.
We outsource our delivery process to logistics providers for the delivery of our products to
our customers and the storage to bonded warehouse services providers. During the Track Record
Period, we had engaged third party suppliers for the logistics and/or bonded warehouse services.
As at the Latest Practicable Date, we had eight third party bonded warehouses in different cities
around the world. As we outsourced such processes to third party suppliers, we cannot guarantee
the quality of the services of our logistics providers and bonded warehouse services providers.
Even though the storage and delivery of our products are covered by insurance, in case our
products are damaged and the insurance coverage is inadequate to cover our loss, our financial
conditions may be negatively affected. Even though we conducted quality control before we
delivered our products, in the case our products are damaged during the delivery or storage
responsible by our logistics providers or bonded warehouse services providers, our customers
may request for products return or exchange or even claim against us for their loss or damage,
which may negatively affect our reputation and our financial conditions.
Any changes to the regulatory landscape or any unforeseen regulatory licensing regime for
the semiconductor transport media industry and MEMS and sensor packaging industry in
the PRC, Hong Kong or any jurisdictions in which we operate or any litigation related to
unknown or unforeseen risks with the use of our products could materially and adversely
affect our business, financial conditions and results of operations.
There is no specific regulatory or licensing regime applicable to the semiconductor
transport media industry and the MEMS and sensor packaging industry in the PRC, Hong Kong
and the jurisdictions in which we operate. During the Track Record Period, we were not required
to obtain any industry specific license or permit for our operation in the PRC, Hong Kong and
the jurisdictions in which we operate. However, as the industries are constantly changing, the
PRC government and Hong Kong government may impose industry specific regulatory or
licensing regime applicable to our business. Our developed products may be subject to
unexpected and unforeseen regulatory regimes, such as regulations related to, but not limited to,
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(i) health and safety; (ii) use of hazardous materials; (iii) packaging; (iv) recycling; (v) waste
disposal and (vi) environmental matters.
Local governments of certain jurisdictions may issue relevant regulations or implementation
guidelines to relevant regulations relating to our products in the future. On the other hand, the
application of existing laws relating to our developed products may not be entirely clear in some
jurisdictions. Any introduction of industry specific regulatory or licensing regime to our
operation as additional costs and manpower are required for the compliance with such regulatory
or licensing regime, which will affect our operation and financial performance. Furthermore, as
we expand internationally, the geographical scope and complexity of regulatory frameworks to
which we are subject will increase. In the case we are unable to fully comply with any
unforeseeable and uncertain regulatory or licensing regime, our business operation may be
adversely affected or even disrupted.
Negative publicity about our industry, our Directors, management, shareholders, employees
and counterparties may materially and adversely affect our business, financial conditions
and results of operations.
Any negative development in the semiconductor transport media and MEMS and sensor
packaging industries could harm our reputation. Negative publicity about our Directors,
management, shareholders and employees, whether related to work or otherwise, could harm our
reputation.
We may in the future enter into strategic alliances with various third parties to further
expand our business. Strategic alliances with third parties could subject us to a number of risks,
including risks associated with sharing proprietary information, non-performance by
counterparties, reputation risk, regulatory risk and an increase in expenses incurred in
establishing new strategic alliances, any of which may materially and adversely affect our
business. To the extent that third parties suffer negative publicity or harm to their reputations
from events relating to their business, we may also suffer negative publicity or harm to our
reputation by virtue of our association with such third parties. Negative publicity or harm to our
reputation could materially and adversely affect our business, financial conditions and results of
operations.
We may be forced to relocate if we are unable to renew any lease of our production
factories.
As at the Latest Practicable Date, we leased certain land and properties in respect of our
factories, offices and warehouse. The terms of the relevant land use rights ranged from one year
to three years, expiring the earliest in June 2024. See “Business – Properties” in this prospectus
for further details. If we are unable to renew the leases with respect to any of our production
factories at commercially reasonable terms, or at all, we may be forced to relocate our
production factories, which may have a material adverse effect on our business, financial
conditions and results of operations.
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During the Track Record Period and up to the Latest Practicable Date, there were incidents
with respect to certain of our leased properties, which include inconsistency with permitted use.
For further details, please refer to the section headed “Business – Properties” for further details.
Although such incidents were not caused by our Group, in the event that we are not allowed to
continue to use such leased properties due to land use reasons, we may need to relocate our
factory production and staff quarters and the warehouse, which may cause business disruption to
our operation.
Our Group is exposed to currency risk.
Parts of our business activities are denominated in foreign currencies, mainly in RMB and
USD. We largely source the supply of our raw materials from suppliers based in the PRC. In
each year during the Track Record Period, all of our top five suppliers, which aggregate
transaction amounts accounted for approximately 55.2%, 56.2% and 55.5% of our total
purchases for the year ended 31 December 2021, 2022 and 2023 respectively, were based in the
PRC and such transactions were settled in RMB. For details regarding the background of our
major suppliers, please refer to the paragraph headed “Business – Procurement and Suppliers –
Major suppliers” in this prospectus. Meanwhile, during the Track Record Period, our subsidiaries
based in the PRC had over 300 employees who were remunerated in RMB. For details regarding
our employees, please refer to the paragraph headed “Business – Employees” in this prospectus.
Consequently, significant appreciation of RMB against USD may increase our cost of sales and
reduce our profitability.
Our Directors confirm that we had not engaged in any hedging activities or arrangement
against foreign exchange rate fluctuations during the Track Record Period and up to the Latest
Practicable Date. Our accounts were presented in USD as the functional currency and in HKD as
the presentation currency of our Group and we recorded net foreign exchange gain of
approximately HK$2.3 million and net foreign exchange loss of HK$6.4 million and HK$2.6
million for the year ended 31 December 2021, 2022 and 2023 respectively. In addition, there are
limited instruments available for us to reduce our foreign currency risk exposure at reasonable
costs. Should there be a significant appreciation of the value of RMB against USD or
fluctuations in other foreign currencies in which we earn from our sales, our business, financial
conditions and results of operations may be adversely affected.
We are subject to credit risk if our customers delay or even default on their obligations to
pay.
We offer credit terms to some of our customers, generally for a period of 90 days from the
invoice date. As at 31 December 2021, 31 December 2022 and 31 December 2023, our trade
receivables amounted to approximately HK$40.7 million, HK$41.1 million and HK$32.7 million,
respectively, accounting for more than 20% of the current assets of the corresponding year. Our
number of trade receivables turnover days were 63 days, 58 days and 71 days respectively for
the years ended 31 December 2021, 2022 and 2023. As at 31 December 2021, 31 December
2022 and 31 December 2023, the allowance for doubtful debts amounted to approximately
HK$0.8 million, HK$1.2 million and HK$0.7 million respectively. Whether our customers will
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settle payment before the end of the credit period granted by us is beyond our control. Delay or
even default in settling payments by our customers may affect our cash flows and increase our
working capital needs. If any of our customers become insolvent or delay or default on its
payment for products they ordered from us, our cash flow, business, results of operations and
financial position could be adversely affected.
We require various certificates, approvals, licences and permits to operate our business.
Any failure to obtain or renew any of these certificates, approvals, licences and permits or
any enforcement action taken against us for non-compliance incidents could materially and
adversely affect our business and results of operations.
In accordance with the laws and regulations in the PRC, we require various certificates,
approvals, licences and permits in order to carry on our business operations in the PRC,
including enterprise registration, business licence, business premises licence and other approvals
or permits granted by the relevant government authorities. These certificates, approvals, licences
and permits may be subject to review, amendment and periodic renewal by the relevant
governmental or regulatory authorities as well as our continued compliance with certain
standards and requirements. We cannot assure you that we will be able to apply, renew or amend
all necessary certificates, approvals, licences and permits in a timely manner or at all. Failure to
apply for, non-renewal of, amendment to or delay in obtaining all requisite certificates,
approvals, licences and permits may disrupt our business operations, which in turn may
materially and adversely affect our business and results of operations.
Our insurance coverage may be inadequate to cover all significant risk exposures.
Our offices, warehouses, production facilities and sources of supply are subject to hazards
and risks beyond our control that may result in operational breakdowns and interruptions and
cause significant damage to persons or property. We may also face exposure to product liability
claims in the event that any of our products is alleged to have resulted in property damage,
bodily injury or other adverse effects.
We take out insurance such as property all risks insurance and business interruption
insurance, but we do not take out product liability insurance with respect to the products we
manufacture. To the extent our insurance policies do cover particular risks, we cannot assure you
that all claims made by us under our insurance policies will be honoured fully or on time by our
insurance providers. For instance, due to the fire accident which occurred in our Shatian
Warehouse in March 2021, our Group recorded a loss of inventories in the amount of
approximately HK$7.7 million for the year ended 31 December 2021. However, the
compensation we received from the insurance company for this fire accident amounted to
approximately HK$6.1 million, which couldn’t fully cover our loss of inventories. Should an
accident, natural disaster, terrorist act, product liability claim or other event result in an
uninsured loss/claim or a loss/claim in excess of insured limits, we could suffer financial loss
and damage to our reputation and could lose all or a portion of future revenue anticipated to be
derived from the relevant product or facilities. Any material loss not covered by our insurance or
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reimbursed by our insurance providers could materially and adversely affect our business,
financial condition and results of operations.
We may be subject to intellectual property infringement or misappropriation claims or
other legal challenges, which could cause us to incur significant expenses, pay substantial
damages and prevent us from selling our products.
Our success depends, in part, upon our intellectual property, products and operations not
infringing, misappropriating or violating the intellectual property rights owned by others. We
may in the future be, subject to claims in various jurisdictions where we operate and where our
products are sold that we have infringed, misappropriated or otherwise violated the intellectual
property rights of others. Patent and trade mark infringement, trade secret misappropriation and
other intellectual property claims and proceedings brought against us, whether successful or not,
can be complex and time-consuming and could result in substantial costs and harm to our
reputation. Such claims and proceedings can also distract and divert our management and key
personnel from other tasks important to the success of our business. Moreover, the legal
threshold for initiating such claims and proceedings is low, so that even claims with a low
profitability of success could be initiated and require significant resources and attention to
defend. We could also be subject to intellectual property claims related to alleged infringements.
In addition, intellectual property litigation or disputes could force us to (i) cease developing,
manufacturing or selling products that incorporate the challenged intellectual property; (ii) cease
the use and registration of certain names, domain names, brands or trade marks in connection
with some or all of our products and business activities in some or all jurisdictions; (iii) obtain
and pay for licences from the holder of the infringed intellectual property right, where such
licences may not be available on reasonable terms, or at all; (iv) re-design or re-engineer our
products; (v) change our business processes; and (vi) pay substantial damages, court costs and
attorneys’ fees, including potentially increased damages for any infringement or violation found
to be wilful.
As such, any intellectual property-related dispute or litigation, regardless of its outcome or
merit, could result in substantial costs and expenses, adverse publicity or diversion of
management resources, any of which could materially and adversely affect our business,
financial conditions and results of operations.
Our results of operations are subject to seasonality of our customers’ product development
and may fluctuate, and comparison of our operating results between quarterly and interim
results may not be meaningful.
Our sales are subject to seasonality. We usually recorded higher sales in the fourth quarter
of the year due to the increase in demand for our products from our customers in anticipation of
the Chinese New Year holidays in the PRC during January or February. Our Directors expect
that the results of our operations will likely continue to be subject to seasonality in the future.
Therefore, any comparison of our operating results between the quarterly and interim results
may not be meaningful.
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Our historical results may not be an indication of our future performance and we may not
be maintain our performance in the future.
Our revenue amounted to HK$202.9 million, HK$257.6 million and HK$189.0 million for
the year ended 31 December 2021, 2022 and 2023, respectively, and our gross profit amounted
to HK$86.7 million, HK$101.9 million and HK$72.0 million during the corresponding years,
respectively. However, our business is susceptible to various market and economic changes and
we are highly dependent on the demand from the downstream industries which our customers
belong to. We cannot assure you that our business will continue to grow at the same rate as we
have experienced during the Track Record Period and our historical results may not be reflective
of our future performance.
The fair value change of financial assets at fair value through profit or loss would have
impact on our financial performance.
During the Track Record Period, our financial assets at fair value through profit or loss
consisted of the fair value change of an unlisted investment in a life insurance policy for Mr.
Tong. Our Group recorded gain on fair value change of financial assets at fair value through
profit or loss amounted to HK$0.4 million, HK$0.3 million and HK$0.4 million for the year
ended 31 December 2021, 2022 and 2023 respectively. Any changes in the unobservable inputs
will affect the estimated fair value of our financial assets at fair value through profit or loss,
which lead to uncertainty in accounting estimation. A substantial decrease in the fair value of
our financial assets at fair value through profit or loss may have an adverse effect on our
financial position as well as our operation results if we hold any financial assets at fair value
through profit or loss in the future.
RISKS RELATING THE JURISDICTIONS IN WHICH OUR BUSINESS OPERATES
Global financial crisis and economic downturn could adversely affect our business,
liquidity, financial condition, results of operations and prospects.
In the past, there has been global financial crisis and economic downturn which have
adversely affected the economy and businesses around the world, including those in Hong Kong
and the PRC. An economic downturn is usually characterised by, among others, higher rate of
unemployment, lower corporate earnings, lower business investment and lower consumer
spendings.
A global economic crisis will result in tightening in the credit markets, lower level of
liquidity, increased rates of default and bankruptcy, increased level of intervention from the
governments, decreased consumer confidence, overall decreased economic activity and high
volatility in credit, equity and fixed income markets, all of which could inevitably result in the
deterioration of the industries.
Moreover, the global financial crisis will result in the deterioration of the financial
industry. As a result, our financing costs may be significantly increased and further external
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financing at commercially acceptable costs may be difficult to be obtained by us. Our
operations, financial condition and business expansion may therefore be materially and adversely
affected. We cannot predict any future global financial crisis, nor are we immune to the effects
of the general worldwide economic downturn. Thus, there is an unpredictable future risk for our
business in the event of a global financial crisis.
Adverse changes in economic, political and legal environment of Hong Kong, the PRC and
the Philippines could materially and adversely affect our business, financial conditions,
results of operations and prospects.
Our existing principal operations are conducted in Hong Kong, the PRC and Singapore and
we are planning to further expand our production in the Philippines. Accordingly, our business,
financial conditions and results of operations and prospects are subject to a significant degree to
the economic, political and legal environment and developments of these countries. We cannot
predict whether changes in the political, economic and social conditions and policies in Hong
Kong, the PRC and the Philippines, or in the relevant laws, rules and regulations, will have any
material adverse effect on our current or future business, financial conditions and results of
operations.
We also intend to implement production in the Philippines, which will be governed by the
Philippines law. The legal system in the Philippines are different from the ones in the regions we
operate. Any uncertainties or changes in the Philippines law and regulations, in particular about
our industry and foreign investment, could adversely affect our future operations in the
Philippines.
All such uncertainties may limit the legal protection available to foreign investors,
including you.
Our production facilities are subject to environmental laws in jurisdictions where we have
or may have operations. Any failure to comply with environmental regulations would
expose us to penalties, fines, suspensions or actions in other forms.
Our business operations are subject to environmental laws promulgated by the respective
government of the jurisdictions where we have or may have operations, such as the PRC, and the
Philippines. We are required to undergo environmental impact assessments, prepare report and
obtain approval for the same, and comply with relevant pollutant discharge requirement. We also
have to implement environmental policies and procedures to control risks associated with the
operation of our production facilities as well as our waste disposal measures. The environmental
laws, regulations and policies applicable to our business operations are constantly evolving and
we cannot predict when or how they will be amended, nor the consequence or impact thereof.
There is no assurance that the relevant government or regulatory authorities will not impose
additional or more stringent laws, regulations or policies in the future, which may subject us to
more onerous duties and obligations. In the event that the relevant government or regulatory
authorities imposes more stringent environmental laws, regulations or policies, our operating
costs may increase, or we may be forced to suspend production or to incur substantial capital
RISK FACTORS
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expenditures or other costs to remain in compliance and we may be unable to pass on these
additional costs to our customers. Also, any changes or amendments to existing environmental
laws, regulations or policies may require us to incur additional financial or other resources to
adjust our production process, introduce new preventive or remedial measures, purchase new
pollution control equipment and update our compliance and monitoring systems in order to
ensure compliance, which in turn may have a negative impact on our financial conditions and
results of operations.
We may be subject to additional contributions of social insurance and housing provident
funds and more stringent recovery actions on previous non-compliance with social
insurance requirements imposed by relevant government authorities in the PRC.
Pursuant to the Social Insurance Law of the PRC ( ) and the
Regulations on the Administration of Housing Provident Fund (၍ଣૢԷ), we are
required to make contributions to the social insurance fund and the housing provident fund under
the relevant PRC laws for our employees in China. During the Track Record Period, our Group’s
subsidiaries in the PRC did not make full contribution to the social insurance fund and the
housing provident fund for our employees employed by the PRC subsidiaries. As advised by our
PRC Legal Advisers, pursuant to the Social Insurance Law of the PRC, our PRC subsidiaries
may be ordered to make up for the shortfall in contribution within a specified time period and be
subject to a daily fine amount to 0.05% of the outstanding contributions from the date on which
payment is overdue. If the outstanding contribution is not made within the specified time period,
our Group may be imposed a fine ranging from one to three times of the amount of the shortfall
in contribution. Pursuant to the Regulation on the Administration of Housing Provident Funds,
our PRC subsidiaries may be ordered to make up the outstanding contribution within a specified
time period, and if our PRC subsidiaries fail to do so, the housing provident fund administrative
center may apply for a court order for enforcement of such contribution. Please refer to the
section headed “Business – Legal Compliance, Licenses and Permits – Legal compliance” in this
prospectus for further details.
If any of the competent and responsible government authorities takes action against us, we
may be required to pay the outstanding amount of contributions previously due and may be
subject to overdue fine or penalty as advised by our PRC Legal Advisers above. Furthermore,
the relevant employees may take legal actions, such as filing an arbitration/court claim, against
us in the future in respect of our failure to make contribution to the relevant social insurance
and housing provident fund for such employees. If we are required to make significant penalty
payments or incur other liabilities, our reputation, cash flows and results of operations may be
adversely affected.
PRC regulation of loans and direct investment by offshore holding companies to PRC
entities may delay or prevent us from using the proceeds of the share offer to make loans or
additional capital contributions to our PRC subsidiaries, which could adversely affect our
liquidity and our ability to fund and expand our business.
Any funds we transfer to our PRC subsidiaries, either as a shareholder loan or as an
increase in registered capital, are subject to approval by or registration with relevant
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governmental authorities in China. According to the relevant PRC regulations on foreign
invested enterprises (the “ FIEs”) in China, capital contributions to our PRC subsidiaries are
subject to the approval of or filing with the MOFCOM or their respective local branches and
registration with a local bank authorized by the SAFE. In addition, (i) any foreign loan procured
by our PRC subsidiaries is required to be registered with SAFE or their respective local
branches and (ii) our PRC subsidiaries may not procure loans which exceed the difference
between their respective total investment amount and registered capital. We may not be able to
complete such registrations on a timely basis, with respect to future capital contributions or
foreign loans by us to our PRC subsidiaries. If we fail to complete such registrations, our ability
to use the proceeds of this offering, and to capitalise our PRC operations may be negatively
affected, which could adversely affect our liquidity and our ability to fund and expand our
business.
On 30 March 2015, the SAFE promulgated the Circular on Reforming the Management
Approach Regarding the Foreign Exchange Capital Settlement of Foreign-Invested Enterprises,
or SAFE Circular 19, which took effect as of 1 June 2015. SAFE Circular 19 launched a
nationwide reform of the administration of the settlement of the foreign exchange capitals of
FIEs and allows FIEs to settle their foreign exchange capital at their discretion, but continues to
prohibit FIEs from using the Renminbi fund converted from their foreign exchange capital for
expenditure beyond their business scopes, providing entrusted loans or repaying loans between
non-financial enterprises. The SAFE issued the Circular on Reforming and Regulating Policies
on the Control over Foreign Exchange Settlement of Capital Accounts, or SAFE Circular 16,
effective in June 2016. Pursuant to SAFE Circular 16, enterprises registered in China may also
convert their foreign debts from foreign currency to Renminbi on a self-discretionary basis.
SAFE Circular 16 provides an integrated standard for conversion of foreign exchange under
capital account items (including but not limited to foreign currency capital and foreign debts) on
a self-discretionary basis which applies to all enterprises registered in China. SAFE Circular 16
reiterates the principle that Renminbi converted from foreign currency-denominated capital of a
company may not be directly or indirectly used for purposes beyond its business scope or
prohibited by PRC laws or regulations, while such converted Renminbi shall not be provided as
loans to its non-affiliated entities. Violations of these Circulars could result in severe monetary
or other penalties. SAFE Circular 19 and SAFE Circular 16 may significantly limit our ability to
use Renminbi converted from the net proceeds of this offering, to fund the establishment of new
entities in China, to invest in or acquire any other PRC companies through our PRC subsidiaries,
or to establish new consolidated VIEs in China if needed in the future, which may adversely
affect our business, financial condition and results of operations.
The PRC government’s control of foreign currency conversion may limit our foreign
exchange transactions.
Currently, the Renminbi cannot be freely converted into any foreign currency, and
conversion and remittance of foreign currencies are subject to PRC foreign exchange
regulations. It cannot be guaranteed that under a certain exchange rate, we will have sufficient
foreign exchange to meet our foreign exchange requirements. Under the current PRC foreign
exchange control systems, foreign exchange transactions under the current account conducted by
RISK FACTORS
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us, including the payment of dividends, do not require advance approval from the SAFE, but we
are required to present documentary evidence of such transactions and conduct such transactions
at designated foreign exchange banks within China that have the licences to carry out foreign
exchange business. Foreign exchange transactions under the capital account conducted by us,
however, must be approved in advance by the SAFE. Under existing foreign exchange
regulations, following the completion of the Share Offer, we will be able to pay dividends in
foreign currencies without prior approval from the SAFE by complying with certain procedural
requirements.
However, there is no assurance that these foreign exchange policies regarding payment of
dividends in foreign currencies will continue in the future. In addition, any insufficiency of
foreign exchange may restrict our ability to obtain sufficient foreign exchange for dividend
payments to shareholders or to satisfy any other foreign exchange requirements. As such, any
control of foreign currency conversion in the PRC may adversely affect our capital expenditure
plans or even our business, operating results and financial conditions.
RISKS RELATING TO THE SHARE OFFER
The Underwriting Agreements may be terminated.
Under the terms of the Underwriting Agreements, the Overall Coordinator (for itself and on
behalf of the Underwriters) is entitled to terminate its obligations under the Underwriting
Agreements by giving notice in writing to us. Such right of the Overall Coordinator is
conditional upon the occurrence of non-exhaustive list of events. For details of the conditions
under which the Underwriting Agreements may be terminated, please refer to the section headed
“Underwriting – Underwriting arrangements and expenses – Public Offer – Grounds for
termination” in this prospectus.
There has been no prior public market for our Shares and an active trading market for our
Shares may not develop or be sustained.
Prior to the Share Offer, there has been no public market for our Shares. Following the
completion of the Share Offer, the Stock Exchange will be the only market on which our Shares
are listed. There is no guarantee that an active public trading market for our Shares will develop
or be sustained after the Share Offer. In addition, we cannot assure you that the Shares will trade
in the public market subsequent to the Share Offer at or above the Offer Price. The Offer Price
will be determined by agreement between us and the Overall Coordinator (for itself and on
behalf of the Underwriters), and may not be indicative of the market price of the Shares
following the completion of the Share Offer. If an active trading market for our Shares does not
develop or is not sustained after the Share Offer, the market price and liquidity of our Shares
may be materially and adversely affected.
RISK FACTORS
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The liquidity and market price of our Shares following the Share Offer may be volatile.
The liquidity and market price of our Shares may be affected by various factors such as:
– variations of our results of operations;
– investors’ perceptions of us and the general investment environment;
– changes in policies and developments relating to the industry in which we operate;
– changes in pricing policies adopted by us or our competitors;
– announcements of significant acquisitions, strategic alliances or joint ventures;
– fluctuations in stock market and trading volume;
– our involvements in litigation;
– recruitments or departures of our key personnel;
– changes in government policies and regulations; and
– general market and economic conditions.
We cannot assure you that these factors will not occur in the future. As illustrated, it is
possible that our Shares may be subject to changes in price not directly related to our
performance.
The sale or availability for sale of substantial amounts of our Shares could also adversely
affect the market price of our Shares.
Sales of substantial amounts of our Shares in the public market after the completion of the
Share Offer, or the perception that these sales could occur, could adversely affect the market
price of our Shares and could materially impair our ability to raise capital through offerings of
our Shares in the future.
The Shares held by certain Shareholders are subject to certain lock-up periods beginning on
the date on which trading in our Shares commences on the Stock Exchange, details of which are
set out in the section headed “Underwriting” in this prospectus. We are currently not aware of
any intention of such Shareholders to dispose of their Shares after the expiry of the lock-up
period, but we cannot assure you that they will not dispose of any Shares they may come to own
in the future, nor can we predict what effect the future sale (if any) will have on the market
price of our Shares.
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We may require additional funding for future growth and our Shareholders’ interest may
be diluted as a result of additional equity fund-raising.
We may be presented with opportunities to expand our business through acquisitions in the
future. Under such circumstances, secondary issue(s) of securities after the Listing may be
necessary to raise the required capital to capture these growth opportunities. If additional funds
are raised by means of issuing new equity securities in the future to new and/or existing
Shareholders after the Listing, such new Shares may be priced at a discount to the then
prevailing market price. Inevitably, existing Shareholders if not being offered with an
opportunity to participate, their shareholding interest in our Company will be diluted. Also, if
we fail to utilise the additional funds to generate the expected earnings, this could adversely
affect our financial results and in turn exert pressure on the market price of the Shares. Even if
additional funds are raised by means of debt financing, any additional debt financing may, apart
from increasing interest expense and gearing, contain restrictive covenants with respect to
dividends, future fund raising exercises and other financial and operational matters.
We cannot guarantee that we will declare or distribute any dividend in the future.
Our Board has the discretion to pay interim dividends as our Board considers to be justified
by our profits and to recommend to our Shareholders to pay final dividends; however, dividend
payment is subject to certain restrictions under Cayman Islands law, namely that our Company
may only pay dividends either out of profits and/or share premium account, and provided always
that in no circumstances may a dividend be paid out of share premium if this would result in our
Company being unable to pay its debts at they fall due in the ordinary course of business. In
addition, our Shareholders may by ordinary resolution declare a dividend, but no dividend may
exceed the amount recommended by our Board. Any decision to declare any dividend would
require the recommendation of our Board and any dividend distribution (other than interim
dividend mentioned above) would also be subject to the approval of our Shareholders. Any
decision to pay any dividend will be made having regard to factors such as our financial results,
Shareholders’ interests, general business conditions, strategies and future expansion needs, our
Group’s capital requirements, the payment by our subsidiaries of cash dividends to our
Company, possible effects on liquidity and financial position of our Group and other factors
which may be deemed relevant at such time. For details, pleases refer to the paragraph headed
“Financial Information – Dividends and dividend policy” in this prospectus. As a result, we
cannot guarantee whether, when and in what form we will pay dividends in the future.
RISKS RELATING TO THE STATEMENTS MADE IN THIS PROSPECTUS
We have not independently verified statistics and facts in this prospectus.
This Prospectus, particularly the sections headed “Business” and “Industry Overview”,
contains information and statistics derived from a third-party report commissioned by us, official
government publications, available sources from public market research and other sources from
third parties. However, the information and statistics from official government sources has not
been independently verified by us, the Sole Sponsor, the Overall Coordinator, the Joint Global
RISK FACTORS
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Coordinators, the Joint Bookrunners, the Joint Lead Managers, the Underwriters, any of their
respective directors or any other parties involved in the Share Offer.
Therefore, we make no representation as to the accuracy or completeness of these statistics
and facts, which may not be consistent with other information compiled within or outside Hong
Kong. Due to possibly flawed or ineffective collection methods or discrepancies between
published information and market practice and other problems, the statistics herein may be
inaccurate or may not be comparable to statistics produced for other economies, and you should
not rely upon them. Furthermore, there is no assurance that they are stated or compiled on the
same basis, or with the same degree of accuracy, as similar statistics presented elsewhere. In all
cases, investors should give consideration as to how much weight or importance they should
attach to or place on such statistics or facts.
Forward-looking statements contained in this prospectus are subject to risks and
uncertainties.
This prospectus contains certain statements that are “forward-looking” and uses
forward-looking terminology such as “aim”, “anticipate”, “believe”, “continue”, “could”,
“estimate”, “expect”, “forecast”, “intend”, “may”, “ought to”, “plan”, “potential”, “project”,
“seek”, “should”, “will”, “would” and other similar terms. Those statements include, among
other things, the discussion of our growth strategy and the expectations of our future operations,
liquidity and capital resources. Investors of our Offer Shares are cautioned that reliance on any
forward-looking statement involves risk 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 those identified in the risk factors discussed above.
In light of these and other uncertainties, the inclusion of forward-looking statements in this
prospectus should not be regarded as representations or warranties by us that our Company’s
plans and objectives will be achieved and these forward-looking statements should be considered
in light of various important factors, including those set out in this section. We do not intend to
update these forward looking statements in addition to our on-going disclosure obligations
pursuant to the GEM Listing Rules or other requirements of the Stock Exchange. Investors
should not place undue reliance on such forward looking information.
Y ou should read the entire prospectus carefully and we strongly caution you not to place
any reliance on any information (if any) contained in press articles or other media
regarding us and the Share Offer.
Prior to the publication of this prospectus, there may be press or other media coverage
regarding our Group or the Share Offer, which may contain certain financial information,
financial projections and other information about our Group that do not appear in this
prospectus. We have not authorised the disclosure of any information in the press or media and
we strongly caution you not to place any reliance on any such information. We do not accept any
responsibility for any such press or media coverage or the accuracy or completeness of any such
RISK FACTORS
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information. We make no representation as to the appropriateness, accuracy, completeness or
reliability of any such information or publication. To the extent that any such information is not
contained in this prospectus or is inconsistent or conflicts with the information contained in this
prospectus, we expressly disclaim any responsibility, liability whatsoever in connection
therewith or resulting therefrom. Accordingly, you should not rely on any such information in
making your decision as to whether to subscribe for the Offer Shares. You should only rely on
the information contained in this prospectus.
RISK FACTORS
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DIRECTORS’ RESPONSIBILITY FOR THE CONTENTS OF THIS PROSPECTUS
This prospectus, for which our Directors (including any proposed directors who are named
as such in this prospectus) collectively and individually accept full responsibility, including
particulars given in compliance with the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, the Securities and Futures (Stock Market Listing) Rules (Chapter 571V of the Laws
of Hong Kong) and the GEM Listing Rules for the purpose of giving information to the public
with regard to our Group. 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 is not misleading or deceptive, and there are no other
matters or omissions of which would make any statement herein or this prospectus misleading,
and all opinions expressed in this prospectus have been arrived at after due and careful
considerations, and are founded on bases and assumptions that are fair and reasonable.
INFORMATION ON THE SHARE OFFER
This prospectus is published solely in connection with the Public Offer, which forms part
of the Share Offer. For applicants in the Public Offer, this prospectus set out the terms and
conditions of the Public 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 forth
herein and therein. No person is authorized 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
authorized by our Company, the Overall Coordinator, the Sole Sponsor, any of the Underwriters,
any of our or their respective affiliates or any of our or their respective directors, officers,
agents, employees, representatives or advisors or any other party involved in the Share Offer.
Neither the delivery of this prospectus nor any offering, sale or delivery made in
connection with our Shares shall, under any circumstances, constitute a representation that there
has been no change or development reasonably likely to involve a change in our affairs since the
date of this prospectus or imply that the information contained in this prospectus is correct as of
any date subsequent to the date of this prospectus.
Details of the structure and conditions of the Share Offer, including its conditions, are set
out in the section headed “Structure and conditions of the Share Offer” in 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” in this prospectus.
INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER
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UNDERWRITING
The Listing of the Shares on the Stock Exchange is sponsored by the Sole Sponsor. The
Public Offer is fully underwritten by the Public Offer Underwriters subject to the terms and
conditions of the Public Offer Underwriting Agreement. The Placing is expected to be fully
underwritten by the Placing Underwriters subject to the terms and conditions of the Placing
Underwriting Agreement. The Share Offer is managed by the Overall Coordinator. Further
information regarding the Underwriters and the underwriting arrangements are set out in the
section headed “Underwriting” in this prospectus.
If, for any reason, the Offer Price is not agreed among our Company and the Overall
Coordinator (for itself and on behalf of the Underwriters) by the Price Determination Date, the
Share Offer will not proceed and will lapse. For further information about the Underwriters and
the underwriting arrangements, please see the section headed “Underwriting” in this prospectus.
RESTRICTIONS ON OFFER AND SALE OF THE OFFER SHARES
Each person acquiring the Public Offer Shares under the Public Offer will be required to
confirm, or be deemed by his acquisition of the Public Offer Shares to have confirmed, that he is
aware of the restrictions on offers of the Offer Shares described in this prospectus and that he is
not acquiring, and has not been offered, any Offer Shares in circumstances that contravene any
such restrictions.
Prospective applicants for the Offer Shares should consult their financial advisers and seek
legal advice, as appropriate, to inform themselves of, and to observe, all applicable laws, rules
and regulations of any relevant jurisdiction. Prospective applicants for the Offer Shares should
also inform themselves as to any relevant legal requirements and any applicable exchange
control regulations and applicable taxes in the countries of their respective citizenship, residence
or domicile.
No action has been taken to permit an offering of the Offer Shares or the distribution of
this prospectus in any jurisdiction other than Hong Kong. Accordingly, without limitation to the
following, this prospectus may not be used for the purposes of, and does not constitute, an offer
or invitation in any jurisdiction or in any circumstances in which such an offer or invitation is
not authorized 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 Public Offer Shares in other jurisdiction
are subject to restrictions and may not be made except as permitted under the applicable
securities laws of such jurisdiction and pursuant to registration with or authorization by the
relevant securities regulatory authorities or an exemption therefrom.
INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER
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APPLICATION FOR LISTING ON THE STOCK EXCHANGE
We have applied to the Stock Exchange for granting of the listing of, and permission to
deal in, the Shares in issue and to be issued pursuant to the Share Offer (including the additional
Shares which may be issued pursuant to the exercise of the Offer Size Adjustment Option).
No part of our share or loan capital is listed on or dealt in on any other stock exchange and
no such listing or permission to list is being or proposed to be sought in the near future.
Under section 44B(1) of the Companies (Winding Up and Miscellaneous Provisions)
Ordinance, any allotment made in respect of any application will be invalid if the listing of, and
the permission to deal in, the Offer Shares on the Stock Exchange is refused before the
expiration of three weeks from the date of the closing of the application lists, or such longer
period (not exceeding six weeks) as may, within the said three weeks, be notified to our
Company by the Stock Exchange.
COMMENCEMENT OF DEALINGS IN THE SHARES
Assuming that the Public Offer becomes unconditional at or before 8:00 a.m. in Hong Kong
on 3 June 2024, it is expected that dealings in our Shares on the Stock Exchange will commence
at 9:00 a.m. on 3 June 2024. The Shares will be traded in board lots of 5,000 Shares each. The
stock code of the Shares will be 8529.
PROFESSIONAL TAX ADVICE RECOMMENDED
Potential investors in the Share Offer are recommended to consult their professional
advisors if they are in any doubt as to the taxation implications of subscribing for, purchasing,
holding or disposing of, or dealing in, the Shares or exercising any rights attaching to the
Shares. We emphasize that none of our Company, the Sole Sponsor, the Overall Coordinator, the
Underwriters, any of our or their respective affiliates or any of our or their respective directors,
officers, employees, advisers, agents or representatives or any other person involved in the Share
Offer accepts responsibility for any tax effects on, or liabilities of, any person resulting from the
subscription for, purchasing, holding or disposing of, or dealing in, the Shares or exercising of
any rights attaching to the Shares.
REGISTER OF MEMBERS AND HONG KONG STAMP DUTY
Our principal register of members will be maintained by our Cayman Island share registrar,
Conyers Trust Company (Cayman) Limited, in the Cayman Islands and our Hong Kong register
of members will be maintained by our Hong Kong Branch Share Registrar, Boardroom Share
Registrars (HK) Limited, in Hong Kong. All Offer Shares will be registered on the Company’s
Hong Kong register of members in Hong Kong. Dealings in the Shares registered on our Hong
Kong register of members will be subject to Hong Kong stamp duty.
INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER
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SHARES WILL BE ELIGIBLE FOR ADMISSION 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 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 business 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 advisors
for details of the settlement arrangements as such arrangements may affect their rights and
interests. All necessary arrangements have been made to enable the Shares to be admitted into
CCASS.
OFFER SIZE ADJUSTMENT OPTION
For details of the Offer Size Adjustment Option, please refer to the section headed
“Structure and conditions of the Share Offer” in this prospectus.
PROCEDURES FOR APPLICATION FOR OFFER SHARES
The procedures for applying for the Public Offer Shares are set out in the section headed
“How to Apply for the Public Offer Shares” in this prospectus.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
Details of the structure and conditions of the Share Offer, including their respective
conditions, are set out in the section headed “Structure and conditions of the Share Offer” in this
prospectus.
EXCHANGE RATE CONVERSION
For the purpose of illustration only, this prospectus contains translations among certain
amounts denominated in Renminbi, Hong Kong dollars, Singapore dollars and U.S. dollars.
Unless otherwise specified, (i) the conversions between Renminbi and HK dollars were made at
the rate of RMB1.00 to HK$1.10, (ii) the conversions between Renminbi and U.S. dollars were
made at the rate of RMB7.10 to US$1.00, (iii) the conversions between U.S. dollars and Hong
Kong dollars were made at the rate of HK$7.78 to US$1.00, and (iv) the conversions between
Singapore dollars and Hong Kong dollars were made at the rate of S$5.81 to HK$1.00.
No representation is made that the amounts denominated in one currency could actually be
converted into the amounts denominated in another currency at the rates indicated or at all.
INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER
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ROUNDINGS
Certain amounts and percentage figures, including share ownership and operating data in
this prospectus, may have been subject to rounding adjustments, or have been rounded to one to
three decimal place(s). 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, figures shown as totals in certain tables may not be an arithmetic aggregation of
the figures which precede them.
LANGUAGE
If there is any inconsistency between this prospectus and the Chinese translation of this
prospectus, this prospectus shall prevail. The translated English names of the PRC nationals,
entities, departments, facilities, certificates, titles, laws, regulations and the like are translations
of their Chinese names and are included for identification purposes only. If there is any
inconsistency, the Chinese name prevails.
INFORMATION ABOUT THIS PROSPECTUS AND THE SHARE OFFER
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DIRECTORS
Name Address Nationality
Executive Directors
Mr. Tong Yuen To (ಷჃᏹ) Flat 50, 4/F, Block C
Luso Apartments, 5 Warwick Road
Kowloon Tong
Kowloon, Hong Kong
Chinese
Mr. Chan Kai Leung (ڥRoom 1411, Block H
Kornhill
Quarry Bay
Hong Kong
Chinese
Mr. Shek Kam Pun (ͩᎀⅳ) Flat E, 20/F, Block 8
Tsuen King Garden
Tsuen Wan
New Territories, Hong Kong
Chinese
Mr. Tam Ming Wa (ശ) Unit 40E, Tower 3
Bellagio
33 Castle Peak Road
Sham Tseng, New Territories
Hong Kong
Chinese
Non-executive Director
Mr. Wong Tsz Lun (ර૔᜝) Room 1603, 16/F
Shing Yan House
Yue Shing Court
Shatin
New Territories, Hong Kong
Chinese
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
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--- page 93 ---
Name Address Nationality
Independent non-executive
Directors
Mr. Chan Oi Fat (௓ฌ೯) Flat SA, 10/F, Block 1
Phase 3, Festival City
Tai Wai
New Territories
Hong Kong
Chinese
Ms. Ma Jay Suk Lin (৵ૺᇳ) Flat D, 11/F
Yee Fung Building
1 Village Road
Hong Kong
Chinese
Mr. Wong Lok Man (ˮᆀ͏) Flat D, 14/F
Yee Yun Mansion
Lei King Wan
Shaukiwan, Hong Kong
Chinese
Please refer to the section headed “Directors and Senior Management” in this prospectus
for further information.
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
–8 1–


--- page 94 ---
PARTIES INVOLVED IN THE SHARE OFFER
Sole Sponsor Yue Xiu Capital Limited
Room 17–37
49/F, Sun Hung Kai Centre
30 Harbour Road
Wanchai
Hong Kong
Overall Coordinator, Joint Global
Coordinators, Joint Bookrunners
and Joint Lead Managers
Yue Xiu Securities Company Limited
Room 17–37
49/F, Sun Hung Kai Centre
30 Harbour Road
Wanchai
Hong Kong
Joint Global Coordinators,
Joint Bookrunners and
Joint Lead Managers
Yue Xiu Securities Company Limited
Room 17–37
49/F, Sun Hung Kai Centre
30 Harbour Road
Wanchai
Hong Kong
Alpha Financial Group Limited
Room A, 17/F
Fortune House
61 Connaught Road Central
Central
Hong Kong
Joint Bookrunners and Joint Lead
Managers
Yue Xiu Securities Company Limited
Room 17–37
49/F, Sun Hung Kai Centre
No. 30 Harbour Road
Wanchai
Hong Kong
Alpha Financial Group Limited
Room A, 17/F
Fortune House
61 Connaught Road Central
Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
–8 2–


--- page 95 ---
CIS Securities Asset Management Limited
21/F, Centre Point
181–185 Gloucester Road
Wanchai
Hong Kong
Conrad Investment Services Limited
23/F, Tung Hip Commercial Building
244–248 Des V oeux Road Central
Sheung Wan
Hong Kong
Emperor Securities Limited
23/F–24/F, Emperor Group Centre
288 Hennessy Road
Wanchai
Hong Kong
Glory Sun Securities Limited
Unit 1908, 19/F
Tower 2, Lippo Centre
No. 89 Queensway
Hong Kong
Livermore Holdings Limited
Unit 1214A, 12/F
Tower II Cheung Sha Wan Plaza
833 Cheung Sha Wan Road
Kowloon
Hong Kong
Plutus Securities Limited
8/F
80 Gloucester Road
Wan Chai
Hong Kong
Quam Securities Limited
5/F and 24/F (Rooms 2401 and 2412)
Wing On Centre
111 Connaught Road Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
–8 3–


--- page 96 ---
Sinomax Securities Limited
28th Floor
Shun Feng International Centre
No.182 Queen’s Road East
Wan Chai
Hong Kong
Tiger Brokers (HK) Global Limited
1/F
308 Des V oeux Road Central
Hong Kong
TradeGo Markets Limited
Room 3405
West Tower, Shun Tak Centre
168–200 Connaught Road
Central
Hong Kong
Legal advisers to our Company as to Hong Kong law:
KS Ng Law Office
Unit 1205, 12/F
Far East Consortium Building
121 Des V oeux Road Central
Hong Kong
Mr. Lawrence Man
Barrister-at-law
Suite 2305, Tower 2
Lippo Centre
89 Queensway
Admiralty
as to PRC law:
King & Wood Mallesons
25th Floor, Guangzhou CTF Finance Centre
No. 6 Zhujiang East Road
Zhujiang New Town, Tianhe District
Guangdong, 510623
PRC
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
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--- page 97 ---
as to Cayman Islands law:
Conyers Dill & Pearman
29th Floor
One Exchange Square
8 Connaught Place
Central
Hong Kong
as to Singapore law:
Altum Law Corporation
160 Robinson Road
#26-06 SBF Center
Singapore 068914
Legal adviser to the Sole Sponsor and
the Underwriters
as to Hong Kong law:
Loeb & Loeb LLP
2206–19 Jardine House
1 Connaught Place
Central, Hong Kong
as to PRC law:
GFE Law Office
Units 3409–3412
Guangzhou CTF Finance Center
No. 6 Zhujiang Road East
Zhujiang New Town
Guangzhou, PRC
Auditors and reporting accountants Moore CPA Limited
(Formerly known as Moore Stephens CP A Limited)
Certified Public Accountants
Registered Public Interest Entity Auditors
801–806 Silvercord
Tower 1, 30 Canton Road
Tsimshatsui, Kowloon
Hong Kong
Industry consultant Frost & Sullivan Limited
Suite 3006, Two Exchange Square
8 Connaught Place
Central, Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
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--- page 98 ---
Tax Consultant SHINEWING Tax and Business Advisory Limited
17/F., Leighton Centre
77 Leighton Road
Causeway Bay, Hong Kong
Compliance Adviser Yue Xiu Capital Limited
Room 17–37
49/F, Sun Hung Kai Centre
30 Harbour Road
Wanchai
Hong Kong
Receiving bank DBS Bank (Hong Kong) Limited
16/F, The Center
99 Queen’s Road Central
Hong Kong
DIRECTORS AND PARTIES INVOLVED IN THE SHARE OFFER
–8 6–


--- page 99 ---
Registered office Cricket Square
Hutchins Drive
PO Box 2681
Grand Cayman KY1- 1111
Cayman Islands
Headquarters and principal place
of business
Unit 8, 35/F., Cable TV Tower
9 Hoi Shing Road, Tsuen Wan
New Territories
Hong Kong
Company secretary Ms. Liu Ningyuan
Unit 8, 35/F., Cable TV Tower
9 Hoi Shing Road, Tsuen Wan
New Territories
Hong Kong
Authorised representatives Mr. Tong Yuen To
Flat 50, 4/F Block C
Luso Apartments, 5 Warwick Road
Kowloon Tong
Kowloon, Hong Kong
Mr. Chan Kai Leung
Room 1411, Block H
Kornhill
Quarry Bay
Hong Kong
Audit committee Mr. Chan Oi Fat (Chairman)
Ms. Ma Jay Suk Lin
Mr. Wong Lok Man
Nomination committee Mr. Tong Yuen To (Chairman)
Mr. Chan Oi Fat
Mr. Wong Lok Man
Remuneration committee Mr. Wong Lok Man (Chairman)
Mr. Tong Yuen To
Mr. Chan Oi Fat
CORPORATE INFORMATION
–8 7–


--- page 100 ---
Principal share registrar and
transfer office
Conyers Trust Company (Cayman) Limited
Cricket Square
Hutchins Drive
PO Box 2681
Grand Cayman KY1- 1111
Cayman Islands
Hong Kong Branch Share Registrar Boardroom Share Registrars (HK) Limited
2103B, 21/F
148 Electric Road
North Point
Hong Kong
Principal banker HSBC
1 Queen’s Road Central
Central, Hong Kong
Company website http://www.ubot.com.hk/
(Note: The contents of this website do not form
part of this prospectus)
CORPORATE INFORMATION
–8 8–


--- page 101 ---
The information and statistics set out in this section and other sections of this
prospectus were extracted from different official government publications, available sources
from public market research and other sources from third parties, and from the independent
industry report prepared by Frost & Sullivan. The Company engaged Frost & Sullivan to
prepare the F&S Report, an independent industry report, in respect of the Share Offer . We
believe that the sources of this information are appropriate sources for such information and
have taken reasonable care in extracting and reproducing such information. We 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. The information from official
government sources has not been independently verified by us, the Overall Coordinator , the
Sole Sponsor , the Joint Global Coordinators, the Joint Bookrunners, the Joint Lead
Managers, the Underwriters, any of their respective directors or any other parties involved in
the Share Offer , and no representation is given as to its accuracy.
SOURCE OF INFORMATION
We have commissioned Frost & Sullivan, an independent market research and consulting
company, to conduct an analysis of, and to prepare a report on the global back-end
semiconductor transport media and MEMS and sensor packaging market. The report prepared by
Frost & Sullivan for us is referred to in this listing document as Industry Report. We agreed to
pay Frost & Sullivan a fee of HK$1,450,000 which we believe reflects market rates for reports
of this type.
Founded in 1961, Frost & Sullivan has 40 offices with more than 2,000 industry
consultants, market research analysts, technology analysts and economists globally. Frost &
Sullivan’s services include technology research, independent market research, economic
research, corporate best practices advising, training, client research, competitive intelligence and
corporate strategy.
We have included certain information from the Industry Report in this listing document
because we believe this information facilitates an understanding of the global back-end
semiconductor transport media and MEMS and sensor packaging market for the prospective
investors. The Industry Report includes information of the global back-end semiconductor
transport media and MEMS and sensor packaging market as well as other economic data, which
have been quoted in the listing document. Frost & Sullivan’s independent research consists of
both primary and secondary research obtained from various sources in respect of the global
back-end semiconductor transport media and MEMS and sensor packaging market. Primary
research involved in-depth interviews with sizeable industry participants and industry experts.
Secondary research involved reviewing company reports, independent research reports and data
based on Frost & Sullivan’s own research database. Projected data were obtained from historical
data analysis plotted against macroeconomic data with reference to specific industry-related
factors. Except as otherwise noted, all of the data and forecasts contained in this section are
derived from the Industry Report, various official government publications and other
publications.
INDUSTRY OVERVIEW
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The Frost & Sullivan Report was complied based primarily on the following assumptions:
(i) the social, economic and political environment of the globe and China is likely to remain
stable in the forecast period, and (ii) related industry key drivers are likely to drive the market
in the forecast period.
GLOBAL SEMICONDUCTOR AND INTEGRATED CIRCUIT (IC) INDUSTRY
OVERVIEW
Definition and Classification
A semiconductor material has conductivity between conductors and insulators at
room temperature. Semiconductor devices are used in integrated circuits, consumer
electronics, network communication, automotive electronics and other fields.
A n integrated circuit is a set of electronic circuits on one small flat piece (or “ chip”)
of semiconductor material, usually silicon.
Value Chain
The value chain of the semiconductor and integrated circuit industry is comprised of industry players
in the upstream, midstream and downstream. Different levels of specialization and functional delineation in
the value chain have led to the emergence of two key operating models in the semiconductor industry,
namely (i) fabless-foundry; and (ii) Integrated Device Manufacturer (IDM). In the fabless-foundry model,
production is split by (i) design; (ii) IC/Wafer Manufacturing; and (iii) IC Assembly, Packaging & Testing.
In the IDM model, one company carries out all or most of the stages of production including design,
manufacturing, and assembly, testing, and packaging, while some production procedures of IDM may also
be subcontracted to other contract manufacturers.
Upstream players are mainly comprised of:
 Research and Development companies focuses on draft, advance and streamline
technology throughout the supply chain.
 Design companies (Fabless) solely focus on IP and IC design and contract out
fabrication. Fabless companies can benefit from lower capital costs while
concentrating their research and development resources on the end market.
 IC/Wafer Manufacturing companies (Front-end/ Foundries) focuses on front-end
semiconductor manufacturing, which refers to the fabrication from a blank wafer to a
completed wafer. These foundry companies concentrate on contract manufacturing,
processing, testing, photo mask and chemical procedure.
INDUSTRY OVERVIEW
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 IC Assembly, Packaging & Testing companies (Back-end) are subcontractors
performing assembly, testing, and packaging tasks, which then supply IC for the
production of all sorts of semiconductor products, while raw material suppliers
provide lead frames and packaging material to supplement this stage of production.
 Transport media companies are specialised manufacturer focuses on the production of
carrier for containment of semiconductor components during all stages of the
manufacturing process. The back-end semiconductor transport media companies
provide back-end functions of the semiconductor and IC industry, (i.e. assembly,
packaging and testing).
 Semiconductor equipment manufacturers provide semiconductor manufacturing equipment e.g.
clean track, diffusion furnace and plasma etcher to IC/Wafer manufacturers, while raw
materials suppliers provide raw wafer and chemicals to manufacturers.
Midstream players distributors and sales channels and downstream players include various
electronics production manufacturers in segments such as automotive, consumer electronics,
industrial and construction, aerospace and defence and communication and networking.
Global Market Size of Electronics Industry
Semiconductor as an essential elements for various types of electronic products, shall grow
along with the continuous development of electronic end-products. The depth of application of
semiconductor has been growing, for instance, sensors and actuators are increasingly applied
across all segments, the demand for Artificial Intelligence enabled, 5G and IoT related
equipment are booming, which in turn further propelled the demand for semiconductor as an
essential component.
The global electronics market size is growing continuously from US$1,999.7 billion to
US$2,155.9 billion from 2019 to 2023, representing a CAGR of 1.9%. Particularly, the increase
of automotive electronics industry with CAGR of 5.2% from 2024 to 2028 will be mainly
contributed by increasing integration and implementation of advanced safety systems such as
automatic emergency braking, lane departure warning and smart parking assistance systems to
decrease road accidents in vehicles. Medical electronics is expected to grow rapidly with CAGR
of 4.0% in the next 5 years as a result of factors such as aging population, advanced healthcare
devices, and increase demand for customization and precision medical services.
INDUSTRY OVERVIEW
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Breakdown of Global Electronics Market Size by Applications, 2019–2028E
Billion US$
Based on
ex-factory
price
Consumer Electronics and
Smart Modules/Devices
Telecommunications
PV Modules
Others
Defense and Aerospace
Marine Electronics
Industrial Electronics
Automotive Electronics
3,000
2,500
2,000
1,500
1,000
500
0
Medical Electronics
849.6
2028E
760
57.9
113.9
37.7
15.7
180.4
358.6
159.5
734.1
2019
592.6
37.5
103.3
29.7
13.6
148.2
226.2
114.5
722.3
2020
565.9
35.6
102.7
27.3
13.6
140.7
216.3
110.6
792.9
2021
608.3
38.8
104.3
29.4
13.9
151.0
239.1
119.6
740.2
2023
650.5
46.7
108.2
32.9
14.5
160.2
272.0
130.7
760
2022
631.6
42.8
106.6
31.3
14.15
155.8
250.2
125.2
769.8
2024E
673.3
50.0
109.6
34.1
14.8
165.5
292.4
136.6
796.7
2025E
695.5
52.5
110.9
35.1
15.1
170.0
309.9
142.5
837.0
2027E
738.6
56.2
113.0
36.9
15.5
177.2
343.2
154.0
820.6
2026E
717.1
54.5
112.0
36.0
15.3
173.7
326.9
148.2
CAGR
0.2%
2.4%
4.7%
1.6%
2.0%
3.4%
2.6%
5.6%
1.2%
2019–
2023
2.5%
2024E–
2028E
3.1%
5.2%
1.5%
2.2%
4.0%
2.5%
3.7%
1.0%
Source: Yearbook of World Electronics Data, Frost & Sullivan
Global Market Size of Semiconductor Industry
Semiconductor is the basis and driving force for the rapid development of information
technology industry. It has been highly penetrated and integrated into all fields of economic and
social development. Its technical level and development scale have become one of the important
symbols to measure a country’s industrial competitiveness and comprehensive national strength.
The growth of regional economy and leading technological advance has boosted the market size
of semiconductor industry from approximately US$412.3 billion in 2019 to approximately
US$573.5 billion in 2022, representing a CAGR of 11.6% but showed a decrease of 8.1% in
2023 to US$526.8 million.
The short-term downturn of the global semiconductor market size is primarily the result of
a confluence of factors, including but not limited to the industry cyclical nature, increasing
inflation, geopolitical tension and the downturn of the global macro-economy. However,
promoted by the rapid technological development as well as recovering demand for
semiconductor devices in various downstream sectors, including automotive and consumer
electronics, the semiconductor industry is expected to rebound in 2024. The market size of
semiconductor industry is forecasted to reach approximately US$832.7 billion by 2028, with a
CAGR of 8.8% from 2024 to 2028. Given the potential growth rate, the slowdown of market
demand in 2023 is expected to be a short-term adjustment of the semiconductor industry and is
not expected to be long-term in nature. The global semiconductor industry is competitive and the
industry standards are constantly changing. Among the major countries and regions, China is
expected to occupy the largest market share of the global semiconductor industry (31.3%),
followed by the United States (27.8%) and Asia Pacific (excluding China) (20.2%) in 2024.
INDUSTRY OVERVIEW
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0
200
400
600
800
1000
2028E2027E
832.7
2019
440.4412.3
2020
555.9
2021
573.5
2022
526.8
2023
595.3
2024E
651.9
2026E
769.6
2025E
709.3
2019–2022 2022–2023
11.6% -8.1%
2024E–2028E
8.8%CAGR
Billion US$
Global Market Size of Semiconductor Industry by Sales Value by Major Countries, 2019–2028E
2023 2024E
28.0% 27.8%
19.7% 20.2%
7.4% 7.5%
29.4% 31.3%
15.5% 13.2%
US
Asia Pacific (excl. China)
Europe
China
ROW
Source: Frost & Sullivan
The semiconductor industry operates within a complex and dynamic cyclical framework,
which usually experiences fluctuations about every 1–2 years. The cycle is determined by
changes in industrial supply and demand relations and is driven by transformative advancements
in industry technologies and downstream applications. The cycle sets the stage for the industry’s
direction, relying on the continual upgrade of new terminal technologies and the emergence of
new-generation applications.
The semiconductor industry’s cyclical pattern reflects historical downturns coinciding with
global economic recessions and geopolitical strains, evident in periods like 2001–2002,
2007–2009, and 2018–2019. The 2023 downturn, influenced by geopolitical tensions and a
macroeconomic slowdown, did not signify fundamental or structural changes in the industry.
Heightened geopolitical tensions disrupted supply chains and international collaborations and
continued to impact the industry in 2023. Additionally, the global macro-economy experienced a
short-term slowdown, resulting in reduced consumer spending and weakened business
confidence. Despite challenges, the underlying structure of the semiconductor sector remained
intact, suggesting a potential for recovery akin to past cycles once external pressures subside.
Looking towards the long term, it is expected that the market size of global semiconductor
industry will reach approximately US$832.7 billion by 2028, at a GAGR of 8.8% from 2024 to
2028. The semiconductor industry’s pervasive presence across sectors like consumer electronics,
automotive, artificial intelligence, industrial applications, and aerospace and defense systems
underscores its indispensability in modern life, indicating a trajectory of long-term growth.
Furthermore, substantial and ongoing governmental support, exemplified by initiatives such as
the U.S. government’s funding for microchip technology and China’s investments in its
semiconductor industry, reinforces confidence in the industry’s sustained development. Although
the effects of such support may take time to materialize, the combination of widespread
applicability and governmental backing suggests a promising long-term outlook for the
semiconductor industry.
Industry participants must strategically navigate the dynamic cycles to remain competitive
and resilient, adapting to transformative innovations, managing production capacities effectively,
and responding agilely to the immediate demands of the market. The understanding of the
cyclical patterns is fundamental for stakeholders in the semiconductor sector, enabling them to
INDUSTRY OVERVIEW
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make informed decisions and position themselves strategically in a landscape characterized by
constant change and technological evolution.
Key Development Trend and Outlook of IC Industry Globally and Asia
From the prospective of the global IC industry, the demand for differentiated products the
development of a new path of IC industry. With the rapid development of 5G, Internet of things,
artificial intelligence, etc., the demand of ICs has become more and more diverse. Different
application scenarios have differentiated requirements for the elements of IC computing speed,
power consumption and cost. Major research institutions and major manufacturers began to
explore new technologies and products. In recent years, key markets of the world’s integrated
circuits have shifted from Europe and the United States to the Asia. After entering the 21st
century, the economic level of the Asia has developed rapidly. The demand for integrated circuit
products has increased. In Asia, the increasing focus toward IoT platforms is boosting the
growth of the market size of IC industry in the world. Countries such as China, India, Japan and
South Korea are actively trying to strengthen the IoT platforms. Governments of these countries
and regions are focusing on entering various public and private collaborations, on leveraging IoT
advancements for smart cities, automation, and other industrial applications, thus reinforcing the
development of the IC industry. The IC industry in Southeast Asia has been growing rapidly
after entering the 21st century. Singapore and Malaysia began to undertake part of the IC
business from Japan and South Korea in the 1990s. After 30 years of development, integrated
circuit industry has become one of the pillar industries of these two countries. The Philippines,
Thailand, and Vietnam also see great prospects in the local IC industry, hoping to attract more
international companies with low labor and land costs. Moreover, Asia has long held the largest
market share of the IC industry globally owing to the presence of several established vendors of
analog ICs and electronics products. The region has emerged as a major automotive hub, with a
maximum market share in terms of vehicle production and sales, as China continues to account
for a large and growing portion of vehicle shipments, which drives the analog IC market.
Furthermore, the demand for ICs is expected to continue to increase, driven by the development
of new technologies such as artificial intelligence (AI), machine learning (ML), and the Internet
of Things (IoT).
As a result, the number of ICs being produced is likely to achieve accelerated growth. This
growth will be supported by advancements in manufacturing technology, which will allow for
the creation of smaller and more precise components such as chips. This will enable the creation
of more powerful and complex computing devices, which are essential for meeting the demands
of these new technologies.
GLOBAL BACK-END SEMICONDUCTOR TRANSPORT MEDIA INDUSTRY OVERVIEW
Definition and Classification
Back-end semiconductor transport media refers to the carrier for containment of
semiconductor components during all stages of the manufacturing process, for example, during
component-assembly operations, transport and storage from the manufacturing plant to the
board-assembly site, and when feeding components to automatic-placement machines for surface
mounting on board assemblies.
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As semiconductor devices consist of delicate components and structures, the carriers for
shipping, handling, or processing of semiconductors are carefully designed and follow specific
industry standards. As well as protecting the leads of the components from damage during
shipment, handling, and placement, the carriers are required to have a high degree of uniformity
and consistency in order to feed parts at high speeds in an automated component placing and
delivery system.
In general, the back-end transport media of semiconductor are classified by configurations,
which mainly comprise tray and tray related products, and tape and reel.
Major Types of Back-end Semiconductor Transport Media
 Tray and tray related products: trays for transporting back-end semiconductors are
conform to JEDEC standards. Trays are specified with stackable feature and fixed-size
slots for placement of chips. As trays can be stacked and bound together to form
standard packaging configurations, they are often used for transport and storage of the
semiconductor components. Trays are also commonly used in automated testing,
inspection, and assembly processes. Tray related products may include end-caps and
tabs which are used to handle a full tray stack and for easy sorting and coding.
 Tape and reel: The tape-and-reel configuration consists of a carrier tape with
sequential individual cavities that hold individual components, and a cover tape that
seals the carrier tape to retain the components in the cavities. The tape is wound onto
a rigid plastic reel that provides mechanical protection during handling and storage.
The tape-and-reel configuration is commonly used for feeding components to
automatic-placement machines for surface mounting on board assemblies.
Features of Back-end Semiconductor Transport Media
Semiconductors such as integrated circuits, modules and other components are extremely
sensitive devices and require careful packaging and handling. The typical features of
semiconductor transport media are listed below:
 Strong and rigid: As a containment of semiconductor, the back-end semiconductor
transport media are required to hold and protect the semiconductor from physical
damage. The materials used should be strong and the structure of the carrier should be
rigid with minimum twist.
 Uniformity and consistency: The handling media require high degree of uniformity
that allows automated pick-and-place machines to efficiently locate and transport the
components from the handling media to applicable places throughout the board
assembly process. Further, the shape of the carrier is required to be consistent to allow
easy storage and handling, for example, components are nested into pockets in fixed
position rows and columns on trays and tapes which can be stacked and bound
together. The configurations of the transport media of semiconductors are conformed
by industry standards and it is uncommon to mix multiple manufacturers’ brands due
to the high precision requirement for the handling media.
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 Electrostatic discharge protection: Semiconductor components are very sensitive to
electrostatic charges and any slight static electricity can damage the semiconductor.
As such, the design and materials used for the carrier are often static dissipative,
specifically to avoid electrostatic charges build up during the peeling off of cover tape
prior to automatic pick-and-place or other mechanical movement.
 High specifications: Back-end semiconductor transport media are manufactured to
high specification with engineered plastics. During the manufacturing process, the
baking temperature, as well as humidity are controlled carefully as any slight changes
of the environment can alter the dimensions of the product and potentially affect the
functionality of the transport media.
 Uncommon to reuse: Back-end semiconductor transport media is designed to act as the
carriers of these semiconductor devices for shipping, handling, or processing, as well
as protecting the leads of the components for damage during shipment, handling and
placement. In light of the high standard of back-end semiconductor transport media
that the customers required, the customers are practically unlikely to reuse the
transport media, which is primarily attributed by (i) it would not be economical to
clean and reuse the transport media considering the risk of damaging the fragile
semiconductor devices of which the unit price is significantly higher than the unit
price of the back-end semiconductor transport media; and (ii) it is costly and
practically impossible for the customers to trace the destination of the transport media
and collect them for reuse as they are not used in-house and are shipped to different
locations for production and the production process might be further sub-contracted by
the downstream industry players.
Value Chain of Back-end Semiconductor Transport Media
The value chain of back-end semiconductor transport media is fairly straightforward. The
upstream supplier of a back-end semiconductor transport media manufacturer consist of raw
materials supplier such as pre-dried granular plastic or special engineered moulding compounds
and related manufacturing facilities and tooling such as injection moulding machine. Apart from
being the media for storage and handling of semiconductor components, the products are used at
various stages across the manufacturing process of semiconductors, for instances, trays and
carrier tapes are readily used to present semiconductor components to pick-and-place machines
for automatic placement onto printed circuit boards. While majority of downstream customers
are back-end semiconductor manufacturing companies, there are industries other than traditional
electronics that also demand for backend semiconductor transport media, for example, the solar
photovoltaic industry, medical device industry, as well as the automotive industry.
Semiconductor corporations generally need to conduct factory audit on their suppliers and
qualify such suppliers for relevant back-end semiconductor transport media, before establishing
business relationship with them.
INDUSTRY OVERVIEW
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Upstream Midstream Downstream
• Raw materials
• Machine facilities and
tooling
• Back-end
Semiconductor
transport media
manufacturer
• IDM companies
• Fabless-foundry
semiconductor
companies
• IC assembly and
packaging test house
• Electronic
component
mounting industry
• Solar photovoltaic
industry
• Medical device
industry
• Automotive
industry
Source: Frost & Sullivan
Global Market Size
Owing to rising digitalization across the world, the surge in demand for semiconductors for
commercial use, industrial use, and consumer electronics is driving the back-end semiconductor
transport media industry. The total market grew from US$767.4 million in 2019 to US$ 962.6
million in 2022, representing a CAGR of 7.8%, but showed a decrease of 17.3% in 2023 to
US$796.0 million. Looking forward, as semiconductor industry continue to benefit from the
development of advanced technology such as artificial intelligence and machine learning, the
industry of back-end semiconductor transport media is anticipated to reach US$1,156.1 million
in 2028, up from US$854.6 million in 2024, with a CAGR of 7.8%.
0
200
400
600
800
1,000
1,200
2019
767.4
244.7
499.3
23.5
818.6
259.1
535.2
24.3
2020
882.4
276.2
581.0
25.2
2021
962.6
306.0
630.4
26.1
2022
796.0
252.1
520.1
23.8
2023
854.6
555.5
24.3
274.8
2024E
932.1
305.0
601.0
26.1
2025E
1,011.7
335.5
648.5
27.6
2028E2027E
1,156.1
389.5
736.2
30.4
2026E
1,087.3
362.4
695.8
29.1
2019–2022
7.7%
8.1%
3.6%
7.8%
2022–2023
-17.5%
-8.9%
-17.3%
-17.6%
2024E–2028E
7.3%
5.7%
7.8%
9.1%Tray and tray related products
Tape and reel
Others
Total
CAGR
Million US$
Tray and tray related products
Tape and reel
Others
Global Market Size of Back-end Semiconductor
Transport Media Industry Breakdown by Type of Media, 2019–2028E
Note: Others include shipping tubes, customised plastic injected parts and other accessories such as end pins,
stoppers and plugs.
Source: Frost & Sullivan
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Market Size of the PRC
The market size of the back-end semiconductor transport media industry in the PRC
experienced a significant decrease in 2023, primarily due to the decline in China’s
semiconductor market. This decline can be attributed to a combination of factors, including but
not limited to economic sanctions impacting access to critical technologies and markets, and
intense competitive pressure from the United States. The downturn underscores the challenges
confronted by Chinese semiconductor companies in preserving market share amid rapid
technological progress and global economic tensions. The market size of the back-end
semiconductor transport media industry in the PRC increased from US$77.2 million in 2019 to
US$85.9 million in 2022, representing a CAGR of 3.6%, but showed a decrease of 14.8% in
2023 to US$73.2 million. To address these challenges, China need to focus on bolstering
domestic innovation, diversifying supply chains, and strengthening international collaborations
to enhance its competitiveness and resilience in the semiconductor industry amidst evolving
geopolitical dynamics and technological landscapes. The market size of the back-end
semiconductor transport media industry in the PRC is expected to grow robustly at a CAGR of
9.7% from US$79.5 million in 2024 to US$115.3 million in 2028 with continued development in
emerging technologies in the domestic Chinese market.
0
20
40
60
80
100
120
2019
77.2
30.9
46.3
73.9
31.8
42.1
2020
79.4
37.3
42.1
2021
85.9
41.3
44.6
2022
73.2
34.9
38.3
2023
79.6
41.4
38.1
2024E
88.3
42.8
45.5
2025E
97.2
47.5
49.7
2028E2027E
115.3
57.2
58.1
2026E
106.2
52.2
54.0
2019–2022
10.2%
-1.2%
3.6%
2022–2023
-15.5%
-14.2%
-14.8%
2024E–2028E
8.8%
9.7%
10.7%Tray and tray related products
Tape and reel
Total
CAGR
Million US$
Tray and tray accessories
Tape and reel
PRC Market Size of Back-end Semiconductor
Transport Media Industry Breakdown by Major Type of Media, 2019–2028E
Source: Frost & Sullivan
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Market Size of Taiwan
Taiwan has been a semiconductor manufacturing hub due to its well-established supply
chain and strong capabilities in wafer manufacturing. The decline in global consumer electronics
demand has indeed resulted in reduced global semiconductor orders in 2023, significantly
impacting manufacturing output in Taiwan. Given the integral role of semiconductor
manufacturing in Taiwan’s economy, the downturn in global semiconductor orders directly
affects the country’s economic performance. As affected by slight stagnation in economy and
downstream demand, the market size of back-end semiconductor transport media industry in
Taiwan grew from US$144.5 million in 2019 to US$184.0 million in 2022, representing a CAGR
of 8.4%, but showed a decrease of 17.4% in 2023 to US$152.0 million. Going forward, in
anticipation of the continued development of semiconductor application, the back-end
semiconductor transport media industry in Taiwan is expected to grow from US$166.8 million in
2024 to US$235.0 million in 2028, with a CAGR of 8.9%.
Taiwan Market Size of Back-end Semiconductor
Transport Media Industry Breakdown by Major Type of Media, 2019–2028E
0
50
100
150
200
250
2019
144.5
49.6
94.9
154.8
52.6
102.2
2020
167.4
56.4
111.0
2021
184.0
63.1
120.9
2022
152.0
51.9
100.1
2023
166.8
109.6
57.2
2024E
183.6
63.4
120.2
2025E
201.6
70.2
131.4
2028E2027E
235.0
82.6
152.4
2026E
219.2
76.5
142.7
Million US$
Tray and tray accessories
Tape and reel
2019–2022
8.4%
8.4%
8.4%
2022–2023
-17.8%
-17.2%
-17.4%
2024E–2028E
8.6%
8.9%
9.6%Tray and tray related products
Tape and reel
Total
CAGR
Source: Frost & Sullivan
Market Size of Southeast Asia
Southeast Asia countries such as Philippines, Malaysia, and Thailand are popular sourcing
destination for semiconductor manufacturers and IC assembly and packaging test houses
manufacturers due to their competitive labor costs. The region had experienced a moderate
growth during 2019 to 2022, with a CAGR of 8.6%, but also showed a decrease of 16.3% in
2023 to US$296.4 million. Looking forward, in anticipation of shifting supply chains from
China to Southeast Asia due to political conflicts between China and western countries and
diversification of global supply chain, the market of back-end semiconductor transport media is
expected to reach US$442.9 million in 2028, from US$320.1 million in 2024 with a CAGR of
8.5%.
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Southeast Asia Market Size of Back-end Semiconductor
Transport Media Industry Breakdown by Major Type of Media, 2019–2028E
0
100
200
300
400
500
2019
275.9
94.6
181.3
296.4
100.8
195.6
2020
322.0
108.5
213.5
2021
353.9
119.3
234.6
2022
296.4
99.3
197.1
2023
320.1
211.3
108.8
2024E
351.5
121.2
230.3
2025E
382.6
133.9
248.7
2028E2027E
442.9
157.1
285.8
2026E
413.5
145.2
268.3
Million US$
Tray and tray accessories
Tape and reel
2019–2022
8.0%
9.0%
8.6%
2022–2023
-16.8%
-16.0%
-16.3%
2024E–2028E
7.8%
8.5%
9.6%Tray and tray related products
Tape and reel
Total
CAGR
Market Outlook in Selected Regions
Growth outlook of the back-end semiconductor transport media industry in the PRC –A s
a result of the continuing decoupling between the PRC and the western countries, there are an
increasing number of companies to shift their supply chain and manufacturing facilities away
from the PRC. It is expected that PRC-located companies will comparatively reduce their
manufacturing capacities and operations and face decrement in international purchase orders.
However, China is taking active measures to counter western countries repressive actions against
China in the filed of semiconductor. For instance, China is reported to raise more than RMB200
billion through the Integrated Circuit Industry Investment Fund (ICF) to accelerate the
development of cutting-edge technologies. In addition, due to the growing political emphasis on
the security of supply chain, the market demand for locally made products from PRC enterprises
is expected to increase rapidly. As such, the emergence of PRC brands of fabless and IC
assembly will create market opportunities for back-end semiconductor transport media industry.
Growth outlook of the back-end semiconductor transport media industry in Taiwan and
Southeast Asian countries – As more international companies swift their supply chain away and
reduce their reliance on the PRC market, Southeast Asian countries such as Malaysia and
Philippines become popular sourcing alternative due to their low labour and operating costs.
Such long-term diversification trend in the global supply chain will also sustain the market
demand in these regional countries. Major semiconductor manufacturers and IC assembly and
packaging test houses are expanding their manufacturing capacity in Southeast Asia, for
instances, Amkor Technology announced in late 2021 that it has plan to build a smart packaging
assembly factory in Vietnam. Further, Taiwan is anticipated for positive market outlook in the
back-end semiconductor transport media industry as it had well-established manufacturing
facilities and related technical know-how.
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Key Growth Drivers and Market Opportunities
Robust downstream demand for semiconductor product – The demand for back-end
semiconductor transport media is highly dependent on the downstream demand from brand
owners and end-customers for electronics products, which are embedded with integrated circuits.
Affected by fluctuations in downstream demand and macroeconomic uncertainty, the global
market size of semiconductor industry experienced a short-term downturn in 2023. Although the
semiconductor industry is known for its occasional short-term weakness, its long-term outlook
remains highly promising. Chips play a pivotal role in driving major emerging technologies like
AI, IoT, and 6G. Also, they are indispensable for advancements in medicine and the development
of innovative medical devices. Moreover, electric grid and climate solutions depend heavily on
these minuscule silicon components, underlining their critical importance in our lives. This
fundamental reality is unlikely to change in either the short or long term. Back-end
semiconductor transport media serve as an essential and complementary containment product for
semiconductor during transportation, especially when semiconductor end-products and
subassemblies are frequently transported regionally and globally along the supply chain given
the surging demand for quicker turnaround in recent years. In turn, back-end semiconductor
transport media shall be continuously driven by the robust growth of the semiconductor market.
Further, driven by the assimilation of technological innovation, especially during the outbreak of
the COVID-19, the demand for various electronic products such as mobile phones, notebooks,
telecommunication servers, automotive, smart home and smart wearables have been propelled.
The continuous increase in penetration of electronic devices and digitalisation in various
application circumstances, coupled with strong product replacement cycle in view of uprising
technologies such as 5G networking and Internet of Things, has spurred the demand for
semiconductor products and thereby the demand for back-end transport media as an
indispensable medium. With the development of the semiconductor industry, there is a trend
towards miniaturization in chips. Technological advancements, diversified applications and
increased sophistication in chip design continue to drive the growth of back-end semiconductor
transport media market despite the challenges posed by miniaturization of semiconductors. For
example, the trend towards smaller, more compact electronic control units (ECUs) in the
automotive industry is a significant result of miniaturization of chips, allowing for higher
integration levels on a single semiconductor. While this might imply a reduction in the demand
of back-end semiconductor transport media due to the smaller size of semiconductor, the
growing adoption of electronic systems in vehicles and the demand for advanced features
counteract this potential decline in sales volume of back-end semiconductor transport media.
In addition, the emerging applications of semiconductors are exemplified by their
integration into various sectors such as smart home devices, the automotive industry, and
healthcare devices. For instance, semiconductors are now fundamental components in smart
refrigerators for temperature control, display panels, and intelligent connectivity. In the
automotive sector, the increasing global sales of new energy vehicles drive demand for power
devices with semiconductors utilized in advanced driver-assistance systems (ADAS),
infotainment systems, etc. Additionally, healthcare devices, including medical imaging
equipment, patient monitoring devices, wearables, and diagnostic tools, are increasingly
incorporating semiconductor technology for enhanced functionality. It is also worth mentioning
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that not all semiconductors are suitable for miniaturization. In certain cases, larger and more
robust semiconductors are required to meet specific application requirements. For instance, in
power electronics, which involves the control and conversion of electrical power, miniaturization
may not be the primary consideration. Instead, semiconductors capable of handling high power
levels, high voltages, and high temperatures are of greater importance. Similarly, in the
automotive industry, where semiconductors are used for engine control, safety systems, and
other critical applications, robustness, reliability, and durability take precedence over
miniaturization. As a result, the demand for back-end semiconductor transport media is
increasing and remains stable.
Increasing production capacity of upstream manufacturer – The production scalability of
upstream semiconductor products serve as pivotal factor for the demand for back-end
semiconductor transport media industry. Since 2020, several dedicated foundries of
semiconductor has allocated extensive effort in ramping up production volume with capacity
utilisation reaching almost 100%. Further, companies such as UMC, TSMC and GlobalFoundries
have announced plans to devote considerable capital to boost its production capacity, while
Samsung is planning to construct a dedicated fab for manufacturing 5G networking and machine
learning integrated circuit. Apart from investing in physical factories and assets in raising
production volume, alternative and emerging technologies in semiconductor production such as
robotics, automated machineries and smart factories contribute to reducing lead time, shortening
production cycle and amplifying the production volume. Service providers in the back-end
semiconductor transport media industry would in turn be benefitted under the expanding
production volume in the upstream with growing turnover of transportation required.
Despite these positive developments, the upstream semiconductor industry has faced
challenges since 2022, marked by a downward cycle attributed to global economic conditions,
trade tensions, and geopolitical uncertainties. This unpredictability has led to a dampening of
investment and consumer spending in the semiconductor sector. However, the industry outlook
suggests a recovery in 2024. This anticipation is based on the expectation that macroeconomic
uncertainties will subside, leading to a resurgence in end-demand for semiconductor products.
The industry including major players, is positioning itself for this recovery through strategic
investments in production capacity and technology.
The impact of increased production volume in the upstream sector is expected to benefit
service providers in the back-end semiconductor transport media industry. As upstream
production expands, there is a corresponding increase in the transportation requirements for
semiconductor products. Overall, the industry is navigating challenges with a forward-looking
perspective, combining capacity expansion with technological innovation to address the evolving
demands of the market.
Advanced specification and value-added services provision – The technological innovation
such as upgrade of configuration and structure of integrated circuit and miniaturised
MEMS-embedded integrated circuit, has heightened the standards for back-end transport media.
The accelerated number of varieties of integrated circuits rolled out in the market has also
propelled the research and development in relation to developing compatible and up-to-standard
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back-end transport media. Semiconductor tray and tape and reel service providers not only
ensure fundamental properties including compatibility, electrostatic protection, mechanical
integrity, thermal stability to be well performed, to offer other additional scope of services has
also been increasingly important, such as (i) the ability to provide stackable trays with other
vendor’s tray in similar package matrix, in accordance with customer’s needs; (ii) handling of
the life cycle of used products including the collecting, sorting, cleaning, measuring, testing and
packing process to ensure the recycled tray products is functioning well during next usage; (iii)
provide sufficient amount of standardised tooling, as well as off-the-shelf mold designs to
accommodate to customised cases, and equipped with extensive design and tooling expertise to
quickly address custom requirements; and (iv) integrated services such as logistics handling and
arrangement and after-sales customer services. Service providers in the back-end semiconductor
transport media industry with core competence on technical know-how and expertise, shall
provide value-added and tailor-made service in response to the dynamic technological
requirement. Integrated service providers offering one-stop services shall benefit from the
growing opportunities on widening service scope and accommodate to more business prospect.
Surging demand for tape-and-reel – The packaging method of semiconductor devices has
been evolving into miniaturisation and greater end-product effectiveness. The latest packaging
method designs with protocol code namely QFN-style, DFN and WLCSP are fast growing
segment leveraging surface mount and wafer level technique which streamlines the
manufacturing process and are increasingly applied in different types of electronic products such
as electric vehicles, consumer electronics and medical devices. As the tape-and-reel
configuration is commonly used for feeding components to automatic-placement machines for
surface mounting on board assemblies, the continuous advancement in surface mount packaging
method shall propel the demand for tape-and-reel in the long run.
Market Development Trends
Uprising of Manufacturing Origin in the PRC and South East Asia – In past decades, the
production and supply chain of semiconductor has been concentrated in few predominant
production locations such as South Korea, Taiwan and the U.S. In recent years, in the PRC and
in South East Asia countries such as Malaysia and Philippines, there are a growing number of
companies undertaking the role of IC/wafer manufacturer i.e. front-end manufacturer and
foundries, as well as IC assembly, packaging testing i.e. back-end manufacturer. It is attributable
to the endeavours by the local government which collectively underpin the development of
semiconductor industry to avoid technological decoupling throughout the local supply chain. For
instance, the PRC Government promulgated policies in relation to semiconductor industry in
supporting upstream academia research and development, implementing tax relief policies,
enforcing law related to securing intellectual properties and accelerating further international
cooperation. Back-end semiconductor transport media service providers as one of the integral
stakeholders in the industry, have found increasing presence in this area to accommodate and
complement with the upstream manufacturers, where the opportunities for cooperation with
upstream manufacturers are continuously expanding.
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Integration of Automation and Technology in Tray and Tape and Reel Production – Tray
and tape and reel service providers are increasingly devoted to accelerate automation and
assimilate computer numerical controlled machineries into the production and inspection line. In
view of the outbreak of the COVID-19, leading players in the industry leverage incorporation of
such technology to implement automation to elevate overall production yield and efficiency
under the operational pressure of shortage of labour and growing labour cost. For instance,
visual inspection incorporating artificial intelligence technology is adopted which is assisting to
recognise defects under complex circumstances and monitor for production anomalies and be
able to eliminate faulty trays in real time.
Growing Adoption of Lean Management – Back-end semiconductor transport media
service providers in recent years adopted lean management directions. It involves the revamp of
operation plan to save cost of inefficiencies, reduce the inventory of material and tools and
minimise waste generation with conservation of valuable materials. The incorporation of
data-based resources management system has also been conducive in decision making,
identifying root causes and propelling continuous improvement in implementing lean
management.
Market Challenges and Constraints
Rising Cost of Operation – In the manufacturing industry in the PRC, the rising cost of
operation is expected to put additional cost pressure on semiconductor transport media
providers. The average monthly salary of production and equipment operator, professional
technician and managerial staff in manufacturing industry have increased at CAGR of 7.1%,
10.7% and 6.7% respectively from 2019 to 2023. Particular raw material such as Acrylonitrile
Butadiene Styrene (ABS) has also recorded a price rise at CAGR of 5.4% from 2019 to 2023.
Accordingly, market participants may need to consider investing considerably on automated
production machinery to minimise the impact of rising labour cost as well as transferring the
growth in cost of operation to customer to alleviate its impact on profitability.
Dependence on Economic Environment and External Uncertainties – The back-end
semiconductor transport media industry is subject to economic volatility and various political
events and global crisis. For instance, in recent years, during the outbreak of the COVID-19, the
implementation of lockdown policies has caused chip production facilities to shut down, leading
to the depletion of inventories. The U.S. China Trade War where the U.S. government imposes
hefty tariff to various products imported from China and vice versa, has significantly impacted
the output volume of semiconductor from the PRC. Severe weather in the U.S. and fires at
facilities in Japan has further delayed the production schedule of various semiconductor
products. The back-end semiconductor transport media as a direct complementary goods of
semiconductor, shall be directly impacted by with these adverse events.
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Shortage of Expertise and Talented Labor – A shortage of expertise and talented labor,
coupled with an absence of systematic cultivation and recruitment for human capital, may pose a
significant challenge for the development of the industry. According to the PRC Semiconductor
Industry Association, there is a workforce shortage of 400,000 labors in the PRC’s
semiconductor and related products industry under the premise of the production target in the
coming few years, which may possibly alter the development progress and production schedule
within the PRC.
Disruption in Supply Chain – Global event such as the COVID-19 outbreak since early
2020 and the US China Trade War has temporarily affected the supply of electronics due to the
disruption on material supply chain and availability of labour associated with the containment
measures undertaken around the globe. Constraints in material sourcing and price fluctuation in
raw material poses significant challenge to industry players.
Entry Barriers
1. Business relationship
The back-end transport media industry is characterised with a relatively concentrated
market landscape with less than 30 market players participating while top players account for a
high market share. Given the long-standing relationship of existing tray and tape and reel
manufacturers with various levels of stakeholders such as brand owners and traders, relationship
and networking within the industry act as an entry barrier due to the fact that the fabrication of
back-end semiconductor transport media require materials and equipment supply, as well as sales
network and reputation comprising traders and various downstream customers. Business
relationship also enable back-end semiconductor transport media manufacturers to expand their
product offerings and achieve provision of one-stop shop solution in order to stand out from
other competitors.
2. Capital investment
Manufacture of back-end semiconductor transport media is considered a capital-intensive
business with substantial initial investment in purchase of module and tooling, establishment of
production facilities with automated and precise production chain and automated inspection tool
as well as recruitment of technical staff. The initial set up cost together with the operational cost
will pose a barrier for new entrants without sufficient financial resources.
3. Stringent quality requirement
As semiconductor products are considered extremely sensitive devices, downstream clients
and brand owners of electronics are therefore generally maintaining stringent requirements
towards their contract manufacturers and demonstrate stickiness to qualified back-end transport
media service providers. Manufacturers shall continuously monitor the products are of high
quality and are highly consistent and stable. Back-end transport media that are able to undergo
stringent and comprehensive verification, validation, testing, site audit processes are highly
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preferred by customers. Further, steady flow of product is one of the key considerations when
downstream customers select a back-end semiconductor transport media provider, as a result,
suppliers who have their own production facilities can maintain competitive advantages within
the industry. Therefore, establishment and existing players excel their competitive advantages in
this area while it poses certain barrier to new entrant.
4. Industry know-how
Tray and tape and reel are fundamental components to a wide variety of transporting
integrated circuit products in different technical specifications. The evolving requirement of
these integrated circuit product such as size and ability to withstand pressure, heat and shock,
will further enhance the barrier to new entrants without technical know-how in respect of design,
manufacturing and packaging of power discrete semiconductor devices. Apart from the technical
know-how, sales channels and business network are considered pre-requisites for back-end
semiconductor transport media manufacturers in the market.
Cost Structure Analysis
From 2019 to 2023, the labour cost in the manufacturing industry in the PRC increased
steadily. In particular, the average monthly wage of professional technician has increased from
RMB8,424.6 to RMB12,663.3 during 2019 to 2023, representing a CAGR of approximately
10.7%. The increasing labour cost is attributable to increasing demand of skillful labour
equipped with skills such as knowledge on computerised management system, modelling
analytical skills and proficiency in foreign languages.
Going forward, the average monthly wage of employed persons in manufacturing industry,
including production and equipment operator, professional technician and managerial staff are
expected to grow at a slower trend at a CAGR of 6.4%, 6.7% and 7.0% respectively for 2024 to
2028, owing to the increasing amount of labour entrants, resulting in a stable growth of wage.
Average Monthly Salary of Employed Persons in Manufacturing Industry (the PRC),
2019–2028E
(Unit: RMB) 2019 2020 2021 2022 2023 2024E 2028E
CAGR
(2019–
2023)
CAGR
(2024E–
2028E)
Production and equipment operator 4,863.0 5,110.3 5,668.7 6,099.1 6,408.5 6,863.5 8,796.5 7.1% 6.4%
Professional technician 8,424.6 8,890.1 9,800.9 11,899.0 12,633.3 13,562.4 17,582.1 10.7% 6.7%
Managerial staff 12,118.1 12,749.7 13,924.8 14,621.0 15,692.8 16,806.9 22,040.4 6.7% 7.0%
Source: Frost & Sullivan
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Impact of Uncertainty in the Environment
Impact of COVID-19
The COVID-19 outbroke since early 2020 temporarily disrupted the supply of electronics
due to disruptions in the material supply chain and labor availability associated with
containment measures taken in different countries. However, COVID-19 also spurred a new way
of communication, known as remote working and learning. Stay-at-home orders and remote
communication led to a significant increase in the demand for computers, tablets, and consumer
electronics. Despite the pandemic, the demand for electronic products remained strong, driven
by the accelerated adoption of technologies such as cloud computing, edge computing, 5G,
industry 4.0, robotics, automation, mobility, augmented reality, virtual reality, and biometrics,
which reduced human contract and encouraged technology assimilation. Additionally, the retail
sales channels for electronic products shifted from offline to online platforms, as evidenced by
the surge in e-commerce platforms in recent years. The surge in demand for smart devices
resulted in a shortage of global chip supply for electronics, highlighting the continued strong
and sustained demand for electronics during the COVID-19 outbreak. These factors collectively
indicate that while the impact of COVID-19 was significant, the semiconductor industry is
well-positioned to rebound. Additionally, the back-end semiconductor transport media, as an
indispensable complementary product of semiconductors, will benefit from robust downstream
demand for semiconductor products and expanding production volumes of upstream
manufacturers.
Impact of the Trade Conflict
The trade conflict between the United States and the PRC has brought about certain
negative impact, given that (i) the imposition of tariffs by the U.S. to the PRC has reduced the
overall demand of semiconductor products in the PRC from influential brand owners in the US;
(ii) the US has invoked action against Chinese manufactured imports including many electronic
components to minimise the transfer of intellectual property and technology to the PRC,
resulting in a diminishing exchange of professional knowledge in the industry; and (iii) the shift
of electronics production from China to other Asian countries has been accelerated by the trade
dispute, multinational companies are moving production to these countries due to lower labour
costs, favourable trade conditions and openness to foreign investment; (iv) the commencement of
the U.S. to the PRC trade war has also led to constraints in material sourcing from suppliers and
increase of raw material costs.
In general, the impact of the political conflict between the PRC and the United States on
semiconductor industry is primarily short-term implications for the reasons including but not
limited to:
Rise of Chinese Brands
The trade conflict between the United States and the PRC has spurred a significant
transformation in the local supply chain within the PRC. Chinese enterprises that once
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heavily relied on foreign suppliers are swiftly diversifying by establishing their own brands
and products. This not only helps fill the supply gap resulting from decreased imports but
also fortifies their homegrown brand identity. Moreover, with a growing political emphasis
on supply chain security, the demand for Chinese-made products is set to surge.
Consequently, the emergence of Chinese fabless and IC assembly brands presents market
opportunities for the back-end semiconductor transport media industry.
Technological Advancements
Both the PRC and the United States have been making substantial investments in their
domestic semiconductor industries, particularly in research and development. Notably, these
efforts have led to advancements in manufacturing technology, design capabilities, and
research institutions. In the long run, these strides in semiconductor technology can
partially offset the impact of external tensions.
Complete Industry Chain Integration
The PRC’s market has proactively adjusted its supply chain management to counter
the adverse effects of the trade war. Driven by shifts in customer supply chains, global
back-end semiconductor transport media companies are increasingly relocating their
sourcing from the United States to the PRC. This trend further catalyzes the growth of the
domestic back-end semiconductor transport media industry, reducing reliance on external
sources for crucial components and providing a shield against supply chain disruptions.
Adaptability of Back-End Semiconductor Transport Media
The adaptability of back-end semiconductor transport media products is a key asset,
enabling quick adjustments to accommodate different semiconductor products. This
flexibility is pivotal in addressing short-term supply chain disruptions or adapting to
changes in product specifications. In the short term, this adaptability can help mitigate
immediate impacts of political conflicts on the semiconductor industry.
A Secure and Orderly Development Environment
The PRC-U.S. political conflict has sharpened the PRC’s focus on cybersecurity. This
heightened attention is likely to lead to increased regulatory oversight, mandating stricter
cybersecurity standards and compliance for semiconductor companies. In the short term,
this may necessitate operational adjustments and investments, potentially affecting costs.
However, in the long run, these efforts can yield substantial benefits, include a more secure
and structured development environment, improved competitiveness, and enhanced risk
management. This will be advantageous for the entire industry.
Since 2022, the frequent modification of “Export Administration Regulation” issued
by BIS (Bureau of Industry and Security) of the United States to the semiconductor
industry has brought notable impacts, extending controls to advanced computer integrated
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circuits and broadening the regulation scope of project transactions involving
supercomputers and semiconductor manufacturing. These regulations pose challenges such
as supply chain constraints, technological innovation hindrances, and a need to reassess
market strategies for semiconductor firms. Additionally, the impact may extend to the
back-end semiconductor transport media industry, as it relies on downstream demand for
semiconductor products and upstream manufacturing volume. Despite these challenges,
there remains optimism for the semiconductor industry. Companies are expected to adapt by
diversifying supply chains and innovating to maintain competitiveness. With continued
resilience, adaptability, and technological advancement, alongside expectations of
normalized demand and supportive government policies, the semiconductor industry is
poised for a promising future.
Impact of Unstable Downstream Customer Demand
If downstream customers of tray and tray related products manufacturers of back-end
semiconductor transport media industry are named by relevant authorities not to purchase their
chip products due to changes in local policies or political reasons, it would have a short-term
impact on the global back-end semiconductor transport media industry. However, when
downstream customers temporarily refrain from having sustainable demand for back-end
semiconductor transport media due to changes in local policies or political reasons,
semiconductor manufacturers typically would address these concerns swiftly. They usually
collaborate closely with relevant authorities to ensure product safety and compliance with
regulations. Additionally, the semiconductor industry benefits from a vast ecosystem of suppliers
and manufacturers, allowing it to adapt and find alternative solutions quickly. The industry’s
ability to innovate, diversify its product offerings, and respond to changing market dynamics
enables global back-end semiconductor transport media industry to rebound swiftly from any
short-term disruptions, ensuring that market demand remains robust in the long run.
COMPETITIVE LANDSCAPE OF GLOBAL BACK-END SEMICONDUCTOR
TRANSPORT MEDIA INDUSTRY
The global back-end semiconductor transport media industry is a concentrated market with
less than 30 players and the top players accounted for most market shares. The reason behind
such market structure was mainly due to the high cost of defects in transport media for printed
circuit board assembly house and so they tend to source from reputable market players and will
not compromise quality for more competitive pricing products. Top 5 players are headquartered
in Korea, Japan, Taiwan and the PRC. The market share of our Group in the global back-end
semiconductor transport media market industry was approximately 2.6% in 2023. For the tray
and tray related products manufacturers in global back-end semiconductor transport media
industry, the top two players have a combined market share of approximately 26–37% in 2023
whereas the market share of our Group was approximately 8.4% in 2023.
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Ranking of Tray and Tray Related Products Manufacturers
in Global Back-end Semiconductor Transport Media Industry, 2023
Rank Name of Company Market share Description
(%)
1 Company A 17–22 Company A is one of the first manufacturers specialises in plastic
injection moulding for semiconductor packages based in Korea.
Company A offers a broad portfolio of products, including trays,
wafer carrier products, carrier tape and reels, bare die tapes and
shipping tubes.
2 Company B 9–15 Company B is one of the top semiconductor packages manufacturers
based in Japan. Company B offers a comprehensive line of
semiconductor transport products including but not limited to JEDEC
IC matrix trays and moisture barrier bags.
3 The Group 8.4 –
4 Company C 7–8 Company C is one of the top semiconductor packages manufacturers
based in Korea. Company C offers a comprehensive line of
semiconductor transport products and static-control products.
5 Company D 6–7 Company D is one of the top manufacturers of semiconductor
packaging materials in Taiwan. Company D focuses on the design
and production of diverse consumer plastic injection moulding
products.
Note: The official revenue and market share data is unavailable since all of the above are private companies.
Frost & Sullivan derived market share estimates for pertinent players by analyzing publicly available
information.
Factors of competition for back-end semiconductor transport media industry lies in the
ability to establish long-standing relationship with renowned semiconductor manufacturers due
mainly to the provision of high-quality products and good reputation, as well as the ability to
address customers’ needs with speed.
GLOBAL MEMS AND SENSOR PACKAGING INDUSTRY
Introduction to MEMS and Sensor
Micro-Electro-Mechanical-System (“ MEMS”) is a miniaturized mechanical and
electro-mechanical element (i.e., devices and structures) that are made using the techniques of
microfabrication and photolithography process. MEMS is a manufacturing technology and a
paradigm for designing and creating complex mechanical devices and systems.
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Due to technology advancement, MEMS is able to leverage batch fabrication techniques for
scalability to attain a low per-device production cost. The physical dimension of a MEMS can
range from millimeters to micrometers. MEMS are usually integrated and packaged together on
the same substrate with other Integrated Circuits (“ IC”), while MEMS devices and systems have
the ability to sense, control and actuate on the micro scale, and generate effects on the macro
scale.
MEMS are assimilated into different applicable components, including radio-frequency
device, pressure sensor, microphone, accelerometer, gyroscope, inertial components, inkjet print
head, optical devices and other devices. MEMS can be found in systems ranging across
industries such as consumer electronics, automotive, healthcare, industrial and other uses. A
major application for MEMS is as sensors. Primary MEMS sensors are pressure sensors,
chemical sensors, and inertial sensors (accelerometers and gyroscopes), and infrared sensors for
temperature measurements.
Compared with Integrated Circuit (“ IC”), Micro-Electro-Mechanical-System (“ MEMS”)
embodies the following advantages (i) the reduced physical size, volume, weight, which
minimises the usage of energy and material which can help with the reduction of costs; (ii) core
competence of MEMS improves accuracy, reproducibility, reliability, and sensitivity (iii)
diversity and integration of applications on various field; and (iv) high level of customisation
during production and application.
Definition and Technical Requirements of MEMS and Sensor Packaging Industry
MEMS and sensor packaging serve as an integral operational procedure which principally
structure various electronic and mechanical components into a metal, plastic, or ceramic casing,
which provides a means for the whole manufactured package to connect to the external
environment.
A MEMS and sensor packaging provider offers services ranging from (i) package and
substrate design, development and prototyping; (ii) mechanical, thermal and electrical analysis;
(iii) handling of packaging materials, IC packaging & product transfers; (iv) air cavity and
injection molded packaging; and (v) package qualification and reliability testing. It is pivotal for
MEMS packaging services providers to provide packaged MEMS products that are able to
withstand harsh environments, intense shock and vibration, extreme temperatures and severe
humidity, while delivering high reliability and dimensional stability at significantly reduced
costs.
Market Size of MEMS and Sensor Packaging Industry
MEMS sensor integrated circuit are packaged in first-level packaging, which is also named
as back-end manufacturing, while second-level packaging adds further electronics, robust
housing and connectors to the MEMS sensor structure. Market size here denotes only first-level
packaging. The market size by revenue of MEMS and sensor packaging industry has increased
from US$4,361.2 million to US$6,409.8 million from 2019 to 2023, representing a CAGR of
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approximately 10.1%. The proliferation of MEMS designs into electronic products, coupled with
the high complexity and various technical challenges and requirements, has precipitated a
continuous demand for MEMS and sensor packaging provision. Going forward, the market size
by revenue of MEMS and sensor packaging is expected to grow at CAGR of approximately 5.2%
from 2024 to 2028.
2019 2020 2021 2022 2023 2024E 2025E 2028E2027E2026E
0
2,000
4,000
6,000
8,000
10,000
4,361.2 4,488.2 5,273.9 5,875.2 6,409.8 6,925.8 7,382.9 7,781.5
8,481.38,147.3
2019–2023 2024E–2028E
10.1% 5.2%CAGR
Million US$
Global Market Size by Revenue of MEMS and Sensor Packaging Industry, 2019–2028E
Source: Frost & Sullivan
COMPETITIVE LANDSCAPE OF GLOBAL MEMS AND SENSOR PACKAGING
INDUSTRY
MEMS and sensor packaging industry is considered highly specialized industry which
requires sophisticated and long product development cycle, extensive technical know-how and
considerable investment in corresponding machinery. The industry is multidisciplinary involving
the domains of electronics, machinery, materials, process manufacturing, physics, and others.
MEMS and sensor packaging plays a vital role in the protection of the wafer and chipset
structure from environmental factors along with providing other benefits such as conductivity,
connective communication, etc. The global MEMS and sensor packaging market is fragmented
and highly competitive. The packaging service for MEMS and sensor packaging market is
comprised of approximately 500 players globally and there are approximately 300 players in the
MEMS and sensor packaging market in the PRC.
COMPETITIVE STRENGTHS OF OUR GROUP
Please refer to the paragraph headed “Business – Competitive strengths” in this prospectus
for a detailed discussion of competitive strengths of our Group.
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This section sets out a summary of the laws and regulations in the PRC and HK, which are
relevant to our operation and business. Information contained in this section should not be
construed as a comprehensive summary of laws and regulations applicable to us.
PRC LA WS AND REGULATIONS
I. The PRC Laws and Regulations Relating to Foreign Investment
1. The Establishment, Operation and Management of Foreign-invested Enterprises
Pursuant to the Company Law of the PRC () (hereinafter
referred to as the PRC Company Law), which became effective on 1 July 1994 and was last
amended on 29 December 2023 and the latest amendments will become effective on 1 July
2024, the PRC Company Law stipulates provisions on the establishment, corporate structure
and management of companies, and shall apply to foreign-invested companies in the forms
of limited liability company and limited companies by shares.
Pursuant to the Foreign Investment Law of the PRC ( )
(hereinafter referred to as the Foreign Investment Law), which became effective from 1
January 2020, such law is applicable to foreign investment in the PRC. Foreign investment
activities are granted with the pre-establishment national treatment and shall follow the
negative list management system. Foreign investors shall follow the same principle as
domestic investors in order to invest in areas that are not on the Negative List. The
organization form and structure and operating rules of foreign-invested enterprises are
subject to the provisions of the PRC Company Law and other applicable laws. With the
implementation of the Foreign Investment Law, the Law of the PRC on Sino-Foreign
Equity Joint Ventures ( ), the Law of the PRC on
Wholly Foreign-owned Enterprises ( ), and the Law of the
PRC on Sino-Foreign Contractual Joint Ventures ( )
have been repealed simultaneously. Foreign-invested enterprises that have been established
before the implementation of the Foreign Investment Law in accordance with the Law of
the PRC on Sino-Foreign Equity Joint Ventures, the Law of the PRC on Wholly
Foreign-owned Enterprises, and the Law of the PRC on Sino-Foreign Contractual Joint
Ventures may continue retaining their original forms of business organizations within five
years after the implementation of the Foreign Investment Law.
Pursuant to the Implementation Regulations for the Foreign Investment Law of the
PRC (ૢԷ ), which became effective from 1 January
2020, foreign investment enterprises established in accordance with the Law of the PRC on
Sino-Foreign Equity Joint Ventures, the Law of the PRC on Wholly Foreign-owned
Enterprises, and the Law of the PRC on Sino-Foreign Contractual Joint Ventures prior to
implementation of the Foreign Investment Law may, within the five-year period following
the implementation of the Foreign Investment Law, adjust their organization form,
organization structure pursuant to the provisions of the PRC Company Law and related
laws, and complete change registration in accordance with the law, or may continue to
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retain their original enterprise organization form or organization structure. After an existing
foreign-invested enterprise’s adjustment of, among others, organizational form,
organizational structure pursuant to legal procedures, measures for shareholding or equity
transfer, earning distribution and residual property distribution, etc. as stipulated in the
relevant contract by the parties concerned to the original equity or cooperative joint venture
may continue to survive as stipulated. Foreign Investment Law and the provisions of such
regulations are applicable to the investment within the PRC by foreign investment
enterprises. Investment in the Mainland of China, including the Hong Kong Special
Administrative Region and the Special Administrative Region of Macao by investors shall
comply with the Foreign Investment Law and the provisions of such regulations.
Pursuant to the Measures on Reporting of Foreign Investment Information ( ̮ਠҳ༟
) (hereinafter referred to as the Measures on Reporting), which became
effective from 1 January 2020, where a foreign investor carries out investment activities in
the PRC directly or indirectly, the foreign investor or the foreign investment enterprise
shall submit the investment information to the competent commerce department. Foreign
investors or foreign-invested enterprises shall submit the investment information by
presenting the initial report, the change report, the cancellation report and the annual report
in accordance with the Measures on Reporting. Foreign-invested enterprises shall submit
their annual report through the National Enterprise Credit Information Publicity System
from 1 January to 30 June of each year.
2. The Direction of Foreign Investment
Pursuant to the Regulation on Guiding the direction of Foreign Investment (ኬ̮
), which became effective from 1 April 2002, foreign investment projects
are divided into four categories, namely encouraged, permitted, restricted and prohibited.
The Catalogue of Industries for the Guidance of Foreign Investment (ኬ
ͦ፽), which became effective from 28 June 1995 and revised from time to time and
partially abolished by the Special Administrative Measures (Negative List) for the Access
of Foreign Investment (2018) (݄( ૶ఊ) (2018و) and
the Catalog of Industries for Encouraged Foreign Investment (2019) ( ོᎸ̮ਠҳ༟ପุͦ
፽(2019و)), covers the encouraged catalogue, the restricted catalogue and the
prohibited catalogue, and it does not cover the permitted category. The provision is
applicable to the investment and establishment of Chinese-foreign equity joint ventures,
Chinese-foreign cooperative joint ventures and wholly foreign-owned enterprises in the
PRC and other forms of foreign investment projects. Investment projects carried out by
investors from the Hong Kong Special Administrative Region are also subject to this
provision.
Pursuant to the Special Administrative Measures (Negative List) for the Access
of Foreign Investment (2021) (݄( ૶ఊ) (2021و))
(hereinafter referred to as the Negative List for the Access of Foreign Investment), which
became effective from 1 January 2022, the documents uniformly set forth the ownership
requirements, requirements for senior executives, and other special administrative measures
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for the access of foreign investment. Fields not listed on the Negative List for the Access
of Foreign Investment shall be administered under the principle of equal treatment to both
domestic and foreign investment. Fields related to culture and finance, as well as relevant
measures on administrative approvals, qualifications and national security not being on the
Negative List for the Access of Foreign Investment shall be implemented in accordance
with existing requirements.
Pursuant to the Interim Provisions on Investment in the PRC by Foreign Investment
Enterprises ( ), which became effective on 1
September 2000 and was amended on 28 October 2015, the Regulation on Guiding the
direction of Foreign Investment () and the Catalogue of
Industries for the Guidance of Foreign Investment (ኬͦ፽) shall apply,
in reference, to investment in the PRC by foreign investment enterprises. Foreign
investment enterprises must not invest in fields in which foreign investment is prohibited.
3. Merger and Acquisition of Domestic Enterprise by Foreign Investors and Overseas
Listing
Pursuant to the requirements of the Provisions Relating to Merger and Acquisition of
Domestic Enterprise by Foreign Investors ( ), which
became effective from 8 September 2006 and was last amended on 22 June 2009, where a
domestic company, enterprise or natural person mergers with the related domestic company
in the name of an offshore company which it or he/she lawfully (1) established; (2)
controls; (3) a foreign investor mergers with; or (4) acquires a domestic company by way
of shareholdings, the merger and acquisition shall be subject to the examination and
approval by the Ministry of Commerce of the PRC. Overseas listing and trading of special
purpose vehicle shall be subject to the approval by the securities regulatory and
management authority of the State Council. In particular, the merger and acquisition of
domestic enterprises by foreign investors means that (1) the foreign investor purchases the
equity of the shareholders of a domestic company or subscribes to the increased capital of a
domestic company, and thus changes the domestic company into a foreign-invested
enterprise; and (2) a foreign investor establishes a foreign-invested enterprise, and
purchases the assets of a domestic company through agreement and operates its assets, or a
foreign investor purchases the assets of a domestic company through agreement, and then
invests such assets to establish a foreign-invested enterprise and operates the assets.
II. The PRC Laws and Regulations Relating to Taxation of an Enterprise
1. V alue-added Tax
Pursuant to the Provisional Regulations on Value-added Tax of the PRC ( ʕശɛ͏΍
೼ᅲБૢԷ), which became effective from 1 January 1994 and was last amended
on 19 November 2017, and the By-law on the Implementation of the Provisional
Regulations on Value-added Tax of the PRC ( ),
which became effective from 25 December 1993 and was last amended on 28 October 2011,
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the enterprises or individuals engaging in the sale of goods or provision of processing,
repairs and replacement services, sale of services, intangible assets, real estates and
importation of goods in the PRC are required to pay the value-added tax for the goods sold
and services offered at the rate of 0%, 6%, 11% and 17%, unless otherwise prescribed.
Pursuant to the Circular of the Ministry of Finance and the State Administration of
Taxation regarding the Pilot Program on Comprehensive Implementation of the Reform
from Business Tax to Value Added Tax (પකᐄุ೼ҷᅄ
), which became effective from 14 May 2016 and certain terms of
which were abolished since 1 July 2017, 1 January 2018 and 1 April 2019, the enterprises
or individuals engaging in the sale of services, intangible assets or real estates in the PRC
are the taxpayers of the value-added tax and thus shall pay the value-added tax, instead of
the business tax as required by the circular. According to the Administrative Measures of
Tax Refund (Exemption) of Exported Goods (Trial) (ৗ( е)ج(༊Б) ),
which became effective from 1 May 2005 and was last amended on 15 June 2018, unless
otherwise prescribed, upon declaration of export and financial accounting for sale, the
value-added tax in relation to the goods exported by export agents can be refunded or
exempted upon approval by the competent tax authority.
Pursuant to the Notice of the Ministry of Finance and the State Administration of
Taxation on Adjusting Value-added Tax Rates (ٙ
), which became effective from 1 May 2018, the tax rates of 17% and 11% applicable
to any taxpayer’s V AT taxable sale or import of goods shall be adjusted to 16% and 10%,
respectively.
Pursuant to the Announcement of the Ministry of Finance, the State Administration of
Taxation and the General Administration of Customs on Relevant Policies for Deepening
the Value-Added Tax Reform (݁
ʮѓ), which became effective from 1 April 2019, the tax rate of 16% applicable to
the V AT taxable sale or import of goods by a general V AT taxpayer shall be adjusted to
13% and the tax rate of 10% applicable thereto shall be adjusted to 9%.
2. Enterprise Income Tax
According to the Enterprise Income Tax Law of the PRC (੻
), which became effective from 1 January 2008 and was last amended on 29
December 2018, and the Regulation on the Implementation of the Enterprise Income Tax
Law of the PRC (ૢԷ ), which became effective from
1 January 2008 and was last amended on 23 April 2019, enterprises and other organizations
that derive incomes in the PRC are the taxpayers of the enterprise income tax and are
required to pay the enterprise income tax according to such laws and regulations. An
enterprise that is established in the PRC under the PRC law, or which is established under
the law of a foreign country (region) but whose actual management entity is in the PRC is
a resident enterprise; an enterprise established under the law of a foreign country (region)
and the actual management entity of which is not in the PRC but has institutions or
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establishments in the PRC or which does not have any institutions or establishments in the
PRC but has income sources from the PRC is a non-resident enterprise. A resident
enterprise shall pay the enterprise income tax at the rate of 25%. A non-resident enterprise
having institutions or establishments in the PRC shall pay enterprise income tax at the rate
of 25% on its incomes sourced from the PRC derived from the said institutions or
establishments as well as on incomes derived from the outside of the PRC but which has
real connection with the said institutions, establishments. A non-resident enterprise having
no institution or establishment in the PRC, or having institutions or establishments but the
incomes of which have no actual connection to its institutions or establishments shall pay
enterprise income tax on the incomes derived from the PRC at the reduced rate of 10%.
Those high-tech enterprises which are necessary to be supported by the state are entitled to
a reduced tax rate of 15% for enterprise income tax. For R&D expenditures incurred by
enterprises in the development of new technology, new products and new skills, if these
expenditures have not reflected in the comprehensive income statement as intangible assets,
they are allowed to make a super-deduction of 50% of the R&D expense on an actual
deduction basis; if these expenditures have been reflected as intangible assets, they are
allowed to make amortization of 150% of the cost of intangible assets.
3. Withholding Tax on Dividend Distributions
According to the Enterprise Income Tax Law of the PRC and the Regulation on the
Implementation of the Enterprise Income Tax Law of the PRC, a withholding tax rate of
10% will generally be imposed on dividends paid to non-PRC resident investors. The
enterprise income tax rate on the dividends may be reduced pursuant to a treaty between
the Mainland of China and the tax jurisdictions in which non-PRC investors reside.
According to the Arrangement between the Mainland of China and the Hong Kong Special
Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal
Evasion with respect to Taxes on Income (ᅄ
τર), which came into effect from 1 January 2007 in the Mainland of
China and was last amended by the Fifth Protocol to the Arrangement between the
Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of
Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income
( ),
which became effective from 6 December 2019, the withholding tax rate for dividends paid
by a PRC resident enterprise to a Hong Kong resident enterprise is 5% in case the Hong
Kong enterprise is the beneficial owner and holds at least 25% of equity interests of the
PRC enterprise directly. According to the Notice of the State Administration of Taxation on
Issues Concerning the Implementation of the Dividend Clauses of Tax Agreement (೼
 ), which became effective from 20
February 2009, the proportion of capital of the PRC resident enterprise owned by the tax
resident of the other side shall, at any time within the successive 12 months before
obtaining dividends, comply with the specific proportion required by the tax agreement.
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4. Urban Maintenance and Construction Tax
Pursuant to the Law of the PRC on Urban Maintenance and Construction Tax ( ʕശ
 ), which became effective on 1 September 2021, all entities
and individuals paying value-added tax or consumption tax within the territory of the PRC
are taxpayers of urban maintenance and construction tax, and shall pay urban maintenance
and construction tax. Urban maintenance and construction tax shall be calculated based on
the amount of value-added tax or consumption tax actually paid by taxpayers. The
obligation to pay urban maintenance and construction tax occurs at the same time as the
obligation to pay value-added tax or consumption tax occurs, and urban maintenance and
construction tax shall be paid at the time when value-added tax or consumption tax is paid.
5. Educational Surcharges
Pursuant to Interim Provisions on the Collection of Educational Surcharges ( ᅄϗ઺
), which became effective on 1 July 1986 and was last amended on 8
January 2011, entities and individuals obliged to pay consumption tax and value-added tax
shall pay educational surcharges. Educational surcharges shall be collected on the basis of
the amount of value-added tax or consumption tax actually paid by entities and individuals,
collected at the rate of 3%, and paid simultaneously with value-added tax or consumption
tax.
6. Transfer Pricing
According to the Enterprise Income Tax Law of the PRC (੻
), the Regulation on the Implementation of the Enterprise Income Tax Law of the
PRC (ૢԷ ), Tax Collection Administration Law of
the PRC ( ) and Rules for the Implementation of Tax
Collection Administration Law of the PRC ( ),
the receipt or payment of charges or fees in business transactions between an enterprise (or
institution or site engaged in production or business operations) established in the PRC by
a foreign enterprise and its associated enterprises, shall be made at arm’s length prices.
Where the receipt or payment of charges or fees is not made at arm’s length prices and
results in a reduction of the taxable income, the tax authorities shall have the right to make
reasonable adjustments.
Pursuant to Announcement on Issuing the Measures for the Administration of
Adjustments under Special Tax Investigation and Mutual Consultation Procedures (೯
ʮѓ ), which was issued by the State
Taxation Administration on 17 March 2017 and became effective on 1 May 2017, where a
tax authority finds, when conducting special tax adjustment monitoring and administration
by affiliated tax declaration examination, contemporaneous documentation administration,
profit level monitoring or other means, that any enterprise has a risk of special tax
adjustments, it may serve a Notice on Tax-related Matters upon the enterprise, and remind
the enterprise of the tax risk it faces. If an enterprise receives a risk alert for special tax
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adjustments or finds that it faces the risk of special tax adjustments, it may make
adjustments and make up the taxes due by itself. In the event that the tax authority
determines to implement the special tax adjustment after investigations, the relevant
enterprise may be required to pay up the relevant tax.
III. The PRC Laws and Regulations Relating to Labor Protection and Social Insurance
and Housing Provident Funds
1. Labor Protection
Pursuant to the Labor Law of the PRC (), which became
effective from 1 January 1995 and was last amended on 29 December 2018, the Labor
Contract Law of the PRC ( ), which became effective from 1
January 2008 and was last amended on 28 December 2012, and the Regulation on the
Implementation of the Labor Contract Law of the PRC (݄
ૢԷ), which became effective from 18 September 2008, employers shall establish and
perfect regulations and systems in accordance with laws and ensure that the employees
shall have the labor rights and perform their labor obligations. An employment relationship
is established between an employer and employees when the employee starts to work for
the employer and a written labor contract shall be entered into within one month from the
date when the employee commences work if an employment relationship has been
established. A labor contract shall include essential terms, such as the duration of the labor
contract, work content and workplace, working hours and holiday, work remuneration,
social insurance, labor protection and labor terms as well as prevention of occupational
hazards. Employers and the employees shall follow the agreement of the labor contract and
fulfill their respective obligations comprehensively.
2. Social Insurance
Pursuant to the Social Security Law of the PRC ( ),
which became effective from 1 July 2011 and was last amended on 29 December 2018, the
Interim Regulations on the Collection and Payment of Social Insurance Fees (ᎈ൬
ᅄᖮᅲБૢԷ), which became effective from 22 January 1999 and was last amended on
24 March 2019, the Trial Measures concerning the Maternity Insurance for Enterprise
Employees ( ), which became effective from 1 January 1995,
the Regulations on Unemployment Insurance (ᎈૢԷ), which became effective
from 22 January 1999, and Regulations on the Work-related Injury Insurance (ᎈૢ
Է), which became effective from 1 January 2004 and was last amended on 20 December
2010, the state established social insurance systems, such as the basic endowment
insurance, basic medical insurance, work-related injury insurance, unemployment insurance,
maternity insurance, to guarantee the rights of citizens to legally obtain material assistance
from the state and society when they become old, ill, suffer from work-related injuries,
become unemployed and give birth to a child. Employers shall pay various types of social
insurance fund for its employees, including basic endowment insurance, basic medical
insurance, maternity insurance, unemployment insurance and work-related injury insurance.
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For employers failing to conduct social insurance registration, the administrative
department of social insurance shall order them to make corrections within a prescribed
time limit; if they fail to do so within the time limit, employers shall have to pay a penalty
more than one time but less than three times of the amount of the social insurance premium
payable by them. Where the employer fails to pay social insurance premiums on time or in
full, it shall be ordered by the social insurance premium collection agencies to pay or make
up the premiums within the specified time limit, and shall be subject to a late payment fee
of 0.05% of the outstanding amount from the maturity date calculated on a daily basis.
Where the employer still fails to do so, relevant administrative department may impose a
fine of more than one time but less than three times of the outstanding amount.
3. Housing Provident Fund
According to the Regulations on Management of Housing Provident Fund (ʮጐ
၍ଣૢԷ), which became effective from 3 April 1999 and was last amended on 24
March 2019, employers shall proceed with the registration of housing provident fund
contribution with the administrative department of the housing provident fund. Upon review
by the housing provident fund administrative center, employers shall proceed with the
procedures of creating or transferring the housing provident fund accounts for its
employees with the entrusted banks and deposit the housing provident fund for its
employees. With respect to the failure of proceeding with housing provident fund
contribution registration as required or opening housing provident fund accounts for their
employees, such employers shall be ordered by the housing provident fund administrative
center to proceed with such procedures within prescribed period; those who fail to proceed
with their registrations within the prescribed period shall be subject to a fine from
RMB10,000 to RMB50,000. Employers shall deposit the housing provident fund on time
and in full without any overdue in the payment or underpays. If the employer is overdue in
the payment or underpays, the housing provident fund administration center shall order the
employer to pay up within the prescribed time limit; if the employer still fails to pay up as
scheduled, the fund administration center may apply to the court for enforcement of the
unpaid amount.
4. Labor Dispatch
Pursuant to the Labor Contract Law and the Interim Provisions on Labor Dispatch
(), which became effective on 1 March 2014 and the Measures for the
Implementation of Administrative License for Labor Dispatch, which became effective on 1
July 2013 ( ), labor dispatch employment is a supplemental
form which can only be adopted for temporary, auxiliary or alternative job positions of
non-major business that serve positions of major businesses, and alternative positions are
positions that can be held by substitute laborers for a certain period of time during which
the laborers of the employers who originally hold such positions are unable to work as a
result of full-time study, being on leave or other reasons. An employer is required to
strictly control the number of dispatched labors which may not exceed 10% of the total
number of its workers.
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IV . The PRC Laws and Regulations Relating to Production Safety and Product Quality
1. Production Safety
Pursuant to the Production Safety Law of the PRC ( ),
which became effective from 1 November 2002 and was last amended on 10 June 2021, a
production and operation enterprise must comply with the relevant laws and regulations on
production safety, strengthen the management of production safety, establish and improve
the responsibility system of production safety and production safety rules, regulations and
systems, improve the condition of production safety, promote the standardization of
production safety and enhance the level of and ensure production safety. Production and
operation enterprises failing to meet the condition of production safety required by the
Production Safety Law of the PRC and the relevant laws, administrative regulations and
national standard or industry standard are not allowed to carry out production and operation
activities. Besides, an enterprise is responsible for teaching its staff about issues relating to
production safety. A production and operation enterprise shall provide their employees with
education and training on production safety. A production and operation enterprise that has
more than 100 employees shall establish production safety management institution to
enhance the safety of production facilities or appoint specific personnel responsible for
production safety management. Enterprises failing to comply with the relevant work safety
requirements may be subject to fines and be ordered to discontinue production (as the case
may be). Where a criminal offense is committed, the enterprise shall bear the criminal
responsibility.
2. Special Equipment
Pursuant to the Special Equipment Safety Law of the PRC ( ʕശɛ͏΍ձ਷त၇ண
), which became effective from 1 January 2014, the state conducts categorized
and full-course safety supervision and administration of the production, trading, and use of
special equipment. Special equipment producers, traders or users, as well as the primary
persons in charge thereof, shall be responsible for the safety of special equipment
produced, marketed or used by them. Special equipment producers, traders and users shall
have special equipment safety management personnel, testing personnel and operating
personnel according to the relevant state provisions, and provide necessary safety education
and skill training for them.
3. Product Quality
Pursuant to the Product Quality Law of the PRC ( ),
which became effective from 1 September 1993 and was last amended on 29 December
2018, manufacturers and sellers shall establish internal product quality management system
and strictly implement post quality specification, quality responsibility and corresponding
assessment measures. The products shall pass the quality inspection and the substandard
products shall not be passed off as qualified products. Manufacturer shall be liable for the
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quality of its products and shall bear the responsibility of the product quality according to
the requirements of such regulation.
4. Fire Protection
Pursuant to the Fire Protection Law of the PRC (), which
became effective from 1 September 1998 and was last amended on 29 April 2021, the
above laws and regulations are applicable to the supervision and administration of fire
protection for construction works to be constructed, expanded and reconstructed. The
competent housing and urban-rural development authority shall carry out examination and
verification on fire protection design for construction works, as well as fire protection
acceptance inspection and record-filing, random checking and fire protection supervision
over the construction works in accordance with the laws.
V . The PRC Laws and Regulations Relating to Environmental Protection
Pursuant to the Environmental Protection Law of the PRC ( ),
which became effective from 26 December 1989 and was last amended on 24 April 2014, all
enterprises and individuals have the obligation to protect the environment. Enterprises and other
production operators shall prevent and reduce environmental pollution and ecological damage
and assume the liabilities for the damages caused in accordance with the laws. The competent
department for environmental protection of the State Council formulates the national
environmental quality standard and national pollutant emission standard and specifications for
inspection. The Provincial People’s Governments may formulate local environmental quality
standard and local pollutant emission standard for items not specified in the national
environmental quality standard and national pollutant emission standard. The Provincial People’s
Governments may formulate local environmental quality standard and local pollutant emission
standard which are more stringent than the national ones for items already specified in the
national environmental quality standard and national pollutant emission standard. Local
environmental quality standard and local pollutant emission standard shall be reported to the
competent department for environmental protection of the State Council for record keeping.
Pursuant to the Law of the PRC on Environment Impact Assessment ( ʕശɛ͏΍ձ਷ᐑ
), which became effective from 1 September 2003 and was last amended on 29
December 2018, Administrative Regulations on Environmental Protection of Construction
Projects (ᚐ၍ଣૢԷ ), which became effective from 29 November 1998 and
was last amended on 16 July 2017, the Catalogue of the Classification Administration of
Environmental Impact Assessment of Construction Projects (2021) (ணධͦᐑྤᅂᚤ൙ᄆʱ
ᗳ၍ଣΤ፽(2021و)), which became effective from 1 January 2021 and the Administrative
Measures on the Filing of Environmental Impact Registration Forms of Construction Projects
( ), which became effective from 1 January 2017,
environment impact assessments shall be carried out in accordance with laws for projects which
are constructed within Chinese territory and in other marine areas under the governance of the
PRC and have environmental impact. The state classifies and manages the environmental impact
assessments of construction projects based on the level of environmental impact of the
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construction projects. The construction enterprises shall organize and prepare the environmental
impact report, environmental impact statement and filling in the environmental impact
registration forms respectively in accordance with the Catalogue of the Classification
Administration of Environmental Impact Assessment of Construction Projects (ணධͦᐑྤᅂ
ᚤ൙ᄆʱᗳ၍ଣΤ፽). The environmental impact reports and environmental impact statements
of construction projects shall be submitted by the construction enterprises to the competent
ecological environment authorities for review and approval. The construction enterprises shall
proceed with the filing procedures of the environmental impact registration forms in accordance
with laws. Construction enterprises are prohibited to commence construction in case the
environmental impact reports and environmental impact statements are not approved by the
relevant authorities in charge of review and approval. Where ancillary environmental protection
facilities are required for a construction project, the same shall be designed, constructed and
came on stream at the same time with the main construction enterprises. When the underlying
construction projects of environmental impact reports and environmental impact statements
completed, the construction enterprises shall carry out acceptance inspection on the ancillary
environmental protection facilities as well as preparing the inspection and acceptance report in
accordance with the required standards and procedures of the competent environmental
protection administrative authorities of the State Council. With respect to construction projects
which are constructed, came into operation or used in stages, the related environmental
protection facilities shall also be inspected and accepted in stages.
Pursuant to the Environmental Protection Law of the PRC ( ),
Water Pollution Prevention and Control Law of the PRC ( ),
which became effective from 1 November 1984 and was last amended on 27 June 2017, Law of
the PRC on the Prevention and Control of Environmental Pollution by Solid Waste ( ʕശɛ͏
 ), which became effective from 1 April 1996 and was last
amended on 29 April 2020, Atmospheric Pollution Prevention and Control Law of the PRC ( ʕ
 ), which became effective from 1 June 1988 and was last
amended on 26 October 2018, Law of the PRC on the Prevention and Control of Pollution by
Noise ( ), which became effective on 5 June 2022, China
exercises the emission license administration system. Enterprises, public institutions and other
manufacturers and business operators which implement the pollutant emission license
administration system shall discharge pollutants according to the requirements set out in their
pollutant emission license and shall not discharge pollutants without obtaining the pollutant
emission license. Pursuant to the Measures for Pollutant Discharge Permitting Administration
(Trial) (ج(༊Б) ), which became effective from 10 January 2018 and was last
amended on 22 August 2019, the Ministry of Environmental Protection shall develop and issue a
classification administration list of pollutant discharge permitting for fixed pollution sources
according to laws. The enterprises, public institutions and other manufacturers and business
operators on the list shall apply for and obtain a pollutant discharge permit according to the
prescribed application time limit.
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VI. The PRC Laws and Regulations Relating to the Import and Export of Goods
Pursuant to the Customs Law of the PRC (), which became
effective from 1 July 1987 and was last amended on 29 April 2021, Administrative Regulations
on the Filing of Customs Declaration Entities of the PRC (ࣩ
), which became effective from 1 January 2022, customs declaration entities refer to
consignors, consignees and customs declaration enterprises of imported or exported goods
registered with the customs in accordance with the Regulations. Consignors, consignees and
customs declaration enterprises of imported or exported goods that apply for filing shall obtain
the qualifications of the market. In addition, consignors and consignees of imported or exported
goods shall obtain record-filing of foreign trade operators. If consignees, consignors and the
customs declaration enterprises of import and export goods have already proceeded with the
filing registration of the customs declaration entity, their branches that meet the preceding
conditions may also apply for the filing of the customs declaration entity. If the filing materials
are completed and meet the filing requirements of the customs declaration entity after reviewing,
the customs shall complete the filing within 3 working days. The filing information shall be
published through the Credit Publicity Platform of Import and Export Business of Customs of
the PRC (ʮ̨̻ͪ ). The filing of the customs declaration
enterprise is valid for long term. Temporary filing is valid for one year, and filing can be
re-applied after expiration.
VII. The PRC Laws and Regulations Relating to Foreign Exchange Management
The lawful currency of the PRC is the Renminbi, which is subject to foreign exchange
controls and is not freely convertible into foreign exchange at present. The State Administration
of Foreign Exchange is empowered with the functions of administering all matters relating to
foreign exchange, including the enforcement of foreign exchange control regulations.
Pursuant to the Regulations for Administration of the Settlement, Sale and Payment of
Foreign Exchange ( ), which became effective from 1 July 1996,
upon approval, foreign investment enterprises can open foreign exchange settlement accounts for
their foreign exchange income for current account with a selected bank engaging in foreign
exchange business in its place of incorporation.
Pursuant to the Regulation on Foreign Exchange Administration of the PRC ( ʕശɛ͏΍
ձ਷̮ි၍ଣૢԷ), which became effective from 1 April 1996 and was last amended on 5
August 2008, foreign exchange income for current account may, in accordance with the relevant
requirements of the state, be retained or sold to any financial institution engaging in foreign
exchange settlement and sale business, and where any foreign exchange income for capital
account is to be retained or sold to a financial institution engaging in foreign exchange
settlement and sales business, an approval shall be obtained from the relevant foreign exchange
administrative authority, other than where no approval is required under the requirements of the
state.
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The Notice of the State Administration of Foreign Exchange on Further Improving and
Adjusting Foreign Exchange Administration Policies for Direct Investment (̮ි၍ଣ҅ᗫ
 ), which became effective from 17
December 2012 and was last amended on 30 December 2019, largely simplifies the previous
foreign exchange review and approval procedures and cancels the approval for the opening of
and capital transfer into foreign exchange account under direct investment. Instead, banks shall
handle the procedures for the account opening entity in accordance with the registration
information of the relevant operation system of the foreign exchange office.
Pursuant to the Circular of the State Administration of Foreign Exchange on Issues
concerning Foreign Exchange Administration over the Overseas Investment and Financing and
Round-trip Investment by Domestic Residents via Special Purpose Vehicles (̮ි၍ଣ҅ᗫ
 ), which became
effective from 4 July 2014, a domestic resident shall, before contributing the domestic and
overseas lawful assets or interests to a special purpose vehicle, apply to the foreign exchange
office for going through the procedures for foreign exchange registration of overseas
investments. A domestic resident contributing domestic lawful assets or interests shall apply to
the foreign exchange office of the place of incorporation, or the foreign exchange office situated
at the place where the domestic enterprise’s assets or interests are located for going through the
procedures for registration; a domestic resident contributing overseas lawful assets or interests
shall apply to the foreign exchange office of the place of incorporation, or the foreign exchange
office of the location of household registration for going through the registration procedures.
The Notice of the State Administration of Foreign Exchange on Further Simplifying and
Improving Foreign Exchange Control Policies on Direct Investment (ආɓ
 ), which became effective on 1 June 2015 and was
last amended on 30 December 2019, cancels the administrative approval requirements on foreign
exchange registration under overseas direct investment and foreign exchange registration under
overseas direct investment shall instead be approved and handled directly by banks. The SAFE
and its branches indirectly supervise the foreign exchange registration under direct investment
through banks. In case such domestic resident makes overseas investment with his or her
onshore assets or interests, he or she shall proceed with the foreign exchange registration of
special purpose vehicles by PRC resident individuals with the banks situated at the place where
the onshore corporate assets or interests are located.
According to the Notice of the State Administration of Foreign Exchange on Reforming the
Management Mode of Foreign Exchange Capital Settlement of Foreign-invested Enterprises ( ਷
 ), which became effective
on 1 June 2015, and partially abolished on 30 December 2019, foreign-invested enterprises could
settle their foreign exchange capital on a discretionary basis according to the actual needs of
their business operations. Whilst, foreign-invested enterprises are prohibited to use the foreign
exchange capital settled in RMB (1) for any expenditures beyond the business scope of the
foreign invested enterprises or forbidden by laws and regulations; (2) for direct or indirect
securities investment (except as otherwise provided by laws); (3) to provide entrusted loans
(unless permitted in the business scope), repay loans between enterprises (including advances by
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third parties) or repay RMB bank loans that lent to a third party; and (4) to purchase real estates
not for self-use purposes (save for real estate enterprises).
According to the Notice of the State Administration of Foreign Exchange on Reforming and
Standardizing the Foreign Exchange Settlement Management Policy of Capital Account (࢕
 ), which became effective on 9 June
2016 and was amended on 4 December 2023, discretionary foreign exchange settlement applies
to foreign exchange capital, foreign debt offering proceeds and remitted foreign listing proceeds,
and the corresponding RMB capital converted from foreign exchange may be used to extend
loans to related parties or repay inter-company loans (including advances by third parties).
VIII. The PRC Laws and Regulations Relating to Intellectual Property Rights
1. Patent
Pursuant to the Patent Law of the PRC (), which became
effective from 1 April 1985 and was last amended on 17 October 2020, and the Rules for
the Implementation of the Patent Law of the People’s Republic of China ( ʕശɛ͏΍ձ਷
), which became effective from 1 July 2001 and was last amended on 11
December 2023, three types of inventions and creations could apply for patents, which are
invention, utility model and design. Invention patents are valid for 20 years, while utility
model patents are valid for 10 years and design patents are valid for 15 years (according to
the Interim Measures on Disposition of Examination-Related Activities Post Patent Law
Implementation ( ), 10 years’
protection term for a design patent filed on or before 31 May 2021, commencing from its
application date), in each case commencing from their respective application dates. The
administrative department of patent under the State Council is responsible for patent
application by making the decision of granting patent right, issuing patent certificate as
well as making registration and announcement. The parent right became effective since the
date of the announcement. The patentee shall pay annual fees commencing from the year
when the parent right is granted. Upon the granting of an invention and a utility model
patent, unless otherwise specified by the Patent Law of the PRC, no organization or
individual may engage in activities protected by the patent without obtaining a license from
the patentee, i.e. it may not, for the purposes of production and business operation,
produce, use, offer to sell, sell, import the patented products, nor use the patented method
and use, offer to sell, sell, import products that are acquired directly through the patented
method. Otherwise, it shall be held liable to the patentee for compensation or may be
subject to the administrative penalty imposed by the relevant administrative authority and
even be prosecuted for criminal liability (as the case may be).
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2. Trademark
Pursuant to the Trademark Law of the PRC (), which
became effective on 1 March 1983 and was last amended on 23 April 2019, and the
Implementation Rules of PRC Trademark Law (ૢԷ ) which
was last amended on 29 April 2014, the period of validity of a registered trademark shall be
ten years, commencing from the date of approval of registration. A trademark registrant
intending to continue to use the registered trademark upon expiry of the period of validity
shall undergo the renewal formalities within 12 months before expiry according to the
relevant provisions. If failing to do so, the trademark registrant may be granted a six-month
grace period. The period of validity of each renewal is ten years, commencing from the day
after the expiry date of the last period of validity. If the renewal formalities are not
undergone within the grace period, the registration of the trademark shall be cancelled.
3. Domain Names
Pursuant to the Measures for the Administration of Internet Domain Names( ʝᑌၣਹ
), which became effective on 24 August 2017, domain name registrations are
handled through domain name service agencies established under the relevant regulations,
and the applicants become domain name holders upon successful registration.
IX. The PRC Laws and Regulations Relating to Properties
1. Land
Pursuant to the Land Administration Law of the PRC ( ʕശɛ͏΍ձ਷ɺή၍ଣ
), which became effective from 1 January 1987 and was last amended on 26 August
2019, and the Regulation on the Implementation of the Land Administration Law of the
PRC (ૢԷ ), which became effective from 1 February
1991 and was last amended on 2 July 2021, issues related to the ownership of land, land
use right, the overall planning of land use, the protection of cultivated land and the
construction land in the PRC are all subject to the supervision of the above laws and
regulations.
2. Property Rights
Pursuant to the Civil Code of the PRC (Պ), civil relationships
arising from the possession and the use of property (including ownership, usufructuary
right, security rights to the property and possession) are subject to the law, of which a
holder of the land use right of the construction land enjoys the rights to possess, use and
seek proceeds from the state-owned land as prescribed by the laws and the rights to build
buildings, structures and their accessory facilities on such land. A mortgage can be set up
on the land use right of the construction land, buildings and other land affiliated items as
prescribed by the laws.
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3. Construction Under Progress
Pursuant to the Law of Urban and Rural Planning of the PRC (ඊ
), which became effective from 1 January 2008 and was last amended on 23 April
2019, Construction Law of the PRC (), which became effective
from 1 March 1998 and was last amended on 23 April 2019, Administrative Measures for
Construction Permits of Construction Projects ( ), which
became effective on 25 October 2014 and was last amended on 30 March 2021 and the
Regulations on the Administration of Construction Project Quality (ணʈ೻ሯඎ၍ଣૢ
Է), which became effective from 30 January 2000 and was last amended on 23 April
2019, construction activities carried out in the preoccupied areas of cities, towns and
villages and in areas subject to planning control due to the needs of urban and rural
construction and development shall comply with the relevant requirements of the Law of
Urban and Rural Planning of the PRC, under which the construction enterprises shall obtain
the Construction Land Use Planning Permit and Construction Works Planning Permit from
the competent urban and rural planning department of the City and County People’s
Government and apply for the Construction Permit with the competent housing and
urban-rural department of the People’s Government above county level at places where the
construction projects are located before construction commences as prescribed by the laws.
Upon receiving the completion report of the construction project, the construction
enterprise shall organize the acceptance inspection by the relevant design, construction and
supervision enterprises.
4. Leasing of Commodity Housing
Pursuant to the Law for Management of Tenancy for Commodity Housing (܊גۜ
), which became effective on 1 February 2011, the law is applicable to
leasing, supervision and management of commodity housing erected on the state-owned
lands situated in the urban planning areas. The parties to a lease of a building shall enter
into a lease contract and shall proceed with the registration of the lease with the real estate
administration authority in which the building is situated in accordance with laws.
Pursuant to the Urban Real Estate Administration Law of the PRC ( ʕശɛ͏΍ձ਷
), which became effective from 1 January 1995 and was last amended
on 26 August 2019, those who acquire the right to use the State-owned land within the
designated urban area for real estate development, engage in real estate development or
transactions of real estate and exercise real estate administration shall abide by the law. For
the purpose of leasing of houses, the lessor and lessee shall sign a written lease contract,
prescribing such provisions as the leasing term, use of the house, rental and repair
liabilities, and other rights and obligations of both parties; and go through registration
procedures for record with the real estate administration department.
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X. The PRC Laws and Regulations Relating to Cybersecurity
On 28 December 2021, the CAC, jointly with other twelve PRC governmental authorities,
promulgated the Cybersecurity Review Measures () (the “CAC
Measures”), which became effective on 15 February 2022. The CAC Measures provides that,
among others (i) online platform operators possessing personal information of more than one
million users must apply to the Cybersecurity Review Office for a cybersecurity review before
conducting any listing in a foreign country; (ii) the purchase of network products and services of
a critical information infrastructure operator and data processing activities of an online platform
operator that affect or may affect national security shall be subject to the cybersecurity review;
and (iii) the relevant governmental authorities in the PRC may initiate cyber security review if
such governmental authorities determine any network products and services and data processing
activities affect or may affect national security. Article 10 of the CAC Measures set out the
following national security risk factors for the relevant targets or situations that shall be focus
on assessing in a cybersecurity review: (i) the risks of illegal control of, interference in, or
destruction of critical information infrastructure arising from the use of the products and
services; (ii) the harm to the business continuity of key information infrastructure caused by the
interruption of the supply of the products and services; (iii) the security, openness, transparency,
diversity of sources of products and services, reliability of supply channels, and the risks of
supply disruption caused by political, diplomatic, and trade factors; (iv) the compliance by
product and service providers with Chinese laws, administrative regulations, and departmental
rules; (v) the risks of core data, important data, or a large amount of personal information being
stolen, leaked, damaged, illegally used, or illegally transferred to another country or jurisdiction;
(vi) there are risks when an initial public offering is launched that key information
infrastructure, core data, important data, or a large amount of personal information are
influenced, controlled, or maliciously used by a foreign government and that network
information security is endangered; and (vii) other factors that may endanger the security of key
information infrastructure, cybersecurity, and data security.
On 14 November 2021, the CAC promulgated the Regulations on the Administration of
Cyber Data Security (Draft for Comments) ( ၣഖᅰኽτΌ၍ଣૢԷ (ᅄӋจԈᇃ) ) (the “Draft
CAC Regulations ”). According to the Draft CAC Regulations, data processors shall, in
accordance with relevant PRC regulations, apply for cybersecurity review when carrying out the
following activities: (i) the merger, reorganization or separation of online platform operators that
have acquired a large number of data resources related to national security, economic
development or public interests, which affects or may affect national security; (ii) processing
personal information of more than one million individuals and seeking a listing in a foreign
country; (iii) apply for listing in Hong Kong, which affects or may affect national security; and
(iv) other data processing activities that affect or may affect national security. As at the Latest
Practicable Date, the Draft CAC Regulations are still in draft form and subject to change with
substantial uncertainty.
Our PRC Legal Advisers, the Sole Sponsor and Sponsor’s legal advisers conducted a
telephone consultation with the China Cybersecurity Review Technology and Certification
Center (ҦஔၾႩᗇʕː ) (the “CCRTCC”), the department responsible for
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accepting applications for cybersecurity review under the guidance of the Office of Cyber
Security Review. The CCRTCC confirmed that the cybersecurity review under the CAC
Measures is applicable to online platform operators or critical information infrastructure
operators, and enterprises not involved in any service, product or data processing activities that
might give rise to national security risks based on the factors set out in Article 10 of the CAC
Measures are not required to apply for the cybersecurity review under the CAC Measures.
Given that (i) our Group is a semiconductor transport media manufacturer for tray and tray
related products and not an online platform operators or critical information infrastructure
operators, (ii) our Group had not been involved in any service, product or data processing
activities that might give rise to national security risks based on the factors set out in Article 10
of the CAC Measures, and had not possessed personal information of over one million users, and
(iii) as of the Latest Practicable Date, our Group has not received any investigations, notices,
warnings or sanctions in relation to cybersecurity, our PRC Legal Advisers are of the view that
the CAC Measures or the Draft CAC Regulations will not affect the Group’s compliance or have
any material adverse impact on the Group’s business, if the Draft CAC Regulations take effect
in the proposed form as at the Latest Practicable Date.
XI. The PRC Laws and Regulations Relating to Overseas Listing
On 17 February 2023, the CSRC released the Overseas Listing Measures, which became
effective on 31 March 2023. The Overseas Listing Measures prohibit overseas offering and
listing for (i) PRC domestic companies that are explicitly prohibited from listing by PRC laws
and regulations; (ii) PRC domestic companies whose offering and listing may endanger national
security, as determined by relevant departments of the State Council; (iii) PRC domestic
companies or their controlling shareholders or actual controllers have committed crimes of
corruption, bribery, encroachment and embezzlement upon property, or disruption of the order of
the socialist market economy in the recent three years; (iv) PRC domestic companies that are
under ongoing investigations for suspected crimes or material violations of PRC laws; and (v)
controlling shareholders of PRC domestic companies, or the shareholders controlled by the
controlling shareholders or actual controllers of PRC domestic companies, are involved in
material disputes over their equity ownership of the company.
According to the Overseas Listing Measures, (1) PRC domestic companies that seek to
offer or list securities overseas, either directly or indirectly, shall fulfil the filing procedure with
the CSRC and report relevant information; (2) if the issuer meets both of the following
conditions, the overseas offering and listing shall be determined as an indirect overseas offering
and listing by a domestic company: (i) any of the total assets, net assets, revenues or profits of
the domestic operating entities of the issuer in the most recent accounting year accounts for
more than 50% of the corresponding figure in the issuer’s audited consolidated financial
statements for the same period; and (ii) its major operational activities are carried out in PRC or
its main places of business are located in PRC, or the senior managers in charge of operation
and management of the issuer are mostly Chinese citizens or are domiciled in PRC; and (3)
where a domestic company seeks to indirectly offer and list securities in an overseas market, the
issuer shall designate a major domestic operating entity responsible for all filing procedures with
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the CSRC, and where an issuer makes an application for initial public offering or listing in an
overseas market, the issuer shall submit filings with the CSRC within three business days after
such application is submitted. If a domestic company fails to complete the filing procedures,
such domestic company may be ordered to make corrections and subject to a warning and a fine
of RMB1 million to RMB10 million by the CSRC.
On the same day, CSRC also issued the Notice on Administration for the Filing of Overseas
Offering and Listing by Domestic Companies (ஷ
), which, among others, clarifies that on the effective date of the Overseas Listing Measures,
domestic companies that have already submitted valid applications for overseas offering and
listing but have not obtained approval from overseas regulatory authorities or stock exchanges
may reasonably arrange the timing for submitting their filing applications with the CSRC, and
must complete the filing before the completion of their overseas offering and listing.
As advised by our PRC legal advisers, our Group does not fall under the scope of
prohibited overseas offering and listing as stipulated in the Overseas Listing Measure. Our
Group has submitted the filing documents to the CSRC of our overseas offering and listing
pursuant to the requirements of Overseas Listing Measures in September 2023. As advised by
our PRC Legal Advisers, after review of the filing documents submitted, the CSRC formed the
view and advised us that we do not fall under the requirements under section 15 of the Overseas
Listing Measures, and we are not under the scope of the CSRC filing requirement on
5 December 2023.
HONG KONG LA WS AND REGULATIONS
(A) Laws relating to our business
Sale of Goods Ordinance (Chapter 26 of the Laws of Hong Kong)
The Sale of Goods Ordinance aims to codify the laws relating to the sale of goods
which shall be applicable to our Group’s business activities. It provides that:
(a) there is an implied condition that the goods shall correspond with the description
where there is a contract for the sale of goods by description;
(b) there is an implied condition that the goods supplied under the contract are of
merchantable quality where a seller sells goods in the course of a business,
except that there is no such condition (i) as regards defects specifically drawn to
the buyer’s attention before the contract is made; or (ii) if the buyer examines the
goods before the contract is made, as regards defects which that examination
ought to reveal; or (iii) if the contract is a contract by sample, as regards defects
which would have been apparent on a reasonable examination of the sample; and
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(c) where there is a contract for sale by sample, there are implied conditions that (i)
the bulk shall correspond with the sample in quality, (ii) the buyer shall have a
reasonable opportunity of comparing the bulk with the sample, and (iii) the
goods shall be free from any defect, rendering them unmerchantable, which
would not be apparent on reasonable examination of the sample.
Any right, duty or liability which arises under a contract of sale of goods by
implication of law may be negatived or varied by express agreement, or by course of
dealings between the parties, or by usage if the usage is such as to bind both parties to the
contract, subject to the Control of Exemption Clauses Ordinance (Chapter 71 of the Laws
of Hong Kong).
Trade Descriptions Ordinance (Chapter 362 of Laws of Hong Kong)
The Trade Descriptions Ordinance aims to prohibit false trade description, false,
misleading or incomplete information, false statements, etc., which shall be applicable to
our Group in respect of products offered in the manufacture and sales of JEDEC tray,
carrier tape and plastic reel and provision of MEMS and sensor packaging. All of the
products or services supplied by our Group may be required to comply with the relevant
provisions therein.
Section 2 of the Trade Descriptions Ordinance provides, inter alia, that “trade
description” in relation to goods means an indication, direct or indirect, and by whatever
means given, of certain matters (including among other things, quantity, method of
manufacture, composition, fitness for purpose, availability, compliance with a standard
specified or recognised by any person, price, their being of the same kind as goods
supplied to a person, price, place or date of manufacture, production, processing or
reconditioning, person by whom manufactured, produced, processed or reconditioned etc.),
with respect to any goods or parts of the goods; and in relation to services means an
indication, direct or indirect, and by whatever means given, of certain matters (including
among other things, nature, scope, quantity, fitness for purpose, method and procedures,
availability, the person by whom the service is supplied, after-sale service assistance, price
etc.).
Section 7 of the Trade Descriptions Ordinance provides that no person shall in the
course of trade or business apply a false trade description to any goods or sell or offer for
sale any goods with false trade descriptions applied thereto.
Section 7A of the Trade Descriptions Ordinance provides that a trader who applies a
false trade description to a service supplied or offered to be supplied to a consumer, or
supplies or offers to supply to a consumer a service to which a false trade description is
applied, commits an offence.
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Sections 13E, 13F, 13G, 13H and 13I of the Trade Descriptions Ordinance provide that
a trader who engages in relation to a consumer in a commercial practice that (a) is a
misleading omission; or (b) is aggressive; (c) constitutes bait advertising; (d) constitutes a
bait and switch; or (e) constitutes wrongly accepting payment for a product, commits an
offence.
A person who commits an offence under sections 7, 7A, 13E, 13F, 13G, 13H or 13I
shall be subject, on conviction on indictment, to a fine of HK$500,000 and to imprisonment
for 5 years, and on summary conviction, to a fine at HK$100,000 and to imprisonment for
2 years.
Import and Export Ordinance (Chapter 60 of the Laws of Hong Kong)
The Import and Export Ordinance (Chapter 60 of the Laws of Hong Kong) is an
ordinance which provides for the regulation and control of, amongst other things, the
import and export of products into or out of Hong Kong.
The import and export of certain articles are prohibited unless with the relevant
licences under sections 6C and 6D of the Import and Export Ordinance. According to
section 6C of the Import and Export Ordinance, no person shall import any article specified
in Schedule 1 to the Import and Export (General) Regulations (Chapter 60A of the Laws of
Hong Kong)), except under and in accordance with an import licence issued under section 3
of the Import and Export Ordinance. Section 6D of the Import and Export Ordinance
provides that no person shall export any article specified in the second column of Schedule
2 to the Import and Export (General) Regulations to the place specified opposite thereto in
the third column of that Schedule except under and in accordance with an export licence
issued under section 3 of the Import and Export Ordinance. Applications for import licence
and export licence are handled by the Director-General or any Deputy or Assistant
Director-General of Trade and Industry pursuant to section 3 of the Import and Export
Ordinance. Anyone who fails to comply with sections 6C and/or 6D shall be guilty of an
offence and shall be liable on conviction to a fine of HK$500,000 and to imprisonment for
2 years.
Import and Export (Registration) Regulations (Chapter 60E of the Laws of Hong Kong)
Pursuant to regulations 4 and 5 of the Import and Export (Registration) Regulations
(Chapter 60E of the Laws of Hong Kong), every person, including company, who imports
or exports or re-exports any article other than an exempted article set out in regulation 3 of
the Import and Export (Registration) Regulations shall lodge with the Commissioner of
Customs and Excise and any Deputy or Assistant Commissioner of Customs and Excise of
Hong Kong (the “Commissioner ”) an accurate and complete import or export declaration
relating to such article using services provided by a specified body, in accordance with the
requirements that the Commissioner may specify. Every declaration required to be lodged
shall be lodged within 14 days after the importation or exportation of the article to which it
relates.
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Trade Marks Ordinance (Chapter 559 of the laws of Hong Kong)
The Trade Marks Ordinance is a statute enacted to make provision in respect of the
registration of trade marks and for connected matters. The Trade Marks Ordinance provides
(amongst other things) that a person infringes a registered trade mark if the person uses in
the course of trade or business a sign which is:
(a) identical to the trade mark in relation to goods or services which are identical to
those for which it is registered;
(b) identical to the trade mark in relation to goods or services which are similar to
those for which it is registered; and the use of the sign in relation to those goods
or services is likely to cause confusion on the part of the public;
(c) similar to the trade mark in relation to goods or services which are identical or
similar to those for which it is registered; and the use of the sign in relation to
those goods or services is likely to cause confusion on the part of the public; or
(d) identical or similar to the trade mark in relation to any goods or services; the
trade mark is entitled to protection under the Paris Convention as a well-known
trade mark; and the use of the sign, being without due cause, takes unfair
advantage of, or is detrimental to, the distinctive character or repute of the trade
mark.
Under the Trade Marks Ordinance, the owner of a trademark is entitled to bring
infringement proceedings against a person infringing his/her/its trade mark for damages,
injunctions, accounts and any other relief available in law.
As at the Latest Practicable Date, our Group had registered two trade mark in Hong
Kong relating to our Group’s business. The Directors confirm that our Group did not
receive any claim for trade mark infringement during the Track Record Period and up to the
Latest Practicable Date. For further details of our Group’s material intellectual property
rights in Hong Kong, please refer to “B. Further information about the business of our
Group – 2. Intellectual property rights” in Appendix IV to this prospectus.
Inland Revenue Ordinance (Chapter 112 of the Laws of Hong Kong)
The Inland Revenue Ordinance (the “ IRO”) imposes taxes on property, earnings and
profits in Hong Kong. The IRO provides, among others, that persons, which include
corporations, partnerships, trustees and bodies of persons, carrying on any trade, profession
or business in Hong Kong are chargeable to tax on all profits (excluding profits arising
from the sale capital assets) arising in or derived from Hong Kong from such trade,
profession or business. As at the Latest Practicable Date, the standard profit tax rate for
corporations is at 16.5%. The IRO also contains provisions relating to, among others,
permissible deductions for outgoing and expenses, set-offs for losses and allowances for
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depreciation. We, as a company carrying out business in Hong Kong, are subject to the
profits tax regime under the IRO.
TRANSFER PRICING GUIDELINES, LA WS AND REGULATIONS
Transfer Pricing Laws and Regulations in Hong Kong Regulations
Regulations concerning transfer pricing between associated enterprises can be found in IRO
and the comprehensive double taxation agreements (the “ DTAs”) between Hong Kong and other
countries or territories, including the Mainland China.
Section 20A of the Inland Revenue Ordinance gives the IRD wide powers to collect tax due
from non-residents. The IRD may also make transfer pricing adjustments by disallowing
expenses incurred by the Hong Kong resident under sections 16(1), 17(1)(b) and 17(1)(c) of the
Inland Revenue Ordinance, make additional assessments under section 60 of the Inland Revenue
Ordinance and challenging the entire arrangement under general anti-avoidance provisions such
as sections 61 and 61A of the Inland Revenue Ordinance.
Under section 60 of the IRO, where it appears to an assessor that for any year of
assessment any person chargeable with tax has not been assessed or has been assessed at less
than the proper amount, the assessor may, within the year of assessment or within 6 years after
the expiration thereof, assess such person at the amount or additional amount which, according
to his judgment, such person ought to have been assessed, and, provided that where the
non-assessment or under-assessment of any person for any year of assessment is due to fraud or
wilful evasion, such assessment or additional assessment may be made at any time within 10
years after the expiration of that year of assessment.
Section 61A of the IRO stipulates that where it would be concluded that person(s) entered
into or carried out transactions for the sole or dominant purpose to obtain a tax benefit (which
means the avoidance or postponement of the liability to pay tax or the reduction in the amount
thereof), liability to tax of the relevant person(s) will be assessed (a) as if the transaction or any
part thereof had not been entered into or carried out; or (b) in such other manner as the
supervising authority considers appropriate to counteract the tax benefit which would otherwise
be obtained.
The DTAs contain provisions mandating the adoption of arm’s length principle for pricing
transactions between associated enterprises. The arm’s length principle uses the transactions of
independent enterprises as a benchmark to determine how profits and expenses should be
allocated for the transactions between associated enterprises. The basic rule for DTA purposes is
that profits tax charged or payable should be adjusted, where necessary, to reflect the position
which would have existed if the arm’s length principle had been applied instead of the actual
price transacted between the enterprises.
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The Departmental Interpretation and Practice Notes No. 45 − Relief from Double Taxation
due to Transfer Pricing or Profit Reallocation Adjustments issued by the Inland Revenue
Department in April 2009 makes it available that where double taxation arises as a result of
transfer pricing adjustments made by the tax authorities of another jurisdiction, a Hong Kong
taxpayer may potentially claim relief under the tax treaty between Hong Kong and that country
(jurisdictions that entered into tax arrangements with Hong Kong includes the Mainland China).
The Inland Revenue Department also issued Departmental Interpretation and Practice Notes
No. 46 (“DIPN 46”) in December 2009 on Transfer Pricing Guidelines − Methodologies and
Related Issues. As stated in DIPN 46, transfer pricing documentation is not mandatory under the
IRO and the taxpayers are not expressly required to create specific documents showing
compliance with the arm’s length principle. The Inland Revenue Department further issued
Departmental Interpretation and Practice Notes No. 48 in March 2012 which provides a
mechanism for taxpayers to pre-agree their transfer pricing arrangements with the Inland
Revenue Department.
In July 2018, the Inland Revenue (Amendment) (No. 6) Ordinance 2018 (the “ Amendment
Bill”) was enacted to introduce a legislative framework to codify how the pricing for the supply
of goods and services between associated parties should be determined and implemented. The
major provisions under the Amendment Bill start to apply for years of assessment commencing
from 1 April 2018.
The major issues covered under the Amendment Bill are as follows:
 Codify international transfer pricing principles include, amongst others, the arm’s
length principle for provision between associated persons, the separate enterprises
principle for attributing income or loss of non-Hong Kong resident person;
 Introduce transfer pricing documentation in Hong Kong, which includes the three-tier
transfer pricing documentation relating to the master file, local file and
country-by-country reporting;
 Codify Advance Pricing Arrangement (“ APA”) regime and extend application to
unilateral APAs; and
 Introduce legal framework for mutual agreement procedures, which includes
arbitration.
Based on the Amendment Bill, a person who have a Hong Kong tax advantage if taxed on
the basis of a non-arm’s length provision (the “ advantaged person ”) will have income adjusted
upwards or loss adjusted downwards. The advantaged person’s income or loss is to be computed
as if arm’s length provision had been made or imposed instead of the actual provision. If the
advantaged person fails to prove to the satisfaction of the assessor of the IRD that the amount of
the person’s income or loss as stated in the person’s tax return in an arm’s length amount, the
assessor of the IRD must estimate an amount as the arm’s length amount and, taking into
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account the estimated amount (a) make an assessment or additional assessment on the person; or
(b) issue a computation of loss, or revise a computation of loss resulting in a smaller amount of
computed loss, in respect of that person pursuant to section 50AAF of the IRO.
In July 2019, the Inland Revenue Department further issued the Departmental Interpretation
and Practice Notes No. 58, No. 59 and No. 60 to set out interpretations to the Amendment Bill.
Overview of Organisation for Economic Co-operation and Development’s Guidelines
The Organisation for Economic Co-operation and Development (the “ OECD”), an
international organisation of international cooperation, promulgated the transfer pricing
guidelines for multinational enterprises and tax administrations (the “ OECD Guidelines ”),
which is consistent with the transfer pricing regulations in the tax jurisdictions involved in our
Covered Transactions including PRC, Japan, the United States and Mexico. Hong Kong is a
participant of the OECD’s Trade Committee and the Committee on Financial Markets.
The OECD Guidelines provide that the arm’s length standard should be used to establish
transfer prices between associated enterprises.
The arm’s length standard is applied by comparing controlled transactions with transactions
between independent enterprises based on “economically relevant characteristics”. Comparability
is achieved if: (i) no differences between the controlled and uncontrolled transactions exist; (ii)
the differences that do exist do not materially affect the condition being examined; or (iii)
reasonably accurate quantitative adjustments can be made to eliminate the effect of any
differences.
The methods presented in the OECD Guidelines can be categorised into three groups:
 Comparable uncontrolled price/transaction methods;
 Other traditional transaction methods, including resale price and cost plus; and
 Transaction profit methods, including profit split and transaction net margin.
The OECD Guidelines state that the objective is to select the method “that is apt to provide
the best estimation of an arm’s length price”. Notwithstanding this overall objective, the OECD
Guidelines adopt the “most appropriate method to the circumstances of the case” principle for
the selection of transfer pricing method.
It is also acknowledged that the OECD Guidelines establish the hierarchy between the
traditional transaction methods and transactional profit methods when both can be applied in an
“equally reliable manner” that the traditional transaction methods should be selected.
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(B) Laws relating to labour, health and safety
Occupational Safety and Health Ordinance (Chapter 509 of the Laws of Hong Kong)
The Occupational Safety and Health Ordinance (the “ OSHO”) provides for the safety
and health protection to employees in workplace, both industrial and non-industrial.
Pursuant to section 6 of the OSHO, every employer must, so far as reasonably
practicable, ensure the safety and health at work of all the employees by, so far as
reasonably practicable:
(a) providing and maintaining plant and systems of work that are safe and without
risks to health;
(b) making arrangements for ensuring, safety and absence of risks to health in
connection with the use, handling, storage or transport of plant and substances;
(c) providing information, instruction, training and supervision as may be necessary
to ensure the safety and health at work of the employees;
(d) as regards any workplace under the employer’s control, (i) maintaining the
workplace in a condition that is safe and without risks to health; or (ii) providing
or maintaining means of access to and egress from the workplace that are safe
and without any such risks; and
(e) providing or maintaining a working environment for the employees that is safe
and without risks to health.
Pursuant to section 6 of the OSHO, an employer who fails to comply with above
provisions commits an offence and is liable (a) on summary conviction to a fine of
HK$3,000,000; or (b) on conviction on indictment to a fine of HK$10,000,000. An
employer who fails to do so intentionally, knowingly or recklessly commits an offence and
is liable (a) on summary conviction to a fine of HK$3,000,000 and to imprisonment for 6
months; or (b) on conviction on indictment to a fine of HK$10,000,000 and to
imprisonment for 2 years.
The Commissioner for Labour is empowered to issue improvement notices and
suspension notices against activity of workplace which may create an imminent hazard to
the employees. Failure to comply with a requirement of an improvement notice without
reasonable excuse constitutes an offence punishable by a fine of HK$400,000 and to
imprisonment for 12 months. An employer who, without reasonable excuse, contravenes a
suspension notice constitutes an offence and is liable on conviction (a) to a fine of
HK$1,000,000 and to imprisonment for 12 months; and (b) to a further fine of HK$100,000
for each day or part of a day during which the employer knowingly and intentionally
continues the contravention.
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Employees’ Compensation Ordinance (Chapter 282 of the Laws of Hong Kong)
The Employee’s Compensation Ordinance (the “ ECO”) provides for the payment of
compensation to employees who are injured in the course of their employment. The ECO
establishes a no-fault and non-contributory employee compensation system for work
injuries, and lays down the rights and obligations of employers and employees in respect of
injuries or death caused by accidents arising out of and in the course of employment, or by
prescribed occupational diseases under the ECO.
Under the ECO, if an employee sustains an injury or dies as a result of an accident
arising out of and in the course of his employment, his employer is in general liable to pay
compensation even if the employee might have committed acts of faults or negligence when
the accident occurred. An employee who suffers incapacity arising from an occupational
disease is entitled to receive the same compensation as that payable to an employee injured
in an accident arising out of and in the course of employment, if the disease is one due to
the nature of any occupation in which he was employed at any time within the prescribed
period immediately preceding the incapacity caused.
Pursuant to section 40 of the ECO, no employer shall employ any employee in any
employment unless there is in force in relation to such employee a policy of insurance to
cover their liabilities both under the ECO and at common law for injuries at work in
respect of all their employees, irrespective of the length of employment contract or working
hours, full-time or part-time employment. An employer who contravenes such requirement
commits an offence and is liable (a) on conviction upon indictment to a fine of
HK$100,000 and imprisonment for 2 years; and (b) on summary conviction to a fine of
HK$100,000 and imprisonment for 1 year.
Minimum Wage Ordinance (Chapter 608 of the Laws of Hong Kong)
The Minimum Wage Ordinance (the “ MWO”) provides for a minimum wage at an
hourly rate for certain employees. The MWO establishes a statutory minimum wage
(“SMW”) regime aimed at striking an appropriate balance between forestalling excessively
low wages and minimising the loss of low-paid jobs while sustaining Hong Kong’s
economic growth and competitiveness. The SMW rate was HK$40 per hour with effect
from 1 May 2023.
Save for certain exceptions specified under section 7 of the MWO, the SMW applies
to all employees, whether they are monthly-rated, weekly-rated, daily-rated, hourly-rated,
piece-rated, permanent, casual, full-time, part-time or other employees, and regardless of
whether they are employed under a continuous contract as defined in Employment
Ordinance (Chapter 57 of the Laws of Hong Kong) (the “ EO”). Any provision in the
contract of employment seeking to extinguish or reduce the employee’s SMW entitlement
shall be void under the law.
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Failure to pay the SMW amounts to a breach of wage provisions under the EO.
According to the EO, an employer who willfully and without reasonable excuse fails to pay
wages to an employee when it becomes due is liable to prosecution and, upon conviction,
to a fine of HK$350,000 and imprisonment for 3 years. Where a wage offence committed
by a body corporate is proved to have been committed with the consent or connivance of,
or to be attributable to any neglect on the part of, any director, manager, secretary or other
similar officer of the body corporate, such person shall be guilty of the like offence and,
upon conviction, is liable to the same penalty.
Mandatory Provident Fund Schemes Ordinance (Chapter 485 of the Laws of Hong Kong)
The Mandatory Provident Fund Scheme Ordinance (the “ MPFSO”) provides for, inter
alia, the establishment of a system of privately managed, employment-related mandatory
provident fund (“ MPF”) schemes to accrue MPF benefits for members of the workforce
when they retire.
Pursuant to section 7A of the MPFSO, the employer and its relevant employee, being
an employee of 18 years of age or over and below retirement age which is 65 years of age,
are each required to make contributions to the registered scheme at 5% of the relevant
employees’ relevant income, meaning any wages, salary, leave pay, fee, commission, bonus,
gratuity, perquisite or allowance expressed in monetary terms, paid or payable by an
employer to the relevant employee in consideration of his employment under his contract of
employment. An employer must ensure that contributions required to be made in
accordance with this section in respect of an employee of the employer are paid to the
approved trustee of the registered scheme of which the employee is a member within the
period and in the manner prescribed by the regulations.
Pursuant to section 9 of the MPFSO, a relevant employee whose relevant income is
less than the minimum level of relevant income, being HK$7,100 per month or HK$280 per
day, is not required to contribute to a registered scheme but he may, if he so wishes, by
notice in writing to his employer elect to do so. Pursuant to section 10 of the MPFSO, A
relevant employee whose relevant income is more than the maximum level of relevant
income, being HK$30,000 per month or HK$1,000 per day, is not required to contribute to
a registered scheme in respect of the excess relevant income but he may, if he so wishes,
by notice in writing to his employer elect to do so.
Pursuant to section 43B(1B) of the MPFSO, an employer who, without reasonable
excuse, fails to comply with section 7A(1), (2) or (7) of the MPFSO commits an offence
and is liable on conviction (a) to a fine at HK$100,000 and imprisonment for 6 months on
the first occasion on which the person is convicted of the offence; and (b) to a fine of
HK$200,000 and imprisonment for 12 months on each subsequent occasion on which the
person is convicted of the offence.
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Pursuant to section 43B(1C) of the MPFSO, an employer who, without reasonable
excuse, fails to comply with section 7A(8) of the MPFSO commits an offence and is (a) in
the case where he has deducted any amount from the employee’s relevant income for the
contribution period concerned as the employee’s contribution and the total amount of
contribution paid in respect of the employee to the approved trustee for that contribution
period is less than the amount so deducted, liable on conviction to a fine of HK$450,000
and imprisonment for 4 years and, in the case of a continuing offence, to a daily penalty of
HK$700 for each day on which the offence is continued; and (b) in any other case, liable
on conviction to a fine of HK$350,000 and imprisonment for 3 years and, in the case of a
continuing offence, to a daily penalty of HK$500 for each day on which the offence is
continued.
Business Registration Ordinance (Chapter 310 of the Laws of Hong Kong)
The Business Registration Ordinance (the “ BRO”) provides for the registration of
businesses in Hong Kong. Business includes any form of trade, commerce, craftsmanship,
profession, calling or other activity carried on for the purpose of gain and also means a
club. Every company incorporated in Hong Kong or non-Hong Kong company registered
under the Companies Ordinance is deemed to be a person carrying on business and is
required to be registered under the BRO. Besides, every non-Hong Kong corporation that
has a representative or liaison office in Hong Kong, or has let out its property situated in
Hong Kong is required to be registered under the BRO.
Pursuant to section 5 of the BRO, every person (a company or an individual) carrying
on a business in Hong Kong, other than those specifically exempted, shall make a business
registration application to the Commissioner of Inland Revenue within 1 month of the
commencement of the business. Pursuant to section 12 of the BRO, a valid business
registration certificate shall be displayed at the place of business to which such certificate
relates. A business registration certificate is renewable every year or every three years (if
the business operator elects for business registration certificate that is valid for three
years).
Pursuant to section 15 of the BRO, any person who fails to make a business
registration application or fails to display a valid business registration certificate shall be
guilty of an offence and shall be liable to a fine at HK$5,000 and imprisonment for one
year. Where a person is convicted of an offence for the failure to make a business
registration application, the magistrate may, in addition to any penalty that may be
imposed, order that the person shall within a time specified in the order do the act which he
has failed to do, and a person who does not comply with such an order commits an offence
and is liable to a fine at HK$5,000 and imprisonment for 1 year.
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COMPLIANCE
As confirmed by our Directors, save as disclosed in the section headed “Business – Legal
Compliance, Licences and Permits – Legal Compliance, our Group had obtained all material
permits, approvals and licences necessary to operate its existing business in Hong Kong and the
PRC from the relevant governmental bodies during the Track Record Period and up to the Latest
Practicable Date.
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BUSINESS DEVELOPMENT
Overview
Our history can be traced back to 2005 when our major subsidiary UBoT Inc. (HK) was
incorporated on 28 November 2005. At the time of inception, we possessed a team of experts
from the semiconductor industry with the aim to provide one-off engineering packing solutions
and full service to back-end semiconductor transport media industry. At the early stage of our
business, our Group mainly undertook sales and marketing, product design and development,
mould tooling design, management and manufacturing and material engineering while we
consigned product manufacturing to other OEM factories. In 2006, we established business
relationships with three of our major customers, including STMicroelectronics, for our tray and
tray related products.
Mr. Tong, our executive Director, chairman of the Board and chief executive officer of our
Company, joined UBoT Inc. (HK) as its President in April 2007. Mr. Tong has over 28 years of
experience in the semiconductor industry, in which he held various managerial positions. For the
background of Mr. Tong, please refer to the section headed “Directors and Senior Management –
Executive Directors” for further details. In April 2008, Mr. Tong acquired shares in UBoT Inc.
(HK) and became the second largest shareholder of UBoT Inc. (HK) while Busy Trade remained
as the largest shareholder.
Leveraging on Mr. Tong’s experience and expertise in the semiconductor industry, in
January 2008, we incorporated UBoT Inc. (SG) in order to serve our major customer in
Southeast Asia. In August 2009, in view of the development potential in the MEMS and sensor
packaging industry supported by technological advancement and increased applicability, we
established UBOTIC in order to expand our business to provide R&D services for MEMS and
sensor packaging. In view of the market potentials in the MEMS and sensor packaging industry,
our Group has continuously made investments in its R&D. Our Group had been developing
and/or developed more than 20 MEMS and sensor packaging and had applied for 15 patents for
the MEMS and sensor packaging developed by it by early 2020. After its success in developing
and commercialising its MEMS and sensor packaging, UBOTIC was gradually awarded orders
from our customers and its financial position had turned around in 2020.
In 2010, given that the sales volume of our JEDEC tray and related products had grown, we
incorporated UBoT Enterprise and set up our Shatian Production Factory, being our first
production factory for the sales and manufacturing of tray and tray related products. In August
2012, we also expanded our production in our Shatian Production Factory for MEMS and sensor
packaging. In order to further expand our back-end semiconductor transport media product lines,
in February 2018, we installed our first carrier tape manufacturing line in our Shatian Production
Factory and commenced trial production of carrier tape and our Group was awarded our first
purchase order for carrier tape in March 2019. In June 2021, we further expanded our production
capacity and commenced operation of our second factory, Houjie Production Factory for the
production of tray and tray related products.
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Mr. Tong became the largest shareholder of UBoT Inc. (HK) in August 2020. As at the
Latest Practicable Date, our Group comprised ten members, our Company, Abundant Wealth,
UBoT Inc. (HK), UBoT Inc. (SG), UBoT Enterprise, UBoT Electronic Packing, Sino Key,
UBOTIC, UBOTIC IP and UBOTIC MEMS.
Business Milestones
The following table sets forth the important milestones in the development of the business
of our Group up to the Latest Practicable Date:
Date Milestone Event
2005 UBoT Inc. (HK) was incorporated on 28 November 2005.
2006 We were awarded our first purchase order of JEDEC tray from three of our
major customers, including STMicroelectronics.
2007 We achieved annual sales of over 4.5 million units of tray and tray related
products.
2008 UBoT Inc. (SG) was incorporated in Singapore as our sales office in South
East Asia.
2009 UBOTIC was incorporated to provide R&D services for MEMS and sensor
packaging.
2010 UBoT Enterprise and our first production factory, Shatian Production
Factory, were established for the manufacturing of tray and tray related
products.
2011 UBOTIC was awarded our first purchase order of MEMS and sensor
packaging.
2012 Our Shatian Production Factory was expanded for MEMS and sensor
packaging.
2014 We successfully registered our first patent in the USA in respect of our
MEMS and sensor packaging.
2018  We installed our first carrier tape manufacturing line in our Shatian
Production Factory and commenced trial production of carrier tape.
 We had over 10 registered patents in the USA and the PRC in respect
of MEMS and sensor packaging.
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Date Milestone Event
2019 We were awarded our first purchase order of carrier tape.
2021  We distributed our products to over 250 delivery points.
 We set up our second production factory, Houjie Production Factory,
for the manufacturing of tray and tray related products.
 Our products have been sold to over 12 countries and regions.
 We achieved annual sales of over 27.5 million units of tray and tray
related products.
2023 We had over 1500 product specifications in our product portfolio
CORPORATE HISTORY
Our Company
Our Company was incorporated in the Cayman Islands as an exempted company with
limited liability on 7 February 2022 in anticipation of the Listing, and has become the holding
company of our Group following the completion of the Reorganisation. As at the Latest
Practicable Date, the subsidiaries of our Company comprised Abundant Wealth, Sino Key, UBoT
Inc. (HK), UBoT Inc. (SG), UBoT Enterprise, UBoT Electronic Packing, UBoT Shanghai,
UBOTIC, UBOTIC IP and UBOTIC MEMS, all of which are wholly-owned subsidiaries of our
Company. Our Company was registered as a non-Hong Kong company under Part 16 of the
Companies Ordinance on 22 March 2022.
Abundant Wealth
Abundant Wealth was incorporated in the BVI as a limited liability company on 26
November 2021, and is authorised to issue a maximum of 50,000 shares of a single class of par
value of US$1.00 each, of which one share, credited as fully paid, was allotted and issued to our
Company. Abundant Wealth is an investment holding company.
On 20 April 2022, as part of the Reorganisation, Abundant Wealth became an intermediate
holding company for the purpose of holding interests in various subsidiaries of our Group.
Please refer to the paragraph headed “Reorganisation” in this section for the summary of the
major Reorganisation steps.
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Sino Key
Sino Key was incorporated in the BVI as a limited liability company on 17 November
2021, and is authorised to issue a maximum of 50,000 shares of a single class of par value of
US$1.00 each, of which one share, credited as fully paid, was allotted and issued to our
Company. Sino Key is an investment holding company.
On 20 April 2022, as part of the Reorganisation, Sino Key became an intermediate holding
company for the purpose of holding interests in various subsidiaries of our Group. Please refer
to the paragraph headed “Reorganisation” in this section for the summary of the major
Reorganisation steps.
UBoT Inc. (HK)
UBoT Inc. (HK) was incorporated in Hong Kong as a limited liability company on 28
November 2005, with 10,000 shares in issue, of which 5,000 shares in UBoT Inc. (HK) were
held by each of Mr. Chan Ying Fan and Mr. Ng Yu Tung as at its date of incorporation. Since its
incorporation, UBoT Inc. (HK) specializes in the manufacturing of precision engineering plastics
and investment holding.
On 29 December 2005, UBoT Inc. (HK) allotted and issued 8,990,000 new shares at
HK$1.00 each, among which, 2,065,000 shares, 1,075,000 shares, 2,250,000 shares and
3,600,000 shares were issued to Mr. Chan Ying Fan, Mr. Ng Yu Tung, Mr. Nie Ye and Busy
Trade, respectively. Completion of the allotment and issue of new shares took place on the same
date and immediately thereafter, UBoT Inc. (HK) was owned as to 23%, 12%, 25% and 40% by
Mr. Chan Ying Fan, Mr. Ng Yu Tung, Mr. Nie Ye and Busy Trade, respectively.
After their resignations from the former employer company (the “ Former Employer ”),
being a Hong Kong company principally engaged in precision engineered plastics manufacturing
for the electronics industry, Mr. Chan Ying Fan and Mr. Ng Yu Tung reunited with their former
fellow colleagues, including Mr. Shek and Mr. Tam, our executive Directors, and Mr. Nie Ye
(collectively, the “ Founder Group”) in a social occasion, and the parties came up with an idea
to start a business with their expertise and business networks.
Despite the Founder Group’s expertise and business networks, they lacked of capital and
manufacturing facilities. The Founder Group therefore proposed to source suitable manufacturing
base to take up product production function after the incorporation of their company instead of
establishing their own manufacturing facility for the time being. Further, Mr. Chan Ying Fan and
Mr. Ng Yu Tung had also, through their networks, tried to introduce some potential investors to
strengthen the capital base of the new company. Mr. Chan Ying Fan and Mr. Ng Yu Tung then
came across the Tang’s Family who possessed both production facility and capital which could
provide assistance to the operation of UBoT Inc. (HK) at the early stage. The Tang’s Family
agreed to invest in UBoT Inc. (HK) and subscribe for its shares through their investment
company, Busy Trade.
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Busy Trade is a company incorporated in Hong Kong on 8 December 2005 and is
wholly-owned by the Tang’s Family. Prior to 11 March 2008, Busy Trade was held by Yield
Strong Limited and Sincere Pleasure Limited on trust for the Tang’s Family. As the Tang’s
Family considered themselves being not familiar with the back-end semiconductor transport
media industry, they preferred to remain as passive investors with no involvement in our Group’s
managements and operations. The Tang’s Family agreed, through Cansum Industries Limited,
their indirectly non-wholly-owned company which is engaged in the manufacturing of injection
moulding mainly for toys and is one of the landlords of the Chengtian Industrial Zone, to
outsource and delegate its production facility to our Group for the manufacture of its own
products.
In February 2006, Mr. Shek and Mr. Tam officially left the Former Employer and joined
UBoT Inc. (HK) as senior management. Mr. Ng Yu Tung and Mr. Shek then utilised their sales
and marketing expertise and business connections accumulated in the Former Employer, after
joining our Group, they approached potential customers including STMicroelectronics. In light
of the Founder Group’s expertise and know-how in the manufacturing of back-end
semiconductor transport media for tray and tray related products, as well as Mr. Ng Yu Tung and
Mr. Shek’s understandings in the requirement and expectation of the three major international
customers (including STMicroelectronics), the Group’s products and the OEM production could
obtain their accreditation in a short period of time and the said major customers started to place
their purchase orders after the accreditation in 2006.
On 1 August 2006, UBoT Inc. (HK) allotted and issued 250,000 new shares to Wind Star
Corporation Limited at HK$1.00 each. Completion of the allotment and issue of new shares took
place on the same date and immediately thereafter, UBoT Inc. (HK) was owned as to
approximately 22.38%, 11.68%, 24.32%, 38.92% and 2.70% by Mr. Chan Ying Fan, Mr. Ng Yu
Tung, Mr. Nie Ye, Busy Trade and Wind Star Corporation Limited, respectively.
On 16 August 2006, Busy Trade and Mr. Nie Ye transferred 600,000 shares and 55,000
shares in UBoT Inc. (HK) to Wind Star Corporation Limited at the consideration of HK$600,000
and HK$500,000, respectively. The share transfers were completed on the same date.
In or around early 2007, learning that Mr. Tong, the then president of the Former Employer,
would leave the Former Employer, Mr. Chan Ying Fan invited Mr. Tong to join UBoT Inc. (HK)
so as to leverage on his experience and connections. Mr. Tong joined UBoT Inc. (HK) in April
2007 as president.
After Mr. Tong was appointed as a director of UBoT Inc. (HK) in April 2008, when he was
given to know that Mr. Chan Ying Fan had the intention to dispose of his shares in UBoT Inc.
(HK), he and Ms. Wong, being ex-wife of Mr. Tong and an Independent Third Party who worked
in the semiconductor industry, acquired Mr. Chan Ying Fan’s shareholdings in UBoT Inc. (HK).
Since then, Ms. Wong has been a passive investor with no involvement in our Group’s
managements and operations.
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On 21 April 2008, (i) Mr. Chan Ying Fan agreed to dispose to Mr. Tong of a total of
1,845,000 shares in UBoT Inc. (HK). The consideration for the said 1,845,000 shares was
HK$90,000, which represented the difference between the total par value of the said 1,845,000
shares and the amount of a debt owed by Mr. Chan Ying Fan to Mr. Tong. At the direction of
Mr. Tong, Mr. Chan Ying Fan transferred 1,395,000 shares and 450,000 shares (as a gift from
Mr. Tong to Ms. Wong) in UBoT Inc. (HK) to Mr. Tong and Ms. Wong at the agreed
consideration of HK$90,000 and nil, respectively; and (ii) Mr. Ng Yu Tung transferred 540,000
shares in UBoT Inc. (HK) to Mr. Tong at the consideration of HK$540,000. The share transfers
were completed on the same date.
On 13 November 2009, UBoT Inc. (HK) bought back 1,400,000 shares from Wind Star
Corporation Limited at the consideration of HK$1,400,000. Completion of the share buy-back
took place on the same date and Wind Star Corporation Limited ceased to be a shareholder of
UBoT Inc. (HK).
On 18 November 2010, Mr. Nie Ye, transferred 1,700,000 shares in UBoT Inc. (HK) to Mr.
Zuo at the consideration of HK$1,700,000. The consideration was made with reference to the
subscription price of HK$1.00 per share (i.e. the par value of HK$1.00) when he subscribed for
the shares on 29 December 2005. The share transfer was completed on the same date and Mr.
Nie Ye ceased to be a shareholder of UBoT Inc. (HK).
On 22 July 2016, since each of Mr. Chan Ying Fan and Mr. Ng Yu Tung wished to pursue
their own businesses, (i) Mr. Chan Ying Fan transferred 225,000 shares in UBoT Inc. (HK) to
Mr. Tong at the consideration of HK$1,000,000; and (ii) Mr. Ng Yu Tung transferred, among
others, 400,000 shares and 140,000 shares in UBoT Inc. (HK) to Mr. Tong and Mr. Chan (at the
direction of Mr. Tong), respectively, in exchange for the transfer of Mr. Tong’s shares in another
company, which is principally engaged in semi-conductor trading, plus HK$2.00 as cash
consideration. Mr. Chan subsequently paid Mr. Tong HK$140,000 for the 140,000 Shares by
instalments. On the same date, Busy Trade transferred 179,800 shares in UBoT Inc. (HK) to Mr.
Tam at the consideration of HK$179,800. The shares transferred to Mr. Chan and Mr. Tam were
incentives to appreciate the senior management for their contributions. All the share transfers
were completed on the same date. Since the completion of the share transfers on 22 July 2016,
each of Mr. Chan Ying Fan and Mr. Ng Yu Tung ceased to be a shareholder of UBoT Inc. (HK)
and UBoT Inc. (HK) was owned by Mr. Tong, Busy Trade, Mr. Zuo, Mr. Chan, Ms. Wong and
Mr. Tam as to 32.61%, 35.93%, 21.66%, 1.78%, 5.73% and 2.29%, respectively.
On 31 August 2020, UBoT Inc. (HK) allotted and issued (i) 13,250,000 new shares to Mr.
Tong at the consideration of HK$3,312,500; (ii) 11,459,800 new shares to Busy Trade at the
consideration of HK$2,864,950; (iii) 540,000 new shares to Mr. Chan at the consideration of
HK$135,000; (iv) 60,000 new shares to Ms. Wong at the consideration of HK$15,000; (v)
510,000 new shares to Mr. Shek at the consideration of HK$127,500; and (vi) 330,200 new
shares to Mr. Tam at the consideration of HK$82,550. The subscriptions for the new shares
strengthened the capital base of UBoT Inc. (HK) and also introduced Mr. Tong as the largest
shareholder of UBoT Inc. (HK), while Busy Trade remained as the second largest shareholder
and a passive investor. Completion of the allotment and issue of new shares took place on the
HISTORY, DEVELOPMENT AND REORGANISATION
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same date and immediately thereafter, UBoT Inc. (HK) was owned by Mr. Tong, Busy Trade, Mr.
Zuo, Mr. Chan, Ms. Wong, Mr. Shek and Mr. Tam as to 46.5%, 42.0%, 5.0%, 2.0%, 1.5%, 1.5%
and 1.5%, respectively.
In early 2022, Mr. Zuo approached Mr. Tong to discuss about realising his investment in
UBoT Inc. (HK) since he was in need of fund for dealing with personal financial needs after his
retirement. After arm’s length negotiation with Mr. Tong, Mr. Zuo agreed to transfer all the
1,700,000 shares, representing 5% of the total shareholding of UBoT Inc. (HK), to Mr. Tong at
the total consideration of HK$1,000,000. Completion of the said transfer took place on 21 March
2022 and immediately thereafter, UBoT Inc. (HK) was owned by Mr. Tong, Busy Trade, Mr.
Chan, Ms. Wong, Mr. Shek and Mr. Tam as to 51.5%, 42.0%, 2.0%, 1.5%, 1.5% and 1.5%,
respectively.
The table below sets forth the details of the share transfer made by Mr. Zuo to Mr. Tong.
Date of the agreement 21 March 2022
Consideration paid HK$1,000,000
Basis of determining the
consideration
With reference to the net asset value of UBoT Inc.
(HK) of approximately HK$20 million as at 31
December 2019 (based on the audited account of
UBoT Inc. (HK) for the year ended 31 December
2019), which was the latest audited financial
statement available as at the date of the agreement,
and the shareholding proportion of Mr. Zuo (i.e. 5%
of the total shareholding of UBoT Inc. (HK)).
Payment date of consideration Payments of consideration were made in tranches
from 18 to 21 March 2022.
Number of shares in UBoT Inc.
(HK)
1,700,000 shares
Number of Shares allotted after
share swap
100 Shares
Number of Shares and percentage
held upon the completion of the
Capitalisation Issue and the
Share Offer
(1)
18,750,000 Shares, representing 3.75% of the total
issued share capital of the Company upon the
completion of the Capitalisation Issue and the Share
Offer.
Cost per Share and approximate
discount to mid-point of Offer
Price range
HK$0.0533 per Share, being a discount of
approximately 90.31%
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Special rights There are no special rights conferred to Mr. Tong
pursuant to the agreement in relation to the transfer
of the shares in UBoT Inc. (HK) from Mr. Zuo to
Mr. Tong.
Use of proceeds N/A
Lock-up period N/A
(2)
Public float The 18,750,000 Shares allotted and issued to Mr.
Tong in respect of his acquisition of the 1,700,000
shares in UBoT Inc. (HK) from Mr. Zuo shall not be
counted as public float.
Strategic benefits of the pre-IPO
investment to our Company
Our Directors were of the view that with Mr. Tong
being the key personnel and the largest shareholder
of our Company, the transfer of the shares in UBoT
Inc. (HK) from Mr. Zuo to Mr. Tong (i) strengthens
Mr. Tong’s commitment to our Group; (ii)
demonstrates Mr. Tong’s confidence in the operations
of our Group; and (iii) serves as an endorsement of
our Company’s performance, strength and prospects.
Notes:
(1) Assuming the Offer Size Adjustment Option is not exercised.
(2) According to the agreement for sale and purchase of 1,700,000 shares in UBoT Inc. (HK) dated 21 March
2022 and entered into between Mr. Zuo and Mr. Tong, there is no lock-up provision in the said agreement.
However, as Mr. Tong is one of our Controlling Shareholders, all the Shares held by Mr. Tong and/or his
nominee(s), i.e. Sino Success are subject to the lock-up periods as stated in Rule 13.16A(1) of the GEM
Listing Rules.
On 20 April 2022, as part of the Reorganisation, each of Mr. Tong, Busy Trade, Mr. Chan,
Ms. Wong, Mr. Shek and Mr. Tam transferred all their shares in UBoT Inc. (HK) to Abundant
Wealth, in consideration of our Company allotting and issuing 515 new Shares, 420 new Shares,
20 new Shares, 15 new Shares, 15 new Shares and 15 new Shares, all credited as fully paid, to
each of Sino Success (at the direction of Mr. Tong), Busy Trade, Mr. Chan, Ms. Wong, Mr. Shek
and Mr. Tam, respectively. Upon completion of the share transfers, UBoT Inc. (HK) became an
indirect wholly-owned subsidiary of our Company. Please refer to the paragraph headed
“Reorganisation” in this section for the summary of the major Reorganisation steps.
HISTORY, DEVELOPMENT AND REORGANISATION
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Sole Sponsor’s Confirmation
Given that (i) our Directors confirmed that the terms of the pre-IPO investment (including
the consideration) were determined on arm’s length basis; (ii) no special rights have been
granted under the pre-IPO investment; and (iii) the pre-IPO investment was completed more than
28 clear days before the date of submission of the application for the Listing, the Sole Sponsor
is of the view that the pre-IPO investment is in compliance with the interim guidance on
Pre-IPO Investments (HKEx-GL29-12) and the Guidance on Pre-IPO investments
(HKEx-GL43-12) issued by the Stock Exchange, whereas the Guidance on Pre-IPO Investments
in convertible instruments (HKEx-GL44-12) issued by the Stock Exchange is not applicable.
UBoT Inc. (SG)
UBoT Inc. (SG) was incorporated in Singapore with limited liability on 18 January 2008,
and has an issued share capital of S$1,000 divided into 1,000 shares, of which 1,000 shares
representing 100% of the ordinary shares of UBoT Inc. (SG) were allotted and issued to UBoT
Inc. (HK). The principal activities of UBoT Inc. (SG) is process and industrial plant engineering
design and consultancy services. UBoT Inc. (SG) specialises in technical and customer service
support.
On 20 April 2022, as part of the Reorganisation, UBoT Inc. (SG) became an indirect
wholly-owned subsidiary of our Company. Please refer to the paragraph headed “Reorganisation”
in this section for the summary of the major Reorganisation steps.
UBoT Enterprise
UBoT Enterprise is a limited liability company established in the PRC on 14 April 2010 as
a wholly foreign-owned enterprise with an initial registered capital of HK$8,000,000. On 6 May
2014, the registered capital of UBoT Enterprise was increased by HK$500,000. As at the Latest
Practicable Date, UBoT Enterprise had a registered capital of HK$8,500,000, of which
HK$8,000,000 had been fully paid-up. The entire registered share capital of UBoT Enterprise
was wholly-owned by UBoT Inc. (HK). Pursuant to the business licence of UBoT Enterprise, its
business scope covers production and sale of plastic products (including precision plastic trays
for integrated circuits, micro-precision injection moulded plastic packaging products, plastic
carrier tapes), cover tapes and plastic moulds, and establishment of R&D institutions for the
R&D of special packaging materials for semiconductors; all subject to applicable laws and
regulations, including but not limited to any necessary permit or approval from relevant
authorities. UBoT Enterprise has been a wholly-owned subsidiary of UBoT Inc. (HK) since its
inception.
On 20 April 2022, as part of the Reorganisation, UBoT Enterprise became an indirect
wholly-owned subsidiary of our Company. Please refer to the paragraph headed “Reorganisation”
in this section for the summary of the major Reorganisation steps.
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UBoT Electronic Packing
UBoT Electronic Packing is a limited liability company established in the PRC on 25
December 2019 as a wholly foreign-owned enterprise with an initial registered capital of
RMB7,000,000. According to the articles of associations of UBoT Electronic Packing, all its
registered capital shall be fully paid-up by 31 December 2050. As at the Latest Practicable Date,
none of the registered capital had been paid and the entire registered capital was wholly-owned
by UBoT Enterprise. Pursuant to the business licence of UBoT Electronic Packing, its business
scope covers R&D of electronic special materials; manufacture of electronic components; sale of
packaging materials and products; technical services, technical development, technical advice,
technical exchange, technical transfer, technical promotion; sale of plastic products; sale of
moulds; sale of semiconductor discrete devices; wholesale of electronic components; retail of
electronic components, and with permission, import and export of goods; import and export of
technology; all subject to applicable laws and regulations, including but not limited to any
necessary permit or approval from relevant authorities. UBoT Electronic Packing has been an
indirectly wholly-owned subsidiary of UBoT Inc. (HK) since its inception.
On 20 April 2022, as part of the Reorganisation, UBoT Electronic Packing became an
indirect wholly-owned subsidiary of our Company. Please refer to the paragraph headed
“Reorganisation” in this section for the summary of the major Reorganisation steps.
UBoT Shanghai
UBoT Shanghai was a limited liability company established in the PRC on 20 December
2023 as a wholly foreign-owned enterprise with a registered capital of RMB500,000. The entire
registered share capital of UBoT Shanghai is wholly-owned by UBoT Inc. (HK). Pursuant to the
business licence of UBoT Shanghai, its business scope covers, among other matters, marketing
planning, business management and consulting, conference and exhibition services, computer
system services, technical services, technology development consulting exchange transfer and
promotion, information technology consulting services (excluding licensing information
consulting services), social and economic consulting services, advertising agency design and
production, graphic design, import and export of goods and technology (save and except for
projects that require special approval according to law of the PRC). UBoT Shanghai has been a
wholly-owned subsidiary of our Group since its inception.
UBOTIC
UBOTIC was incorporated in Hong Kong with limited liability on 11 August 2009, of
which 100 shares, credited as fully paid, representing the entire issued share capital in UBOTIC,
was allotted and issued to UBoT Inc. (HK). Since its incorporation, UBOTIC specialises in the
provision of R&D services for MEMS and sensor products packaging technology.
On 20 April 2022, as part of the Reorganisation, UBoT Inc. (HK) transferred all its shares
in UBOTIC to Sino Key in consideration of our Company allotting and issuing 514 new Shares,
420 new Shares, 20 new Shares, 15 new Shares, 15 new Shares and 15 new Shares, all credited
HISTORY, DEVELOPMENT AND REORGANISATION
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as fully paid, to each of Sino Success, Busy Trade, Mr. Chan, Ms. Wong, Mr. Shek and Mr. Tam,
respectively, at the direction of UBoT Inc. (HK). Upon completion of the share transfers,
UBOTIC became an indirect wholly-owned subsidiary of our Company. Please refer to the
paragraph headed “Reorganisation” in this section for the summary of the major Reorganisation
steps.
UBOTIC IP
UBOTIC IP was incorporated in Hong Kong with limited liability on 1 December 2019, of
which 100 shares, credited as fully paid, representing the entire issued share capital in UBOTIC
IP, was allotted and issued to Mr. Tong. UBOTIC IP is principally engaged in investment
holding and holding of intellectual properties of our Group.
On 20 April 2022 as part of the Reorganisation, UBOTIC IP became an indirect
wholly-owned subsidiary of our Company. Please refer to the paragraph headed “Reorganisation”
in this section for the summary of the major Reorganisation steps.
UBOTIC MEMS
UBOTIC MEMS is a limited liability company established in the PRC on 2 August 2012
with an initial registered capital of HK$15,600,000. As at its date of establishment, UBOTIC
MEMS was wholly-owned by UBoT Inc. (HK) and none of its registered capital had been
paid-up. Given that UBOTIC had accumulated loss since its inception due to its high R&D
investment costs and time was required to commercialise its MEMS and sensor packaging, the
then shareholders of UBoT (HK) had hesitation in the investment of a new R&D arm, namely
UBOTIC MEMS. The then shareholders of UBoT Inc. (HK) agreed to dispose of UBOTIC
MEMS to Mr. Tong and Mr. Ng Yu Tung at its initial stage and that UBOTIC MEMS would take
up the R&D of new products UBOTIC was not interested in. On 6 September 2012, UBoT Inc.
(HK) entered into an equity transfer agreement with Mr. Ng Yu Tung, pursuant to which UBoT
Inc. (HK) agreed to transfer 20% of the unpaid registered capital of UBOTIC MEMS to Mr. Ng
Yu Tung at nil consideration. On the same day, UBoT Inc. (HK) entered into an equity transfer
agreement with Mr. Tong, pursuant to which UBoT Inc. (HK) agreed to transfer 80% of the
unpaid registered capital of UBOTIC MEMS to Mr. Tong at nil consideration. Both Mr. Tong
and Mr. Ng Yu Tung had to assume the payment obligation in respect of the corresponding
unpaid registered capital in UBOTIC MEMS owned by them. Completion of both transfers took
place on 29 October 2012. UBoT Inc. (HK) initially established UBOTIC MEMS to undertake
R&D of MEMS and sensor packaging not undertaken by UBOTIC and new R&D projects to
expand the Group’s product portfolio. However, given their experience with UBOTIC, the then
shareholders of UBoT Inc. (HK) took a conservative approach towards investing in R&D for
new products and considered that the R&D costs at the initial stage may affect the benefits of
the then shareholders. The directors of UBoT Inc. (HK) subsequently decided to transfer
UBOTIC MEMS to Mr. Ng Yu Tung and Mr. Tong at nil consideration taking into account that
the net liability position of UBOTIC MEMS and the registered capital of UBOTIC MEMS was
not paid-up at that time.
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On 23 August 2016, in light that Mr. Ng Yu Tung wanted to leave UBoT Inc. (HK), he
entered into an equity transfer agreement with Mr. Tam, pursuant to which Mr. Ng Yu Tung
agreed to transfer 20% of the unpaid registered capital of UBOTIC MEMS to Mr. Tam at nil
consideration and Mr. Tam had to assume the payment obligation in respect of the unpaid
registered capital in UBOTIC MEMS owned by him. Completion of the said transfer took place
on 1 November 2016.
On 6 December 2021, Mr. Tam entered into an equity transfer agreement with UBOTIC IP,
pursuant to which Mr. Tam agreed to transfer 20% of the unpaid registered capital of UBOTIC
MEMS to UBOTIC IP at nil consideration. Completion of the said transfer took place on 31
December 2021.
On 6 December 2021, Mr. Tong entered into an equity transfer agreement with UBOTIC IP,
pursuant to which Mr. Tong agreed to transfer 80% of the registered capital of UBOTIC MEMS,
being the entire paid-up capital of UBOTIC MEMS in the amount of HK$4,810,000, contributed
solely by Mr. Tong, at the consideration of HK$4,810,000. Completion of the said transfer took
place on 31 December 2021.
According to the articles of associations of UBOTIC MEMS, all its registered capital
should be fully paid-up by 31 December 2023. As at the Latest Practicable Date, the paid-up
registered capital of UBOTIC MEMS was HK$4,810,000.
Pursuant to the business licence of UBOTIC MEMS, its business scope covers production
and sales of microelectromechanical system (MEMS) products, provision of high technology
services such as MEMS design, micro-precision machining, MEMS assembly and packaging, as
well as MEMS mould design and services. Establishment of R&D institutions for the R&D of
MEMS; all subject to applicable laws and regulations, including but not limited to any necessary
permit or approval from relevant authorities.
On 20 April 2022, as part of the Reorganisation, UBOTIC MEMS became an indirect
wholly-owned subsidiary of our Company. Please refer to the paragraph headed “Reorganisation”
in this section for the summary of the major Reorganisation steps.
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CORPORATE STRUCTURE IMMEDIATELY PRIOR TO THE REORGANISATION
The following chart shows the shareholding and corporate structure of our Group
immediately before the commencement of the Reorganisation:
UBoT Inc. (HK)
Hong Kong
UBOTIC
Hong Kong


UBoT Inc. (SG)
Singapore
Mr. Tong Busy Trade
Hong Kong Mr. Zuo Mr. Chan Ms. Wong Mr. Shek Mr. Tam
Mr. Tang Ms. Tang Mr.
CL Tang
Mr.
CM Tang
100%100%
100%
100%
46.5% 42.0% 5.0%  2.0% 1.5% 1.5% 1.5%
70.2% 5.0% 12.4% 12.4%
UBoT
Electronic Packing
PRC
UBoT Enterprise
PRC
80%
Mr. Tong
100%
Mr. Tam
20%
UBOTIC IP
Hong Kong
UBOTIC MEMS
PRC
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REORGANISATION
The companies comprising our Group underwent the Reorganisation in preparation for the
Listing, pursuant to which our Company became the holding company of our Group. The
Reorganisation involved the following major steps:
1. Acquisition of UBOTIC MEMS by UBOTIC IP
On 6 December 2021, UBOTIC IP acquired 80% and 20% equity interest in UBOTIC
from Mr. Tong and Mr. Tam at the consideration of HK$4,810,000 and nil, respectively,
which was determined with reference to the entire paid-up capital of UBOTIC MEMS of
HK$4,810,000 contributed solely by Mr. Tong at the time of the acquisition. Upon
completion of the equity transfer, UBOTIC MEMS became a direct wholly-owned
subsidiary of UBOTIC IP.
The transfer of the entire equity interest in UBOTIC MEMS to UBOTIC IP was
properly and legally completed and settled.
2. Incorporation of Sino Success
On 2 December 2021, Sino Success was incorporated in the BVI with limited liability,
with an authorised share capital of 50,000 shares of a single class of par value of US$1.00
each. On 28 December 2021, 1 share in Sino Success, credited as fully paid, was allotted
and issued to Mr. Tong.
3. Incorporation of our Company
On 7 February 2022, our Company was incorporated in the Cayman Islands as an
exempted company with limited liability, with an authorised share capital of HK$380,000
divided into 380,000,000 Shares of HK$0.001 each, of which one Share was allotted and
issued, credited as fully paid at par, to the initial subscriber, which was transferred for cash
at nominal consideration to Sino Success on the same date.
4. Incorporation of Abundant Wealth
On 26 November 2021, Abundant Wealth was incorporated in the BVI with limited
liability, with an authorised share capital of 50,000 shares of a single class of par value of
US$1.00 each. On 8 March 2022, 1 share in Abundant Wealth, credited as fully paid, was
allotted and issued to our Company.
5. Incorporation of Sino Key
On 17 November 2021, Sino Key was incorporated in the BVI with limited liability,
with an authorised share capital of 50,000 shares of a single class of par value of US$1.00
each. On 8 March 2022, 1 share in Sino Key, credited as fully paid, was allotted and issued
to our Company.
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6. Acquisition of UBOTIC IP by UBOTIC
On 31 March 2022, UBOTIC acquired all the shares in UBOTIC IP, representing its
entire issued share capital, from Mr. Tong at the consideration of HK$61,000, which was
determined with reference to the net asset value of UBOTIC IP based on the then latest
unaudited management account of UBOTIC IP as at 28 February 2022. Upon completion of
the share transfer, UBOTIC IP became a direct wholly-owned subsidiary of UBOTIC.
The transfer of all the shares in UBOTIC IP to UBOTIC was properly and legally
completed and settled.
7. Acquisition of UBOTIC by Sino Key
On 20 April 2022, UBoT Inc. (HK) transferred all its shares in UBOTIC to Sino Key
in consideration of our Company, at the request of Sino Key, allotting and issuing 514 new
Shares, 420 new Shares, 20 new Shares, 15 new Shares, 15 new Shares and 15 new Shares,
all credited as fully paid, to each of Sino Success, Busy Trade, Mr. Chan, Ms. Wong, Mr.
Shek and Mr. Tam, respectively at the direction of UBoT Inc. (HK). Meanwhile, Sino Key
allotted and issued 99 new shares in it to our Company in light of our Company allotting
and issuing new Shares as consideration for the acquisition of the entire issued share
capital of UBOTIC.
The transfer of all the shares in UBOTIC to Sino Key was properly and legally
completed and settled.
8. Acquisition of UBoT Inc. (HK) by Abundant Wealth
On 20 April 2022, each of Mr. Tong, Busy Trade, Mr. Chan, Ms. Wong, Mr. Shek and
Mr. Tam transferred all his/her/its shares in UBoT Inc. (HK) to Abundant Wealth in
consideration of our Company allotting and issuing 515 new Shares, 420 new Shares, 20
new Shares, 15 new Shares, 15 new Shares and 15 new Shares, all credited as fully paid, to
each of Sino Success (at the direction of Mr. Tong), Busy Trade, Mr. Chan, Ms. Wong, Mr.
Shek and Mr. Tam, respectively. Meanwhile, Abundant Wealth allotted and issued 99 new
shares in it to our Company in light of our Company allotting and issuing new Shares as
consideration for the acquisition of the entire issued share capital of UBoT Inc. (HK).
The transfer of all the shares in UBoT Inc. (HK) to Abundant Wealth was properly and
legally completed and settled.
9. Establishment of UBoT Shanghai
On 20 December 2023, UBoT Shanghai was established in Shanghai, the PRC, as a
wholly foreign-owned enterprise with limited liability. UBoT Shanghai has a registered
capital of RMB500,000, which is wholly-owned by UBoT Inc. (HK). Hence, UBoT
Shanghai is an indirectly wholly-owned subsidiary of our Company.
HISTORY, DEVELOPMENT AND REORGANISATION
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CORPORATE STRUCTURE IMMEDIATELY AFTER COMPLETION OF THE
REORGANISATION BUT BEFORE COMPLETION OF THE SHARE OFFER AND THE
CAPITALISATION ISSUE
Upon completion of the Reorganisation set out above, our Company became the holding
company of our Group. The following chart sets out the shareholding and corporate structure of
our Group immediately after the Reorganisation but prior to the completion of the Capitalisation
Issue and the Share Offer (without taking into account of any Shares which may be allotted and
issued by our Company pursuant to the exercise of the Offer Size Adjustment Option and the
exercise of any options which may be granted under the Share Option Scheme):
UBoT Inc. (HK)
Hong Kong
UBOTIC
Hong Kong
Busy Trade
Hong Kong Mr. Chan Ms. Wong Mr. Shek Mr. Tam
Mr. Tang Ms. Tang Mr.
CL Tang
Mr.
CM TangMr. Tong
Abundant Wealth
BVI
100%
UBoT Inc. (SG)
Singapore
UBoT Enterprise
PRC
UBoT
Electronic Packing
PRC
100% 100%
UBoT Shanghai
PRC
100%
100%
51.5% 42.0% 2.0% 1.5% 1.5% 1.5%
70.2% 5.0% 12.4% 12.4%
100%
100%
100% 100%
 UBOTIC IP
Hong Kong
UBOTIC MEMS
PRC
Our Company
Cayman Islands
100%
100%
Sino
Success
BVI
Sino Key
BVI
HISTORY, DEVELOPMENT AND REORGANISATION
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CORPORATE STRUCTURE IMMEDIATELY AFTER COMPLETION OF THE
REORGANISATION, THE SHARE OFFER AND THE CAPITALISATION ISSUE
The following chart sets forth the shareholding structure of our Group immediately
following the Capitalisation Issue and the Share Offer (without taking into account of any Shares
which may be allotted and issued by our Company pursuant to the exercise of the Offer Size
Adjustment Option and the exercise of any options which may be granted under the Share
Option Scheme):
UBoT Inc. (HK)
Hong Kong
UBOTIC
Hong Kong

Sino
Success
BVI
 Busy Trade
Hong Kong Mr. Chan Ms. Wong Mr. Shek Mr. Tam
Mr. Tang Ms. Tang Mr.
CL Tang
Mr.
CM Tang Mr. Tong
Abundant
Wealth
BVI
Sino Key
BVI
100%
UBoT Inc. (SG)
Singapore
UBoT Enterprise
PRC
UBoT
Electronic Packing
PRC
100% 100%
100%
100%
UBoT Shanghai
PRC
38.625% 31.5% 1.5% 1.125% 1.125% 1.125%
70.2% 5.0% 12.4% 12.4%
100%
100%
100%
100%
100%
UBOTIC IP
Hong Kong
UBOTIC MEMS
PRC
Our Company
Cayman Islands

100%
Public
shareholders
25%
HISTORY, DEVELOPMENT AND REORGANISATION
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PARTIES ACTING IN CONCERT
On 25 March 2022, Mr. Tong and Busy Trade entered into the Acting in Concert
Confirmation, whereby they acknowledged and confirmed that:
(a) despite the respective legal ownership of each shareholder in UBoT Inc. (HK) during
the Track Record Period, Mr. Tong and Busy Trade have had the mutual understanding
and arrangement all along to act in concert with each other in exercising their
respective powers as shareholders of UBoT Inc. (HK), to collectively control UBoT
Inc. (HK) in obtaining benefits from the activities of UBoT Inc. (HK); and
(b) they are parties acting in concert (having the meaning as ascribed thereto in the
Takeovers Code) in respect of UBoT Inc. (HK) during the Track Record Period and up
to the date of the Acting in Concert Confirmation.
Pursuant to the Acting in Concert Confirmation, each of Mr. Tong and Busy Trade
confirmed the existence of the mutual understanding and arrangement in the past, and agreed to
act in concert for all operational, management and financial matters in relation to UBoT Inc.
(HK) for so long as (i) Busy Trade remains interested (either directly or indirectly) in the share
capital of UBoT Inc. (HK); and (ii) Mr. Tong remains interested (either directly or indirectly) in
the share capital of UBoT Inc. (HK) and/or remains as the key management member of UBoT
Inc. (HK), including but not limited to the following arrangement (the “ Agreed
Arrangements ”):
(i) they have managed and controlled and shall continue to manage and control, directly
or indirectly, the members of our Group on a collective basis and they have made and
shall continue to make collective decisions in respect of the commercial decisions and
the financial and operating policies of the members of our Group;
(ii) they have given and shall continue to give unanimous consent, approval or rejection
on any other material issues and decisions in relation to the businesses of the members
of our Group;
(iii) they have agreed to consult and have consulted, and shall continue to agree to consult,
and consult, each other in advance so as to reach unanimous consensus among
themselves in respect of all decisions and resolutions passed or proposed to be passed
in all meetings of shareholders and directors of our Group; and
(iv) they have cooperated and shall continue to cooperate with each other to obtain and
maintain the consolidated control and the management of our Group.
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Immediately after the completion of the Reorganisation, UBoT Inc. (HK) became
wholly-owned by Abundant Wealth, which in turn was wholly-owned by our Company. Mr. Tong
(through his investment vehicle, Sino Success) and Busy Trade will together be entitled to
exercise and control approximately 70.125% of the entire issued share capital of our Company
upon the completion of the Capitalisation Issue and the Share Offer (without taking into account
of any Shares which may be allotted and issued by our Company pursuant to the exercise of the
Offer Size Adjustment Option and the exercise of any options which may be granted under the
Share Option Scheme). To translate the Agreed Arrangements in UBoT Inc. (HK) into the control
of our Company after the Reorganisation, on 15 September 2023, each of Mr. Tong, Sino
Success, Busy Trade, Mr. Tang, Ms. Tang, Mr. CL Tang and Mr. CM Tang entered into the Listco
Concert Deed in respect of the exercise of their respective powers as shareholders of our
Company and to consolidate their control over our Group. The Listco Concert Deed contains
similar terms relating to the Agreed Arrangements and the parties’ understanding, agreement and
arrangement to act in concert for the material operational, management and financial matters of
our Group for so long as they remain (directly or indirectly) as the Controlling Shareholders.
HISTORY, DEVELOPMENT AND REORGANISATION
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OVERVIEW
Established in 2005, we are a back-end semiconductor transport media manufacturer
engaging in precision manufacturing on engineering plastics casings, in which we derived our
revenue principally from the sale of tray and tray related products during the Track Record
Period. Other than specialising in the design, development, manufacture and sale of tray and tray
related products, we have also included carrier tape in our product categories since 2019. In
addition to back-end semiconductor transport media, we are also provider of MEMS and sensor
packaging. According to the F&S Report, the market share of tray and tray related products was
31.3%, 31.8% and 31.7% in the back-end semiconductor transport media industry for the year
ended 31 December 2021, 2022 and 2023 respectively. Among all the tray and tray related
products manufacturers in the back-end semiconductor transport media industry, we ranked the
third in the globe in 2023 in terms of sales revenue, with a market share of approximately 8.4%.
Our back-end semiconductor transport media products, namely (i) tray and tray related
products, which are containers which store semiconductor components during their production
and delivery processes using mainly precision engineering plastics, and (ii) carrier tape, are
mainly used for the protection of semiconductor devices, including power discrete
semiconductor device, optoelectronic, IC and sensors, etc. Our tray and carrier tape with pockets
formed in the tray or tape surface are designed for housing, safe handling, transport and storing
different semiconductor devices, including power discrete semiconductor device, optoelectronic,
IC and sensors and are ESD protective and highly thermal resistant. Our MEMS and sensor
packaging provides an encasement designed to promote the electrical contacts that deliver
signals to the circuit board of an electronic device and also to protect the MEMS and sensors
from potentially damaging external elements and the corrosive effects of age. Supported by our
R&D and material engineering department and sales and marketing personnel, as well as our
customizable manufacturing platform and design enablement services, we are able to cater a
great variety of customer-specific requests and ease up the timely completion of complex
designs that are optimized in terms of cost and performance. During the Track Record Period
and up to the Latest Practicable Date, we had developed a diversified product portfolio of over
1,500 product specifications in various dimensions with different thermal, mechanical and
physical properties metrics, which satisfy our customers’ specifications and required quality
standards.
The value chain of the semiconductor and integrated circuit industry is comprised of
industry players in the upstream, midstream and downstream.
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Set out below is an illustration of the value chain of the semiconductor industry:
Value chain of semiconductor industry
IC Assembly, Packaging &
Testing (Back-end functions)
Upstream
Midstream
Electronics Production
Automotive Consumer
Electronics
Industrial and
Construction
Aerospace and
Defence
Communications and
Networking
Downstream
IC/Wafer Manufacturing
(Front-end/Foundries)
Chemical
Research and
Development
Draft, advance and
streamline technology
throughout the
supply chain
Design (Fabless)
IP
Design/
IC ODM
IC
Design
Fabless – Foundry model
Integrated Device Manufacturer (IDM) model
Integrated Complete Process: Design, IC/Wafer Manufacturing, IC Assembly, Packaging, Testing
Distributors and Sales Channels
Transport media, Equipment manufacturers, Raw materials suppliers
Production Process
and Testing Facility
(Turnkey Solution)
Circuit
Board
IC
Lead
Frame
IC
Module
Photo
mask
Production
Process and
Testing
Facility
Our Group is a supplier for upstream back-end functions of the semiconductor and
integrated circuit industry (i.e. assembly, packaging and testing). For more details on the
functions and value of back-end semiconductor transport media manufacturers, please refer to
the section headed “Industry Overview – Global Semiconductor And Integrated Circuit (IC)
Industry Overview – Value Chain” in this prospectus.
We set up two production factories in Dongguan, the PRC. As at the Latest Practicable
Date, we had four production facilities, in which two of them are responsible for the
manufacturing of tray and tray related products and each of the rest is responsible for production
of carrier tape and MEMS and sensor packaging. According to the F&S Report, the global
market size of back-end semiconductor transport media industry will increase at a CAGR of
7.8% from approximately US$854.6 million in 2024 to approximately US$1,156.1 million in
2028, while the global market size of MEMS and sensor packaging industry will increase at a
CAGR of 5.2% from approximately US$6.9 billion in 2024 to approximately US$8.5 billion in
2028. In order to capture the market growth for both back-end semiconductor transport media
industry and MEMS and sensor packaging industry, we plan to increase our production
capacities and capabilities by upgrading our production facilities in the PRC, in particular,
purchasing automated machines and implementing production in the Philippines for carrier tape.
With over 15 years of development, we have established a broad customer base including
some of the international IDM Companies, fabless-foundry semiconductor companies and IC
assembly and packaging test house, such as STMicroelectronics. According to F&S Report, for
IDM companies, each of them carries out all or most of the stages of production including
design, manufacturing, and assembly, testing, and packaging, while some production procedures
of IDM may also be subcontracted to other contract manufacturers. IDM model derives
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efficiencies from vertical integration. For fabless-foundry semiconductor companies, production
is split by (i) design; (ii) IC/Wafer Manufacturing; and (iii) IC Assembly, Packaging & Testing.
According to the F&S Report, fabless-foundry model derives efficiencies from delineation of
task and specialisation. The majority of sales of our Group has been derived from the sales of
tray and tray related products worldwide, especially in Southeast Asia, the PRC and Taiwan.
Further, we have also established sales network in Europe, the U.S., Korea and Japan. For each
of the three years ended 31 December 2023, approximately 35.6%, 35.6% and 36.6% of our
revenue was generated from our sales in the Southeast Asia countries, while approximately
27.3%, 24.3% and 26.1% of our revenue was generated from our sales in the PRC for each of
the relevant year. We also generated approximately 19.3%, 23.0% and 18.0% of our revenue
from our sales in Taiwan for each of the three years ended 31 December 2023. To serve our
customers in close manner, we set up our headquarters in Hong Kong and maintain four offices
in Hong Kong, Dongguan, the PRC, Shanghai, the PRC and Singapore and eight sales points
around the world in which we engaged sale representatives, which are located in (i) Shanghai,
the PRC, (ii) Taipei, Taiwan, (iii) Kaohsiung, Taiwan, (iv) Seoul, Korea, (v) Melaka, Malaysia,
(vi) Italy, Europe, (vii) Arizona, the United States and (viii) the Philippines, respectively. As we
have developed an established clientele worldwide in the back-end semiconductor transport
media industry, we intend to continue to work closely with our global customers and to leverage
our scale and technology leadership to further address opportunities in the fast growing
semiconductor industry, especially in the PRC.
Our revenue increased from approximately HK$202.9 million for the year ended 31
December 2021 to approximately HK$257.6 million for the year ended 31 December 2022 and
decreased to approximately HK$189.0 million for the year ended 31 December 2023, in which
we generated a substantial portion of our revenue from the sale of tray and tray related products,
which accounted for approximately 96.3%, 95.9% and 91.2% of our total revenue for the year
ended 31 December 2021, 31 December 2022 and 31 December 2023, respectively. Our net
profit decreased by approximately 17.4% from approximately HK$26.4 million for the year
ended 31 December 2021, to approximately HK$21.8 million for the year ended 31 December
2022 owing to the effect of listing expenses in the amount of approximately HK$10.0 million.
For the year ended 31 December 2023, our net profit decreased by approximately 76.9% from
approximately HK$21.8 million for the year ended 31 December 2022 to approximately HK$5.0
million for the year ended 31 December 2023.
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COMPETITIVE STRENGTHS
We have been growing in terms of our size, market share and financial performance
throughout the years and we believe the following competitive strengths contribute to our
success:
Our business is semiconductor industry driven and we will be benefited from the
long-term growth of the global semiconductor industry
Our semiconductor transport media products, namely JEDEC tray and carrier tape, are
critical for different stages of the manufacturing process of semiconductor devices.
Therefore, our customers are mainly from the semiconductor industry and our business is
highly driven by the semiconductor industry. Back-end semiconductor transport media
serves as an essential and complementary containment product for semiconductor devices
during transportation, especially when semiconductor end-products and subassemblies are
frequently transported regionally and globally along the supply chain given the surging
demand for quicker turnaround in recent years. In turn, back-end semiconductor shall be
continuously driven by the robust growth of the semiconductor industry. Further, the
demand for back-end semiconductor transport media is also highly dependent on the
downstream demand from brand owners and end-customers for electronics products, which
are embedded with integrated circuits and chips. Driven by technological innovation, the
demand for various electronic products such as mobile phones, notebooks,
telecommunication servers, automotive, smart home and smart wearables have been
propelled. The continuous increase in penetration of electronic devices and digitalisation in
various application circumstances, coupled with strong product replacement cycle in view
of uprising technologies such as 5G networking and Internet of Things, has spurred the
demand for semiconductor products and thereby the demand for back-end semiconductor
transport media.
According to the F&S Report, the global market size of semiconductor industry by
sales value increased at a CAGR of 11.6% from 2019 to 2022 but showed a decrease of
8.1% in 2023 and is forecasted to increase at a CAGR of 8.8% from US$595.3 billion in
2024 to US$832.7 billion in 2028, in which semiconductor industry in the PRC is expected
to outgrow the other markets according to the F&S Report. In recent years, there are a
growing amount of companies undertaking the role of IC wafer manufacturer, IC assembly
and packaging testing, which is attributable to the policies implemented by the PRC
Government in support of the semiconductor industry. In 2023, China has accounted for
35.4% of the market share of global semiconductor industry and it is estimated that the
market share of China will remain at 36.7% in 2024.
According to the F&S Report, in 2023, we ranked the third among all the tray and tray
related products manufacturers in the global back-end semiconductor transport media
industry. We record a growth in revenue from HK$202.9 million for the year ended 31
December 2021 to HK$257.6 million for the year ended 31 December 2022. In particular,
for the year ended 31 December 2021 and 2022, we recorded revenues of HK$55.5 million
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and HK$62.6 million, or approximately 27.3% and 24.3%, of our total revenues, from
China-based customers, respectively. Despite we recorded decrease in revenue for the year
ended 31 December 2023 as compared to the year ended 31 December 2022, our Directors
are of the view that such decrease was attributed by the slowdown in the semiconductor
industry in the year ended 31 December 2023 due to factors such as geopolitical tensions
and the global macroeconomic downturn, which was a short-term adjustment of the
semiconductor industry and is not expected to be long-term in nature. In particular, the
market size of the global semiconductor industry decreased by approximately 8.1% in 2023.
For details, please refer to the paragraphs headed “Financial Information – Historical
Financials”.
As one of the market leaders in the tray and tray related products manufacturers in the
global back-end semiconductor transport media industry, at the early stage of our business
after we incorporated UBoT Inc. (HK) in 2005, we mainly undertook sales and marketing,
product design and development, mould tooling design, management and manufacturing and
material engineering while we consigned products manufacturing to other OEM factory. In
2006, we established business relationship with three of our major customers. In view of
the continuous increase in the sales volume of our tray and tray related products, we
commenced operation of our first production factory in Shatian, Dongguan, Guangdong
Province, the PRC in 2010. In 2021, we also commenced operation of our second
production factory in Houjie, Dongguan, Guangdong Province, the PRC. With our
manufacturing base in Dongguan and our broad presence of our offices and sales points, we
are able to reach, build and maintain long-term relationships with international IDM
companies, fabless-foundry semiconductor companies and IC assembly and packaging test
house around the globe. Our manufacturing base in Dongguan also serves as a platform to
capture the anticipated continued growth of the PRC’s semiconductor industry. We believe
that our flexibilities and capabilities in production would allow us to capture opportunities
from the accelerated market trend and better serve our existing and potential customers in
the PRC or overseas markets. Over the years, we have continued to invest in our
manufacturing technologies for applications of advanced materials in our products and
enhance our production efficiency, in order to further strengthen our position in the
back-end semiconductor transport media and MEMS and sensor packaging industry. With
our established position in the back-end semiconductor transport media industry, and as our
business is semiconductor industry driven, we believe we will be benefited from the
long-term growth of the semiconductor industry.
Our established position in the back-end semiconductor transport media industry
allows us to further pursue opportunities in sales of carrier tape and other new
products in the long-term growth of the semiconductor industry in the PRC and
overseas markets
As one of the market leaders in the tray and tray related products manufacturers in the
global back-end semiconductor transport media industry, we have established a large
customer base for our back-end semiconductor transport media products. During the Track
Record Period, we derived our revenue principally from the sales of tray and tray related
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products and carrier tape has been included in our product categories since 2019. In many
sectors and applications nowadays, tape-and-reel packing solution has also become an
important packaging method for semiconductor devices. While trays are commonly used for
housing semiconductor devices with medium and large size, tape-and-reel packing solution
can contain more semiconductor devices in relatively small size, which can drastically
reduce the assembly down time in the manufacturing process, and is commonly used for
feeding components to automatic-placement machines for surface mounting on board
assemblies. Further, the packaging method of semiconductor devices has been evolving into
miniaturisation and greater end product effectiveness. The latest packaging method designs
with protocol code namely QFN style, DFN and WLCSP are fast growing segment,
leveraging surface mount and wafer level technique, which streamlines the manufacturing
process, and are increasingly applied in different types of electronic products, such as
electric vehicles, consumer electronics and medical devices. As the carrier tape and reel
configuration is commonly used for feeding components to automatic placement machines
for surface mounting on board assemblies, the continuous advancement in surface mount
packaging method shall propel the demand for carrier tape and reel in the long run.
According to the F&S Report, the global industry of back-end semiconductor transport
media is anticipated to reach US$1,156.1 million in 2028 from US$854.6 million in 2024,
growing with a CAGR of 7.8%. In particular, the global market of carrier tape and reel is
expected to increase from US$555.5 million in 2024 to US$736.2 million in 2028 at a
CAGR of 7.3%.
Pursuant to the F&S Report, the downstream customers, such as IDM companies and
fabless-foundry semiconductor companies, utilize both tray and tray related products and
carrier tape as back-end semiconductor transport media throughout their manufacturing
process. With our operating history of over 15 years, we have developed an established
clientele worldwide in the back-end semiconductor transport media industry. During the
Track Record Period, we were a supplier of back-end semiconductor transport media for
over 300 customers. In 2023, we distributed our products to over 250 delivery points. We
believe that our established broad and solid relationship with customers allows us to
capture the market demand on carrier tape products from our existing customers. In view of
the development of carrier tape and reel market and leveraging on our established clientele
in the back-end semiconductor transport media industry, we intend to pursue opportunities
in sales of carrier tape under the fast-growing semiconductor industry in the PRC and
overseas markets, and therefore, we set up our automated production facilities for trial
production of carrier tape in 2018. As an established player in the global back-end
semiconductor transport media industry and the emerging growing trend of the use of
tape-and-reel packing solution in the market, we are therefore also well positioned to
capture growing carrier tape and reel market in the globe by leveraging our established
position in providing back-end semiconductor transport media as well as our existing solid
relationships with semiconductor manufacturers.
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Vertically integrated business model with R&D and product development capabilities
and self-operated production factories enable us to offer a comprehensive product
portfolio to our customers
We adopt the vertically integrated business model to get control over our principal
business operation, involving design, development, manufacture and sale of back-end
semiconductor transport media and providing MEMS and sensor packaging, as a market
player in the semiconductor industry. With the capabilities to perform all steps of work,
ranging from research and development, manufacture and sales, our Group operates our
own production factories in Dongguan, the Guangdong Province in the PRC without the
need of outsourcing any research and development and production work to third parties.
Our own production factories have been capable of handling the required production work
for the orders placed by our customers. Our production factories were equipped with skilled
labour and machineries for all steps involved in production of back-end semiconductor
transport media and MEMS and sensor packaging, including but not limited to JEDEC tray,
carrier tape, flow sensor module and IC packaging, including semi-hermetic sensor
packaging (ERAQFN).
After 15 years of operating history with our strong R&D and product development
capabilities, we have developed a diverse product portfolio with 1,500 different product
specifications. When our customers make enquiries with us, they would set out different
specifications in terms of dimension, shape, colour, combination of material and types of
the back-end semiconductor transport media. With our diverse product portfolio, we may
recommend product specifications from our existing product portfolio to our customers if
they match our customers’ requirements. Otherwise, our R&D and material engineering
department, comprising 33 personnel with R&D expertise in the back-end semiconductor
transport media and MEMS and sensor packaging industry, would modify and adjust our
existing product specifications to meet with our customers’ requirements or design and
develop new products from scratch in a timely manner. We also conduct market research
from time to time and gather information received by our sales and marketing personnel
about the market in order to understand and analyse the market trend for our own R&D
initiatives for the design and development of new products that can be used for new
semiconductor devices in the semiconductor industry. During the Track Record Period, we
have developed eleven new product material and design applications and conducted 22
R&D projects on new product innovation, material advancement and manufacturing process
enhancement. For instance, for tray and tray related products, we developed lightweight
MPPO (carbon nanotube embedded) material with high-level of cleanliness for trays in
Cleanroom application and high-cleanliness bare-die tray laminated with a layer of
temperature-sensitive special tape which facilitates the picking process of semiconductor
devices; for carrier tape, we developed 2D laser code marking on carrier tape, which
enables individual identification and tracking of each semiconductor device that stores
along the carrier tape, in order to facilitate our customer’s manufacturing process; and for
MEMS and sensor packaging, we developed exposed die QFN/DFN packaging, which
provides robust protection to the sensing die and enables the flow sensor module to pass
stringent stress tests required by customers. As at the Latest Practicable Date, we have a
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total of 15 registered patents in the PRC, the United States and Hong Kong. For details of
our R&D capabilities, please refer to the paragraph headed “Research and Development” in
this section. With our diverse product portfolio and our strong R&D and product
development capabilities, we are able to keep track of the fast growing semiconductor
industry and we are able to retain our existing customers and attract new customers of
renowned international brands and multi-national corporations from the semiconductor
industry.
Given the substantial amount of variations in our customer’s requirements, it is
essential and we are able to control the production process of our products through our own
production and facilities, so that we can manage to provide the customer-specified products
in a timely manner and better monitor the quality of our products. We are of the view that
our self-operated production function has created synergy effect to our sales function by
allowing more possibilities in our product diversification for our customer’s requirements.
Our sales network has been critical to the enhancement of our sales performance. We
have accumulated more than 15 years of operation in providing back-end semiconductor
transport media and over 10 years in providing MEMS and sensor packaging. Our
customers have grown accustomed to the sales procedures, experienced sales and marketing
personnel and location of our sales offices, sales points and third-party bonded warehouses,
after years of cooperation. Our accomplished sales function has played a key role for
keeping the continuous rise in our sales performance.
Established broad and solid relationship with major international customers from the
semiconductor industry and strong reputation with proven track record
We have been engaging in the provision of back-end semiconductor transport media
for more than 15 years under our established brand “UBoT”. As our major distribution
channel, we have set up our sales offices in Hong Kong, Dongguan, the PRC, Shanghai, the
PRC, and the Singapore and our sales points in (i) Shanghai, the PRC, (ii) Taipei, Taiwan,
(iii) Kaohsiung, Taiwan, (iv) Seoul, Korea, (v) Melaka, Malaysia, (vi) Italy, Europe, (vii)
Arizona, the United States and (viii) the Philippines where we have our sales
representatives stationed for the liaison with our potential and existing customers in the
relevant regions for the a wider coverage and presence across the world. We ranked the
third among the tray and tray related products manufacturers in the global back-end
semiconductor transport media industry with market share of approximately 8.4% in 2023
pursuant to the F&S Report. Therefore, we believe that we have developed proven track
record of high-quality products over our long years of presence.
As a supplier in the back-end semiconductor transport media industry and solution
provider in the MEMS and sensor packaging industry, our customers are mainly
multi-national corporations of semiconductor products, such as STMicroelectronics.
However, according to the F&S Report, before such semiconductor corporations establish
business relationship with any suppliers for the supply of back-end semiconductor transport
media, they generally need to conduct factory audit on such suppliers and qualify suppliers
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for relevant products. In order to be qualified by our customers, we have passed in various
aspects for the factory audit, including but not limited to quality control, raw material
management, process flow and customer support. As at the Latest Practicable Date, we are
a supplier for over 300 customers.
In addition, we have put in tremendous effort in strengthening our relationship with
our customers throughout the years after we are qualified. As at the Latest Practicable
Date, all of our major customers have maintained a business relationship with us for more
than 10 years. Our experienced sales representative stationed at our sales points frequently
gets in touch with our customers to understand their requirements and feedbacks on their
orders.
Based on the historical growth in our revenue during the Track Record Period, we
believe there will be continuous demand for our back-end semiconductor transport media
products from our customers in the coming years. According to the F&S Report,
tape-and-reel packing solution is another type of back-end semiconductor transport media,
which is able to house more semiconductor devices with relatively small size, and the
downstream customers, such as IDM companies and fabless-foundry semiconductor
companies, utilize both tray and tray related products and carrier tape as back-end
semiconductor transport media throughout their manufacturing process. Therefore, our
Directors believe that our established broad and solid relationship with customers allows us
to capture the market demand on carrier tape and reel products from our existing
customers. Further, our Directors are of the view that as our customers tend to purchase
from qualified suppliers which have passed their factory audits, it is generally easier for
our Group to obtain orders for new products from our customers. We believe that being a
qualified supplier and with our established broad and solid relationship with our customers,
it will be easier for us to capture opportunities for the sales of carrier tape from our
customer base.
Furthermore, our business operation mainly involves design, development,
manufacture and sale of back-end semiconductor transport media products. We are not
engaged in the work in the downstream segment of our industry including electronic
production work, with a vision to focus on improving our product quality and avoid any
potential competition with our customers. Our Directors are of the view that our
experienced sales and marketing personnel and strategic positioning in the industry value
chain allows us to boost up our reputation among our target customers and maintain a
stable and long term relationship with them.
We have established worldwide sales network with in-depth market penetration
supported by our sales and marketing personnel in our office and different sales points
While we have our offices in Hong Kong, the PRC and Singapore supported by our
sales, marketing and customer service department, we have also engaged sales
representatives who station in our sales points in different countries around the world and
our products are currently sold in 12 countries. As at the Latest Practicable Date, we
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covered eight sales points and eight third party bonded warehouses in different cities
around the world, which are strategically located in the major sales regions, such as
Shanghai, Taipei, Kaohsiung, Seoul, Malaysia, the Philippines, Arizona and Rome. As some
of our major customers are multi-national corporations with presence of different functions
across different regions and countries, we set up our sales points in proximity to our major
customers so that we can provide timely response and technical support and regularly visit
our customers to maintain business relationship.
The extensive geographical coverage of our offices and sales points also allow us to
provide comprehensive services and timely technical support to our multi-national clients in
different regions. Our well-established global sales representatives possess extensive
operational, engineering and technical expertise, substantial experience in the back-end
semiconductor transport media and MEMS and sensor packaging industry and in-depth
knowledge to our products, and therefore, they are able to understand customers’ needs and
accommodate their request and communicate closely with our customers during the entire
production process to ensure that our products are properly engineered in accordance with
their requested design and specifications. Our sales representatives at each sales point are
non-exclusive independent contractors of our Group and are responsible for expanding the
Group’s business on a fixed monthly income plus sales commission, ranging from 0.15% to
3.0% of the invoice value, from our Group. They cannot engage in any work that conflicts
with the work of acting as a sales representative of our Group, for example, by representing
back-end semiconductor transport media manufacturers other than our Group. Such
independent contractors primarily coordinate orders made by our clients in the region,
address technical problems and collect feedback as to the quality of our products. Our
presence in such a diverse number of locations also enabled us to keep ourselves abreast of
the latest development of our customers’ products and the market trend in the region, and
thus, we are well positioned to be able to quickly respond to and take advantage of any
expected strong economic growth or other positive market developments, such as any
expected increase in consumer spending power or demand, in any region.
Experienced management team and sales and production staff with in-depth industry
knowledge
Our professional and experienced management team has been one of the key factors
attributing to our prominent success in our business performance. As at the Latest
Practicable Date, Mr. Tong, our executive Director and controlling shareholder, had more
than 28 years of experience in the semiconductor industry and precision engineered plastics
manufacturing. Majority of our other executive Directors and senior management team also
had over 24 years of experience in the industry. Our management team is characterised by
their continual commitment to our Group, professional execution capability in the back-end
semiconductor transport media and MEMS and sensor packaging industry and financial
management knowledge. For further information on our Directors and senior management
team, please refer to the section headed “Directors and Senior Management” in this
prospectus.
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We have also retained experienced employees, especially in our sales, marketing and
customer service department, manufacturing department and R&D and material engineering
department, during our business operation in the last decade. As at the Latest Practicable
Date, our sales, marketing and customer service department consisted of 17 staff, who
possessed extensive knowledge and connection in the industry and our manufacturing
department and R&D and material engineering department consisted of 245 and 31 staff,
respectively, who have displayed specialised skills and knowledge gained through their
ample experience in production and research and development on back-end semiconductor
transport media, MEMS and sensor packaging and application of different compound
plastic material.
We believe that the extensive industry experience and requisite industry knowledge
possessed by our management and staff have been crucial to our efficient business
operation and established sales network.
BUSINESS STRATEGIES
Increase our production capacity and capabilities by promoting automation of our
production process, upgrading our production facilities and acquiring requisite machineries
As at the Latest Practicable Date, we operated two production factories, our Shatian
Production Factory and Houjie Production Factory, with four production facilities in total, and
two of them are responsible for the production of tray and tray related products and each of the
rest is responsible for the production of carrier tape and MEMS and sensor packaging,
respectively. The production facilities for tray and tray related products had an estimated
production capacity of approximately 32.9 million unit, 33.0 million unit and 30.2 million unit
of tray for the year ended 31 December 2021, 2022 and 2023, respectively, while the production
facilities for carrier tape had an estimated production capacity of approximately 6.9 million
metre of carrier tape with the width of 24mm for the each of the year ended 31 December 2021,
2022 and 2023. The production facilities for flow sensor module under MEMS and sensor
packaging had an estimated production capacity of approximately 12,000 unit for each of the
year ended 31 December 2021, 2022 and 2023, while the production facilities for semi-hermetic
sensor packaging (ERAQFN) under MEMS and sensor packaging had an estimated production
capacity of approximately 180,000 unit for each of the year ended 31 December 2021, 2022 and
2023. Our limited production capacity in particular in tray and tray related products is
demonstrated by the consistently high utilisation rates throughout the Track Record Period,
details of which are set out in the paragraph headed “Production capacity and utilization” in this
section.
According to F&S Report, the PRC market size of the back-end semiconductor transport
media industry had experienced moderate growth due to the increased digitalization of the
country and is expected to grow at a CAGR of 9.7% from US$79.5 million in 2024 to US$115.3
million in 2028 with continued development in emerging technologies in the domestic Chinese
market. In addition, due to the low labor and operating cost in Southeast Asia region and
diversification of global supply chain, Southeast Asia countries are popular sourcing destination
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for semiconductor manufacturers and IC assembly and packaging test house, and therefore, the
market size of back-end semiconductor transport media industry in Southeast Asia is expected to
reach US$442.9 million in 2028, from US$320.1 million in 2024 with a CAGR of 8.5%.
Although the utilisation rates of our production facilities decreased for the year ended 31
December 2023 due mainly to the decrease in sales orders received in the period, as a result of
the temporary slowdown in the semiconductor industry in 2023 due to factors such as
geopolitical tensions and the global macroeconomic downturn, our Directors are of the view that
the market demand of our products remains strong as the demand for semiconductor devices is
expected to increase in long-term as a result of the technological advancements.
In order to grasp the market potential in the PRC and Southeast Asia market supported by
the expected increasing demand from our customers driven by the expanding prevalence and
advancement of technology in the semiconductor industry, we plan to increase our production
capacity and capabilities by (i) upgrading our production facilities in the PRC, in order to
promote automation of the production process and increase production capacity, and (ii)
implementing production in the Philippines for carrier tape. We anticipate that the increased
level of automation in production and the increase in our production capacity would allow us to
expand our business and acquire more customers along the production chain of semiconductors.
With the increase in our production capacity and capabilities, we believe that our Group can
fulfil the demand for our products from our customers such that we can strengthen the
relationship with them, and at the same time, serve a more diversified customer base.
Upgrading our production facilities in the PRC
As at the Latest Practicable Date, we had two production factories, Shatian Production
Factory and Houjie Production Factory with a total GFA of approximately 17,089 sq. m. in
Dongguan, the PRC, equipped with four production facilities in operation. For the years ended
31 December 2021, 2022 and 2023, the effective utilisation rate of our Shatian Production
Factory for tray and tray related products is 95.4%, 89.1% and 65.2%, respectively, while the
effective utilisation rate of our Houjie Production Factory is 89.5%, 101.9% and 76.5% for the
years ended 31 December 2021 and 2022 and 2023, respectively. Our Houjie Production Factory
completed first phase of construction work and machine installation in June 2021 and the second
phase of construction work is expected to commence in mid 2024 and to be completed by the
late of 2025.
(i) Tray and tray related
Pursuant to the F&S Report, the global market size of tray and tray related products in the
back-end semiconductor transport media industry is expected to grow at CAGR of 7.8% from
2024 to 2028, and in particular, the PRC market size of tray and tray related products is
expected to grow at a greater CAGR of 10.7% from US$38.1 million in 2024 to US$57.2 million
in 2028. In view of the uprising market demand for the tray and tray related products in the
back-end semiconductor transport media industry and our high utilization of the existing
production facilities, we target to enlarge our scale of production, enhance our production
process and implement automated production infrastructures at our Shatian Production Factory
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and Houjie Production Factory for the production of tray and tray related products, which in turn
further boost up our production capacity and efficiency. During the Track Record Period, our
production capacity has been substantially utilised in our Shatian Production Factory. We target
to implement and upgrade our automated production infrastructures at our production factories to
minimize the manual processes, further boost up our production efficiency and capacity on our
manufacturing process of tray and tray related products and also increase the production
accuracy, and thus, enhance our product quality. As for the post-treatment processes on the
production of tray, including cleaning and inspection, it would be beneficial if such steps which
are labour intensive and require lower skill level involved in our production facilities are
automated to handle the substantial volume of tray and tray related products. For Houjie
Production Factory, we have already adopted a high level of automated production process by
installing automation equipment/machines when the Houjie Production Factory commenced its
operation in 2021 including high-precision injection moulding machine, dehumidifying machine,
robotic arm, and crushing machine. We also intend to adopt a gradual approach to further
increase the production capacity and automation level of the Houjie Production Factory. For the
year ended 31 December 2022, the utilisation rate of the production facilities in our Houjie
Production Factory for tray and tray related products has reached over 100% as a result of
increased production level to cope with the increase in sales. For the year ended 31 December
2023, the utilisation rate of the production facilities in our Houjie Production Factory for tray
and tray related products was 76.5% because of our decrease in production level associated with
the decline in demand as a result of the temporary slowdown in the market.
In light of the above, we intend to upgrade our production facilities in the PRC for
promoting automation and increase the capacity in the production of tray and tray related
products. Our Directors believe that a higher level of automation in our production process will
lower our production cost, in particular labour cost, and increase our production capacity and it
is important for the effective expansion of our business operation in the future. Our Directors
consider that production capacity is an important factor for international customers in their
supplier selection. Having a high production capacity allows our Group to meet with customers’
demand, broaden our market reach and continue to drive our growth of business. Semiconductor
manufacturers value a strong and stable supply chain. With expanded production capacity, our
Group would be well-positioned to capture market opportunities brought forth by the long-term
growth in the semiconductor industry.
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The following table sets out our expansion plan for tray and tray related products in the
production facilities in the PRC including the number of machine and/or equipment to be
purchases, investment costs, breakdown of net IPO proceeds to be used, key timeline for
implementation and capacity increased upon completion:
Plans Purpose Investment costs
Net IPO proceeds
to be used
Key timeline of
implementation
Capacity increased
upon completion
(i) Acquisition of automated
machine and/or equipment
 23 sets of robotic arms
 27 sets of crushing
machines
(ii) Set up a control room with
automated machineries for
crushing recycled trays and
blending material
(iii) Upgrade warehouse in Houjie
Production Factory with
automated machineries and
equipment
 Upgrade our existing
injection moulding
machines
 Enhance automation
level of our production
HK$26.4 million,
HK$17.0 million is
covered by the net
proceeds, accounting
for approximately
54.4% of the total net
proceeds. The
remaining portion of
HK$9.4 million is
covered by internal
resources
2024: HK$3.0
million
2025: HK$9.1
million
2026: HK$4.9
million
Phase one –
commence upon
the Listing Date
and be completed
by late 2024
Approximately
18 million unit upon
full operation
altogether in Shatian
Production Factory
and Houjie
Production Factory
 6 sets of three-dimensional
visual inspection systems
 35 sets of automated loading
robotic systems
 4 electric lift trucks
 Automate quality
inspection process of
tray and tray related
products to improve
quality and consistency
of our products
 Facilitate the collection
and loading of moulded
goods
Commence in
early 2025 and be
completed in late
2025
 20 sets of injection
moulding machines
with automated
ancillary equipment
 Expand production
capacity
Commence in
early 2025 and be
completed in late
2026, with five
injection moulding
machines with
automated
ancillary
equipment
purchased every
six months
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(ii) Carrier tape
According to the F&S Report, the packaging method of semiconductor devices has been
evolving into miniaturization and greater end-product effectiveness. The latest packaging method
designs with protocol code namely QFN-style, DFN and WLCSP are fast growing segment
leveraging surface mount and wafer level techniques which streamlines the manufacturing
process and are increasingly applied in different types of electronic products, such as electric
vehicles, consumer electronics and medical devices. As carrier tape and reel configuration is
commonly used for feeding components to automatic-placement machines for surface mounting
on board assemblies, the continuous advancement in surface mount packaging method shall
propel the demand for carrier tape and reel in long run. The global market size of carrier tape
and reel in the back-end semiconductor transport media industry is expected to increase at a
CAGR of 7.3% from US$555.5 million in 2024 to US$736.2 million in 2028. In order to cater
for the expected increasing demand in carrier tape products, our Directors believe that it is
imminent to increase our production capacity for carrier tape products. Therefore, we installed
our first carrier tape manufacturing line in our Shatian Production Factory to commence trial
production of carrier tape in 2018. With established clientele worldwide and the emerging
growing trend of the use of tape-and-reel-packing solution in the market, we believe that we are
well positioned to capture growing carrier tape and reel market in the globe.
Our Group intends to expand the carrier tape production capacity in both the PRC and the
Philippines to serve both existing customers and to acquire new customers.
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Our production capacity expansion plan for carrier tape in the PRC mainly involves the
acquisition of production machineries, equipment and ancillary supporting systems for our
Shatian Production Factory. The following table sets out our production capacity expansion plan
for carrier tape in Shatian Production Factory in the PRC including the number of machine
and/or equipment to be purchases, investment costs, breakdown of net IPO proceeds to be used,
key timeline for implementation and capacity increased upon completion:
Plans Purpose
Investment
costs
Net IPO
proceeds
to be used
Key timeline of
implementation
Capacity
increased upon
completion
(i) Acquisition of automated
machine and/or
equipment
 1 fully automated
rotary carrier tape
manufacturing line
 2 semi-automated
flatbed carrier tape
machines
 ancillary supporting
systems, equipment
and mould tools
(ii) Renovation of the
production area in our
Shatian Production
Factory
Increase production
capacity to capture
growing carrier tape and
reel market in the globe
HK$1.6 million,
HK$1.0 million
is covered by
the net proceeds,
accounting for
approximately
3.2% of the total
net proceeds.
The remaining
portion of
HK$0.6 million
is covered by
internal
resources
2025: HK$1.0
million
Commence in
mid 2025 and
expected to be
completed by
late 2025
Additional
annual
production
capacity of
carrier tape with
the width of 24
mm will be
approximately
4.8 million
metre upon its
full operation
For our production capacity expansion plan for carrier tape in the Philippines, please refer
to the section headed “Business – Business Strategies – Implementation Production in the
Philippines for carrier tape” below.
(iii) MEMS and sensor packaging
MEMS and sensor packaging industry is considered highly specialised industry which
requires sophisticated and long product development cycle, extensive technical know-how and
considerable investment in corresponding machinery. The industry is multidisciplinary involving
the domains of electronics, machinery, materials, process manufacturing, physics, and others.
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The demand for professionals and talents are rising significantly in view of the surging
production demand and rising complexity in designs, while the supply of manpower who are
highly proficient in scientific research is insufficient. As a result, Chinese MEMS pressure
sensor enterprises are relatively small in scale, with longer product development cycles and
require extensive research and development in manufacturing line and end-product quality prior
to mass production. For instance, a MEMS and sensor manufacturer in Suzhou disclosed in its
public transfer prospectus in 2016 that it took more than 5 years to complete the technology
development works of MEMS sensor manufacturing process and packaging process in local
foundries. Nevertheless, along with the development of IoT where it sets forth higher
requirements on the physical size, power consumption and cost of pressure sensors, the use of
MEMS and sensors has increased steadily owing to its competitive advantages and the
application scenarios have become increasingly diverse. As the MEMS and sensor packaging
industry in the PRC is currently at development stage and the market is fairly fragmented,
existing players outperform by offering steady flow of product, establishing long-standing
business relationship to maintain customer stickiness, recruiting high-caliber technical labour,
applying specialised machinery and equipment, implementing stringent and comprehensive
verification. The high degree of fragmentation in the MEMS and sensor packaging industry is
attributed to the wide variety of end products and coverage of different industries namely
consumer electronics, automotive, healthcare, industrial etc.
The proliferation of MEMS designs into electronic products, such as radio-frequency
device, pressure sensor and microphones etc., coupled with the high complexity and various
technical challenges and requirements, has precipitated a continuous demand for MEMS and
sensor packaging. According to the F&S report, the global market size by revenue of MEMS and
sensor packaging industry increased from approximately US$4,361.2 million to approximately
US$6,409.8 million from 2019 to 2023 at a CAGR of approximately 10.1% and is expected to
grow at CAGR of approximately 5.2% from 2024 to 2028 to reach approximately US$8,481.3
million.
For the year ended 31 December 2022 and 2023, our production facilities in Shatian
Production Factory for MEMS and sensor packaging (semi-hermetic sensor packaging
(ERAQFN)) recorded effective utilisation rate of over 100% because it had operated longer than
our assumption for maximum production capacity in order to meet the increased demand from
our customers as a result of the increased production in line with the increase in sales of MEMS
and sensor packaging in the year.
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In anticipation of the growing demand for MEMS and sensor packaging, we intend to
acquire automated machineries and equipment in order to increase our production capacities in
Shatian Production Factory and increase our product development capabilities, which would in
turn diversify our product portfolio on MEMS and sensor packaging. The following table sets
out our production capacity expansion plan for MEMS and sensor packaging in the Shatian
Production Factory in the PRC including the machine and/or equipment to be purchased,
investment costs, breakdown of net IPO proceeds to be used, key timeline for implementation
and capacity increased upon completion:
Plans Purpose
Investment
costs
Net IPO
proceeds
to be used
Key timeline of
implementation
Capacity
increased upon
completion
Acquisition of automated
machine and/or equipment
 moulding system
machine which enables
encapsulation method for
exposed die packaging
for special sensor module
application
 die attach machine with
higher speed and die
placement accuracy and
capability to handle more
demanding requirements
on die placement control
 automatic optical
inspection system for
promoting automation of
inspection process (a
brand new equipment to
the Company)
Increase production
capacities in Shatian
Production Factory and
increase product
development capabilities,
which would in turn
diversify our product
portfolio on MEMS and
sensor packaging
HK$5.3 million,
HK$3.4 million
is covered by
the net proceeds,
accounting for
approximately
10.8% of the
total net
proceeds. The
remaining
portion of
HK$1.9 million
is covered by
internal
resources
2025: HK$3.4
million
Divided into two
phases and is
expected to
commence in
early 2025 and
expected to be
completed by
late 2025
Additional
annual
production
capacity of
approximately
0.3 million unit
of flow sensor
module and 0.6
million unit of
semi-hermetic
sensor packaging
(ERAQFN) upon
its full operation
in the Shatian
Production
Factory
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Implement production in the Philippines for carrier tape
Southeast Asia countries such as Philippines, Malaysia, and Thailand are popular sourcing
destination for semiconductor manufacturers and IC assembly and packaging test houses due to
their competitive labor costs, which accelerated the growth of semiconductor industry in the
Southeast Asia, driving and hastening the future development of the back-end semiconductor
transport media and MEMS and sensor packaging industry in the Southeast Asia. Pursuant to the
F&S Report, in addition to the surging market demand for carrier tape and reel in the global
back-end semiconductor transport media industry, the Southeast Asia market size of the carrier
tape and reel in the back-end semiconductor transport media industry is expected to reach
US$285.8 million in 2028 from US$211.3 million in 2024 at CAGR of 7.8%. In view of the
surging market demand on carrier tape in Southeast Asia and leveraging on our established
clientele in the back-end semiconductor transport media industry, we also intend to expand our
manufacturing presence to the Philippines, in order to capture the growth of carrier tape in the
Southeast Asia market.
During the Track Record Period, our Group has been taking initiatives to increase the
product qualifications with our existing customers of carrier tape products with sizeable scale of
operations. In addition, our Group has also been in the enquiry stage with other international
customers which consisted our existing customers of tray and tray related products with whom
we have an established relationship. As at 31 December 2023, our Group has 85 ongoing carrier
tape products project (each project represents one carrier tape products under development), 26
potential customers (including both existing customers for tray and tray related products and
new customers), and 31 projects that reached the stage of providing quotation and technical
drawing to the customer. Our Directors are of the view that the qualified supplier status of our
Group for our customers of tray and tray related products will bring positive impact on the
demand of our customers for carrier tape products from us. While our Group is not the exclusive
supplier of carrier tape products of these customers and no legally-binding documents have been
entered between our Group and these customers, our Directors are of the view that this will not
impair their potential demand of our carrier tape products as it is an industry practice that
semiconductor manufacturers and the IC Assembly house have a few suppliers in different
regions to reduce operational risk in case of disruption in supply chain and an intention to
commence business relationship is indicated by having its products qualified by customers as
opposed to entering into any framework agreements or issuing any indicative order.
According to the F&S Report and as confirmed by our Directors, the fact that potential
customers began vendor audit procedure (i.e. qualifying products) is an indication that they have
intention to commence business relationship with the supplier. Given that (i) we have been
receiving enquiries from our existing customers for our carrier tape products, (ii) the sound
relationship with our customers, (iii) the industry practice of having multiple suppliers, and (iv)
the scale of operation of our existing customers, our Directors are of the view that we will be
able to obtain orders from our existing customers of tray and tray related products for carrier
tape products even though they may continue to place part of the orders with their original
suppliers.
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In light of the uncertainty from the political environment and the trade war between the
United States and China, our Directors are also of the view that the expansion plan in the
Philippines can mitigate our operational risks by having an additional production facility given
that our existing two production factories are located in the PRC. Our Directors are also of the
view that having a production factory outside of the PRC can mitigate risk of prohibition against
the products manufactured by production facilities located in the PRC or exported from the PRC
that maybe imposed due to change in political environments. Our Group is also of the view that
having a production factory in the Philippines will put our Group in a better position to establish
an entity in the Philippines and a strong arm reaching out to Southeast Asia’s customers and
carry on manufacturing activities outside of China in the event more stringent trade restrictions
are imposed on PRC entities. For details of the impact of the Trade War on our business, please
refer to the paragraphs headed “Business – Impact of Trade War on our business” in this section
below.
Our Directors are also of the view that the establishment of production plant in the
Philippines will serve to attract customers who are concerned with having diversified locations
of production facilities and enhance our price competitiveness given the lower labour costs and
logistics costs in the Philippines thus attract new customers.
In this regard, in order to implement production of carrier tape in the Philippines, we plan
to work with potential business partner who owns a production site in the Philippines with
manpower to support the basic operation of the site, while we intend to place our engineers and
machineries and equipment to be acquired by us to the production site in the Philippines. The
production site in the Philippines is expected to have a planned minimum GFA of 1,200 sq. m.,
housing one set of production facilities for carrier tape, raw material storeroom, material
crushing room, coating room, QA room, mould tooling room and office.
BUSINESS
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The following table sets out our production implementation plan for production in the
Philippines including the number of machine and/or equipment to be purchases, investment
costs, breakdown of net IPO proceeds to be used, key timeline for implementation and capacity
increased:
Plans Purpose
Investment
costs
Net IPO
proceeds
to be used
Key timeline of
implementation
Capacity
increased
Acquisition of automated
machine and/or equipment
 3 fully automated rotary
carrier tape
manufacturing lines
 6 semi-automated flatbed
carrier tape machines
 ancillary supporting
systems, equipment and
mould tools Renovation
of the production site
Expand our manufacturing
presence to the
Philippines, in order to
capture the growth of
carrier tape in the
Southeast Asia market
HK$4.7 million,
HK$3.1 million
is covered by
the net proceeds,
accounting for
approximately
9.8% of the total
net proceeds.
The remaining
portion of
HK$1.6 million
is covered by
internal
resources
2026: HK$3.1
million
Divided into two
phases and is
expected to start
by early 2026
and completed
by late 2026
Additional
annual
production
capacity will be
approximately
14.3 million
metre of carrier
tape with the
width of 24 mm
upon its full
operation
In respect of our proposed expansion in the Philippines, we had carried out an internal
feasibility study on the establishment of the production site. Based on our study, our
management team considered that our Group can leverage the historical experience in operating
OEM factory and management knowhow to capture the expected increase in demand for carrier
tape products of our customers with operations in the Southeast Asia, and the growing business
opportunities in the Southeast Asia market. For details of our historical experiences in operating
OEM factory, please refer to the section headed “History, development and reorganisation”. We
have also identified a number of favourable factors to support our expansion in the Philippines
including (i) the operation of the production site in the Philippines will be cost effective due to
competitive labour cost, low tax rates and other operating expenses; and (ii) our Group is also
able to secure the supply of raw materials for the production in the Philippines as the raw
materials will be purchased by our Group from suppliers from the PRC, Thailand and Taiwan
and then consigned to the Philippines. Our Directors also consider that the establishment of
production plant in the Philippines brings more benefits to our Group than other Southeast Asian
countries as (i) there are major customers of our Group with sizeable manufacturing sites in the
Philippines and hence our Group can better serve their demand; (ii) our Group is familiar with
the market in the Philippines considering that our revenue generated in the Philippines ranked
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first in the Southeast Asia region during the Track Record Period; and (iii) our Group has readily
available engineers to relocate in the Philippines to monitor the production process in the
product site if required.
Further, it allows our Group to enhance our competitiveness in pricing for our carrier tape
products to our customers with the proximity in the Philippines with lower unit cost per meter of
carrier tape. The table below sets forth a cost-benefit analysis of costs associated for operating a
production facility in the Philippines versus a production facility in the PRC.
Cost components
Estimated
unit cost per
meter of
carrier tape if
manufactured
in the PRC
Estimated
unit cost per
meter of
carrier tape if
manufactured
in the
Philippines
Total
estimated
cost-savings
per meter of
carrier tape
(US$) (US$) (US$)
Raw materials 0.0132 0.0132 N/A
Indirect materials 0.0053 0.0053 N/A
Labour cost (Notes1&2 ) 0.0008 0.0005 0.0003
Depreciation of right-of-use
assets/Factory rental cost (Note 3) 0.0015 0.0016 (0.0001)
Logistics cost (Note 4)
Ocean freight cost 0.0027 0.0002 0.0025
Trucking cost 0.0014 0.0001 0.0013
Terminal handling charges 0.0037 0.0003 0.0034
Other expenses (Note 5) 0.0004 0.0001 0.0003
0.0082 0.0007 0.0075
Total 0.0290 0.0213 0.0077
Notes:
We made the following principal assumptions when performing the cost-benefit analysis:
(1) The calculation is based on the estimated production output using six lanes, with 3000 meters of each lane
per hour, 22 working hours per day and 26 days of production in a month.
(2) The calculation is based on the estimation of using two operators for one machine, with one for loading
operation and another one for packing.
(3) The calculation is based on the floor area of 1,200 sq.m. of the production facility.
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(4) The logistics cost of producing carrier tapes mainly include (i) for manufacturing in the Philippines, the
shipment and delivery costs of raw materials from the PRC to the production facilities in the Philippines;
and (ii) for manufacturing in the PRC, the shipment and delivery costs of finished goods from the PRC to
the overseas warehouse for the customers of our Group in the Philippines. The calculation is based on the
assumption that the warehouse in the Philippines is located in the proximity of the production facility, the
distance and means for transportation of raw materials from the PRC to the Philippines for production is
the same as for transportation of finished goods from the PRC to the warehouse in the Philippines.
(5) Other expenses include customs clearance charges, documentation charges, chassis fees and other related
charges.
According to our cost-benefit analysis, the costs associated with implementing production
in the Philippines for carrier tape is lower than that of in the PRC with an estimated cost-saving
of approximately 26.6% mainly arising from lower labour cost and logistics cost incurred in the
Philippines.
In addition, according to the F&S Report, the Philippines is one of the manufacturing hubs
in Asia. The Philippines has a stable labour supply over the past few years, especially in the
manufacturing sector which has accounted for approximately 8% of total employment during the
2010s. Workers in the manufacturing sector generally require trainings and are skilled labours
such as machineries operators, technicians, and engineers. Further, there are more than 400
economic zones in the Philippines, each providing their own different fiscal and non-fiscal
incentives to foreign investors, amongst them some of which have large-scale production
facilities and relevant amenities. In light of the above, the availability of skilled workers and
business partners, as well as the abundant land for manufacturing site will serve to support the
development of the semiconductor market in the Philippines by our Group.
Our selection criteria of the business partner mainly include the following: (i) availability
of production site located in free trade zone with all required licenses and approvals, (ii)
availability of sufficient operators to support the production at the production site, (iii)
established transportation network of the production site to reach our customers, (iv) due
compliance of the production site with local laws and regulations, and (v) availability of dust
free manufacturing environment. As at the Latest Practicable Date, we are in the process of
selecting our business partners for such implementation plan. The Directors confirm that our
Group has conducted market research and understood the feasibility and availability of business
partners for such plan. While our Group intends to consign the product manufacturing to our
potential partner, we will undertake sales and marketing, product design and development, mould
tooling design, management and manufacturing and material engineering. We will also assign
our engineers to station in the Philippines to monitor the production process.
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The following table sets out the approximate investment costs, source of fund investment
payback and breakeven period of our upgrade and expansion plans in the PRC and the
Philippines:
Plans Approximate investment costs Source of fund
Investment payback
period
(Note)
Upgrade our
production
facilities in the
PRC
HK$33.2 million in total, including:
For tray and tray related products
HK$21.4 million is covered by
the net proceeds, or 68.4% of
the net proceeds from the
Share Offer. The remaining
portion of HK$11.8 million is
covered by internal resources.
– HK$26.4 million for (i) upgrading
our existing injection moulding
machines with robotic arms and
crushing machines; (ii) setting up a
control room with automated
machineries for crushing recycled
trays and blending material; (iii)
upgrading our warehouse in Houjie
Production Factory; and (iv)
purchasing automated machineries
and equipment
Approximately 5.8 months
assuming that full capacity is
utilized
For carrier tape
– HK$1.6 million for (i) purchasing
one fully automated rotary carrier
tape manufacturing line; (ii)
purchasing two semi-automated
flatbed carrier tape machines; (iii)
purchasing ancillary supporting
systems, equipment and mould
tools; and (iv) renovating the
production area
Approximately 34 months
assuming that 75% capacity is
utilized
For MEMS and sensor packaging
– HK$5.3 million for acquiring
automated machineries and
equipment
Approximately 9.9 months
assuming that full capacity is
utilized
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Plans Approximate investment costs Source of fund
Investment payback
period (Note)
Implement
production in the
Philippines for
carrier tape
HK$4.7 million in total for (i)
purchasing three fully automated rotary
carrier tape manufacturing lines; (ii)
purchasing six semi-automated flatbed
carrier tape machines; (iii) purchasing
ancillary supporting systems, equipment
and mould tools; and (iv) renovating
the production site
HK$3.1 million is covered by
the net proceeds, or 9.8% of
the net proceeds from the
Share Offer. The remaining
portion of HK$1.6 million is
covered by internal resources.
Approximately 35 months
assuming that 75% capacity is
utilized
Note: Assuming each of the future plans has been fully implemented.
For further details, please see “Future Plans and Use of Proceeds” in this prospectus.
Intensify our sales and marketing efforts in the global market including the PRC market
Global market
According to the F&S Report, in respect of the global manufacturing market of back-end
semiconductor transport media, the global market size is expected to grow from US$854.6
million in 2024 to US$1,156.1 million in 2028. In particular, for tray and tray related products,
the global market size is expected to grow from US$274.8 million in 2024 to US$389.5 million
in 2028, and for carrier tape and reel, the global market size is expected to grow from US$555.5
million in 2024 to US$736.2 million in 2028. Further, in respect of the global market of MEMS
and sensor packaging industry, the global market size is expected to grow from US$6,925.8
million in 2024 to US$8,481.3 million in 2028. In light of the uprising trend of the back-end
semiconductor transport media market and the MEMS and sensor packaging market, we plan to
increase our market share in the industry by enhancing our sales efforts and market penetration
in existing markets, expanding our customer base, exploring new markets and increasing
recognition of our Group worldwide. We believe in the importance of adopting effective
marketing strategies as a means of increasing the market awareness and recognition of our
Group so as to increase the market share and to secure sustainable growth in the long-run.
Amongst others, we intend to achieve the above through establishing new sales point in Boston,
the U.S. by recruiting one sales representative and two sales representatives for technical
support function in each of Malaysia and the Philippines in support of the sales and marketing
function by providing customer services, quality assurance and technical support to the
customers, with a view to expand our sales and marketing in each region to focus on the
soliciting of new customers. The selection of cities or countries to locate the sales
representatives of our Group is based on the proximity of the location to our major customers
and to maintain customer relationships and providing customer services when required. For
instance, Customer D, which is a major customer of our Group, is headquartered in Boston for
its MEMS and sensor packaging business. Customer D, Customer E and STMicroelectronics,
which are our major international customers, have manufacturing plants in Malaysia and the
Philippines.
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PRC market
From the perspective of regional development, the manufacturing market of back-end
semiconductor transport media in the PRC have demonstrated growth potential with forecasted
CAGR in market size of 9.7% between 2024 and 2028 and is expected to grow from US$79.5
million in 2024 to US$115.3 million in 2028, respectively, pursuant to the F&S Report. In
particular, for tray and tray related products, the PRC market size is expected to grow from
US$38.1 million in 2024 to US$57.2 million in 2028 at CAGR of 10.7%, and for carrier tape
and reel, the PRC market size is expected to grow from US$41.4 million in 2024 to US$58.1
million in 2028 at CAGR of 8.8%. Further, in respect of the PRC market of MEMS and sensor
packaging, the PRC sales value is expected to grow from US$3,957.5 million in 2024 to
US$5,231.1 million in 2028 at CAGR of 7.2%.
In light of the market potential in the PRC, we intend to intensify our sales and marketing
efforts to further enhance customer loyalty, reputation and market recognition. In particular,
considering the rapid growth in the market demand for tray and tray related products, we intend
to focus on expanding our sales and marketing efforts on the sales of tray and tray related
products in the PRC. To leverage our capabilities and technical know-how, we intend to deepen
our sales penetration to existing customers and establish business relationship with new
customers in the PRC. In line with our expansion plan to increase our production capacity and
research and development capabilities, we intend to establish new sales points in Chengdu and
Shenzhen by recruiting two sales representatives in each of the new sales point, in order to (i)
strengthen and build closer relationship with our existing key customers; (ii) target new
customers of premium brands; (iii) capture local PRC market; and (iv) extend our market
foothold to strengthen our market coverage in the South-Western China and penetrate the market
in Gansu and Tianshui in the PRC. Chengdu and Shenzhen are cities located in the proximity of
our Group’s existing and potential customers in the PRC to cover customers in the southern
China region including Fujian Province and Guangdong Province (for Shenzhen office) and in
the middle, southwest and northwest China regions including Sichuan Province, Chongqing City,
Hunan and Shanxi Province (for Chengdu office). During the Track Record Period, over 20
existing PRC customers and nine potential PRC customers were located in southern China while
for middle, southwest China and northwest regions, there were 10 existing PRC customers and
10 potential PRC customers.
The total investment costs of the above strategy is HK$3.0 million. We intend to apply
6.2% or HK$1.9 million of the net proceeds from the Share Offer towards the abovementioned
strategy. For further details, please see “Future Plans and Use of Proceeds” in this prospectus.
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Improve efficiency and achieve cost reductions by purchasing ERP system and upgrading
the information system
We seek to improve our efficiency and achieve cost reductions in our production and
operation. We intend to optimise the efficiency of our operation by (i) purchasing ERP system to
integrate systems in the offices in HK and the PRC and (ii) upgrading information system
through upgrading relevant hardware, software, networking and server to support the ERP
system. The ERP system is expected to provide us with an integrated real-time tracking of our
core business processes such as production, order processing, accounting information related to
accounts receivable and accounts payable and inventory management, allowing us to coordinate
our business management in a more effective and efficient way. At the same time, the ERP
system reduces manual intervention to our business processes through improving automation in
our daily operation, thereby lowering the risk of human errors. Leveraging the advanced ERP
system, our Directors believe that we can improve our operational efficiency, allowing us to
dedicate more resources on growing our business. We believe that we can achieve further
savings by increasing our efforts on optimising and streamlining our operation flow and control
to achieve a higher degree of cost-effectiveness. We believe that the system upgrade will allow
us to enhance our client management human resources management and communication between
various departments as well as to rapidly respond to the changes of supply chain and purchase
orders, and to facilitate data analysis on our inventory control, production scheduling and
logistic planning.
The total investment costs of the above strategy is HK$2.0 million. We intend to apply
4.2% or HK$1.3 million of the net proceeds from the Share Offer towards the aforementioned
strategy. For further details, please see “Future Plans and Use of Proceeds” in this prospectus.
Further strengthen our research and development capabilities to expand our product
offering, raw materials and production technologies
The rapid nature of technological advancement and consumers’ growing dependence on
electronic devices and thus semiconductors exert substantial influence on our business
operations and product offerings, as well as the development of the back-end semiconductor
transport media and MEMS and sensor packaging industry. Recognising that the market potential
of back-end semiconductor transport media and MEMS and sensor packaging driven by the
growth and development of the semiconductor market, we will constantly design and develop
new products and materials in accordance with the market trend and needs and improve our
existing products to achieve functionality enhancement and/or cost efficiency. In order to keep
abreast of the market trend in the semiconductor industry, we consider it is essential to
continuously expand our product portfolio. In order to promptly respond to our customers’ new
specification requirements, expand our product offerings, as well as needs on implementing
product upgrades, we believe that it is crucial to enhance our product offerings continuously
through constant innovation of product designs and invention of new products which
accommodate the latest industry development and technology. Further, we intend to put further
effort in researching on innovative product development in the future potential market,
cost-effective materials development and customer-driven new products and solutions
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development, and in view of the growing market of carrier tape in the back-end semiconductor
transport media industry, we intend to conduct research and development on carrier tape for use
in semiconductor wafer level packaging and medical industry, as well as bio-degradable material
for carrier tape in view of environmental protection. As such, we designate further improvement
of our research and development capabilities as one of our key business strategies.
To cater for the future plan on our research and development, as well as the manpower and
expertise needs in achieving high research speed and quality in developing advanced products
and production technologies, we intend to hire approximately five additional research and
development personnel, such as research engineers, material specialists and mould design
engineers, with in-depth experience in product development and specialised equipment
development of similar industries and/or strong educational backgrounds in relevant disciplines,
to focus on the research and development projects on material engineering, product designs and
manufacturing process. Further, we believe that it is crucial to introduce mould design software
and upgrade our development facilities in order to offer an advanced and efficient platform for
us to work on our product design and development. As such, we intend also to acquire advanced
mould design software to be deployed for new product designs. In addition, as indicated in our
expansion plan on MEMS and sensor packaging in our Shatian Production Factory, we intend to
purchase certain machineries and equipment, such as die attach machine and automatic optical
inspection system. We believe that such machineries and equipment would also enhance our
product and technology development capabilities on MEMS and sensor packaging and improves
the efficiency of our research and development process as a whole. We also believe that the
enhancement of our research and development capabilities would allow us to increase the
number of research and development projects which we can conduct, and in turn hastens our
development of new product designs, upgrade of our existing product offerings and optimisation
of our production operations.
The total investment costs of the above strategy is HK$1.5 million. We intend to apply
3.1% or HK$1.0 million of the net proceeds from the Share Offer towards the abovementioned
strategy. With our strong research and development capabilities, we strive to increase our market
share by expanding our product offerings for our existing customers and potential new
customers. Our Directors believe that the diversification and expansion of our product offerings
will strengthen our position in the back-end semiconductor transport media industry and increase
our market share in the MEMS and sensor packaging industry.
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OUR BUSINESS MODEL
We are a back-end semiconductor transport media manufacturer for tray and tray related
products. Other than specialising in the design, development, manufacture and sales of tray and
tray related products, we have also included carrier tape in our product categories since 2019. In
addition to back-end semiconductor transport media, we are also provider of MEMS and sensor
packaging. Our back-end semiconductor transport media products are mainly used for the
protection of semiconductor devices, including power discrete semiconductor device,
optoelectronic, IC and sensors, etc., from different forms of damages during their transportation,
storage and usage. As for our MEMS and sensor packaging, we provide an encasement designed
to protect the semiconductor devices, such as MEMS and sensors, to promote the electrical
contacts that deliver signals to the circuit board of an electronic device and from potentially
damaging external elements and the corrosive effects of age. During the Track Record Period,
we serve a broad customer base that includes some of the international IDM companies,
fabless-foundry semiconductor companies and IC assembly and packaging test house, such as
STMicroelectronics, and we derived our revenue principally from the sale of tray and tray
related products.
As one of the back-end semiconductor transport media manufacturers with over 15 years of
operating history in the industry, we have been devoted to developing a business model with
particular focus on product development, on which our customers have placed great value as
proven by our long term relationship with them. During the product development stage, we
conduct research and development on the structural design and material engineering of our
back-end semiconductor transport media and MEMS and sensor packaging that are customised
for our customer’s products.
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The following diagram illustrates the business model of our operations:
Procurement of
materials
Production planning
and scheduling Mass production Quality control
& assurance
Placing of purchase orders by customers
Procurement, Planning, Production and Quality Control
Packaging and delivery
Please refer to the paragraph headed “Research and development” for further details.
Provision of after-sales
technical support
and services
Delivery and after-sales services
Sales approach
customers
Sales receives
product specification
from customers
Selection of product
specifications from
existing product
portfolio(1)
Provision of
quotation
and proposal
to customer
Fabrication
and/or
delivery of
sample
product
to customers
Receipt
of customers’
approval
and
qualifications
No approval
or
qualification
by customers
Design and develop
customised products
R&D and material
engineering department
reviews customers’
specification/comments
for product modification
R&D
initiatives
R&D initiatives
New product inquiries
R&D and material
engineering department
reviews customers’
specification and
discusses with customers
for recommendations
Sales receives
inquiry from existing
customers for
their qualified products
Existing qualified product inquiries
Provision of
quotation and preliminary
production schedule
to customers
R&D, sales and qualification
(1): Our existing product portfolio consists of (i) new product specifications developed from our R&D projects and
(ii) the specifications of products that we have developed for our customers. As at the Latest Practicable Date,
our product portfolio consisted of over 1,500 product specifications, with approximately 800 new product
specifications that are designed and developed by our R&D department based on JEDEC industry standards and
are recommended to all of our customers, and approximately 700 product specifications developed specifically
for our customers, which are developed and designed by our R&D department with the assistance of our
customers, customised to their specific requirements and are not generally recommended to other customers of
our Group.
R&D, sales and qualification
We have our own R&D initiatives for new product design and development and we also
receive inquiry from customers with regard to new products and existing qualified products.
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For R&D initiatives, based on the market research conducted by and information from the
market received by our sales and marketing personnel, our R&D and material engineering
department designs and develops new products and updates and enhances the product
specifications from our existing product portfolio. Once there are newly designed and developed
products, our sales and marketing personnel actively approaches our existing or potential
customers for introduction. After receiving feedbacks from our customers about the newly
designed and developed products, our R&D and material engineering department would further
customise and modify the products during product development based on the specific
requirements provided by our customers. For details of our R&D and product development,
please refer to the paragraph headed “Research and development” in this section.
For new product inquiry made by customers, after our sales and marketing personnel
receives inquiry from customers with their required specifications, our R&D and material
engineering department would review our customers’ specifications and discuss with customers
for recommendation. We would normally request our customers to provide us with their product
catalogue in order for us to understand their needs thoroughly, conduct technical reviews on
their type of semiconductor devices and recommend existing product specifications or design
customised products that suit them best. We would select product specifications from our
existing product portfolio if they can satisfy with our customers’ requirements or modify and
adjust our existing product specifications as necessary. Otherwise, we would design and develop
customised products according to the specific requirements provided by customers, such as
pocket shape and configurations of the customised products and the quality standards.
For both R&D initiatives and new product inquiry made by customers, after our customers
confirm the product types, we would provide quotation and proposal to them. We would then
fabricate and/or deliver sample products to our customers for approval and qualifications.
Depending on the complexity of the product requirement, it usually takes at least three to six
months to complete the product qualification process. For customers which approve and qualify
our products, they would proceed to place orders.
As for customers which inquires about their existing qualified products, we would generally
provide quotations and production schedules to them after receiving their inquiries for their
consideration.
Placing of purchase orders by customers
For our customers which approved and qualified our new products and which inquired
about our existing qualified products, we would generally request them to provide us with terms
such as the estimated quantity, packaging and credit terms, which are referred to as a blanket
order, for us to assess whether our existing raw materials inventory level and production
schedule are able to fulfil customers’ demands. Once we confirm the production and delivery
schedule, our customers would send their purchase order with actual quantity delivery schedule
and delivery method to us by batches and we would acknowledge and confirm their purchase
order through email. We generally do not enter into long term framework agreements with our
customers in respect of their purchase since this is not an industry practice.
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Whilst our Group does not maintain any establishment of office in our overseas sales
points, we have independent contractors to act as our sales representatives who station in
different countries to get in touch with our customers to understand their requirements and
feedbacks on their orders. Our top management generally travel overseas for the initial sales
negotiation and verbally agree with customers on the major terms of subsequent transactions
cooperation details such as estimated quantity, product specification, business relation and credit
terms. In practice, the major terms of any subsequent transactions are generally made with
reference to the cooperation details previously agreed upon by the top management of our Group
in the initial sales negotiation conducted overseas by them on behalf of our Group prior to the
Track Record Period (who were unable to travel abroad frequently and were generally stationed
in the Hong Kong headquarters during the Track Record Period as a result of the travelling
restriction due to COVID-19). Our Directors confirm that such “ cooperation details ” were
agreed such that a mutual intention for the customers to engage our Group as its supplier for
certain products and our Group to supply and sell to such customer is formed and laid down the
foundation for the subsequent business relationship and sales.
According to the F&S Report, functions of semiconductor devices and chips can change
without changing the size of the chips. Accordingly, in the back-end semiconductor transport
media industry, the types of tray and tray related products required for each semiconductor (i.e.
the products of our Group required by our customer) seldom change even though there may be
changes to the semiconductor devices given that only the change in size of chips would affect
the specifications of the tray and tray related products required by the customers.
Our Directors confirm that in case changes in the specifications are required, usually only
minimal changes based on the existing models are required as our Group’s tray and tray related
products are JEDEC tray which has to conform to the relevant industry standard and such
changes seldom go beyond the scope of the original “ cooperation details ”.
During the Track Record Period (i.e. when our Group was affected by the COVID-19
pandemic), the majority of changes in purchase volume and delivery details were dealt with in
the purchase order separately issued by our customers that no new face-to-face negotiation was
required to take place.
The sales representatives are responsible for and serve as a communication channel
between the local customers and our Group and are material in facilitating international sales.
The sales representatives possess industry experience and are familiar with the local
environment. They are constructive to our Group in locally facilitating the receipt of orders from
customers, liaising with customers for the details of subsequent orders and providing ancillary
support to customers. For details, please refer to the paragraphs headed “Business – Customers –
Sales and marketing” in this section below.
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Procurement, planning, production and quality control
After our customers place purchase orders with us, we would formulate production plan and
schedule. For procurement, we generally procure our raw materials according to a procurement
plan prepared by us on a monthly basis. Our procurement team under the Administration and
Operation Support Department would also procure additional raw materials from our suppliers
from time to time, depending on our inventory level of the raw materials required. Depending on
the location of the customers, our staff of the Hong Kong headquarter or our sales
representatives, confirm purchase order with our production factories in the PRC. Our
manufacturing department will proceed with mass production in accordance with the
specifications agreed with customers and the production plans and schedules. For details of our
production process, please refer to the paragraph headed “Production – Our production process”
in this section. During the production process, our quality assurance department would conduct
various inspections and checks at each production step. Further, our quality assurance
department would conduct inspections and checks on our products after the production process
to ensure the products match with customers’ specifications and the quality standards required.
For details of our quality control and assurance process, please refer to the paragraph headed
“Quality control” in this section.
Delivery and after-sales services
Once our finished products pass the quality control inspections and checks, we will arrange
for the products to be packed and delivered according to our customers’ requirements. For
delivery, we may deliver the products to (i) our third party bonded warehouses in proximity to
our customers’ final delivery address for onward delivery in accordance with our customers’
designated delivery schedules or (ii) the address of our customers or their warehouses directly.
We strive to provide quality and effective after-sales services and technical support to our
customers and collect feedback as to the quality of our products for future product enhancement.
In the event that a defect is identified by our customers, our customers may reject our
products or ask for product replacement under our product replacement policy. For details of our
product return and warranty policy, please refer to the paragraph headed “Customers – Product
defect and replacement” in this section.
For certain long-term customers, we pay them on-site visits regularly to conduct review and
inspection on the performance of our products. We also offer a complimentary technical advisory
service to certain long-term customers, in which we inspect their machinery, analyse the
performance of their machines, and evaluate the effectiveness of our products on their machinery
with the most up-to-date technology from time to time.
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OUR PRODUCTS
We principally engage in the design, development, manufacture and sales of back-end
semiconductor transport media, including trays and carrier tape, which are mainly used for the
protection of semiconductor devices, including power discrete semiconductor device,
optoelectronic, IC and sensors etc., during their transportation, storage and usage. We also
provide MEMS and sensor packaging, which provides an encasement designed to promote the
electrical contacts that deliver signals to the circuit board of an electronic device and also
protect the MEMS and sensors from potentially damaging external elements and the corrosive
effects of age. Therefore, our products perform critical function in and cater for the
manufacturing processes of semiconductor devices and thus various types of electronic products,
such as tablets, smartphones and personal computers. etc. We had built up a wide range of
product portfolio of over 1,500 product specifications which meet customer’s specifications and
required quality standards. All of our products are RoHS and REACH compliant to satisfy the
required industry standards. Our products can be generally classified into three categories: (i)
tray and tray related products; (ii) MEMS and sensor packaging; and (iii) carrier tape.
The following sets forth a breakdown of our revenue by our product categories during the
Track Record Period:
Y ear ended 31 December
2021 2022 2023
Revenue % of total Revenue % of total Revenue % of total
HK$’000 % HK$’000 % HK$’000 %
Product category
Tray and tray related 195,429 96.3 246,954 95.9 172,250 91.2
MEMS and sensor
packaging 7,152 3.5 10,092 3.9 16,508 8.7
Carrier tape 367 0.2 519 0.2 211 0.1
Total 202,948 100.0 257,565 100.0 188,969 100.0
Our tray and tray related products
Trays are used across the semiconductor and microelectronics industry for safe handling,
transporting and storing semiconductor devices with medium and large size in general, such as
ICs, modules and other components. As our trays are specialised for cradling semiconductor
devices during the transit between facilities along the production chain, they are often designed
in specific shape for fixating designated semiconductor devices onto the tray to avoid any
damages caused by external force. Tray related products include end-caps and tabs which are
used to handle and bind a full tray stack and for easy sorting and coding of trays.
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Trays are moulded into rectangular outlines and featured uniformly spaced and fixed-size
pockets for cradling chips and can be stacked and bound together to form standard packaging
configurations. The spacing provides exact semiconductor locations for standard industry
automated-assembly equipment used for pick-and-place board-assembly processes. Trays are
constructed from moulding compounds of carbon-loaded plastics with essential properties on
providing ESD, mechanical integrity and thermal stability. Different customers would have
different requirements on the specifications of tray and we are capable of producing both JEDEC
tray and non-JEDEC tray according to our customers’ requests. JEDEC standard is an open
industry standard and was primarily established to provide recognised technical standards and
allow interoperability between different electrical components. The configuration of tray is
generally conformed to the JEDEC standard, which specify, including but not limited to, package
outline drawings, packing quantity, matrix, etc. of different packages.
Subject to the application of semiconductor devices to which our trays are housing and the
customers’ specifications, our trays vary in pocket shape, configuration, ESD profile, build of
material, thermal resistance, cleanliness, thickness, rigidity and colour. Therefore, we
manufacture our trays in various structural designs and material formulas according to the needs
of our customers. As material blends and modification permit engineering plastics’
characteristics to be optimized across a broad range to suit different applications, our R&D and
material engineering department possesses expertise and know-how to modify the raw materials
by designing and developing intricate material formulas, in order to engineer materials covering
a wide spectrum of different properties, such as combinations of different temperature ratings,
ESD profile, colour, mechanical strength and level of cleanliness etc. to fulfill the customers’
requirements and intended application. In particular, our products are made of blends of raw
plastic materials, such as PPO and ABS, recycled plastic material, re-compound plastic material
and formulated plastic material under customized material formulas, and we generally offer
JEDEC trays with thermal-resistance temperature ranging from 75 degree Celsius to 180 degree
Celsius and ESD profile of (i) 10e4-10e9 and (ii) 10e5-10e11. Our customers generally designate
the temperature rating and ESD profile of trays based on the extent of reliability test their
semiconductor products have to undergo, and thus, thermal resistance and ESD profile of trays
become the most critical features amongst others. For example, we engineered MPPO (carbon
nanotube embedded) material to achieve balance in cleanliness, ESD protection performance and
strength.
In terms of the structural design of our tray and tray related products, our R&D and
material engineering department will conduct simulation and structure analysis on the customers’
semiconductor device and devise the structural design of the product which fits the type and
shape of the customers’ semiconductor device specifically. In addition to the pocket shape and
configuration, our R&D and material engineering department will also customize the structural
design of our tray and tray related products based on customers’ specifications or based on our
R&D results to improve product performance. For instance, we designed bare-die tray laminated
with a layer of temperature-sensitive special tape which facilitates the picking process of
semiconductor devices. In view of the various combinations of structural designs and material
formulas of our product specifications, we have no specific product category for our tray and
tray related products.
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The selling price of our tray and tray related products ranges from HK$4.7 – HK$50.7. The
selling price of our tray and tray related products may vary greatly depending on a number of
factors, including (i) type, complexity and design of the product, (ii) materials and specifications
designated by the customer, (iii) cost of plastic materials mixture, (iv) production cost, (v)
function of the product, (vi) the quantity orders of the same purchase, (vii) market segment of
the customer involved in, (viii) our marketing strategies and (ix) prevailing market price. As
such, the selling prices of our tray and tray related products vary significantly and led to the
wide price range during the Track Record Period.
Our Directors believe that there are no specific life cycles for our Group’s tray and tray
related products as our offerings are principally various solutions developed for our customers
based on their specific requirements and commercial needs. As such, the life cycles for our
Group’s tray and tray related products and solutions depend on a number of external factors such
as demand and changes in preferences of our customers and the technologies developed in the
industries of back-end semiconductor transport media, as well as semiconductor devices and
electronic products.
The following photos show samples of certain tray and tray related products of our Group
with different specifications:
Bakeable JEDEC tray with pocket size of 55mm x 55mm for
holding BGA device
(Note: The semiconductor devices placed on our tray product above are not
our Group’ s product and are shown for illustration purpose only )
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Bakeable JEDEC tray with pocket size of 5mm x 5mm for
holding our MEMS and sensor packaging product for
illustration purpose only
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Our MEMS and sensor packaging
MEMS and sensors can operate in a wide range of systems in the communications,
consumer, industrial and automotive fields, and MEMS can be assimilated into different
applicable components, including ratio-frequency device, pressure sensor, microphone,
accelerometer, gyroscope, inertial components, inkjet print head, optical devices and other
devices. A MEMS device generally integrate micro-sensors, actuators and signal-processing
components and is able to capture physical data such as measuring temperature, air pressure,
magnetic fields and radiation and process them, while sensor is a device or system that detects a
physical property and then records and/or responds to the stimulation.
MEMS and sensor packaging therefore serves as an integral operational procedure which
principally structure various electronic and mechanical components into a casing, which
provides a means for the whole manufactured package to connect to the external environment. It
also serves to protect the die from potentially damaging external elements and the corrosive
effects of age and facilitate electrical connections and heat dissipation. During the Track Record
Period, the selling price of our MEMS and sensor packaging ranges from HK$4.3–HK$59.0.
In each packaged product, there are various MEMS-to-package connection schemes, such as
single die wire bonded or flip-chip bonded, multiple dies stacked with wire bonds or flip-chip
bonding. The MEMS die, which is produced by MEMS processing and manufacturing
companies, are generally attached and interconnected with die attach material and the substrate
through wire bonding or alternatively flip flop solder bonding process. ASIC die is usually
required for low power operation, signal processing, etc., hence packaging schemes integrates
both a MEMS and an ASIC assembled into the same package. We are capable of formulating
complex MEMS and sensor packaging for our customers in order to facilitate our customers in
achieving the intended function of their MEMS and sensor device. We offer services ranging
from (i) MEMS & sensor housing and/or module design, (ii) MEMS and sensor packaging
structure design and material selection, (iii) MEMS and sensor packaging or module prototype
development and engineering lot service, (iv) MEMS and sensor packaging qualification service,
manufacturing process development and volume manufacturing services, and (v) MEMS and
sensor packaging electrical testing and reliability testing services. Our Directors are of the view
that the volume of order of our MEMS and sensor packaging is dependent on the acceptance and
popularity of our customers’ MEMS and sensor devices in the market. Our Group provides
tailor-made solutions to our customers in respect of MEMS and sensor packaging including
advising the optimal design and material that can optimise the application and function of the
MEMS and sensor of our customers. The product life cycle of our MEMS and sensor packaging
mostly ranges from minimum three to five years for consumer market applications to maximum
over 15 to 20 years for industrial market applications.
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Set out below is certain information about our representable MEMS and sensor packaging,
their areas of application and price range:
Product Description
Price range during
the Track Record
Period
(1) Flow sensor module
 The flow sensor module is used for
measuring flow of gas or liquid.
 Product size: 24 x 21 mm
 Application in process control and
monitoring, oil and gas leak
detection, HV AC and air control
system, CPAP and respiratory
devices and liquid dispensing
systems.
Approximately
HK$31.7 –
HK$59.0
(2) Semi-hermetic
sensor packaging
(ERAQFN)
 Semi-hermetic sensor packaging
(ERAQFN) is an encasement to
protect sensor performing functions
of gas detection and concentration
measurement, flame detection and
motion detection from corrosion
and/or physical damage.
 Product size: 3.7 x 5.65 mm
 Certified under JEDEC standard.
 Application in gas sensing, flame
detection, food and oil analysis,
motion detection and gesture
recognition.
Approximately
HK$4.3 – HK$30.8
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Product Description
Price range during
the Track Record
Period
(3) Custom-design
Casing for SiP
(System-in-Package)
 Custom-design Casing for SiP
(System-in-Package) uses
Liquid-Crystal-Polymer material
and is an encasement to absorb
radio frequency and protect IC
devices from physical damage.
 Product size: 10.3 x 13.3 mm
 Application in Radio
Frequency/Microwave device for
5G Infrastructure equipment
installation deployment.
Approximately
HK$15.4 –
HK$24.7
Carrier Tape
Tape-and-reel packing solution mainly consists of the carrier tape, plastic reel and cover
tape. Similar to our trays, carrier tape and plastic reel are mainly used as protective packages for
safe handling, transport and storage of the semiconductor devices with relatively small size and
prevent semiconductor devices from physical and ESD during outbound transport and inbound
storage. Tape-and-reel packing solution is also designed for feeding the semiconductor devices
to automatic-placement machines for surface mounting on board assemblies and can drastically
reduce the assembly down time in the manufacturing process. Carrier tape is punched with
sequential individual cavities that each holds one semiconductor device, and a cover tape sealed
onto the carrier tape to retain the devices in the cavity which are then stored in a reel that
provides mechanical protection during handling and storage.
Our carrier tape and reel satisfy the EIA standard and can be used for all SMT packages.
The EIA Standard provides guidance on component marking, data modelling, colour coding and
packaging materials for electronic component and system, which also specifies, number of leads,
tape width, tape pitch, component orientation and dimensions of cavity and reel etc. Different
from function of trays, carrier tape and reels are used for holding semiconductor devices with
relatively small size. More semiconductor devices can be stored in carrier tape than in trays. As
tape and reel configuration is commonly used for surface mounting processes, it is more
applicable to mass production than that of trays. Carrier tape and reel are also generally lighter
in weight which would effectively lower the transportation cost.
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Our Directors believe that there are no specific life cycles for our Group’s carrier tape
products as our offerings are principally various solutions developed for our customers based on
their specific requirements and commercial needs. As such, the life cycle for our Group’s carrier
tape products and solutions depends on a number of external factors such as demand and
changes in preferences of our customers and the technologies developed in the industries of
back-end semiconductor transport media, as well as semiconductor devices and electronic
products.
The following photos show certain carrier tape products of our Group:
Carrier tape with different width
Carrier tape with width of 16mm
containing our MEMS and sensor
packaging product for
illustration purpose
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Carrier tape with width of 12mm
Carrier tape with width of 16mm
containing our MEMS and sensor
packaging product for
illustration purpose
The selling price of our MEMS and sensor packaging and carrier tape, depends on (i) type,
complexity and design of the product, (ii) materials and specifications designated by the
customer, (iii) cost of material mixture, (iv) production cost, (v) function of the product, (vi) the
quantity orders of the same purchase, (vii) market segment of the customer involved in, (viii)
our marketing strategies and (ix) prevailing market price. As such, the selling prices of our
major products vary significantly and led to the wide price range during the Track Record
Period. For further details regarding our pricing policy, please refer to the paragraph headed
“Customers – Pricing policy and credit terms” in this section.
Customised and non-customised products
Our products can also be broadly categorised into (i) customised products; and (ii)
non-customised products. Customised products are developed and designed by our R&D
department with the assistance of our customers, customised to their specific requirements and
are not generally recommended to other customers while non-customised products are
standardised products based on JEDEC industry standards and are generally recommended to all
of our customers. Please refer to the paragraphs headed “R&D, sales and qualification” in this
section above for details of our R&D initiatives.
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Set out below is the number of our customised products and non-customised products in
our product portfolio during each year of the Track Record Period:
As at 31 December
As at
31 March
2021 2022 2023 2024
Customised products 382 544 638 661
Non-customised products 835 861 874 874
Total 1,217 1,405 1,512 1,535
During the Track Record Period, the price range for our customised products was generally
higher than our non-customised products, amounting to approximately USD0.9–6 per unit while
that for non-customised products was approximately USD0.7–4 per unit.
Based on the past experience of our Directors, our customers are generally more willing to
place orders for customised products in a growing market. As a result, we dedicated R&D efforts
and resources in developing more customised products to cater to the needs of our customers.
The number of our customised products increased by 162 from 382 as at 31 December 2021 to
544 as at 31 December 2022 and further increased by 94 to 638 as at 31 December 2023. Our
Directors consider that the greater increase in number of customised products in FY2022 than
that in FY2023 was because the market condition in FY2022 was more favourable as compared
to FY2023. Notably, the number of customised products increased by 58 in the first half of
FY2023 but in a lesser extent of 36 in the second half of FY2023 owing to the deteriorated
market conditions in the second half of FY2023. Given our capability and focus on developing
customised products, we usually benefit from the positive market sentiments and receive more
sales orders for customised products when the market condition is favourable, during which
period the orders received by us could outpace the market growth while also recording steady
growth in the sales for our non-customised products. However, when the market slows down, the
demand for new and customised products is generally more susceptible to the gloomy market
condition where decrease in orders in terms of quantity could be greater than the industry
average while affecting our existing and non-customised products less. During the Track Record
Period, the total number of our non-customised products remained relatively stable while the
number of customised products increased. Our Directors consider that the demand for
customised products are more sensitive to market conditions and is one of the factors for the
fluctuation of our financial results.
Seasonality
Our sales performance is affected by seasonality. We generally record relatively stable sales
revenue around the year, save for the period near the Chinese New Year holidays. Some of our
customers established their manufacturing sites or assembly house in Asia. They would generally
place orders prior to the Chinese New Year holidays as Chinese New Year is often the off-season
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in Asia, especially the PRC, as most of the manufacture workers would cease to work during this
period. As such, the demand for our products is generally higher before the Chinese New Year
holidays and is generally lower during the Chinese New Year holidays. Thus, we recorded the
sales revenue of approximately HK$44.3 million and HK$52.5 million for the first quarter of
2021 and 2022, respectively, and approximately HK$58.0 million, HK$60.9 million for the last
quarter of 2021 and 2022, respectively. For the year ended 31 December 2023, the
semiconductor industry experienced a temporary slowdown and our customer adjusted its
inventory policy and moderated its orders accordingly throughout the year. In 2023, the sales
revenue for the last quarter of 2023 was smaller than that for the first quarter. Irregular revenue
fluctuations are common for suppliers of semiconductors that our sales performance throughout
the year may vary from time to time.
RESEARCH AND DEVELOPMENT
We are committed to providing reliable products which conform to the preferences and
requirements of our customers and the market. In order to cater for new specifications and
requirements as well as needs of implementing product upgrades for our customers, we are
required to constantly conceptualise and invent new product formulae in response to the latest
market and product trends, which in turn raises the entry barrier for competitors to compete with
or imitate our products. Furthermore, we strive to diversify the range of our product offerings
and explore new areas of product applications via research and development, so as to capitalise
on the latest technological developments within the industry and strengthen our market position.
As significant value is added to semiconductor devices during each successive manufacturing
step, it is essential that the semiconductor device be handled carefully and precisely to minimize
damage. Our customers rely on our products to improve yields by protecting the semiconductor
devices from degradation, abrasion and contamination during the manufacturing process. Hence,
highly reliable interface dimensions and advanced materials with key properties, such as thermal
resistance and ESD profile, are crucial for high-quality back-end semiconductor transport media.
Therefore, we also utilise our accumulated industry knowledge and material engineering
expertise and know-how to constantly develop and improve our material compound formulas and
application, in order to effectively target our research and development towards products that
satisfy our customers’ manufacturing requirements. As such, we believe that our research and
development capabilities are critical to our continued success in the back-end semiconductor
transport media and MEMS and sensor packaging industries.
In developing new back-end semiconductor transport media and/or MEMS and sensor
packaging, we maintain active communication with our customers to ensure that the products in
development are proximate to the requested specifications. The research and development
process is a collective contribution where our sales and marketing personnel, R&D and material
engineering department, manufacturing department and quality assurance department closely
work with one another to materialise products in development. To facilitate the communication
with our customers, we regularly convene development meetings to discuss and review the
particulars of development planning, as well as produce and submit prototypes for their
inspection and testing. See “R&D initiatives” below for further details.
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As at the Latest Practicable Date, our R&D and material engineering department comprised
33 employees, respectively, under the leadership of Dr. Wang Huimin, our director of material
engineering, who is mainly responsible for product development and material engineering of
back-end semiconductor transport media, and Mr. Kenneth Kwan, our head of research and
development, who is mainly responsible for the product development of MEMS and sensor
packaging. Dr. Wang received both his Bachelor’s Degree of Material Science and Engineering
and Master’s Degree of Engineering from Northwestern Polytechnical University of the PRC and
his Degree of Doctor of Philosophy from Zhejiang University of the PRC and has more than 24
years of experience in molecule design and materials design and manufacturing technology, and
the prediction of materials’ properties and lifetime. Mr. Kenneth Kwan graduated with a bachelor
degree in engineering from University of Birmingham in the U.K. and has accumulated over 25
years of experience within the industry. See “Directors and Senior Management – Senior
management” in this prospectus for details of their biographies.
As at the Latest Practicable Date, reflecting the research and development efforts of our
Group, we have obtained 15 patents in the PRC, the U.S. and Hong Kong. For further details,
please refer to “Intellectual property rights” below.
During the Track Record Period, our Group had completed 22 research and development
projects, which mainly aims to (i) expand our product portfolio; (ii) improve product quality;
and (iii) optimize our manufacturing process. The table below sets forth some of the major
research and development projects being conducted during the Track Record Period:
No.
Category of
research
and
development
project
Research and
development project Description of the project
Commencement
date of project
Status of
project
Investment
amount
(HK$)
(approximately)
Tray and tray related products
1. Expand
product
portfolio
Manufacturing technology
of MPPO-CNT trays
To develop a new generation tray
with super cleanliness,
light-weight and improved ESD
protection.
March 2021 Completed 287,417
2. Expand
product
portfolio
Design and manufacturing
technology of bare-die
trays for Cleanroom
application
To design and develop bare-die
tray laminated with a layer of
special tape which is temperature
sensitive to facilitate the picking
process of semiconductor device.
March 2020 Completed 172,912
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No.
Category of
research
and
development
project
Research and
development project Description of the project
Commencement
date of project
Status of
project
Investment
amount
(HK$)
(approximately)
MEMS and sensor packaging
3. Expand
product
portfolio
Exposed die QFN/DFN
packaging
It is applied to flow sensor module
for liquid flow application. With
EMC material to protect the
sensing die, it is robust enough to
pass stringent stress test that are
specified by customers.
July 2020 Ongoing 1,370,000
4. Expand
product
portfolio
Consumer version
(low-cost version)
semi-hermetic sensor
packaging (ERAQFN)
It is the low-cost version of
ERAQFN package and aims for
consumer market. EMI shielding
plastic cap or lid is applied to
provide better electrical
performance to the product.
January 2021 Ongoing 825,000
Carrier tape
5. Expand
product
portfolio
Laser marking on carrier
tape
Laser mark 2D codes onto each
carrier tape pocket divider ridge.
This will enable individual
identification and tracking of the
integrated chip in the carrier tape
based on the 2D codes marked.
The laser marking equipment will
be integrated with auto camera
inspection, markings verification
and feedback, auto feeding
mechanism and audible alarm
system to indicate rejects.
January 2021 Ongoing 780,000
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No.
Category of
research
and
development
project
Research and
development project Description of the project
Commencement
date of project
Status of
project
Investment
amount
(HK$)
(approximately)
6. Improve
product
quality
and
optimize
manufacturing
process
Carrier sheet extrusion Extruding carrier sheet using
existing rotary forming machine.
Carrier sheet will be slit into
various widths to be used for
carrier tape production at the
flatbed forming machine. This will
enable material customization to
suit each individual customer
preference and achieve higher
cost-efficiency.
August 2021 Ongoing 78,000
We incurred HK$4.1 million, HK$4.3 million and HK$4.8 million for the year ended 31
December 2021, 2022 and 2023, respectively, as our research and development expenses, which
mainly include salary of our research and development personnel and cost of materials, testing
expenses, utilities and depreciation charges of our machineries and equipment for use in research
and development activities.
R&D process
New Products
Set out below is a flow chart illustrating the research and development process in our
typical research and development initiatives on new products:
R&D Initiatives
based on
market research
(Creation of product
concept based on
market research)
Design and develop
customised products
based on new product
requests from customers
(Customers provide
new product
specification)
OR
Research Stage
Product structural
design
Design simulation,
analysis and evaluation
Material property
analysis
Conduct preliminary
testing on prototype
Design Stage
Mass production
implementation plan
Mould tooling design
and manufacturing
Mould tooling testing
Development Stage
Pilot production based
on developed recipe
Subsequent
mass production
Acceptance Stage
+
+
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Research stage
The research stage typically commences upon (i) self-initiated market research with the
primary aim to develop new back-end semiconductor transport media and MEMS and sensor
packaging to expand our customer base and increase our profitability, or (ii) receiving new
product requests from customers on design and development of customized products. We keep
ourselves up to date with market trends through proactively seeking customers’ feedback and
extensive research. We believe that our market awareness and experience are particularly useful
for our product design and development. For the self-initiated research and development, we
conducted research and development project on manufacturing technology of MPPO (carbon
nanotube embedded) trays, which could improve ESD protection and cleanliness of trays. Such
new product was launched in late 2023. We also conducted research and development project on
consumer version of semi-hermetic sensor packaging (ERAQFN), which is ongoing as at the
Latest Practicable Date. For customer-initiated research and development, our Group has been
able to develop a broad range of back-end semiconductor transport media and MEMS and sensor
packaging, and work closely with our customers in product design and modelling. For instance,
we co-developed bare-die tray for Cleanroom application with our customer, which is laminated
with a layer of temperature-sensitive special tape which facilitates the picking process of
semiconductor device.
Design stage
Upon commencement of the product design and development stage, we will formulate our
product development plan within a specified timeframe, which will set out preliminary schedule
for each step including delivering product designs, prototypes, moulding and pilot productions.
While we generally bear all the costs relating to product design and development, such costs are
normally factored in the price of the product. We believe that our continued effort in product
design and development will enable us to maintain sustainable growth and will help to improve
our profit margins.
Our R&D and material engineering department is responsible for developing conceptual
design of our product and our sales and marketing personnel would maintain regular contact
with our customers to discuss their requirements and preferences in the case of
customer-initiated research and development. We work closely with our customers throughout
the product design and development process to fine tune the design, material and technical
specifications in order to optimize product features and functionality. Development ideas may be
initiated by us without any preliminary input from the customer, and customers will provide us
with basic specifications on their products for our further development. Our product design and
development expertise is dedicated to exploring technical advancements to improve product
quality, functionality and reduce production cost.
For self-initiated research and development, based on the result from market researches,
our R&D and material engineering department would work on the new product structural design
and materials property analysis, respectively. For customer-initiated research and development,
based on the customers’ specifications, our R&D and material engineering department would
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conduct design simulation, structure analysis and material property analysis on the product and
devise the product design and material formula. 2D and 3D design simulation report would then
be generated and be internally reviewed by R&D and material engineering department,
manufacturing department and quality assurance department. After the internal review process,
the product design would then be submitted to our customer for their evaluation and approval.
Subsequent to the customers’ approval and/or internal analysis and evaluation on the product
design, we would produce prototype and conduct preliminary testing on prototype.
Development stage
Based on the design and development plan and/or suggestions put forward by our
customers, our R&D and material engineering department would then conduct a three-step
development which includes (i) project implementation planning; (ii) mould tooling design and
manufacturing; and (iii) mould tooling testing. The three-step development is a continuous
trial-and-error process which aims to identify and eliminate potential errors and continuously
evaluate, assess and refine the product in development. Throughout the development stage, our
R&D and material engineering department would actively communicate and coordinate with our
customers. Preliminary enquiries, internal discussions and evaluations would also be conducted
and cross-communicated between our R&D and material engineering department and various
departments to exchange development ideas and research angles.
Acceptance stage
Once the design is qualified and confirmed to be in order by our customers and/or to be
launched in the market, the developed product formula would be finalised and relayed to our
administration and operation support department, manufacturing department and quality
assurance department for raw material procurement, inventory planning and production planning.
Prior to mass production of a new product, our R&D and material engineering department will
confirm with our manufacturing department the manufacturing plan and technical specifications
to ensure the product conforms with the required design and standard and to maintain consistent
product quality. Our administration and operation support department, manufacturing department
and quality assurance department would then initiate mass production based on the developed
product formula.
Improvement on Material and Manufacturing Process
Our R&D efforts not only focused on delivering a broad and deep portfolio of advanced
and differentiated product design, we also cast our R&D efforts on material improvement, as
well as flexible and adaptive manufacturing techniques, for achieving cost-efficiency and
enhancing material performance. Our R&D and material engineering department would carry out
the material formula design and cost analysis on such formula. Our R&D and material
engineering department would then perform properties testing and component analysis on the
formulated material in order to optimize the formulation. After the formulation optimization, our
R&D and material engineering department would carry out the material compounding process for
injection moulding and subsequently conduct performance tests and evaluation, including but not
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limited to the standard bar test and injected tray test. Eventually, if the formulated material
passes the cost evaluation, we would commence the mass production of the formulated material.
Besides research and development on material improvement, we also conducted research and
development projects on optimizing our manufacturing process, including carrier sheet extrusion.
PRODUCTION
Our production factories
As at the Latest Practicable Date, we operated two production factories, (i) Shatian
Production Factory; and (ii) Houjie Production Factory. Our Shatian Production Factory is
primarily responsible for the entire production processes of tray and tray related products,
carrier tape and MEMS and sensor packaging, while our Houjie Production Factory specialises
in the injection moulding processes of tray and tray related products. Our Houjie Production
Factory is installed with advanced production machineries, including high-precision injection
moulding machines, robotic arm, dehumidifier and machine-side runner crusher, in order to
enhance our production efficiency by automation. Further, our Shatian Production Factory is
equipped with Cleanroom facilities, which allow our essential production stages for MEMS and
sensor packaging, such as die-attach, wire-bonding, high-power microscope inspection and
epoxy curing, to be processed in a consistent and clean environment. We perform regular check
on the air quality inside the Cleanroom to make sure our Cleanroom facilities function properly.
Set out below are the details of our production factories as at the Latest Practicable Date:
Production factory Location
Number of
production
facilities (1)
Commencement
of operation
Approximate
GFA
(sq. m.)
Shatian Production
Factory
Block No. 1 and No. 3, No. 17 Chengtian
Road, Shatian Town, Dongguan,
Guangdong Province, the PRC (୷̹Ӎ͞
ᕄϓ͞༩17໮ 1໮ᅽʿ3 ໮ᅽ)
3 2010 9,254
Houjie Production
Factory
Block C, Baishantou Area, Huangang
Village, Houjie Town, Dongguan,
Guangdong Province, the PRC (൑
ʫC ಊ)
1 2021 7,835
(1) Each set of production facilities herein refers to all the machineries and equipment utilized by each of our
production factory in the PRC for manufacturing each category of our product which are our (i) tray and
tray related products, (ii) MEMS and sensor packaging, and (iii) carrier tape products respectively.
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Shatian Production Factory
Our Shatian Production Factory, located at Block No. 1 and No. 3, No. 17 Chengtian Road,
Shatian Town, Dongguan, Guangdong Province, the PRC, owns 3 production facilities, each of
which is specialised in the production of tray and tray related products, MEMS and sensor
packaging and carrier tape products, respectively. As at the Latest Practicable Date, our Shatian
Production Factory has a GFA of approximately 9,254 m
2 and 263 workers.
Houjie Production Factory
Our Houjie Production Factory, located at Block C, Baishantou Area, Huangang Village,
Houjie Town, Dongguan, Guangdong Province, the PRC, owns 1 production facility which is
specialised in the injection moulding process of tray and tray related products. As at the Latest
Practicable Date, our Houjie Production Factory has a GFA of approximately 7,835 m
2 and 70
workers.
For further details about our properties, please refer to the paragraph headed “Properties”
in this section.
Production capacity and utilisation
Maximum production capacity (Note 1) Actual production volume Utilisation rate (Note 2)
For the year ended
31 December
For the year ended
31 December
For the year ended
31 December
Factory 2021 2022 2023 2021 2022 2023 2021 2022 2023
(Note 3) (Note 4)
Tray and tray related (unit)
Shatian Production Factory 26,282,000 16,524,000 8,030,800 25,080,728 14,720,000 5,233,530 95.4% 89.1% 65.2%
Houjie Production Factory 6,623,900 16,509,050 22,191,000 5,925,900 16,820,362 16,978,879 89.5% 101.9% 76.5%
Total 32,905,900 33,033,050 30,221,800 31,006,628 31,540,362 22,212,409 94.2% 95.5% 73.5%
Carrier tape (m)
Shatian Production Factory 6,933,005 6,933,005 6,933,005 695,000 1,191,200 1,197,655 10.0% 17.2% 17.3%
MEMS and sensor packaging
(Flow Sensor Module) (unit)
Shatian Production Factory 12,000 12,000 12,000 10,702 11,654 9,870 89.2% 97.1% 82.3%
MEMS and sensor packaging
(semi-hermetic sensor packaging
(ERAQFN)) (unit)
Shatian Production Factory 180,000 180,000 180,000 67,800 184,431 184,488 37.7% 102.5% 102.5%
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Notes:
1. The calculation of the maximum production capacities is based on the following assumptions:
(i) In relation to tray and tray related products, that the relevant production facilities in our production
factories are used 24 working hours per day for applicable number of days of operation per year
(excluding all employees’ general holiday and public holidays).
(ii) In relation to carrier tape products, that the relevant production facilities in our production factories are
used 12 working hours per day for applicable number of days of operation per year (excluding all
employees’ general holiday and public holidays) in producing carrier tapes with the width of 24mm.
According to our Directors, the production of carrier tape products requires more skilled labour who are
not willing to work on night shift, thus the production can only be carried for 12 working hours per day.
(iii) In relation to MEMS and sensor packaging (both flow sensor module and ERAQFN), that the relevant
production facilities in our production factories are used 12 working hours per day for applicable number
of days of operation per year (excluding all employees’ general holiday and public holidays). According to
our Directors, the production of MEMS and sensor packaging requires more skilled labour who are not
willing to work on night shift, thus the production can only be carried for 12 working hours per day.
2. Each of the utilisation rate is calculated by dividing the actual production volume by the relevant maximum
production capacity presented in percentage level.
3. The maximum production capacities of our Shatian Production Factory for tray and tray related products
decreased because we moved some machineries to our Houjie Production Factory. The overall decrease in
maximum production capacity was because approximately 20 days were used for the relocation and installation
of machines.
4. The decrease in utilisation rates of our production facilities was primarily due to the decrease in sales orders
received in the period as a result of a temporary slowdown of the semiconductor industry in early 2023 and our
strategy to prioritise the use of our existing inventory. We reduced working hours of our staff in light of the
reduced demand.
The fluctuation of the utilisation rate of tray and tray related products was primarily due to
the changes in production level as a result of the fluctuation of purchase orders from our
customers, which was generally in line with the fluctuation in our revenue. For the year ended
31 December 2022, the utilisation rate of the production facilities in our Houjie Production
Factory for tray and tray related products has reached over 100% because our manufacturing
staff worked extra shifts and our production facilities had operated longer than our assumption
for maximum production capacity as a result of increased production level to cope with the
increase in sales. The decrease in utilisation rate of tray and tray related products of our Shatian
Production Factory in 2022 was primarily because part of our production was moved to our
Houjie Production Factory for its automation facilities for cost-saving purpose while the overall
utilisation rate of tray and tray related products for our Shatian Production Factory and Houjie
Production Factory increased from 94.2% in FY2021 to 95.5% in FY2022. The general decrease
in utilisation rates of our production facilities for tray and tray related products for the year
ended 31 December 2023 was primarily due to the decrease in sales orders received in the year
as a result of a temporary slowdown of the semiconductor industry in 2023.
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For our carrier tape products, our utilisation rate during the Track Record Period was
relatively low as carrier tape is a new product only introduced by us in 2019. Further,
semiconductor companies generally need to conduct on-site factory audit on their suppliers and
qualify and approve any new product of back-end semiconductor transport media before placing
orders. However, under COVID-19 and the implementation of relevant travel restrictions, it has
been difficult for (i) our technical engineers to visit our customers for undergoing qualification
procedures and machine adjustment process and (ii) our customers to conduct on-site audit
process, before they could place any orders. Therefore, during the Track Record Period, we
lodged 19 types of carrier tape product to eight of our customers, including STMicroelectronics
and Customer D, who also purchased our tray and tray related products during the Track Record
Period. Nonetheless, we foresee that there will be more customers on carrier tape in the future.
As at the Latest Practicable Date, we have received enquiries from our existing or potential
customers on our carrier tape products, some of which are our major customers who also
purchased our tray and tray related products during the Track Record Period.
The utilisation rate of flow sensor module of our Shatian Production Factory increased to
97.1% in FY2022 as a result of increased production in line with the increase in sales and the
preparation of the inventory for the delivery in the first quarter 2023. For the year ended 31
December 2023, the utilisation rate of flow sensor module of our Shatian Production Factory
decreased to 82.3%. Such decrease was mainly due to our preparation of the inventory was
sufficient to cope with our sales for the year ended 31 December 2023. The utilisation rate of
semi-hermetic sensor packaging (ERAQFN) of our Shatian Production Factory in FY2022
increased as compared to that in FY2021. For the year ended 31 December 2022, our production
facilities in Shatian Production Factory for semi-hermetic sensor packaging (ERAQFN) recorded
effective utilisation rate of over 100% because it had operated longer than our assumption for
maximum production capacity in order to meet the increased demand from our customers as a
result of the increased production in line with the increase in sales of MEMS and sensor
packaging in FY2022 and the preparation of the inventory for the delivery in the first quarter
2023. For the year ended 31 December 2023, we recorded a utilisation rate of 102.5% for
semi-hermetic sensor packaging (ERAQFN) of our Shatian Production Factory. This was because
our manufacturing staff worked extra shifts and our production facilities had operated longer
than our assumption for maximum production capacity to meet with customers’ demand in the
year.
In view of the utilisation rate of the production facilities in our Houjie Production Factory
for tray and tray related products and production facilities in Shatian Production Factory for a
MEMS and sensor packaging semi-hermetic sensor packaging (ERAQFN) reaching over 100%
for the year ended 31 December 2022 and 2023, and to enhance the level of automation
throughout the production process, as well as to meet with the expected increasing demand from
our customers and further expand our business to capture future opportunities, we plan to
increase our production capacity and capabilities by upgrading our production facilities in the
PRC. We also intend to implement production in the Philippines for carrier tape to capture the
demand on carrier tape in the Southeast Asia region. See “Business Strategies – Increase our
production capacity and capabilities by promoting automation of our production process,
upgrading our production facilities and acquiring requisite machineries” and “Business Strategies
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– Implement production in the Philippines for carrier tape” in this section for details of our
expansion plans.
Major machineries and equipment used in our production process
The details of machineries and equipment involved in the production process as at the
Latest Practicable Date are set out below:
Machinery/
equipment Usage
Approximate
number of units
Approximate
average
remaining
useful life
Approximate
average age
For tray and tray related products
Injection
moulding
machine
Performing forming process using moulds.
Plastic materials are heated and melted, and
then sent to the mould where they are
cooled to form the designated shape.
46 8 years 11 years
Robotic arm Picking up solidified tray products from the
mould tooling, placing and stacking the tray
products safely and precisely on the
collection conveyor belt, and subsequently
picking up the runner from the mould
tooling and placing into the side-crusher to
refeed back to material hooper, in order to
save labour cost and material cost.
24 13 years 3 years
Dehumidifying
machine
Drying or removing moisture from the
formulated plastic material before feeding
the dried material into the material hooper
of injection moulding machine in precisely
controlled interval and dosing, in order to
ensure stable material performance.
30 13 years 3 years
Crushing
machine
Compressing and crushing the still hot runner
in appropriate force and immediately refeed
back into the material hooper to prevent
generating debris and particulate so as to
improve material yield.
21 13 years 3 years
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Machinery/
equipment Usage
Approximate
number of units
Approximate
average
remaining
useful life
Approximate
average age
For carrier tape
Extruder unit Melting the formulated polymers in a
controlled environment and extrude them out
in a molten form for carrier forming
process.
2 8 years 4 years
Forming module Forming the carrier tape sheet into the
required pocket design using rotary vacuum
mould.
2 8 years 4 years
Punching module Punching the required holes on the carrier tape
sheet using a mechanical punching die set.
2 8 years 4 years
Slitting module Trimming the excess carrier sheet edge
material and slitting the carrier sheet to the
required width into carrier tape.
2 8 years 4 years
Vision Inspection
system
Inspecting every individual carrier tape pocket
for dimension and surface appearance using
a mounted camera inspection system. Alarm
will automatically activate when any carrier
tape pocket falls out of dimension
specification.
3 8 years 4 years
Winding module Winding the carrier tape into jumbo reel
according to the required length and winding
tension.
2 8 years 4 years
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Machinery/
equipment Usage
Approximate
number of units
Approximate
average
remaining
useful life
Approximate
average age
For MEMS and sensor packaging
Injection
moulding
machine
Performing a forming process using moulds.
Plastic materials are heated and melted, and
then sent to the mould where they are
cooled to form the designated shape.
1 18 years 13 years
Dispense
machine
For higher volume, automatic and precision
dispensing process for a wide range of
epoxies for bonding, sealing, potting,
encapsulating, insulating etc.
1 18 years 7 years
Die bonder Attaching die or chip to substrate or lead
frame or package by pre-applied epoxy
2 18 years 17 years
Wire bonder For wire bonding which creates electrical
interconnections between semiconductors (or
other ICs) and silicon chips using bonding
wires, which are fine wires made of
materials such as gold.
5 18 years 18 years
Overmoulding
Machine
For transfer moulding. A closed-mould system
resulting in less rubber escaping from the
cavity and limited excess flash. Before the
process takes place, the appropriate amount
of moulding material is measured, inserted
and then placed into the moulding pot.
1 18 years 13 years
We own the principal machineries and equipment involved in our production process.
During the Track Record Period, we purchased the production machineries and equipment from
Independent Third Parties.
During the Track Record Period, we have 11 staff in total stationed at the Shatian
Production Factory and Houjie Production Factory responsible for repair and regular
maintenance of the production machineries and equipment. During the Track Record Period and
up to the Latest Practicable Date, we have not encountered any prolonged suspension of the
production process or significant interruption in our business operations due to failures or
breakdown of our machineries and equipment.
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For details of depreciation method of our machineries and equipment, please refer to the
paragraph headed “Financial Information – Material accounting policy information – Property,
plant and equipment” in this prospectus.
Our production process
Tray and tray related products
Upon receiving purchase orders from our customers, we commence the production stage.
The following flowchart shows the major steps generally involved in our production process of
tray and tray related products:
Injection
moulding
Cleaning
and
inspection
Packing
and
storage
Before the production process begins, we work on material preparation, including specimen
preparation, mixing, blending and measurement of materials, according to designated material
formula based on customers’ requirements and intended application, and engineer materials
covering a wide spectrum of different properties, such as combinations of different temperature
ratings, ESD profile, colour, mechanical strength and level of cleanliness. The moisture content
of the material is also controlled according to the material quality requirement. Also, we would
conduct mould tooling inspection prior to the production, including pocket checking, dimension
measurement, mould core status and mould assemble. For further details on the specifications of
our tray and tray related products, please refer to the paragraph headed “Our products – Our tray
and tray related products” under this section.
Key step Description Time required
1. Injection
moulding
Setting up the parameters,
including barrel temperatures,
mould temperature and
holding pressure, etc.
Subject to the specification of
the product, such as product
weight and structure, the time
required for injection
moulding varies from 20
seconds to 45 seconds.
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Key step Description Time required
2. Cleaning and
inspection
This is post-process for
cleanliness control and
inspection of tray and tray
related products, which
includes (i) air blowing for
cleaning of tray surface, (ii)
visual inspection to ensure
product integrity, and (iii)
function inspection on
different properties and
features, such as surface
resistance test and baking test.
For auto-cleaning, it takes
approximately 3 to 5 seconds
per piece.
For inspection process, it takes
approximately 80 minutes per
lot of sample on visual
inspection and approximately
20 minutes per lot of sample
on function inspection.
3. Packing and
storage
Products are wrapped and
packed into custom-design
packing box and product
labels are attached before
putting into warehouse for
storage.
Approximately 6 to 10 minutes
per lot of product for label
printing.
Carrier tape
The following flowchart shows the major steps generally involved in our production
process of carrier tape:
Extrusion Forming Punching Slitting Vision
inspection Winding
Packing
and
storage
Key step Description Time required
1. Extrusion Raw plastic materials are
blended, heated, melted and
extruded out in a molten form
to the forming module for
carrier forming process.
 Average forming speed of
the carrier tape with the
width of 24mm is
approximately 8–10 metre
per minute.
2. Forming Rotary forming applies vacuum
technique to form pockets of
required design on the carrier
tape sheet.
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Key step Description Time required
3. Punching Designated holes are punched on
the pockets and sides of the
carrier tape sheet.
4. Slitting Carrier tape sheet is slitted into
the required carrier tapes
width according to the
specification.
5. Vision
inspection
Dimension and surface
appearance of individual
carrier tape pocket are
inspected by vision camera
system.
6. Winding Carrier tapes are wound into
jumbo reels with label
identification.
7. Packing and
storage
Products are wrapped and
packed into carton box and
product labels are attached
before putting into warehouse
for storage.
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MEMS and sensor packaging
The following flowchart shows the major steps generally involved in our production
process of flow sensor module:
Frame attach
and
die attach
Wire bond
and
glop top/
encapsulation
Housing
attach
and
sealing
Male header
soldering
Flow sensor module
Key step Description Time required
1. Frame attach
and die
attach
A frame is attached onto a PCB
by adhesive epoxy to create a
cavity for die attach and
serves as a base for flow
sensor housing. A sensing die
is then attached into the cavity
of PCB by adhesive epoxy.
Approximately 3.3 minutes per
unit.
2. Wire bond and
glop top/
encapsulation
Interconnection is made between
sensor die and PCB with gold
wire. The die is then
encapsulated in the cavity and
the wires are encapsulated by
epoxy resin to protect them
from damages.
Approximately 3.0 minutes per
unit.
3. Housing attach
and sealing
A plastic housing is attached on
PCB the housing peripheral is
sealed by adhesive epoxy.
Approximately 0.9 minutes per
unit.
4. Male header
soldering
Metal pins are attached by
solder to PCB as connector.
Approximately 1.4 minutes per
unit.
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Semi-hermetic sensor packaging (ERAQFN)
The following flowchart shows the major steps generally involved in our production
process of semi-hermetic sensor packaging (ERAQFN):
Die attach Wire bond
Filter attach,
cap attach
and sealing
Key step Description Time required
1. Die attach MEMS and ASIC die is attached
onto the cavity unit by
adhesive epoxy.
Approximately 0.2 minutes per
unit.
2. Wire bond Interconnection is made between
sensor die and PCB with gold
wire.
Approximately 0.2 minutes per
unit.
3. Filter attach,
cap attach
and sealing
Filter is attached onto metal cap
by adhesive epoxy and a metal
cap is attached on the cavity
unit and sealed by adhesive
epoxy.
Approximately 3.2 minutes per
unit.
Our PRC Legal Advisers confirm that, during the Track Record Period and up to the Latest
Practicable Date, we had complied with all applicable production safety laws and regulations in
the PRC in all material respects.
QUALITY CONTROL
We have placed strong emphasis on quality of our products by implementation of a
comprehensive quality control system. The scope of our quality control measure cover
substantial part of our production process, starting from procurement of raw materials to
packaging. We have maintained a quality control manual which has been prepared with reference
to the requirements under JEDEC, EIA, RoHS, REACH standards and applicable industry
standards in place. As at the Latest Practicable Date, our quality assurance department
comprised 28 staff, which were stationed at our Shatian Production Factory and Houjie
Production Factory.
For raw materials, we mainly source materials from suppliers that are on our internal
approved list, which is being reviewed regularly. Our management would confirm and check if
the quality of materials provided by the approved suppliers at least once per year to ensure the
stable quality of our raw materials. Our quality assurance department would also conduct sample
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test on the raw materials delivered to our production factories based on our quality control
manual. As we customise tray and tray related products for our customers, among others, we
develop intricate materials formulas based on our customers’ specific requirements in terms of
temperature rating, ESD profile and mechanical strength etc. Prior to the mixing and blending of
plastic materials based on specific material formulas, samples are taken from incoming material
and the properties of materials are measured and tested according to ASTM standards, to
determine if the incoming materials meet the incoming acceptance criteria based on technical
requirements, in order to ascertain that designated properties of material could be duly
performed. We generally return any substandard and defective materials to our suppliers for
replacement. Our Directors confirm that no material replacement incident has occurred which
had affected our production schedule to a material extent during the Track Record Period and up
to the Latest Practicable Date.
During the production process, our quality assurance department is required to conduct
various inspections and checks at each production step. In addition to the internal quality control
manual, our quality assurance department would ensure the products match with the customers’
specifications. The major tests for quality control include surface resistance test, bending test,
strapping test, stacking test, concavity/convexity test and baking test etc. Our quality assurance
department is required to conduct the tests during the production process in a comprehensive
way on piece-by-piece basis on sampling.
For the finished goods, our quality assurance department would conduct final check on our
products after completion of the whole production process. They would inspect the packaged
finished products to ensure they are free from material defects and are packed in the ways as
requested by the relevant customers.
Our Directors confirm that, during the Track Record Period and up to the Latest Practicable
Date, there was no incident of failure of our quality control systems which had a material and
adverse impact on our business operation.
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CUSTOMERS
The majority of sales of our Group has been derived from the sales of tray and tray related
products worldwide, especially in Southeast Asia, the PRC and Taiwan and thus our clientele
base has been broad. Further to the Southeast Asia, the PRC and Taiwan market, we have also
established sales network in Europe, the U.S., Korea and Japan. For each of the years ended 31
December 2021, 2022 and 2023, we sold our products to over 300 customers respectively. Most
of the customers are IDM companies, fabless-foundry semiconductor companies and IC assembly
and packaging test house around the world. The table below sets forth the breakdown of
customer profile in terms of revenue during the Track Record Period:
Y ear ended 31 December
2021 2022 2023
Revenue % of total Revenue % of total Revenue % of total
HK$’000 % HK$’000 % HK$’000 %
Fabless – foundry
semiconductor
companies 1,581 0.8 2,433 0.9 1,610 0.9
IDM companies 75,669 37.3 97,681 37.9 67,153 35.5
IC assembly and
packaging test houses 125,698 61.9 157,451 61.2 120,206 63.6
Total 202,948 100.0 257,565 100.0 188,969 100.0
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The table below sets forth the breakdown of our revenue by geographical location during
the Track Record Period:
Y ear ended 31 December
2021 2022 2023
Revenue % of total Revenue % of total Revenue % of total
HK$’000 % HK$’000 % HK$’000 %
Southeast Asia 72,219 35.6 91,694 35.6 69,152 36.6
Singapore 11,994 5.9 13,003 5.0 7,054 3.7
Malaysia 20,330 10.0 21,497 8.3 19,893 10.5
Indonesia 811 0.4 1,184 0.5 33 0.0 (Note)
Philippines 25,909 12.8 40,600 15.8 23,017 12.2
Thailand 13,175 6.5 15,410 6.0 19,155 10.2
PRC 55,495 27.3 62,647 24.3 49,342 26.1
Taiwan 39,195 19.3 59,159 23.0 33,982 18.0
The United States 16,782 8.3 20,059 7.8 4,906 2.6
Europe 3,433 1.7 8,248 3.2 14,027 7.4
Hong Kong, Korea and
Japan 15,824 7.8 15,758 6.1 17,560 9.3
Total 202,948 100.0 257,565 100.0 188,969 100.0
Note: The percentage is minimal and represents less than 0.1% of our total revenue.
With our operating history of over 15 years in the industry, we have accumulated a vast
pool of regular customers through our established reputation. In each year during the Track
Record Period, our major customers have purchased products from our Group for over 10 years.
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Major customers
Our five largest customers in each year/period accounted for approximately 60.9%, 58.4%
and 54.9% of our total revenue for the years ended 31 December 2021, 2022 and 2023,
respectively, while our largest customer in each year accounted for approximately 20.6%, 18.9%
and 16.7% of our total revenue for the respective periods. The following table sets forth brief
particulars of our top five customers in each year during the Track Record Period:
Y ear ended 31 December 2021
Rank Customer
Major products
provided by us
Y ears of
business
relationship
with our
Group Business activities of the customers
Revenue
contribute
Approximate
percentage
of our total
revenue Credit period Payment method
(HK$’000)
(approximately)
1 Customer A Tray and tray related
products
18 years The subsidiaries of a company incorporated in
Taiwan listed on TWSE and NYSE, which is a
provider of semiconductor assembly and test
services. Our Group had business relationship
with 11 subsidiaries of Customer A.
41,777 20.6% Less than 45 days By telegraphic
transfer
2 Customer C Tray and tray related
products
14 years The subsidiaries of a company listed on Shanghai
Stock Exchange and engaged in developing
integrated circuits. Our Group had business
relationship with 4 subsidiaries of Customer C.
24,094 11.9% 45 days By telegraphic
transfer
3 Customer B Tray and tray related
products
13 years A company incorporated in the United States and
listed on NASDAQ, together with its
subsidiaries, which are mainly engaged in
manufacturing, designing and sale of computer
memory and computer data storage. Our Group
had business relationship with 6 subsidiaries of
Customer B.
20,750 10.2% 60 days By telegraphic
transfer
4 STMicroelectronics Tray and tray related
products and
carrier tape
17 years The subsidiaries of STMicroelectronics N.V ., a
company headquartered in Switzerland and
listed on NYSE, which are mainly engaged in
the provision of semiconductor solutions for
automotive, industrial, personal electronics and
communication equipment, computers and
peripherals market. Our Group had business
relationship with 9 subsidiaries of
STMicroelectronics.
20,454 10.1% Around 50 days By telegraphic
transfer
5 Customer D Tray and tray related
products, carrier
tape and MEMS
and sensor
packaging
15 years A company based in the United States and listed
on NASDAQ, together with its subsidiaries,
which are principally engaged in designing,
manufacturing, testing and marketing a broad
portfolio of solutions, including ICs, software
and subsystems. Our Group had business
relationship with 11 subsidiaries of Customer
D.
16,451 8.1% 45 days By telegraphic
transfer
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Y ear ended 31 December 2022
Rank Customer
Major products
provided by us
Y ears of
business
relationship
with our
Group Business activities of the customers
Revenue
contribute
Approximate
percentage
of our total
revenue Credit period Payment method
(HK$’000)
(approximately)
1 Customer A Tray and tray related
products
18 years The subsidiaries of a company incorporated in
Taiwan listed on TWSE and NYSE, which is a
provider of semiconductor assembly and test
services. Our Group had business relationship
with 11 subsidiaries of Customer A.
48,673 18.9% Less than 45 days By telegraphic
transfer
2 Customer D Tray and tray related
products, carrier
tape and MEMS
and sensor
packaging
15 years A company based in the United States and listed
on NASDAQ, together with its subsidiaries,
which are principally engaged in designing,
manufacturing, testing and marketing a broad
portfolio of solutions, including ICs, software
and subsystems. Our Group had business
relationship with 11 subsidiaries of Customer
D.
30,026 11.7% 45 days By telegraphic
transfer
3 Customer B Tray and tray related
products
13 years A company incorporated in the United States and
listed on NASDAQ, together with its
subsidiaries, which are mainly engaged in
manufacturing, designing and sale of computer
memory and computer data storage. Our Group
had business relationship with 6 subsidiaries of
Customer B.
27,028 10.5% 60 days By telegraphic
transfer
4 Customer C Tray and tray related
products
14 years The subsidiaries of a company listed on Shanghai
Stock Exchange and engaged in developing
integrated circuits. Our Group had business
relationship with 4 subsidiaries of Customer C.
23,610 9.2% 45 days By telegraphic
transfer
5 STMicroelectronics Tray and tray related
products and
carrier tape
17 years The subsidiaries of STMicroelectronics N.V ., a
company headquartered in Switzerland and
listed on NYSE, which are mainly engaged in
the provision of semiconductor solutions for
automotive, industrial, personal electronics and
communication equipment, computers and
peripherals market. Our Group had business
relationship with 9 subsidiaries of
STMicroelectronics.
20,754 8.1% Around 50 days By telegraphic
transfer
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Y ear ended 31 December 2023
Rank Customer
Major products
provided by us
Y ears of
business
relationship
with our
Group Business activities of the customers
Revenue
contribute
Approximate
percentage
of our total
revenue Credit period Payment method
(HK$’000)
(approximately)
1 Customer A Tray and tray related
products
18 years The subsidiaries of a company incorporated in
Taiwan and listed on TWSE and NYSE, which
is a provider of semiconductor assembly and
test services. Our Group had business
relationship with 11 subsidiaries of Customer
A.
31,487 16.7% Less than 45 days By telegraphic
transfer
2 Customer D Tray and tray related
products, carrier
tape and MEMS
and sensor
packaging
15 years A company based in the United States and listed
on NASDAQ, together with its subsidiaries,
which are principally engaged in designing,
manufacturing, testing and marketing a broad
portfolio of solutions, including ICs, software
and subsystems. Our Group had business
relationship with 11 subsidiaries of Customer
D.
21,737 11.5% 45 days By telegraphic
transfer
3 STMicroelectronics Tray and tray related
products and
carrier tape
17 years The subsidiaries of STMicroelectronics N.V ., a
company headquartered in Switzerland and
listed on NYSE, which are mainly engaged in
the provision of semiconductor solutions for
automotive, industrial, personal electronics and
communication equipment, computers and
peripherals market. Our Group had business
relationship with 9 subsidiaries of
STMicroelectronics.
18,104 9.6% Around 50 days By telegraphic
transfer
4 Customer E Tray and tray related
products
17 years A company incorporated in the United States and
listed on NASDAQ together with its
subsidiaries, which are mainly engaged in
semiconductor packaging and test services. Our
Group had business relationship with 5
subsidiaries of Customer E.
17,078 9.0% 45 days By telegraphic
transfer
5 Customer C Tray and tray related
products and
carrier tape
14 years The subsidiaries of a company listed on Shanghai
Stock Exchange and engaged in developing
integrated circuits. Our Group had business
relationship with 4 subsidiaries of Customer C.
15,371 8.1% 45 days By telegraphic
transfer
To the best knowledge of our Directors, all of the top five customers were Independent
Third Parties, and none of our Directors or their associates or any Shareholder who owns more
than 5% of the issued share capital of our Company has, to the best knowledge of our Directors,
any interest in any of the top five customers of our Group or has any past or present
relationships (including, without limitation, business, employment, family, trust, financing, fund
flow or otherwise) with our Company, our subsidiaries, Shareholders, directors or senior
management, or any of their respective associates with any of the top five customers of our
Group in each year during the Track Record Period.
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During the Track Record Period, we did not enter into long-term or framework agreements
with our customers and our customers’ orders are confirmed by purchase orders placed with us.
Pricing policy and credit terms
Our pricing is generally determined based on a cost-plus pricing model, which is made with
reference to the following factors: (i) type, complexity and design of the product; (ii) materials
and specifications designated by the customer; (iii) cost of the combinations of plastic materials
and other raw materials; (iv) production cost; (v) function of the product, (vi) the quantity
orders of the same purchase and adjustments which is made with reference to the following
factors; (vii) market segment of the customer involved in; (viii) our marketing strategies; and
(ix) prevailing market price. Our pricing strategy is reviewed from time to time by our
management to ensure we offer competitive prices to our customers.
Our Group has further maintained an internal discount and rebate policy to strengthen the
loyalty of our regular customers. The internal discount and rebate policy, which governs the
discounts and rebates offered to customers and sets out the list of qualified customers, was
approved by our management. Strictly following the internal discount and rebate policies, our
sales and marketing personnel is allowed to offer a pre-fixed discount rate or rebate rates
ranging from 1% to 3%, to certain customers who are on the approved list subject to the
management’s discretion on case-by-case basis with reference to their purchase amount, our
business performance and market conditions.
During the Track Record Period, all of our sales were denominated in HKD, RMB or USD.
The general payment terms offered to our customers range from a credit term of 0 to 90 days
from the invoice date. During the Track Record Period and up to the Latest Practicable Date, we
have encountered impairment of trade and bills receivables. For further details, please refer to
the paragraph headed “Financial Information – Description on major components of statements
of financial position – Trade and other receivables, deposits and prepayments” in this
prospectus.
Sales and marketing
Given the nature of the semiconductor industry, reputation and word of mouth
recommendation, which can only be cultivated over time with track record, are crucial to us. As
our major products are customised trays, being back-end semiconductor transport media which
are applied to semiconductor devices for highly technical products such as automobiles,
airplanes and medical devices, we have put effort in managing our customer relationship by
developing our technological know-how, gaining mutual trust between our customer and our
Group and establishing tacit understanding with our customers and reliability of our products
which can satisfy the high standards and requirements of our customers. We have designated
specific sales and marketing personnel for each customers to encourage more frequent
communication and better understanding of customers’ needs. Before the Track Record Period
when there was no travelling restriction due to COVID-19, our experienced sales and marketing
personnel (i.e. the top management of our Group) travelled frequently to visit potential
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customers of our Group for initial sales negotiation. Our Directors are of the view that direct
contact with customers is critical and effective in the commencement of any future sales to our
customers and is an industry norm. Our experienced sales and marketing personnel also
possesses abundant industry knowledge to facilitate the discussion in relation to the product
specifications in each order. During the overseas visits to the customers, the top management
would introduce details of our Group such as our production capability, the qualification and
experience of the management and the technical staff of our Group as well as understanding the
major needs and requirements of the potential customers. Our top management would verbally
agree on the salient terms and the framework of the sales with the customers during their
overseas visits. Upon completion of products qualification with the potential customer, specific
terms, including precise product specifications such as the matrix, thermal resistance,
cleanliness, thickness, rigidity and colour, production quantity, unit price, packing, delivery and
payment terms would be specified in details in the purchase order(s) placed by the customer
afterwards.
During the Track Record Period when there was travelling restriction, nominal pricing
adjustments for subsequent transactions with existing customers, which contributed to over 95%
of the revenue of our Group during the Track Record Period, were negotiated between the
customers and the top management of our Group through various means, such as telephone/video
conferencing and/or emails with reference to the primitive sales transactions effected overseas.
There was accordingly minimal increase in sales and marketing activities conducted by the top
management of our Group in Hong Kong. While during the Track Record Period, new overseas
customers, which contributed to less than 5% of the revenue of our Group during the Track
Record Period, mostly approached our Group by way of referral from existing customers and/or
emails enquiries. We believe that the referral from our customers has contributed to the
continuous expansion of our business operation over the years.
In addition to business referrals by our existing customers, we also try to reach new
customers by various means. We have regularly participated in trade exhibitions across the
world. Before the Track Record Period when there was no travelling restriction due to
COVID-19, we participated in trade exhibitions in the USA, France and Germany. During the
Track Record Period, we participated in the Semicon China, a trade exhibition held in Shanghai.
We consider attending exhibitions is a good opportunity for us to introduce our products to
potential customers around the globe. We would also invite our clients to visit our production
factories in Dongguan to understand our product portfolios. Our website, which conveys detailed
information about our products types and collection, further serves as a promotional platform.
In order to maintain relationship with the existing customers and explore new business
opportunities, other than our employees in the sales, marketing and customer service department
who support our sales offices in Hong Kong, the PRC and Singapore, we also engage sales
representatives who station at our sales points for the liaison with our potential and existing
customers in the relevant regions for a wider coverage and presence across the world. During the
Track Record Period, we engaged a total of ten sales representatives. The sales representatives
are mainly responsible for maintaining close relationship and provide instant technical support to
our existing customers, introducing new customers and business opportunities to our Group,
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facilitating the communication between our Group and the customers and following up with the
design and specifications of the customers’ products. The sales commission agreements we enter
into with our sales representatives generally set out, among others, the duties of our sales
representatives, amount of fixed fee per month and the rate of performance-based commission.
The amount of sales commission we pay our sales representatives is subject to commercial
negotiation, the rate of which is determined based on regional segment market and sale
representative’s experience and capability. The sales representatives assist our Group in handling
sales orders with customers and they have the competitive edge of speaking the local language,
possessing abundant industry and sale experiences and having a broad network within the
industry. In general, the top management of our Group travel overseas to conclude the major
terms of the sales while the sales representatives assist in attending to the subsequent sales
confirmation with the customers, which are based upon the initial terms agreed by the top
management of our Group in the primitive sales negotiated and concluded overseas. The service
of our sales representatives has been well received by our customers over the years and is a part
of our sale and marketing efforts.
Our Directors are of the view that, based on the current scale of operation, engaging
independent sales representatives has brought commercial benefits to our Group as compared to
establishing overseas branch office. The Group will likely need to pay higher fixed cost
including overseas management cost even though less variable performance-based commission to
the sales staff will be payable as more support is provided to the sales staff with the direct
management and control of the company as opposed to being an independent sales
representative.
Set out below is a cost-benefit analysis taking into account our Group’s historical revenue
and salary and sales commission generated/ incurred during the Track Record Period based on
the unaudited management accounts of our Group:
Historical
revenue
Historical salary
and sales
commission
Estimated
expenses for
overseas branch
office
(HKD’000) (HKD’000) (HKD’000)
Southeast Asia
(The Philippines and
Malaysia)
FY2021 46,239 1,238 2,400
FY2022 62,096 1,275 2,400
FY2023 42,910 1,461 2,400
(Notes1&2 )
Taiwan (Taipei and
Kaohsiung)
FY2021 39,195 954 2,400
FY2022 59,159 1120 2,400
FY2023 33,982 995 2,400
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Notes:
(1) The monthly fixed cost, taking reference from the historical fixed costs of our Singapore office, which
included items such as staff salary and bonus, statutory provident funds, rental of office and office
administration and utility cost, is estimated at HKD100,000 per month.
(2) HKD2,400,000 is arrived at by multiplying HKD100,000 (estimated monthly fixed cost) by twelve (12
months) and two (two offices in the region in this cost-benefit analysis).
As illustrated above, during the Track Record Period, the historical annual salary and sales
commission of engaging sales representatives has been smaller than the estimated annual
expenses for maintaining overseas branch offices in the relevant sales point.
Our Group engages independent sales representatives to conduct overseas business because
our Directors consider the scale of operation of each overseas location does not warrant the
establishment of overseas branch offices as any potential costs saved by establishing overseas
branch offices will have to be considered together with the fixed costs in establishing and
maintaining overseas branch offices. Considering the scale of operation of our Group, our
Directors are of the view that our overseas sales points have yet to achieve sales substantial
enough for the Directors to consider switching the business model to overseas branch office
model.
Our Directors are fully aware that it is possible that the scale of operation can grow to an
extent that overseas branch offices maybe of more commercial benefits to our Group but at this
juncture the benefits of engaging independent sales representatives outweighed that of having
overseas branch offices. In any event, our Directors are not restricted to engaging independent
sales representatives and have the flexibility in deciding whether to establish overseas branch
offices from time to time when it is deemed necessary or commercially beneficial taking into
account the scale of operation in any relevant region.
Our Directors confirm that, all sales representatives engaged by us during the Track Record
Period were Independent Third Parties, and the commissions paid to our sales representatives are
determined based on arm’s length negotiations.
Product defect and replacement
We follow up with any complaint against our products by conducting a preliminary
assessment on the complaint for our tray and tray related products. An investigation will be
conducted to investigate the cause for the product quality or defect issue concerned, so that the
relevant departments can implement the adequate improvement or rectification measures.
We do not offer any warranty period for our products. However, we offer product
replacement in respect of the alleged product quality or defect issue discovered during goods
inspection by customers upon usage. Our quality assurance department will inspect and arrange
testing of the relevant batch of products supplied in order to analyse the issue and its cause.
Where the product issue is not caused by us, we explain the results of our quality inspection and
testing to the customer and undergo relationship management procedures accordingly. Where we
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are responsible for the product issue, we will apply mitigation procedures, generally by
replacing the product in defect, to appease the customer and devise plans for improvement and
implement preventive measures to minimise to risks of re-occurrence of similar product issues.
We maintain an active internal communication across departments to ensure that the
corresponding plans and measures are adequately enforced.
During the Track Record Period, the nature of product defects are generally minor defects.
The amount of product return and replacement were approximately HK$0.3 million, HK$0.5
million and HK$0.4 million for the years ended 31 December 2021 and 2022 and 2023,
respectively, and the rate of product return and replacement were 0.1%, 0.2%, and 0.2% for the
years ended 31 December 2021, 2022 and 2023, respectively. We did not make provisions in
relation to our product liability during the Track Record Period. Our Directors confirm that
during the Track Record Period, we did not receive any material complaints from our major
customers on product quality, and there had been no massive recall on our products, nor had we
incurred any material product replacement or related expenses.
PROCUREMENT AND SUPPLIERS
We seek to select our suppliers under a stringent approach to ensure a stable supply of
plastic materials of good quality at reasonable cost. We have shortlisted a list of approved
suppliers which had previously undergone and passed our qualification assessment. The ability
of offering quality materials, punctuality of delivery are the key factors when we assess our
suppliers. We conduct annual review on our list of approved suppliers so as to ensure their
product or service quality, delivery performance and supply prices continuously meet our
requirements. At the time when procurement is required, we would compare the fee quotations
among the shortlisted suppliers and when necessary, we would further negotiate with each of
them to obtain a more favourable quotation.
We intend to continue to source from our existing major suppliers, given their proven track
record in terms of quality, stable supply and timely delivery. Our Directors are of the view that
it is commercially beneficial to our operations to develop long-term and close relationship with
our major suppliers. We believe our success is largely driven by our ability to tailor customers’
need in our production by providing extensive product portfolio with good quality. As such,
stable supply of good quality products with reasonable price is one of the key emphasis of our
Group in selecting suppliers in order to accommodate our production with flexibility.
The significant plastic materials for our business comprise of raw plastic materials,
recycled plastic materials and re-compound plastic materials and formulated plastic materials.
Our Directors consider that there would be alternative plastic material suppliers available in the
market at reasonable cost and in a timely manner due to the large number of suppliers available
at the market. During the Track Record Period and up to the Latest Practicable Date, we did not
experience any material lack of capacity, supply shortages, delays or disruptions in our
operations relating to our suppliers, or any material product claims attributable to our suppliers.
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Major suppliers
Our five largest suppliers in each year/period accounted for approximately 55.2%, 56.2%
and 55.5% of our total purchases for the years ended 31 December 2021, 2022 and 2023,
respectively, while our largest supplier in each year accounted for approximately 15.9%, 18.5%
and 15.3% of our total purchases for the respective periods. We use various raw materials,
recycled materials and re-compound materials in our production process. Raw materials are
virgin materials which are used to produce or manufacture directly, such as PPO and ABS.
Recycled materials are engineering plastic of thermoplastic in nature without contamination,
normally acquired from market players in the surface-mount technology industry. Re-compound
materials are materials processed by the suppliers by combining recycled materials with raw
materials and additives in accordance to the formula as directed by the Company. The following
table sets forth brief particulars of our top five suppliers in each year during the Track Record
Period:
Y ear ended 31 December 2021
Rank Supplier
Major products/
services provided
to us
Y ears of
business
relationship
with our
Group
Business activities of
the suppliers
Amount of
purchase
Approximate
percentage
of our total
purchase Credit period Payment method
(HK$’000)
(approximately)
1 Supplier D
(4) PPO and ABS 14 years A company based in PRC, together with its
subsidiaries, engaging in manufacturing of
plastic products for daily-use, medical-use
and work safety equipment etc
17,476 15.9% 60 days after
monthly statement
By telegraphic
transfer
2 Supplier A
(1) Recycled material 14 years Two companies incorporated in HK and PRC,
respectively, engaging in sales, development
and manufacturing of plastics products for
electronic products
15,298 13.9% 60 to 90 days after
monthly statement
By telegraphic
transfer
3 Supplier C
(3) PPO, ABS and
re-compound
material
6 years A company established in PRC engaging in
research and development of engineering and
technology, new material technology
development, technology consultation
services and sales of electronic products and
compound material
10,821 9.8% 45 days after
monthly statement
By telegraphic
transfer
4 Supplier B
(2) Recycled material 7 years A company established in PRC mainly
involved in sales of raw and auxiliary
materials for IC and packaging materials,
developing technical know-hows on
electronic products, inspection, maintenance
and sales of electronic gadgets and recycling
of waste materials
10,347 9.4% 60–90 days By telegraphic
transfer
5 Supplier E
(6) Recycled material 7 years A company based in PRC mainly engaging in
manufacturing and sale of plastics products
6,779 6.2% 120 days after
monthly statement
By telegraphic
transfer
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Y ear ended 31 December 2022
Rank Supplier
Major products/
services provided
to us
Y ears of
business
relationship
with our
Group
Business activities of
the suppliers
Amount of
purchase
Approximate
percentage
of our total
purchase Credit period Payment method
(HK$’000)
(approximately)
1 Supplier E
(6) PPO and recycled
materials
7 years A company based in PRC mainly engaging in
manufacturing and sale of plastics products
23,797 18.5% 120 days after
monthly statement
By telegraphic
transfer
2 Supplier D (4) PPO and ABS 14 years A company based in PRC, together with its
subsidiaries, engaging in manufacturing of
plastic products for daily-use, medical-use
and work safety equipment etc
15,315 11.9% 60 days after
monthly statement
By telegraphic
transfer
3 Supplier A
(1) Recycled material 14 years Two companies incorporated in HK and PRC,
respectively, engaging in sales, development
and manufacturing of plastics products for
electronic products
12,621 9.8% 60 to 90 days after
monthly statement
By telegraphic
transfer
4 Supplier F
(7) Tooling & Mould
Supplier
5 years A company established in PRC engaging in
manufacturing mould and tooling accessories
11,613 9.0% prepayment or 90
days after monthly
statement
By telegraphic
transfer
5 Supplier C
(3) PPO, ABS and
re-compound
material
6 years A company established in PRC engaging in
research and development of engineering and
technology, new material technology
development, technology consultation
services and sales of electronic products and
compound material
9,037 7.0% 45 days after
monthly statement
By telegraphic
transfer
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Y ear ended 31 December 2023
Rank Supplier
Major products/
services provided
to us
Y ears of
business
relationship
with our
Group
Business activities of
the suppliers
Amount of
purchase
Approximate
percentage
of our total
purchase Credit period Payment method
(HK$’000)
(approximately)
1 Supplier E
(6) Recycled material 7 years A company based in PRC mainly engaging in
manufacturing and sale of plastics products.
14,926 15.3% 120 days after
monthly statement
By telegraphic
transfer
2 Supplier C (7) PPO, ABS and
re-compound
material
6 years A company established in PRC engaging in
research and development of engineering and
technology, new material technology
development, technology consultation
services and sales of electronic products and
compound material.
11,559 11.8% 45 days after
monthly statement
By telegraphic
transfer
3 Supplier F
(3) Tooling & Mould
Supplier
5 years A company established in PRC engaging in
manufacturing mould and tooling
accessories.
10,806 11.1% prepayment or 90
days after monthly
statement
By telegraphic
transfer
4 Supplier A
(1) Recycled material 14 years A company established in PRC engaging in
developing and manufacturing plastics
products for electronic products.
10,369 10.6% 60 to 90 days after
monthly statement
By telegraphic
transfer
5 Supplier G
(8) Recycled material 2 years A company established in PRC engaging in
manufacturing and sale of plastic products.
6,489 6.7% 90 days after
monthly statement
By telegraphic
transfer
Notes:
(1) Supplier A is group of two private companies. One of which was established in January 2009 in the PRC and
controlled by two individuals with a registered capital of approximately RMB10 million, and the other one was
incorporated in March 2021 in Hong Kong and controlled by an individual with a share capital of HKD800,000.
(2) Supplier B is a private company established in July 2013 in the PRC and controlled by two individuals with a
registered capital of approximately RMB1 million.
(3) Supplier C is a private company established in December 2018 in the PRC and controlled by an individual with a
registered capital of approximately RMB10 million.
(4) Supplier D is a listed company listed on the Shanghai Stock Exchange. It was established in May 1993 with a
registered capital of approximately RMB2.57 billion as at 31 December 2021. It has a revenue of approximately
RMB40.2 billion and a net profit attributable to equity of approximately RMB1.66 billion for the year ended 31
December 2021. It also wholly owns a private company incorporated in Hong Kong which was established in
July 2009.
(5) Supplier E is a private company established in June 2006 in the PRC and controlled by an individual with a
registered capital of approximately RMB300,000.
(6) Supplier F is a private company established in August 2018 in the PRC and controlled by an individual with a
registered capital of approximately RMB1 million.
(7) Supplier G is a private company established in March 2021 in the PRC and controlled by two individuals with a
registered capital of approximately RMB5 million.
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To the best knowledge of our Directors, all of the top five suppliers were Independent
Third Parties, and none of our Directors or their associates or any Shareholder who owns more
than 5% of the issued share capital of our Company has, to the best knowledge of our Directors,
any interest in any of the top five suppliers of our Group or has any past or present relationships
(including, without limitation, business, employment, family, trust, financing, fund flow or
otherwise) with our Company, our subsidiaries, shareholders, directors or senior management, or
any of their respective associates) with any of the top five suppliers of our Group in each year
during the Track Record Period.
Plastic materials
We mainly source the raw materials, such as PPO and ABS, recycled material and
re-compound material from third-party suppliers. For each type of plastic material, we generally
have more than two suppliers. We believe that this practice minimises the risk of default and
over-reliance on any particular supplier. We generally make our purchase based on the amount of
outstanding sales order and the sales forecast. Our procurement team generally issues purchase
requisitions and purchase orders to our suppliers only after seeking internal approval from our
management under R&D and material engineering department and administration and operation
support department. We would also apply plastic materials recycled from our unsold finished
goods of tray and tray related products.
The purchase price of our raw materials are generally determined with reference to the
prevailing market conditions. We do not undertake hedging activities against the price of raw
materials. During the Track Record Period, we had not experienced any material adverse effect
on our business or financial performance as a result of price fluctuations of raw materials.
Mould tooling
We mainly procure our mould tooling from third-party suppliers based in the PRC. Our
mould toolings are principally used for moulding our tray and tray related products. In designing
and developing our products, we adopt modular toolings which can minimize the time and costs
for mould tooling repairing and maintenance. By using modular toolings, once the tooling is out
of order, only the necessary module is required for maintenance. We could use back-up module
of the same shape and size, if any, for temporary replacement while our manufacturing
department repairs the same or we could engage our supplier to produce a new module for us if
such module cannot be repaired, which could minimize the time and costs for maintenance.
There are multiple sources for us to purchase and customise different sets of tooling. We
believe that this practice minimises the risk of default and over-reliance on any particular
supplier. We have long-standing relationships with our tooling suppliers and we generally seek
quotations from the suppliers after customers confirm their order with us. Our administration
and operation support department will then issue purchase requisitions and purchase orders to
our suppliers after seeking internal approval from our head of procurement team in
administration and operation support department and approval from customers on the product
design prepared by our R&D and material engineering department. We generally make our
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purchase on mould tooling based on the customers’ order. For order of products that are not
under our existing product portfolio, we will purchase on new mould tooling from our suppliers,
while for order of products that are under our existing product portfolio, we will purchase extra
units of such model of mould tooling for back-up. During the Track Record Period, we had not
experienced any material adverse effect on our business or financial performance as a result of
price fluctuations of mould toolings.
Inventory control
We typically place orders with our suppliers on an as-needed basis in accordance with our
production schedule and sales forecast. We typically maintain an inventory level of raw
materials that is sufficient for two months of our regular production operation. We also have
consignment arrangement with our customers under which we ship finished goods to the third
party bonded warehouse according to the sales forecast of our customers.
As at 31 December 2021, 31 December 2022 and 31 December 2023, we recorded
inventory in the amount of HK$60.1 million, HK$60.7 million and HK$65.6 million,
respectively. Our inventory turnover days decreased from 155 days for FY2021 to 142 days for
FY2022 and increased to 197 days for the year ended 31 December 2023. Inventory turnover
days slightly decreased to 142 days as at 31 December 2022 as a result of the adjustment to
inventory control of our Group since the alleviation of the COVID-19 pandemic. Inventory
turnover days increased to 197 days as at 31 December 2023 due to the increase in inventory
level arising from the prolonged distribution schedule requested by our customers with the
decrease in demand of the end customers for their products and the decrease in cost of sales
level because of lower production volume. As at 31 December 2023, approximately 33.0% of
finished goods was held in our overseas bonded warehouses under consignment arrangement. As
at Latest Practicable Date, over 90% of the inventories are supported by the purchase order.
Generally, we perform analysis from time to time on the sales performance and inventory
level by using the operational data collected, which we in turn utilise such data to optimise the
stock level of each product and minimise stock aging by adjusting our sales and marketing
campaigns. We perform stocktaking on a regular basis to verify the record of inventory level.
Any inventory discrepancies discovered during each stock count will be followed up and
reported to our management department. During the Track Record Period, we also did not
experience any interruption to the supply of our products or fail to secure sufficient quantities of
irreplaceable products that had any material adverse impact on our business operations.
We have developed a comprehensive system to monitor our level of inventory, including
raw materials at our production factories, as well as products at our warehouses.
We record the inventory level of raw materials in stock at each of our production factories
and warehouses. We also record and keep track of the level of raw materials incoming and
outgoing for the purpose of production, so that our administration and operation support
department can decide the appropriate timing for the procurement of the relevant raw materials.
Based on the pre-determined maximum and minimum level of for each kind of raw materials and
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the records on inventory level, our procurement team would be alert when the level of inventory
falls below the minimum level or exceeds the maximum level and make adjustments on
procurement accordingly.
ENTITY WHO W AS BOTH OUR CUSTOMER AND SUPPLIER
During the Track Record Period and up to the Latest Practicable Date, to the best
knowledge and belief of our Directors, one of our five largest customers, namely Customer B,
was also our supplier. Customer B is company incorporated in the U.S., together with its
subsidiaries, which is mainly engaged in manufacturing, designing and sale of computer memory
and computer data storage. Customer B is one of our major customers and we have been
supplying tray and tray related products to Customer B for application in transporting and
delivering product of Customer B. Customer B would normally resell the used trays to us at a
discounted price and such arrangement is made for the purpose of scrap recycling under the
company policy of Customer B. We would make use of the used trays by smashing the trays for
re-compounding during the production of tray and tray related products.
The table below sets forth the percentage of our revenue and purchases attributable to
Customer B during the Track Record Period:
For the year ended 31 December
2021 2022 2023
%%%
Sales to Customer B
Percentage of our total revenue
during the relevant year/period 10.2 10.5 4.4
Average gross profit margin 43.0 43.0 44.0
Purchases from Customer B
Percentage of our total purchases
during the relevant year/period 0.3 0.4 0.2
During the Track Record Period, the gross profit margins generated from providing our
products to Customer B were comparable to our overall gross profit margins for the same period.
Moreover, the credit period granted by us to Customer B was consistent with those in our
normal business operation. To the best knowledge and belief of our Directors after making all
reasonable enquiries, Customer B and its respective ultimate beneficial owners are Independent
Third Parties. Our Directors confirmed, and the Sole Sponsor concurred that the transactions
with Customer B were entered into on arm’s length negotiations and at comparable terms to
contracts with other customers and suppliers.
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TRANSFER PRICING ARRANGEMENT
Our Group generally procures raw materials from various independent suppliers located in
the PRC, Hong Kong and other overseas countries through UBoT Enterprise, depending on the
nature and needs of the specific engagements with customers. Manufacturing work will then be
conducted in the Shatian Production Factory and Houjie Production Factory. After manufacturing
process is completed, finished goods will be sold to UBoT Inc. (HK) or directly to independent
customers. For finished goods being sold to UBoT Inc. (HK), they will be further sold to
independent customers around the world. For some customers located in the Southeast Asia
region, UBoT Inc. (SG) would provide marketing service to UBoT Inc. (HK) to assist in
communicating with the customers and promote the products.
During their respective courses of business, UBoT Enterprise and UBoT Inc. (HK) carried
distinct functions. UBoT Enterprise was engaged in manufacturing and sales of products for the
purpose of enjoying the relatively low production costs in the PRC.
On the other hand, UBoT Inc. (HK) was engaged in trading of products to customers
located in various countries and regions. Over the years, UBoT Inc. (HK) has established a
well-recognised brand name and therefore, in order to capture such advantage, UBoT Inc. (HK)
was designated, with the assistance and support of the independent sales representatives located
overseas, to handle a significant part of the external sales with independent customers.
Accordingly, arrangement was made for UBoT Enterprise to sell finished goods to UBoT Inc.
(HK) to utilise the relevant strengths of the respective entities. Occasionally, when UBoT
Enterprise receives purchase orders directly from the local PRC customers, since the sales were
concluded directly in the PRC, UBoT Enterprise would conduct sales transactions directly with
those PRC customers without selling the finished goods to UBoT Inc. (HK) for onward sales to
independent customers.
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During the Track Record Period, the countries/regions that account for the major customers
of our Group include the PRC, Taiwan, the Philippines, Malaysia, the United States, South
Korea, Singapore, Thailand, Europe, Japan and Indonesia. The following diagrams set forth the
operation flow for certain sales of finished products of our Group:
UBoT EnterpriseIndependent
suppliers
UBoT Inc. (HK)
• Provide
 raw materials
• Carries out
 manufacturing
 work to produce
 finished goods
• Sells the finished
 goods
Independent local
PRC customers
• Buy finished goods
 from UBoT Enterprise
Independent
overseas
customers
• Buy finished goods
 from UBoT Inc. (HK)
Throughout the sales process, UBoT Inc. (SG) performs the marketing function and assist
in communicating with customers and promoting the Group’s products.
Transfer pricing review
We have engaged SHINEWING Tax and Business Advisory Limited, our Tax Consultant, to
review the transactions among our subsidiaries under our Group during the Track Record Period
and the transfer pricing compliance status of our Group.
In conducting the Transfer Pricing Analysis, our Tax Consultant has followed the relevant
transfer pricing guidance in Hong Kong, the PRC and Singapore when performing the transfer
pricing review and benchmarking analysis (“ Transfer Pricing Analysis ”) which applied the
transactional net margin method (TNM method) as the transfer pricing methodology and adopted
(i) full cost mark-up ratio (“ FCMU ratio”) and (ii) berry ratio as the respective indicator in
measuring UBoT Enterprise’s and UBoT Inc. (SG)’s profit levels for the cross-border related
party transactions indicated below.
Under the Group’s existing business model, our Tax Consultant has identified and
conducted Transfer Pricing Analysis on the two major cross-border related party transactions
(the “Cross-border Transactions ”) as follows:
i. Sales of finished goods from UBoT Enterprise to UBoT Inc. (HK); and
ii. Provision of marketing service by UBoT Inc. (SG) to UBoT Inc. (HK).
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Summary of the Cross-border Transactions with transfer pricing exposure is as follows:
Name of Group
Company
Nature of the
transaction
Name of the
receiving Group
company
Amount in
FY2021
Amount in
FY2022
Amount in
FY2023
UBoT Enterprise
(the PRC)
Sales of finished
goods
UBoT Inc. (HK)
(Hong Kong)
Approximately
RMB47,513,000
Approximately
RMB77,955,000
Approximately
RMB67,469,000
UBoT Inc. (SG)
(Singapore)
Provision of
marketing
services
UBoT Inc. (HK)
(Hong Kong)
Approximately
S$555,000
Approximately
S$599,000
Approximately
S$612,000
Regarding the pricing terms of the Cross-border Transactions, our Group adopts cost-plus
pricing approach to set the price of its products. The relevant prices are primarily determined by
Mr. Tong, being a controlling shareholder and an executive Director, and the other top
management of our Group, including Mr. Chan and Mr. Tam, both being an executive Director,
with reference to:
i. UBoT Enterprise’s purchase cost on raw materials and its production costs plus
mark-up; and
ii. UBoT Inc. (SG)’s marketing service costs plus mark-up.
The Transfer Pricing Analysis focuses on reviewing whether the profit margin derived (i)
by UBoT Enterprise from its sales of finished goods to UBoT Inc. (HK), and (ii) by UBoT Inc.
(SG) from its provision of marketing services to UBoT Inc. (HK) during the Track Record
Period were comparable to independent third parties and hence achieved the arm’s length
principle.
Transfer Pricing Analysis on Cross-border Transactions
Due to the significant costs on both the production-related direct costs as well as the
general operating expenses (e.g. indirect labor, rental expenses and other general administrative
expenses, FCMU ratio under TNM method was adopted as profit level indicator for evaluating
the profitability of UBoT Enterprise
(Note 1) under sales of finished goods to UBoT Inc. (HK) in
the Transfer Pricing Analysis. As berry ratio under TNM method should only be used to test the
profits of limited risk distributor that do not own or use any intangible assets, it was adopted as
the profit level indicator for evaluating the profitability of UBoT Inc. (SG)
(Note 2) under
provision of marketing service to UBoT Inc. (HK) which adds value to a transaction through the
provision of marketing services.
Our Tax Consultant selected potential comparable companies which have the same or
similar Standard Industrial Classification (SIC) code as compared to our Group’s product
categories (i.e. engaging in the production of plastic trays for semiconductor industry). In
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addition, as our Group operates mainly in Hong Kong, the PRC and Singapore, reference figures
in similar geographic locations (i.e. the far east and central Asia region) were used for the
purposes of conducting comparable studies. In particular, our Tax Consultant included potential
comparable companies that have different scale of operations in terms of revenue as the analysis
of transfer pricing mainly focuses on the FCMU/berry ratio, which are ratio analysis instead of
an absolute value analysis. Our Tax Consultant considers that the selected data provides an
exhaustive list and a full-spectrum reflection of industrial operational circumstances, which
enhances the robustness of the results of the transfer pricing analysis to gain wider and
comprehensive acceptance by the tax authorities in the respective locations and the Sole Sponsor
concurs, that the selection of the comparable companies used in the analysis of the Intra-Group
Transactions is fair, reasonable and representative as (i) the comparable companies were selected
from the TP Catalyst database, an internationally recognised database which is generally
accepted by tax authorities to extract data of exclusively public listed companies worldwide; and
(ii) the selected comparable companies are independent from our Group and each other which
could provide fair and impartial information for transfer pricing analysis. Specifically for the
purpose of the transfer pricing analysis, the Tax Consultant selected potential comparable
companies that (i) have Standard Industrial Classification (SIC) codes appropriate for
comparison purpose, i.e. in the same/similar industries engaging in semiconductor and related
devices, plastic products and computer peripheral equipment and printed circuit boards, etc.,
which are similar to our Group’s products categories; (ii) export the products to/distribute the
products in the geographic locations similar to our Group; and (iii) have different scale of
operations in terms of revenue as the analysis of transfer pricing mainly focuses on the FCMU
ratio, which is a ratio analysis instead of an absolute value analysis.
Notes:
(1) UBoT Enterprise adopted FCMU ratio in measuring its profit levels because such ratio comprehensively takes
into account the overall profit level of an entity as compared to the overall expenses incurred, which is
appropriate for the manufacturing and trading business UBoT Enterprise is engaged in for transfer pricing
benchmarking study purpose.
(2) UBoT Inc. (SG) adopted berry ratio in measuring its profit levels because such ratio assesses the return of an
entity (i.e. the gross profit) earned on its value-adding distribution activities, and assumes that part of the costs
of these activities refers to the entity’s operating expenses, which is appropriate for the provision of marketing
services UBoT Inc. (SG) was engaged in for transfer pricing benchmarking study purpose.
Related party transactions between UBoT Enterprise and UBoT Inc. (HK)
Based on the findings of our Tax Consultant, in particular the analysis on the functions and
risks undertaken by UBoT Enterprise as a manufacturer of precision engineering plastics, data of
relevant comparable companies is extracted from the TP Catalyst database for comparison.
According to the data selection procedures and analysis performed under the Transfer Pricing
Analysis, the FCMU ratios of UBoT Enterprise calculated for FY2021 (-4.65%), for FY2022
(-3.17%) and for FY2023 (2.45%) fell within the inter-quartile range of the average FCMU
ratios for the comparable companies from 2019 to 2021 (i.e. between -6.06% and 5.83%, with a
median of 0.93%) and from 2020 to 2022 (i.e. between -4.28% and 6.47%, with a median of
1.29%) respectively
(Note) .
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Note: Since the whole year financial data for 2023 would not be fully released by the TP Catalyst database until the
late 4th quarter of 2024, data for 2020 to 2022 is adopted for analysis for FY2023, which is an internationally
accepted practice in general.
Based on the aforesaid, our Tax Consultant and the Directors are of the opinion that the
related party transactions between UBoT Enterprise and UBoT Inc. (HK) during the Track
Record Period could be regarded as being conducted on an arm’s length basis based on the
application of the specific transfer pricing benchmarking methodology. Our Directors confirmed
that, as at the Latest Practicable Date, UBoT Enterprise had completed all the relevant tax
filings related to its related party transactions in compliance with the relevant PRC laws and
regulations and we were not aware of any enquiry, audit or investigation by any tax authority in
the PRC with respect to the related party transactions between UBoT Enterprise and UBoT Inc.
(HK) carried out by our Group.
Our Directors confirmed that UBoT Enterprise has not been required by any tax authority
to submit contemporaneous documents relating to the related party transactions and has not
received any notice from the tax authority indicating it will make a special tax adjustment in
relation to transfer pricing issues for the past years.
As a result, our Tax Consultant is of the view that the related party transactions have
properly complied with the relevant transfer pricing regulations or guidelines applicable in the
PRC and Hong Kong, and our Tax Consultant is of the view that the risk of UBoT Enterprise
being challenged of its tax positions by the relevant PRC tax authority is considerably remote,
and that it is also unlikely that the IRD will initiate transfer pricing adjustment on UBoT Inc.
(HK) for the Track Record Period. Based on such transfer pricing analysis, our Directors are of
the view that the related party transactions were conducted in accordance with the arm’s length
principle from Hong Kong and the PRC perspectives.
Related party transactions between UBoT Inc. (SG) and UBoT Inc. (HK)
In order to facilitate the communication of UBoT Inc. (HK) with its customers from the
Southeast Asia region (e.g. from Singapore and Malaysia), UBoT Inc. (SG) provided marketing
services to UBoT Inc. (HK) by way of providing direct liaison service with those customers
from the Southeast Asia region. UBoT Inc. (SG) carried on such activities through maintaining
office and employing staff locally in Singapore. In the above regard, the marketing service costs
of UBoT Inc. (SG) represented its various daily operating costs incurred in providing the subject
marketing service, including staff costs, transportation costs and office supplies. Based on the
findings of our Tax Consultant, in particular the analysis on the functions and risks undertaken
by UBoT Inc. (SG) as a marketing services provider in respect of precision engineering plastics,
data of relevant comparable companies is extracted from the TP Catalyst database for
comparison. According to the data selection procedures and analysis performed under the
Transfer Pricing Analysis, the berry ratios of UBoT Inc. (SG) calculated for FY2021 (1.02),
FY2022 (1.15) and FY2023 (0.95) fell below the inter-quartile range of the average berry ratios
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for the comparable companies from 2019 to 2021 (i.e. between 1.12 and 1.84, with a median of
1.49) and that from 2020 to 2022 (i.e. between 1.29 and 1.96, with a median of 1.70)
respectively
(Note) .
Under a formal official transfer pricing adjustment exercise for FY2021, FY2022 and
FY2023, if any, adjustments made in the subject case should be initialized by the Singapore
in-charge tax authorities of UBoT Inc. (SG) with respect to the tendency of the berry ratios. Our
Tax Consultant made hypothetical adjustments which could be generally accepted by the
Singapore in-charge tax authority, i.e. by adjusting the profit levels of UBoT Inc. (SG) for
FY2021, FY2022 and FY2023 to berry ratios of 1.49, 1.70 and 1.70 which are the respective
median of berry ratio from the comparable companies.
The taxpayers involved (i.e. UBoT Inc. (SG) and UBoT Inc. (HK)) should be entitled to the
corresponding adjustments concluded firstly by the tax authority in respect of the tax position of
UBoT Inc. (SG), and subsequently by the IRD in respect of the tax position of UBoT Inc. (HK).
The additional profits adjusted to UBoT Inc. (SG) would cause an increase in taxable profits of
UBoT Inc. (SG) and an increase in Singapore corporate income tax liability at 17% tax rate for
FY2021, FY2022 and FY2023. On the other hand, there will be a reduction in taxable profits of
UBoT Inc. (HK) in FY2021, FY2022 and FY2023 at 16.5% profits tax rate.
Under these scenarios, the upward profit adjustments of UBoT Inc. (SG) for FY2021,
FY2022 and FY2023 are estimated to be S$250,665, S$316,692 and S$470,802 respectively,
leading to an additional Singapore income tax liability of S$42,613, S$53,837 and S$80,836
respectively (equivalent to approximately HK$246,000, HK$312,000 and HK$474,000).
On the other hand, there would be a reduction of profits for UBoT Inc. (HK) by S$250,665,
S$316,692 and S$470,802 (equivalent to HK$1.44 million, HK$1.84 million and HK$2.79
million) for FY2021, FY2022 and FY2023 respectively, with a decrease in profits tax liability of
approximately HK$239,000, HK$303,000 and HK$460,000 accordingly. The overall tax impact
from the Group’s perspective would be a net increase in tax liabilities of HK$7,000, HK$9,000
and HK$14,000 respectively. In this regard, since the amounts of the overall tax liability
adjustments are minimal, our Tax Consultant does not foresee any material income tax provision
required even under the transfer pricing adjustment scenarios. As advised by our Tax Consultant,
our Directors are of the view that the transfer pricing arrangement of our Group has been in
compliance with the relevant transfer pricing laws and regulations.
Based on the above and as confirmed by our Directors, the Group’s transfer pricing
arrangements have not been challenged or investigated by any relevant tax authorities in Hong
Kong and Singapore during the Track Record Period and up to the Latest Practicable Date.
Note: Since the whole year financial data for 2023 would not be fully released by the TP Catalyst database until the
late 4th quarter of 2024, data for 2020 to 2022 is adopted for analysis for FY2023, which is an internationally
accepted practice in general.
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Commercial rationale and the measures for the related party transactions
UBoT Enterprise was a company established in the PRC and was engaged in manufacturing
and sales of products while UBoT Inc. (HK) was a company incorporated in Hong Kong and was
engaged in trading of products to customers located in various countries and regions. In order to
enhance the effectiveness of the Group’s management and business operations, to enhance our
sourcing flexibility, to utilise the relevant strengths of the respective entities, and to avoid the
concentration of sales and procurement/manufacturing functions into a single entity within our
Group, our Group arranged UBoT Enterprise to sell finished goods to UBoT Inc. (HK) for
onward sales to independent customers.
The Group is committed to ensure that the Cross-border Transactions will be conducted on
an arm’s length basis going forward and would take various measures to ensure its compliance
with the relevant transfer pricing laws and regulations in jurisdictions where it operates. The
management of our Group had been and will continue to closely monitor the Group’s transfer
pricing arrangement including reviewing the reasonableness of the pricing policy of its
intra-group transactions from time to time, and where necessary, appoint a tax adviser to review
such transfer pricing arrangements to ensure compliance with the arm’s length principle and
measures to ensure on-going compliance.
HISTORICAL OFFSHORE PROFITS CLAIM AND DEPRECIATION ALLOW ANCE
Background of the Offshore Profits Claim, depreciation allowance and the tax position of
UBoT Inc. (HK) and the Withdrawal
UBoT Inc. (HK) had claimed its entire trading profits derived from its business operations
as offshore in nature and not subject to profits tax in Hong Kong for the years of assessment
2008/09 to 2021/22, which had been challenged by the IRD. UBoT Inc. (HK) had also included
depreciation allowance in its profits tax return on the basis that its capital expenditure on
machinery or plant which is essential to the production of its profits. Meanwhile, our Directors
considered, and the Tax Consultant concurred, that UBoT Inc. (HK), as a legal entity on its own,
was not chargeable to any overseas tax on the basis that UBoT Inc. (HK) should not constitute a
permanent establishment (“ PE”) in any overseas jurisdictions where the other subsidiaries of our
Group and the sales representatives of our Group operated, including the PRC and Singapore.
As advised by our Tax Consultant, UBoT Inc. (HK) had grounds to claim its trading profits
for the Track Record Period as offshore sourced and not subject to profits tax in Hong Kong,
which was subject to the review and agreement of the IRD. However, for the purpose of
reducing the amount of time, manpower and resources and to expedite the finalization of the
matter, UBoT Inc. (HK) formally withdrew the Offshore Profits Claim with the IRD in July
2023. The Withdrawal also included UBoT Inc. (HK)’s agreement to not pursue any claim for
depreciation allowance in respect of machinery or plant used outside Hong Kong. The IRD
indicated that the Offshore Profits Claim had been fully and conclusively resolved after the
Withdrawal.
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Historical development of the Offshore Profits Claim
Grounds of our Directors to lodge the Offshore Profits Claim
At the material time of lodging the Offshore Profits Claim, our Directors had relied on the
advice of its former tax advisor and understood that UBoT Inc. (HK) had grounds and bases to
claim its profits as offshore sourced. Our Directors originally lodged the Offshore Profits Claim
on the basis that given the majority of its transactions were negotiated outside of Hong Kong
and other complicated and inextricable offshore elements (such as the involvement of overseas
sales representatives, having manufacturing activities in the PRC and arrangement and the
inspection and delivery of finished goods were conducted outside Hong Kong) involved. As
such, our Directors sought to obtain the IRD’s view on treating at least part of the relevant
profits as offshore sourced by way of lodging the Offshore Profits Claim, which is within the tax
regulatory framework in Hong Kong.
Interim View of the IRD
Prior to the Track Record Period, the IRD issued enquiry letters since April 2010 to enquire
about the Offshore Profits Claim, which focused on whether the activities performed by UBoT
Inc. (HK) in Hong Kong during the relevant years of assessment gave rise to profits generating
activities in Hong Kong.
During the assessment process, the IRD formed the interim view of not accepting the
Offshore Profits Claim and invited UBoT Inc. (HK) to consider withdrawing the claim on the
basis that (i) the documents provided by UBoT Inc. (HK) indicated that UBoT Inc. (HK)
contracted out manufacturing work to a Hong Kong company
(Note) ; (ii) the travel records of
certain top management of UBoT Inc. (HK) showed they spent more than two-thirds of their
time in Hong Kong; and (iii) the copies of purchase orders, invoices, shipping and banking
documents provided by UBoT Inc. (HK) indicated that UBoT Inc. (HK)’s relevant business
operations were carried out in Hong Kong.
View of our Directors
Our Directors did not agree with the interim view of the IRD because our Directors were of
the view that the essential procedures for concluding sales were conducted outside of Hong
Kong and, among others, UBoT Inc. (HK) had offshore elements such as (i) location of
customers; (ii) having its production in the Mainland China; (iii) the finished goods were stored
outside of Hong Kong before shipment and (iv) the loading, shipment and unloading of the
goods were arranged and done outside Hong Kong, for which the IRD had commented there was
Note: Our Directors confirm that UBoT Inc. (HK) contracted out manufacturing work to Cansum Industries Limited, a
company incorporated in Hong Kong with limited liability and indirectly and non-wholly owned by Tang’s
Family, as an OEM partner because our Group did not have manufacturing facilities in the PRC before the
establishment of UBoT Enterprise in 2010. For details, please refer to the section headed “History, Development
and Reorganisation – Corporate History – UBoT Inc. (HK)” in this prospectus.
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inadequate documentary evidence and had been requesting supplementary documents from UBoT
Inc. (HK).
Our Directors were of the view that the interim view of the IRD did not definitively reflect
negatively on the Offshore Profits Claims as at the material time (i) the opportunity for
discussion was still open and ongoing, (ii) the Tax Consultant was engaged to communicate and
understand the requests from the IRD and (iii) UBoT Inc. (HK) was in formal appeal process
with the IRD and the final adjudication may ultimately differ.
View of our Tax Consultant on the grounds of the Offshore Profits Claim
On the balance of fact, the Tax Consultant is of the opinion, and our Hong Kong Legal
Counsel concurred, that UBoT Inc. (HK) had grounds to claim its trading profits for the Track
Record Period as offshore sourced and not subject to profits tax, which is subject to the review
and agreement of the IRD.
The Tax Consultant arrived at such view based on the understanding of the overall business
operation and the review of the business transactions documents of UBoT Inc. (HK), including:
(i) the essential procedures for concluding sales were conducted outside of Hong Kong:
before the Track Record Period, the top management of UBoT Inc. (HK) travelled
abroad to negotiate and conclude sales outside Hong Kong. On one hand, the
management of UBoT Inc. (HK) would visit the office of the overseas customers for
sales negotiation. On the other hand, the overseas customers would visit the factory
site of our Group located in the PRC for the essential vendor audit. Without the
aforementioned overseas client office visits and vendor audit performed in the Group’s
PRC factory prior to the COVID-19 pandemic, it would be impossible to generate the
profits of UBoT Inc. (HK).
(ii) continuation of initial sales concluded outside of Hong Kong: with reference to the
Departmental Interpretation and Practice Notes No. 21 (Revised) (“ DIPN 21”) issued
by the IRD, in locating the source of profits from Hong Kong profits tax perspective,
focus should be put on the identification of “effective cause(s)” in deriving the
relevant profits and the respective location(s), without being distracted by antecedent
or incidental matters. UBoT Inc. (HK) has substantial business activities and operation
arrangement performed outside Hong Kong and critically without those activities
conducted outside Hong Kong, UBoT Inc. (HK) could not have derived the profits for
all the relevant years. The locality of all profits generated from subsequent sales
should be in line with that of UBoT Inc. (HK)’s initial sales transactions with the
respective customers on the basis that such subsequent sales were principally the
continuation and extension of the initial sales concluded previously overseas (see (i)
above). Although during the Track Record Period, the top management of UBoT Inc.
(HK) was not able to travel abroad due to the COVID-19 pandemic, most of the
relevant sales during the Track Record Period were in essence the continuation of the
sales effected prior to COVID-19 pandemic outside Hong Kong.
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(iii) the respective activities conducted in Hong Kong were antecedent or incidental in
nature: the respective activities conducted by the staff of UBoT Inc. (HK) in Hong
Kong, including (i) the maintenance of the customer services team to issue and receive
purchase orders, (ii) accounting and business records custodian, and (iii) the
maintenance of bank accounts and trade financing function are antecedent or
incidental matters and should be segregated from the critical profit generating
activities substantially conducted outside Hong Kong. The Tax Consultant is of the
view that as compared with the essential business activities conducted outside Hong
Kong, such duties of the staff of UBoT Inc. (HK) performed in Hong Kong were
incidental and antecedent in nature.
Historical depreciation allowance in relation to assets used outside Hong Kong
UBoT Inc. (HK) included depreciation allowance in its profits tax return on the basis that if
the Offshore Profits Claim was denied, its capital expenditure on machinery or plant for which
the use of such was essential to the production of its profits should be qualified for depreciation
allowance. However, the IRD considered that the arrangement where UBoT Inc. (HK)’s moulds
had been allowed to be used by entity in the PRC constituted a lease, and therefore not qualified
for depreciation allowance under section 39E of the IRO and did not grant the part of allowance
on these assets used outside Hong Kong. As confirmed by our Directors, UBoT Inc. (HK)
initially made objection to the IRD on the basis that its claim should be granted in case the
profits are considered to be onshore chargeable profits. Despite procedurally UBoT Inc. (HK)
was within its rights to raise further objection, taking also into account that the Offshore Profits
Claim and depreciation allowance are mutually exclusive, we withdrew the aforesaid claim
subsequently in May 2023 in order to avoid protracted exchange of correspondence on the
subject matter and to expedite an early finalisation of the tax position for the relevant years of
assessment.
Reason for the Withdrawal
As more than a decade had elapsed and substantial resources had been consumed for the
purpose of reducing the amount of time, manpower and resources and to expedite the
finalization of the matter, UBoT Inc. (HK) formally withdrew the Offshore Profits Claim with
the IRD in July 2023. The IRD had issued the revised profits tax assessments/profits tax
assessments (the “ Withdrawal Assessments ”) for the relevant years on the basis that 100% of
the trading profits of UBoT Inc. (HK) are subject to profits tax in Hong Kong, which
represented the final amount of the profits tax payable to the IRD after the Withdrawal.
As confirmed by our Tax Consultant, in a verbal enquiry took place on 13 October 2023,
the IRD indicated that the Offshore Profits Claim had been fully and conclusively resolved after
the Withdrawal. As at the Latest Practicable Date, based on the verbal confirmation from the
IRD and the views of our Tax Consultant and the Hong Kong Legal Counsel, our Directors
confirm that the Offshore Profits Claim had been completely resolved and there should not be
any tax-related matters, including additional tax assessment and/or any penalties or
investigations, arising from or associated with the Offshore Profits Claim.
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Given that the Withdrawal Assessments were computed and made without granting the
depreciation allowances in question and that there was no verbal or written indication from the
IRD on imposition of penalty, the Tax Consultant advised that UBoT Inc. (HK)’s claim for
depreciation allowance had been completely resolved and the risk of penalty being imposed due
to the inclusion of depreciation allowance is remote. The Hong Kong Legal Counsel also takes
the view that there is no real risk of a penalty in the circumstances of the current case.
Maximum profits tax liabilities and remote risk of penalty
Prior to the Withdrawal, the IRD had issued protective profits tax assessments to UBoT Inc.
(HK) for the years of assessment 2008/09 to 2016/17 which disregarded the Offshore Profits
Claim and without granting any 30% pooling depreciation allowance on certain machineries and
equipment (the “ Protective Assessments ”)
(Note) .
Y ears of assessment 2008/09 to 2016/17
Our Tax Consultant advised that, the Protective Assessments in the total amount of
HK$22,232,000 have already taken into account the potential profits tax liabilities arising from
the Offshore Profits Claim for the relevant years of assessment, the entirety of which had been
settled by our Group in the form of tax reserve certificates/payment of tax by instalments.
Subsequently, under the Withdrawal Assessments issued, the remaining tax payables for the
period was approximately HK$1,261,000, of which approximately HK$1,090,000 was settled
during the year ended 31 December 2023 and remaining amount of HK$171,000 to be settled
subsequent to the year ended 31 December 2023. As confirmed by the Tax Consultant, such
remaining tax payable arose primarily because IRD double used tax loss accumulated in prior
years to set off against UBoT Inc. (HK)’s assessable profits in the Protective Assessments.
Y ears of assessment 2017/18 to 2022/23
For the years of assessment 2017/18 to 2022/23, our Group made a full provision of profits
tax in the amount of HK$16,686,000 by following the IRD’s assessing practice adopted in the
Protective Assessments. As advised by the Tax Consultant, the full provision of profits tax has
Note:
Y ear of assessment Date of issue
2008/09 27 February 2015
2009/10 8 March 2016
2010/11 17 March 2017
2011/12 15 March 2018
2012/13 13 March 2019
2013/14 27 February 2015
2014/15 4 March 2021
2015/16 28 January 2022
2016/17 16 February 2023
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already taken into account the potential profits tax liabilities arising from the Offshore Profits
Claim since it was computed and provided by following the IRD’s assessing practice adopted in
the Protective Assessments. Subsequently after the Withdrawal, the total tax payable for 2017/18
to 2021/22 amounted to approximately HK$10,618,000 under the Withdrawal Assessments, of
which approximately HK$3,270,000 was settled during the year ended 31 December 2023, and
the remaining balance will be settled by instalments agreed with the IRD and was included in
the income tax provision under current liabilities as at 31 December 2023, while the tax payable
for 2022/23 (on onshore basis) amounted to approximately HK$6,129,000, which demonstrated
that the provision made by our Group substantially reflected the maximum potential tax
exposure of UBoT Inc. (HK).
In the Protective Assessments, the amounts of depreciation allowance not granted (on assets
used outside Hong Kong) by the IRD amounting to HK$1.8 million, HK$2.0 million, HK$12.5
million, HK$5.3 million, HK$5.8 million, HK$6.5 million, HK$6.1 million, HK$5.3 million for
each of the years of assessment from 2008/09 to 2015/16, respectively, had also been taken into
account in the computation of tax payable.
Penalties under sections 80(2), 82(1) and 82A(1) of the IRO
The Tax Consultant confirmed that, in the process of the Withdrawal, the IRD did not
indicate there will be any penalty arising from sections 80(2), 82(1) and 82A(1) of the IRO,
after considering the totality of facts in relation to the Offshore Profits Claim. The IRD also
indicated that the Offshore Profits Claim had been fully and conclusively resolved after the
Withdrawal. As at the Latest Practicable Date, our Directors are not aware of any inquiry,
notice, warning, or sanctions from the IRD for UBoT Inc. (HK) in relation to the relevant
penalties.
Further, the Hong Kong Legal Counsel, after reviewing the mode of operation of UBoT Inc.
(HK) (including the variation in the mode of operation during the COVID-19 pandemic) and the
manner of the Offshore Profits Claim made by UBoT Inc. (HK) on the profits tax return form
and in the profits tax computation submitted to the IRD, was of the view that a claim made in
such a manner was in the nature of a disclosure, drawing the IRD’s attention to the matter and
inviting the IRD to agree or review the particular position taken by made by UBoT Inc. (HK),
and should in no way be seen as tax evasion punishable by virtue of section 82(1) of the IRO
and should not constitute the filing of incorrect returns without reasonable excuse under sections
80(2) and 82A(1) of the IRO.
Considering that (i) UBoT Inc. (HK) withdrew the Offshore Profits Claim; (ii) up to the
Latest Practicable Date, the Offshore Profits Claim was not subject to any further enquiry from
IRD; and (iii) the view of the Hong Kong Legal Counsel, our Tax Consultant is of the view that
the risk of being penalized because of lodging the Offshore Profits Claim is remote.
In addition, our Controlling Shareholders have entered into the Deed of Indemnity with and
in favour of our Company and UBoT Inc. (HK), pursuant to which our Controlling Shareholders
have irrevocably undertaken, to fully indemnify our Group, on a joint and several basis, against
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among other matters all claims, actions, demands, proceedings, judgments, losses, liabilities,
damages, costs, charges, fees, expenses, penalties and fines suffered or incurred or accrued by
our Group directly or indirectly, arising from, as a result of or in connection with any loss
and/or penalty resulting from or in respect of the Offshore Profits Claim that exceeds the income
tax provision provided by our Group as at 31 December 2023.
For further details of the implication of the Offshore Profits Claim and the Withdrawal on
the financial performance of our Group, please refer to the paragraphs headed “Financial
Information – Historical Offshore Profits Claim and relevant tax provisions made” in this
prospectus.
Tax Payment Status after the Withdrawal
According to the Withdrawal Assessments, the total final profits tax liabilities for the years
of assessment 2008/09 to 2016/17 as assessed by the IRD had been substantially satisfied by
way of tax reserve certificates/payment of tax by instalments made before the Withdrawal with
reference to the Protective Assessments while the total profits tax liabilities for the years of
assessment 2017/18 to 2021/22 had been substantially reflected by way of the income tax
provision under current liabilities as at 31 December 2023. The total amount payable under the
Withdrawal Assessments (excluding surcharge) is HK$11,879,504 for the years of assessment
2008/09 to 2021/22.
Going forward, UBoT Inc. (HK) filed profits tax return on the basis that all of its profits
are onshore profits and our Directors confirm it will continue to file its profits tax return on
onshore basis in the future on the basis that there is no material change to its mode of operation.
The assessed tax for the year of assessment 2022/23 and provisional tax for the year of
assessment 2023/24 (excluding the part of provisional tax formally held over by the IRD) is
HK$10,731,147.
To better manage the liquidity position of UBoT Inc. (HK), UBoT Inc. (HK) applied for,
and the IRD approved settlement of the outstanding tax payment by instalments in twelve
months (together with the tax payable for the year of assessment 2022/23 and provisional tax for
the year of assessment 2023/24). As at the Latest Practicable Date, UBoT Inc. (HK) had made
payment under the Withdrawal Assessments for the years of assessment 2008/09 to 2021/22 as
well as the final assessment for 2022/23 in the total amount of HK$13,620,000 with further
instalments in the total amount of approximately HK$11,070,000 to be settled on a monthly
basis, which will be completed by end of October 2024 (together with the applicable surcharge
under the instalment plan).
Compliance with applicable tax laws and regulations in other overseas jurisdictions
No PE in jurisdictions other than Hong Kong, the PRC and Singapore
With reference to the general and generic principles commonly adopted in double taxation
arrangements and the Organisation for Economic Co-operation and Development Model, our Tax
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Consultant advised that our Group only had PE in Hong Kong, PRC and Singapore and should
not have constituted any PE in other jurisdictions. The Tax Consultant advised that UBoT Inc.
(HK)’s trading activities outside Hong Kong should not constitute any PE and tax presence in
any other tax jurisdictions and should not be subject to any foreign tax exposure on the basis
that UBoT Inc. (HK) did not maintain any physical office/branch/business premises or employ
any sales staff vested with general authority to conclude initial sales in any regions of the
customers and suppliers or elsewhere while the sales representatives engaged by UBoT Inc.
(HK) were separate legal entities who traded with UBoT Inc. (HK) and were liable for the
activities in their own capacity. Our Group had duly paid tax in Hong Kong (as Protective
Assessments in the form of tax reserve certificates/payment of tax by instalments), in the PRC
and Singapore where our Group has PE during the Track Record Period. Our Directors further
confirm that, during the Track Record Period, UBoT Inc. (HK) had not been requested to pay
any foreign tax in respect of the products sold in jurisdictions other than Hong Kong, the PRC
and Singapore.
No non-compliance of tax obligations in Hong Kong, the PRC and Singapore
As advised by our Tax Consultant, our PRC Legal Advisers, Hong Kong Legal Counsel and
our legal advisers as to Singapore Law, our Directors confirm that our Group had not committed
any non-compliance in respect of our tax obligation in the major jurisdictions where we operate
and have PE during the Track Record Period and up to the Latest Practicable Date that could
have a material adverse effect on our business, prospects, financial conditions or results of
operations. In such premises, as supported by the view of our Tax Consultant, our Directors are
of the view, and the Sole Sponsor concurred, that our Group has complied with all applicable tax
laws and regulations in the jurisdictions where the sales representatives operated during the
Track Record Period.
Suitability to act as directors and suitability for listing
With (i) the background of the Offshore Profits Claim, (ii) the support of our Tax
Consultant’s opinion and the Hong Kong Legal Counsel’s opinion on the grounds and legitimacy
of the Offshore Profits Claim and (iii) the view of the Hong Kong Legal Counsel that the
making of the Offshore Profits Claim in the profits tax return shall in no way be seen as tax
evasion, our Directors are of the view, and the Sole Sponsor concurred, that the Offshore Profits
Claim would not constitute tax evasion pursuant to applicable tax laws and regulations and will
not affect the suitability of our Directors to act as directors of a listed issuer under Rules 5.01
and 5.02 of the GEM Listing Rules, and the suitability for listing of our Company under
Rule 11.06 of the GEM Listing Rules. Based on the confirmation of our Directors and having
made all reasonable enquiries, the Sole Sponsor confirmed that to the best of their knowledge,
our Group and the Tax Consultant had never received any letter from the IRD which pointed out,
queried or otherwise mentioned any dishonesty or intent to evade tax on the part of our Group
and our Directors and senior management.
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IMPACT OF THE TRADE W AR ON OUR BUSINESS
The trade war between the United States and the PRC has commenced since July 2018 and
has brought certain negative impacts to the semiconductor industry which may indirectly affect
our business, given that we mainly serve customers from the semiconductor industry and that
our business is semiconductor industry driven.
Since the commencement of the trade war, the semiconductor industry in the PRC has been
affected by incidents such as (i) the imposition of tariffs by the United States to the PRC, (ii)
actions of the United States and the PRC against the imports from each other to minimise the
transfer of intellectual property and technology and (iii) the accelerated shift of electronics and
semiconductor devices production from the PRC to other Asian countries to ensure stable supply
chain with lower labour costs and to reduce uncertainty on PRC enterprises arising from the
trade war. Whilst our products are not subject to additional tariff or trade restriction and are not
the primary target and direct focus of trade restrictions, our products are in complementary
demand of semiconductor devices such that our business was indirectly affected by the
fluctuation in demand of semiconductor devices. In particular, the demand for our products was
adversely affected by the CAC’s ban on operators of key infrastructure in the PRC to procure
semiconductors from one of our major customers based in the United States in 2023. For further
details, please refer to the paragraphs headed “Risk factors – Trade war between the United
States and the PRC may adversely affect our business, financial conditions and results of
operation” in this prospectus.
Development of the trade war and its impact on our business operation
Material sourcing constraints at the early stage of the trade war
The commencement of the trade war led to constraints in material sourcing from suppliers
including PPO and recycled materials and increase of raw material costs for PRC semiconductor
manufacturers. According to the F&S Report, the major source of supply of resin, which is a
material used to produce PPO, comes from Europe, Japan and the United States. The suppliers in
the PRC mainly undergo compounding work for these resins sourced overseas for sale to its
customers. With the fear of the shortage of raw materials imported from the United States, there
was a competition among the precision engineering plastics manufacturers, industrial material
suppliers and other players along the supply chain of the semiconductor industry in the PRC for
available raw materials in or around 2018. With the increase in the price of raw materials as a
result of such competition, the costs of raw materials of our Group for the year ended 31
December 2018 increased significantly and caused a decrease of approximately 12% in our gross
profit margin (unaudited) as compared to that for the year ended 31 December 2017. To cope
with the situation of rising price of raw materials and avoid the recurrence of similar incident,
our Group had taken measures such as widening our supplier base and increasing the use of
recycled materials as an alternative.
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Growing emphasis on local supply chain in the PRC
Our Directors are of the view that the aforementioned negative impacts of the trade war on
PRC semiconductor manufacturers have been gradually mitigated since early 2019 as the supply
chain of raw materials became stable after the market players adjusted and coped with the
uncertainties brought forth by the trade war. According to the F&S Report, the Chinese
enterprises in the semiconductor industry sought to import substitution to make up for the
shortfall that was caused by the decrement in supplies from the United States. Moreover, due to
the growing political emphasis on the security of supply chain, the market demand for locally
made products from Chinese enterprises increased rapidly. Our Group had benefitted from the
growing emphasis on local supply chain in the PRC and received increasing orders from PRC
customers. As a result, our revenue generated in the PRC increased by approximately HK$7.1
million, or 12.8% from approximately HK$55.5 million for the year ended 31 December 2021 to
approximately HK$62.6 million for the year ended 31 December 2022. Even when our Group
experienced a drop in revenue as a result of the temporary slowdown of the semiconductor
industry in the year ended 31 December 2023 due to factors such as geopolitical tensions and
the global macroeconomic downturn, our revenue generated in the PRC showed a smaller
decrease of approximately 21.2% by proportion as compared to other geographical locations as a
result of our widened customer base in the PRC. Furthermore, according to the F&S Report,
among the major countries and regions, China is expected to occupy the largest market share of
the global semiconductor industry at 31.3% in 2024. For details, please refer to the paragraphs
headed “Financial Information – Selected Line Items in the Consolidated Statements of Profit or
Loss and other Comprehensive Income – Revenue”.
Recent policies and restrictions imposed by the United States and the PRC
Entity list and license requirements imposed by the United States
In order to facilitate the imposition of export controls, the United States has in place the
Export Administration Regulations (the “ EAR”) which contains a list of items, software, and
technology that are subject to export controls.
On 7 October 2022, the U.S. Department of Commerce’s Bureau of Industry and Security
(“BIS”) published rules that introduce new restrictions related to semiconductors, semiconductor
manufacturing, supercomputers, and advanced computing items and end uses in Mainland China,
Hong Kong SAR or Macau SAR (the “ BIS Rules”), which was further revised on 25 October
2023 and 4 April 2024. The BIS Rules included measures on additional control on certain
advanced and high-performance computing chips and computer commodities that contain such
chips and new license requirements for items subject to the EAR destined for an end-use in the
development or production of supercomputers, certain types of advanced semiconductors in
China, or those destined to a semiconductor fabrication facility in China that fabricates ICs
meeting specified requirements and expanded the scope of foreign-produced items subject to
license requirements for twenty-eight existing entities that are located in China. Since the
implementation of the EAR and the BIS Rules, the PRC semiconductor manufacturers faced
difficulties in sourcing raw materials subject to the EAR and disruption in supply chain.
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Our Directors are of the view that there were no applicable restrictions from the United
States (including the BIS Rules) that brought a direct impact on the production and export of the
products of our Group because during the Track Record Period and up to the Latest Practicable
Date:
(i) we are not named on the entity list of the BIS which contains entities that are subject
to license requirements for United States persons and companies to export, re-export
and transfer (in-country) specified items and none of our customers or suppliers are
named on such entity list that there was no disruption to the procurement in the
United States of our customers and suppliers; and
(ii) we are not named on the denied persons list of the BIS which contains entities which
United States persons and companies may not participate in an export transaction with
and none of our customers or suppliers are named on such denied persons list that
there was no relevant export control on our customers; and
(iii) we did not have sales to any countries or regions subject to comprehensive trade
embargos under U.S. export controls (which currently include Cuba, Iran, North
Korea, Syria, the Crimea Region of Russia/Ukraine and the self-proclaimed Luhansk
People’s Republic and self-proclaimed Donetsk People’s Republic regions) or
person(s) and identity(ies) listed on the U.S. Department of Treasury’s Office of
Foreign Assets Control’s Specially Designated Nationals and Blocked Persons List or
other restricted parties lists maintained by the United States; and
(iv) we were not subject to any additional tariffs for our exports to the United States due
to the trade war.
During the Track Record Period and up to the Latest Practicable Date, the BIS Rules
mainly focused on advanced and high performance computing chips and computer commodities
but not our main products, i.e. tray and tray related products. Whilst we are a participant on the
supply chain of the semiconductor industry (being a supplier for upstream back-end functions of
the semiconductor and integrated circuit industry), our products were not the target and the
direct focus of the BIS Rules and therefore were not directly affected. However, it is possible
that the extent and scale of trade restrictions between the two countries might be escalated if the
United States and the PRC fail to reach any agreement on the various trade tensions that remain.
For further details, please refer to the paragraphs headed “Risk Factors – Risks Related to Our
Business and Industry – Trade war between the United States and the PRC may adversely affect
our business, financial conditions and results of operation”.
Ban on U.S. semiconductor manufacturer imposed by the PRC
On 21 May 2023, the CAC requested operators of key infrastructure in the PRC to stop
buying products from one of our major customers based in the United States during the Track
Record Period on the basis that its products carry serious network security risks. After the PRC
banned sales of chips of such major customer based in the United States to PRC entities, its
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revenue decreased substantially by approximately 49.5% in 2023 based on public information.
Since our product is in complementary demand with the products of such major customer based
in the United States, our revenue from such customer and its subcontractors showed a decrease
for the year ended 31 December 2023, which in turn negatively affected our financial
performance for the period. While we maintained our business relationship with such major
customer after the procurement ban was imposed against it, our revenue attributable to such
major customer decreased by approximately 69.5% for the year ended 31 December 2023 as
compared to the year ended 31 December 2022. Our Directors consider that the inherent demand
for chips in the PRC will not diminish because of such procurement ban and PRC entities may
adjust their procurement strategy and seek substitutes from alternative supplier. According to
F&S, competitors of such major customer may experience an uptick in demand for their products
as PRC companies seek alternative suppliers to meet their needs. After the market participants
respond to market changes, the demand for our products is set to resume to normal as there was
no fundamental change in factors affecting the demand for our products. Further, such restriction
could prompt the PRC to expedite efforts to strengthen its domestic semiconductor production
capabilities, benefiting PRC semiconductor manufacturers in the long run.
Analysis of hypothetical impact of the trade restrictions imposed by the United States and the
PRC
(i) assuming the entity list of the BIS is expanded to our Group, our customers or suppliers
If the scope of the entity list is expanded to our Group, we may face difficulty and/or
higher cost to procure from the United States. During the Track Record Period, we did not
purchase raw materials or machinery from the United States. Our Directors are of the view that
this hypothetical scenario will not bring any direct adverse impact on our operation.
If the scope of the entity list is expanded to our customers or suppliers (in particular, our
PRC customers and suppliers), we may face (i) lower demand from our customers as a result of
the decrease in demand in their products or disruption in their production and/or procurement;
and (ii) higher procurement costs from our suppliers as the available supply may reduce due to
the disruption in the supply chain of such suppliers if the restriction expand to our raw materials
for production.
Further, if the scope of the entity list is expanded to the end customers of our PRC
customers, we may also face lower demand from our PRC customers as a result of the
consequential decline in the demand for their products from their end customers.
During the Track Record Period, approximately 27.0%, 24.5% and 29.1% of our revenue
was contributed by our customers headquartered in the PRC. Assuming the entity list is
expanded to all of our customers headquartered in the PRC and they ceased to purchase from our
Group, our revenue is estimated to reduce by approximately 27.0%, 24.5% and 29.1%,
respectively (being the revenue contribution by our customers headquartered in the PRC during
the Track Record Period).
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(ii) assuming the ban on procurement from U.S. semiconductor manufacturers is expanded to
all of our customers headquartered in the United States
If the coverage of the ban on procurement from U.S. semiconductor manufacturers is
expanded to all of our customers headquartered in the United States, we may face reduced
demand from our customers headquartered in the United States as a result of the decrease in
demand for their products. During the Track Record Period, approximately 19.7%, 23.5% and
17.3% of its revenue was contributed by customers of our Group headquartered in the United
States, respectively. Assuming the ban on procurement from U.S. semiconductor manufacturers
is expanded to all of our customers headquartered in the United States and they ceased to
purchase from our Group during the Track Record Period, our revenue is estimated to reduce by
19.7%, 23.5% and 17.3%, respectively (being the revenue contribution by our customers
headquartered in the United States during the Track Record Period).
Our Directors confirm that during the Track Record Period and up to the Latest Practicable
Date, to their best knowledge and belief, save as disclosed above, none of the downstream
customers of our tray and tray related products have been named by relevant authorities to
subject to a procurement ban.
Note: In this analysis, given that the trade restrictions imposed are entity-based instead of location-based, our
Directors are of the view that using the unaudited revenue contribution by entities headquartered in the
United States and the PRC (for example, sales concluded with a Filipino arm of a PRC entity is included
in this analysis) is a more meaningful and accurate analysis than using geographical revenue contribution.
Measures to mitigate the potential adverse impacts from the implementation of restrictions on
our major customers
To minimize the potential impact of the trade war on our business, we will adopt the
following measures to mitigate the adverse impacts that may result from the trade restrictions:
(i) Expanding our customer base: Our Group has been actively engaging new customers
based in the PRC and overseas countries. As at 31 December 2023, our Group had
over 300 customers worldwide and our five largest customers in each year/period
accounted for approximately 60.9%, 58.4% and 54.9% of our total revenue for the
years ended 31 December 2021, 2022 and 2023, respectively, while our largest
customer in each year accounted for approximately 20.6%, 18.9% and 16.7% of our
total revenue for the respective periods, showing a decreasing trend in concentration
of customers. Given (i) our Group’s extensive sales network; (ii) the market
recognition and the proven track record with a long established history, our Directors
believe that our Group has no major obstacles in expanding our customers base.
(ii) Developing our business and enhancing our presence in the Southeast Asia market: as
disclosed in the paragraphs headed “Business – Business Strategies – Implementation
Production in the Philippines for carrier tape”, our Group intends to set up production
facilities for carrier tape in the Philippines. During the Track Record Period, our
Group had a strong performance in the Southeast Asia region, where the revenue
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contribution of the customers from the Southeast Asia region amounted to
approximately 35.6%, 35.6% and 36.6%, for each of the three years ended 31
December 2023, respectively. Our Directors are of the view that establishing a
production site of carrier tape products in the Philippines is an initiative to diversify
any potential concentration risk of our production. With such new production site, our
Group will be in a better position to establish an entity in the Philippines a strong arm
reaching out to Southeast Asia’s customers and carry on manufacturing activities
outside of China to attract customers who are concerned with having diversified
location of production facilities in the event of that more stringent trade restrictions
are imposed on PRC entities.
According to the F&S Report, the semiconductor industry will grow continuously along
with the increasing demand for the electronic products and semiconductor manufacturers
typically address these concerns swiftly with its vast ecosystem of suppliers and manufacturers
and rebound from any short-term disruptions.
View of our Directors
Our Directors are of the view that the negative effect of the decrease in revenue arising
from the ban from the CAC is an isolated incident as such customer was alleged to be involved
in network security risks and national security and does not indicate that other customers of our
Group will be subject to similar procurement bans. Further, according to the F&S Report,
semiconductor manufacturers typically rebound from any short-term disruptions swiftly with its
vast customer base and ecosystem of suppliers. Our Directors believe that the overall growth and
demand in the semiconductor industry remain strong and industry players will adjust from such
disruptions without major obstacles. Our Directors are also of the view that the above
hypothetical situation represents remote scenarios and will not bring significant adverse impact
on our business given that the trade restrictions are not directly imposed on our Group.
Given that our Group’s products sold to the United States are not subject to additional
import tariffs due to the trade war up during the Track Record Period and to the Latest
Practicable Date, our Directors are of the view that the trade war does not have a direct impact
on our business. Further, the indirect impact on our business can be mitigated by (i) our
measures to widen our customer base and (ii) the growing emphasis on the security of local
supply chain in the PRC as a result of the trade war. Therefore, our Directors do not foresee that
the demand for our products will be materially and adversely affected by the trade war between
the United States and the PRC.
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BUSINESS SUSTAINABILITY
Overview
Despite our overall growth in revenue and expansion in scale since our inception, we had
experienced fluctuation in market conditions due to the dynamic nature of the semiconductor
industry, given that our products are in complementary demand of semiconductor devices. For
the year ended 31 December 2023, our Group recorded a drop in revenue of approximately
26.6% as compared to the year ended 31 December 2022. Our Directors are of the view that
such decrease was primarily due to the slowdown in the semiconductor industry in the year
ended 31 December 2023, which was a short-term adjustment of the semiconductor industry due
to factors such as geopolitical tensions and the global macroeconomic downturn and is not
expected to be long-term in nature. According to Frost & Sullivan, heightened geopolitical
tensions disrupted supply chains and international collaborations and continued to impact the
industry in 2023. During the year ended 31 December 2023, the CAC’s ban on operators of key
infrastructure in the PRC to procure semiconductors from one of our major customers based in
the United States had contributed to our deteriorated financial performance in the year. For
details, please refer to the section headed “Business – Development of the trade war and its
impact on our business operation – Recent policies and restrictions imposed by the United States
and the PRC – Ban on U.S. semiconductor manufacturer imposed by the PRC”. Additionally, the
global macro-economy experienced a short-term slowdown, resulting in reduced consumer
spending and weakened business confidence. In particular, the market size of the global
semiconductor industry decreased by approximately 8.1% in 2023. Please refer to the section
headed “Industry Overview – Global Market Size of Semiconductor Industry” for more details.
Our Directors consider that the impact from the short-term adjustment of the semiconductor
industry in 2023 due to factors such as geopolitical tensions and the global macroeconomic
downturn is not expected to be substantial over the long term, considering (i) the long-term
growth of the semiconductor industry; (ii) the high consumer demand, (iii) the emphasis on
security of supply chain and supportive policies in favour of the development of semiconductor
devices in the PRC.
Long-term growth of the semiconductor industry
According to the F&S Report, the global market size of semiconductor industry by sales
value increased at a CAGR of 6.3% from 2019 to 2023 and is forecasted to increase at a CAGR
of 8.8% from US$595.3 billion in 2024 to US$832.7 billion in 2028, in which semiconductor
industry in the PRC is expected to outgrow the other markets. Despite short-term downturn and
adjustment, the long term outlook of the global semiconductor market remain strong and on a
linear growth, driven by the emerging technologies such as AI, IoT and 6G, as well as the
broader applications in various fields such as medical and automotive. According to the F&S
Report, promoted by technological advancement manifested in (i) the growing applications in
artificial intelligence across different industries which would drive the need for more powerful
and energy-efficient processors, accelerators, and memory solutions, (ii) stabilized and
developed demand in consumer electronics market including smartphones and laptops and (iii)
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the proliferated development of automotive electronics such as autonomous driving technology
which would require sophisticated semiconductor solutions, the semiconductor industry is
expected to rebound in 2024. As a result, even after the temporary slowdown of the market
demand in 2023, our Directors are of the view that the semiconductor industry still maintained a
relatively high overall growth rate, and that such positive trend is expected to persist once the
semiconductor industry undergoes short term adjustment.
According to the F&S Report, looking forward, as semiconductor industry continue to
benefit from the development of advanced technology such as artificial intelligence and machine
learning, the industry of back-end semiconductor transport media is anticipated to reach
US$1,156.1 million in 2028, from US$854.6 million in 2024, growing with a CAGR of 7.8%.
Leveraging the growing market size and demand, we expect to achieve better economies of scale
from higher utilisation of our production capacity to meet growing customer demands. Higher
profit margins are typically associated with the economies of scale. As we grow our production
level and achieve better economies of scale, we expect our operating expenses, which are
predominantly fixed in nature, to account for a decreasing proportion of our revenue.
High consumer demand
The growth in electronics industry also positively affects the market demand for our
products. According to the F&S Report, semiconductor as an essential element for various types
of electronic products, shall grow along with the continuous development of electronic
end-products. The depth of application of semiconductor has been growing, for instance, sensors
and actuators are increasingly applied across all segments, the demand for artificial intelligence
enabled, 5G and Internet of Things related equipment are booming, which in turn further
propelled the demand for semiconductor as an essential component and therefore increase the
overall demand for back-end semiconductor transport media. On a daily life basis, the growing
applicability of semiconductor devices across various sectors such as consumer electronics (e.g.
television, computers, mobile phones), automotive (e.g. electronic cars), artificial intelligence
applications (e.g. advanced medical care, self-driving cars), industrial use (e.g. energy
generation, solar panels) and aerospace and defense system, is evident. The global electronics
market size had been growing continuously from US$1,999.7 billion to US$2,155.9 billion from
2019 to 2023, representing a CAGR of 1.9%. Particularly, the increasing integration and
implementation of advanced safety systems such as automatic emergency braking, lane departure
warning and smart parking assistance systems to decrease road accidents in vehicles will
contribute to the increase in market size of the automotive electronics industry with CAGR of
3.1% from 2024 to 2028. In the era of technological advancement, our Directors are confident
that the demand for semiconductor devices will increase in the long term which would in turn
continue to boost the overall demand of back-end semiconductor transport media.
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The emphasis on security of supply chain and supportive policies in favour of the
development of semiconductor devices in the PRC
Since the commencement of the U.S.-China trade war in July 2018, there had been a
growing political emphasis on the security of supply chain for the back-end semiconductor
transport media industry in the PRC and the local market demand in the PRC has increased
rapidly. According to the F&S Report, the market size of back-end semiconductor transport
media of the PRC is expected to grow at a CAGR of 9.7% from approximately US$79.5 million
to US$115.3 million from 2024 to 2028. The PRC has also taken active measures to counter
western countries repressive actions against the PRC in the field of semiconductor. For instance,
the PRC is reported to raise more than RMB200 billion through the Integrated Circuit Industry
Investment Fund to accelerate the development of cutting-edge technologies. As a result, despite
the business relating to the United States may occasionally be affected by changes in policies
and government measures, our Group has taken various measures to expand our sales in the PRC
to mitigate any adverse impact on our financial performance as well as to capitalise on the
growth in market demand in the PRC including actively expanding our customer base. During
the year ended 31 December 2023, despite the overall decrease in revenue and profits due to the
short-term adjustment in the semiconductor industry, our revenue generated in the PRC showed a
smaller decrease of approximately 21.2% by proportion as compared to other geographical
locations as a result of our widened customer base in the PRC.
View of our Directors on business sustainability and the long-term prospects of the
semiconductor industry
Our Directors consider the drop in revenue and profitability for the year ended 31
December 2023 does not cast doubt on the business sustainability of our Group based on the
following reasons:
(i) Our financial performance had been coinciding with market performance and
fluctuations since our inception in 2005 and we eventually achieved long-term growth
leveraging our resilience and the adaptability of our management:
In the global economic recession and the cyclical movement of the semiconductor
industry during 2018 and 2019 (prior to the Track Record Period) during which the
Sino-U.S. Trade War commenced, our Group sustained net loss because of the
unfavourable market environment in which we faced difficulty in material sourcing.
To cope, our Directors had successfully implemented countering measures to navigate
recession caused by extrinsic factors, including but not limited to (a) widening our
customer base in the PRC and the globe to diversify the risk of trade restrictions
arising from geopolitical tensions; (b) expanding our supplier base to prevent abrupt
increase in material costs; (c) changing our inventory policies to counter any
disruption in logistics arrangements and (d) continuously invested in our R&D
capabilities to maintain our competitiveness. The subsequent significant improvement
in financial results of our Group (i.e. we recorded significant growth in revenue in the
year ended 31 December 2020 to the year ended 31 December 2022) has proven that
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the fundamental business model of our Group is healthy, profitable when the market
resumes to normal circumstances and sustainable in long term.
The drop in profitability for the year ended 31 December 2023 was primarily due to
the global economic downturn and the cyclical movement of the semiconductor
industry in 2023. Nonetheless, even at a weak market, our Group was able to sustain a
certain level of revenue, which was higher than the revenue generated in the year
ended 31 December 2020 of approximately HK$166.0 million because of our widened
customer base and overall long-term growth of the market.
We believed that our track record demonstrated that our Group is resilient and able to
put into place effective countering measures to navigate recession caused by extrinsic
factors.
(ii) Our diversified customers base can reduce the influence caused by isolated event
beyond our control:
In addition to above-mentioned extrinsic economic and market conditions in FY2023,
our Directors form the view that the decrease in revenue generated from the sales of
tray and tray related products of approximately 30.3% in FY2023 as compared to
FY2022 was also caused by an isolated event beyond the control of our Group, i.e, the
procurement ban imposed by the PRC against our major customer in the United States.
The revenue attributed to such major customer decreased by approximately 69.5% in
FY2023 as compared to FY2022. If the effect of such incident were excluded, the total
revenue attributed to the tray and tray related products of our Group in FY2022
(excluding such major customer in the United States) would have decreased in a lesser
extent of approximately 21.3% in FY2023 as compared to FY2022.
Meanwhile, we recorded an increase in the revenue attributed to two of our top 10
customers in FY2023 as compared to FY2022 despite market downturn, particularly a
PRC-based IC assembly and packaging test houses, indicating that the measures we
have taken to widen our customer base and deepen marketing efforts, especially in the
PRC market, have been effective in maintaining our revenue stream.
As we implement our business strategies and future plans which place emphasis on
expanding customer base, our Directors take the view that the effect of such incidents
on our financial performance will be less pronounced going forward.
(iii) We are not aware of any structural factors, including but not limited to substitutes
and/or viable alternatives for tray and tray related products in the supply chain of the
semiconductor industry or new major competitors in the market that would
substantially reduce our market share in the back-end semiconductor transport media
industry or impair the demand for our products.
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(iv) There was no termination of the business relationship between our Group and our
major customers during the Track Record Period.
Our Directors also believe that the risk of the substantial deterioration in financial
performance of our Group is remote, based on the following observations:
(i) Based on the revenue report of our Group, our Group recorded a slightly decrease in
revenue of the first quarter of 2024, compared with the fourth quarter of 2023. Since
the first quarter of a year is typically a down season for PRC manufacturing
companies taking into account the effect of the Chinese New Year holidays and the
fourth quarter of a year is typically a peak season in the semiconductor industry
considering the differences in working days, our Directors consider the level of
revenue in the first quarter of 2024 represents similar operational performance as
compared to the fourth quarter of 2023. Thereafter, our Group has received purchase
orders for tray and tray related products of approximately 1.7 million pieces and 1.8
million pieces as at 31 December 2023 and 31 March 2024, respectively, showing that
the financial performance is expected not to be further deteriorated in the second
quarter of 2024 as compared to that in the first quarter of 2024.
(ii) Our Group usually receives more orders for customised products in a thriving market.
Our Group introduced 58, 36 and 23 additional customised products in the first half of
2023, the second half of 2023 and the first quarter of 2024, respectively. As compared
to the first half of 2023, the number of new customised products increased at a slower
rate in the second half of 2023, which was in line with the temporary downturn in the
semiconductor industry. However, in the first quarter of 2024, the number of new
customised products increased at a higher rate than that in the second half of 2023,
indicating comparatively higher market interests in customised products in 2024.
Going forward, our Group will proactively take appropriate measures to ensure our
business growth and long-term profitability. For details, please refer to the paragraphs headed
“Measures to enhance profitability” below.
Measures to enhance profitability
Our Group has been taking various measures to capture the growth of the market and
increase our profitability, including (i) actively widen our customer base by continuing our sales
and marketing efforts, (ii) enhance our production efficiency by promoting automation of our
production process and (iii) expand our product offerings by taking research and development
initiatives.
During the year ended 31 December 2023, despite the lukewarm market sentiments, our
Group strategically continued our R&D and sales and marketing efforts, to capture the overall
long term growth of the semiconductor industry and to prepare for the rebound of the market.
We intend to further our commitment on product development to strengthen our market position
and introduce competitive and quality products to meet with the demand from our customers. As
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an initiative to extend our focus in the PRC market, we have established a branch office in
Shanghai during the year ended 31 December 2023 to cater to the expanding customer base in
the PRC. UBoT Shanghai had commenced operation since 1 January 2024. Since 1 January 2024
and up to 31 March 2024, it had attracted three new customers in the PRC who had contributed
to revenue to our Group in the amount of approximately RMB25,000. The amount is relatively
small because such new customers had been engaging in the process of completing qualification
progress with us and have yet to place substantial orders with us. However, our Directors are
confident that UBoT Shanghai is an important tool that will contribute in intensifying our sales
and marking effort as well as to promote the sale of carrier tape of our Group in the PRC. We
will also continue our efforts in enhancing customer stickiness by visiting our customers more
frequently to understand their needs, extending local technical support by our sales
representatives, preparing free tooling samples for customers in respect of new orders and
maintaining our scale and quality of production to maintain customer confidence.
We believe that with our continued efforts in sales and marketing, commitment to research
and development, and the strengthening of our brand awareness and customer loyalty, we will be
in a position to enhance our profitability and capture the long term growth of the back-end
semiconductor transport media industry.
We have also implemented additional measures to navigate the cyclical downturn of the
semiconductor industry, including (i) dedicated staff to actively monitor changes in international
regulations in relation to the semiconductor industry, allowing us to proactively adapt our
operations in response to the evolving regulatory requirements; and (ii) strengthened our efforts
in collecting market information on the demand and supply dynamics within the semiconductor
industry, ensuring alignment with market trends and customer demands.
We also intend to strengthen our collaborations with key suppliers for more favourable
price arrangements and implement operational efficiency initiatives to optimize resources
allocation and minimise cost. We expect to further improve our financial performance in the near
future through continuously implementing the above-mentioned measures.
INTELLECTUAL PROPERTY RIGHTS
As at the Latest Practicable Date, our Group had registered a total of six trade marks, of
which two were registered in Hong Kong, three were registered in the PRC and one in Taiwan.
In addition, our Group had registered a total of 15 patents in the PRC, the U.S. and Hong Kong.
Details of our intellectual property rights, which, in the opinion of our Directors, are
material to our business and operations, are set out in the section headed “B. Further information
about the business of our Group – 2. Intellectual property rights” in Appendix IV to this
prospectus. Our Directors believe that our Group has applied for registration or has registered all
intellectual property rights that are essential and material to our business and operation.
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During the Track Record Period and up to the Latest Practicable Date, we were not
involved in any infringement of other’s intellectual property rights or infringement of our
intellectual property rights by others that would have a material adverse impact on our business
and we were not involved in any legal proceedings involving infringement of intellectual
property rights.
A W ARDS AND RECOGNITIONS
During the Track Record Period and up to the Latest Practicable Date, we received the
following awards and recognitions for our business:
Y ear of award Entity
Award/
Recognition Awarding body
27 January 2020 UBOTIC MEMS ISO 9001:2015 British Standards
Institution
2 February 2021 UBoT Enterprise ISO 45001:2018 Intertek
Certification
Limited
19 January 2022 UBoT Enterprise ISO 9001:2015 Intertek
Certification
Limited
19 January 2022 UBoT Enterprise ISO 14001:2015 Intertek
Certification
Limited
COMPETITION
According to the F&S Report, the global back-end semiconductor transport media industry
is a concentrated market with less than 30 players and the top players accounted for most market
shares. The reason behind such market structure was mainly due to the high cost of defects in
transport media for printed circuit board assembly house attributable to the high value of
semiconductor devices and so they tend to source from reputable market players and will not
compromise quality for more competitive pricing products. Key factors of competition for
back-end semiconductor transport media industry lies in the ability to establish long-standing
relationship with renowned semiconductor manufacturers due mainly to the provision of
high-quality products and good reputation, as well as the ability to address customers’ needs
with speed. We achieved a position being the company which ranked the third, which represents
a 8.4% market share, among the tray and tray related products manufacturers in the global
back-end semiconductor transport media industry in 2023.
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In view of continuous expansion of the back-end semiconductor transport media industry,
we believe we will be able to obtain further market share in this profitable market, taking
advantage of our market position, solid industry reputation, extensive product portfolio,
long-standing relationship with renowned companies and worldwide distributions and support.
For further information in relation to the industry’s competitive landscape and our
competitive advantages, please refer to the section headed “Industry Overview” in this
prospectus and the paragraph headed “Competitive Strengths” under this section.
EMPLOYEES
As at the Latest Practicable Date, we had approximately 403 full-time employees, of which
31, 369 and three are in our Hong Kong office, the PRC offices and production factories and
Singapore office, respectively. The following table sets forth the number of our full-time
employees by functions as at the Latest Practicable Date:
Hong Kong
Office
PRC Offices
and
production
factories
Singapore
Office
Sales, marketing and customer
service 7 7 3
Manufacturing 3 242 –
R&D and material engineering 3 28 –
Quality assurance – 28 –
Management 4 – –
Finance 8 7 –
Administration and operation support 4 55 –
Information technology support 2 2 –
Total 31 369 3
Remuneration
We have entered into written employment contracts with our employees. We offer
remuneration package including basic salaries, overtime pay and performance related bonuses
(by commission rate for sales staff or piece rate for production staff). For our PRC employees,
we also offer contributions to the statutory social security insurance and when applicable,
accommodation and meals. Our remuneration package is performance-oriented in general and the
management would review and appraise the performance of our employees annually. Our
Directors believe that our Group’s remuneration package in competitive in the market.
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Training and recruitment
We have striven to provide comprehensive training to our employees to promote sense of
belongings and work dedication. The new employees are required to participate in our
orientation session and are provided with our staff handbook which sets out the code of conduct
and confidentiality obligation. Existing employees are encouraged to join the regular training
programmes provided by our Group. Apart from internal training, we also arrange our staff to
participate in external trainings in relation to safety education held by regulatory authorities.
We generally recruit our workforce through posting online advertisement on recruitment
websites, or recruitment events. For managerial roles, we would also engage employment agents
to conduct the recruitment.
Staff benefits and relation
Insurance for employees based in Hong Kong
Our Group has maintained various types of insurance, including but not limited, (i)
mandatory provident fund prescribed by the Mandatory Provident Fund Schemes Ordinance
(Chapter 485 of the Laws of Hong Kong) for our employees based in Hong Kong; (ii)
employer’s liability insurance generally covering death or work injury of employees; (iii) public
liability insurance covering the legal liability for damages in respect of bodily injury, property
damage or other contingencies caused in connection with our business; and (iv) directors and
officers liability insurance.
Social insurance and housing provident fund contribution for our employees based in the PRC
We strictly abide by the basic welfare policies of the central and local governments, and
pay basic social insurance, such as including basic pension insurance, basic medical insurance,
unemployment insurance, occupational injury insurance, maternity insurance, as well as housing
provident fund contributions for our employees based in the PRC in accordance with the Social
Insurance Law of the PRC (ج.)
During the Track Record Period, our Group had non-compliance incidents in respect of
social insurance and housing provident fund contributions. For details, please refer to the
paragraph headed “Legal compliance, licences and permits – Legal compliance” in this section.
Save as disclosed in this paragraph and the aforementioned paragraph, our Directors, as advised
by our PRC Legal Advisers, have confirmed that during the Track Record Period and up to the
Latest Practicable Date, our Group had complied with the relevant labour and social insurance
laws and regulations in the PRC in all material respects, and as confirmed by the relevant
competent government authorities, no penalty was imposed on our Group by any PRC
governmental authorities in relation to any labour and social insurance matters.
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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.
In addition to maintaining adequate insurance policies for our staff, we offer competitive
remuneration package to our staff. During holidays, we also provide additional holiday and/or
bonuses and allowances. We organise social gatherings and events for our staff regularly to
encourage harmonious relationship among staff and promote team spirit.
Among our PRC subsidiaries, UBoT Enterprise and UBOTIC MEMS have established a
labour union respectively, to protect the labour rights and interests of our employees in
accordance with the relevant PRC laws and regulations. The current Qualification Certificate of
Trade Union Legal Entity (ࣣof UBoT Enterprise and UBOTIC MEMS is valid
until March 2027 and September 2024, respectively.
During the Track Record Period, we had not experienced any interruptions to our
operations caused by major labour disputes and there were no complaints or claims from our
employees which had a material adverse impact on our business. Our Directors believe we have
established a good relationship with our employees.
PROPERTIES
As at the Latest Practicable Date, we had one leased property in Singapore, one leased
property in Hong Kong and eight leased properties in the PRC.
Leased property in Singapore
As at the Latest Practicable Date, we leased the following property in Singapore:
Location
Our use of
property Tenancy Period Rental Approximate GFA
(sq. m.)
Ruby Industrial
Complex,
80 Genting Lane,
#04-01F Singapore
349565
Sales office and call
centre
One year up to
31 October 2024
Monthly rent of
SG$600.14
16
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Leased property in Hong Kong
As at the Latest Practicable Date, we leased the following property in Hong Kong:
Location
Our use of
property Tenancy Period Rental Approximate GFA
(sq. m.)
Unit 8, 35/F,
Cable TV Tower,
9 Hoi Shing Road,
Tsuen Wan,
New Territories
Our headquarters
and principal
place of business
in Hong Kong
Two years up to
30 June 2024
(Note)
Monthly rent of
HK$38,000.00
256
Unit 8, 38/F,
Cable TV Tower,
9 Hoi Shing Road,
Tsuen Wan,
New Territories
Office premises From 21 October
2023 and up to
30 June 2026
Monthly rent of
HK$42,500.00
256
Note: As at the Latest Practicable Date, we had commenced negotiation with the landlord in respect of the
renewal of the tenancy agreement and the landlord indicated their willingness to renew the relevant
tenancy agreement with us.
Leased properties in the PRC
As at the Latest Practicable Date, we leased the following properties in the PRC:
No. Location
Our use of
property Tenancy Period Rental
Approximate
GFA
(sq. m.)
1. Block No. 1,
No. 17 Chengtian Road,
Shatian Town, Dongguan,
Guangdong Province,
the PRC (“ Property A ”)
Production factory
and dormitory
Three years up to
31 December
2024
Monthly rent of
RMB123,681
8,407
2. Block H,
Mingtian Industrial
District,
Shatian Town, Dongguan,
Guangdong Province,
the PRC (“ Property B ”)
Production factory Three years up to
31 December
2024
Monthly rent of
RMB16,870
847
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No. Location
Our use of
property Tenancy Period Rental
Approximate
GFA
(sq. m.)
3. Room 1204, 1205,
No. 1 Zhigu,
Xinhongwan District,
No. 68 Xingzhou Road,
Shatian Town, Dongguan,
Guangdong Province,
the PRC
Warehouse Five years up to
12 July 2027
Monthly rent of
RMB66,402 and
the rent increases
by 10% every
36 months
3,905.97
4. BlockB&C ,Baishantou
Area, Huangang Village,
Houjie Town, Dongguan,
Guangdong Province,
the PRC
Production factory
and warehouse
Ten years up to
2 January 2028
Monthly rent of
RMB264,117 and
the rent increases
by 10% every 36
months
12,973
5. Room 2302, Block 2,
Ziwei Ginza,
Shatian Town, Dongguan,
Guangdong Province,
the PRC
Residence –
dormitory for
employees
One year up to
31 October 2024
Monthly rent of
RMB2,500
95.04
6. Unit 901,
Block 2D,
Donggang City Garden,
Shatian Town, Dongguan,
Guangdong Province,
the PRC
Residence –
dormitory for
employees
One year up to
14 June
2024
(Note)
Monthly rent of
RMB2,100
109
7. Room 301, Block 3B
Donggang City Garden,
Shatian Town, Dongguan,
Guangdong Province,
the PRC
Residence –
dormitory for
employees
One year up to
31 October 2024
Monthly rent of
RMB2,000
108
8. Unit 901, Block E,
Building 1, Phase 1,
Donggang City Garden,
Shatian Town, Dongguan,
Guangdong Province,
the PRC
Residence –
dormitory for
employees
20 months up to
31 October 2024
Monthly rent of
RMB2,250
125
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No. Location
Our use of
property Tenancy Period Rental
Approximate
GFA
(sq. m.)
9. Unit 601,
Building 12,
Phase 2,
Donggang City Garden,
Shatian Town, Dongguan,
Guangdong Province,
the PRC
Residence –
dormitory for
employees
Two years up to
31 December
2025
Monthly rent of
RMB2,100
113
10. Room 1905, Block 2,
Ziwei Ginza,
Shatian Town, Dongguan,
Guangdong Province,
the PRC
Residence –
dormitory for
employees
One year up to
9 March 2025
Monthly rent of
RMB2,500
123
11. Parcel of land in
Mintian Village,
Dongguan City
Parking 47 months up to
15 June 2026
Monthly rent of
RMB28,000
1,850
12. Room 901, No. 1 Zhigu,
Xinhongwan District,
No. 68 Xingzhou Road,
Shatian Town, Dongguan,
Guangdong Province,
the PRC
Warehouse One year up to 15
September 2024
Monthly rent of
RMB18,438
1,418.3
13. Room 2306, 3F,
Building 2,
20 Xuhong Middle Road,
Xuhui District,
Shanghai,
the PRC
Office Three years up to
31 January 2027
Monthly rent of
RMB15,664.58
103
Note: As at the Latest Practicable Date, we had commenced negotiation with the landlord in respect of the
renewal of the tenancy agreement and the landlord indicated their willingness to renew the relevant
tenancy agreement with us.
Property A and Property B are leased from Chengtian Zhiye, a company indirectly
non-wholly owned by Tang’s Family, our Controlling Shareholder. Save for Property A and
Property B, all of the remaining properties are leased from Independent Third Parties. For
further details in relation to the lease of the properties from Chengtian Zhiye, please refer to the
section headed “Connected Transactions” in this prospectus.
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As at the Latest Practicable Date, we had no single property with a carrying amount of 15%
or more of our total assets, and on this basis, we are not required by Rule 5.01A of the GEM
Listing Rules to include in this prospectus any valuation report. Pursuant to section 6(2) of the
Companies (Exemption of Companies and Prospectuses from Compliance with Provisions)
Notice, this prospectus is exempted from compliance with the requirements of section 342(1)(b)
of the Companies (Winding Up and Miscellaneous Provisions) Ordinance in relation to
paragraph 34(2) of the Third Schedule to the Companies (Winding Up and Miscellaneous
Provisions) Ordinance, which requires a valuation report with respect to all of the interests in
land or buildings.
Inconsistency with permitted use
We currently use Property B as our manufacturing site for the production of MEMS and
sensor packaging while the permitted use under the building ownership certificate is for canteen.
As advised by our PRC Legal Advisers, the land use right of the land where Property B erected
on is industrial use and the use of Property B as manufacturing site is not in breach of the
prescribed land use right but is inconsistent with the building permit usage which was stated to
be used as “canteen”. As advised by our PRC Legal Advisers, in light of the aforesaid
inconsistency, our Group has appointed an architectural agent to prepare the necessary
application documents for changing the permitted use of Property B to “factory” use. As at the
Latest Practicable Date, the lessor has initiated the application procedures to the relevant
authority. The response from the relevant authority is expected to receive by the end of 2024.
Failing to obtain the approval by the relevant authority, there exist the risk that the Company
may not continue to use Property B as manufacturing site. As at the Latest Practicable Date, we
had not received any challenge to our right to occupy and use Property B. Our PRC Legal
Advisers are of the view that it is less likely that we would not be able to use the property: (i)
the current usage is consistent with the permitted usage under the land use right certificate; (ii) a
certificate has been issued by Dongguan Housing and Urban-Rural Development Bureau
confirming that the application documents filed by UBOTIC MEMS for fire safety acceptance
(ࣩin respect of Property B as an industrial workshop are completed and filing was
granted; (iii) no administrative actions have been initiated or imposed on UBOTIC MEMS; (iv)
UBOTIC MEMS has liaised with the landlord of Property B to apply for the change in use of
permit use of Property B. Our Directors are of the view that, if the inconsistency in the actual
land use with the permitted land use prevents us from continuing the lease such that we are
required to move our production facilities for MEMS and sensor packaging to another location,
we can re-arrange production space in Property A and Houjie Production Factory, such that some
moulding machines in Property A would be relocated to our Houjie Production Factory to release
further space in Property A to cater for UBOTIC MEMS production facilities. The aforesaid
arrangement will not have any material adverse effect on our business and financial condition
and our expansion plan.
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Failure to register leased properties
Pursuant to the applicable PRC laws and regulations, property lease contracts are required
to be registered with the relevant PRC government authorities. As at the Latest Practicable Date
we have filed two lease contracts in respect of leased properties numbered 1 and 2 above for
registration pending the response from the relevant local authorities and such registrations have
not yet completed. In respect of leased properties numbered 3, 4 and 12 in the paragraph headed
“Leased properties in the PRC”, the property lease contracts registrations cannot be completed
due to the lack of property ownership certificate (ࣣIn respect of leased property
numbered 13 in the paragraph headed “Leased properties in the PRC”, the property lease
contract registration cannot be completed due to the landlord did not provide us with the
necessary documents for us to complete the registration. Our PRC Legal Advisers have advised
us that the lack of registration of the lease contracts will not affect the validity of the lease
contracts under PRC laws, our Group has the rights to occupy and use all the leased properties.
The PRC Legal Advisers further advise us that the non-registration of each lease within the
prescribed time as required by the competent construction (real estate) departments of the
municipalities directly under the PRC government, cities and counties where the relevant
premises are located, will be subject to a maximum fine of RMB10,000. The estimated total
maximum penalty for failure to complete the lease registration of the properties those leased by
us will be RMB60,000. Our Directors are of the view that, and our PRC Legal Advisors concur
that the penalty will not have any material adverse effect on the Group’s business and financial
condition. Our PRC Legal Advisers further advised that despite the lack of property ownership
certificate for the leased properties numbered 3, 4 and 12, the landlord of each of the said leased
properties has obtained relevant land use right certificates. The relevant building application and
approval procedures in respect of such leased properties have also been completed, and they are
ready for delivery and use and will not affect our occupation of the said leased properties.
For further details in relation to the lease of the aforesaid properties from Mr. Tang, please
refer to the section headed “Connected Transactions” in this prospectus.
Historical failure to obtain the consent of the collective owner and complete the application
of building construction permits during the Track Record Period
During the Track Record Period, UBoT Enterprise leased a site in Shatian Town,
Dongguan, Guangdong Province, the PRC for the use as warehouse. The said warehouse was
sited on a piece of land which belonged to collective construction land use right. It required the
consent of 2/3 of all collective owners of that piece of the land for the transfer of the land use
right to the lessor of the warehouse. Our PRC Legal Advisers have advised that the lack of the
consent of 2/3 of all collective owners, the transfer of land use right of such site may be
required to be rectified by the order of the Natural Resources Management Department. Our
PRC Legal Advisers advised that UBoT Enterprise, being the lessee, bears no risk of fine and
penalty from the local authority. Further, UBoT Enterprise entered into a termination contract
with the lessor in relation to the early termination of the lease contract of this property on 31
July 2022 and has settled all the rent and return the property to the lessor. As advised by our
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PRC Legal Advisers, such termination contract is valid and has been duly fulfilled and that the
risk of any fine and penalty from the local authority is remote.
INSURANCE
Our Group maintains various types of insurance to cover our business operation and we
evaluate the adequacy of our insurance policies from time to time. The insurance policies
maintained by our Group include public liability, employees’ compensation, business
interruption, keyman and property all risks insurance, etc. Moreover, according to the relevant
PRC laws and regulations, we are required to make contributions to our employees’ social
security insurance and housing provident fund. For further details, please refer to the paragraph
headed “Employees” in this section.
We had made one insurance claim in the amount of HK$6.1 million under the property all
risks insurance policy in relation to a fire accident at our Shatian Warehouse occurred on 19
March 2021 and the claim has been duly settled between UBoT Enterprise and the insurer on 29
December 2021. Save as disclosed above, we had not made nor subject to any material insurance
claims.
Given the above, our Directors are of the view that the insurance coverage is adequate and
in line with industry norm.
HEALTH AND OCCUPATIONAL SAFETY
We have established a series of internal policy and manual in relation to the health and
occupational safety of our employees. There are safety officers stationed at our production
factories. We have composed safety guidelines in minimising the risk of work-related accidents
and injuries during the production process. Detailed guidelines including the appropriate
protective work gear, checks to be conducted before usage of equipment and machineries,
operation manual of operation of equipment and machineries and procedures for reporting and
handling work-related accidents and injuries are included the our internal safety policy and
manual. Furthermore, we provide our employees with regular training programmes on work
safety as a continuous measure to enhance workplace safety.
We have introduced standard procedures in reporting and handling accidents. Upon
occurrence of accidents, the staff will report to the relevant production team leader, who shall
inform the supervisor and the department manager to handle the case. The production team
leader shall provide the details of the accidents based on a standard template for review and
approval by our human resources manager. The human resources manager is responsible for
assessing the impact of the accidents and approving on the follow-up sick leaves and
compensation.
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The table below sets out the number of reported work-related accidents and accidents rate
of our Group during the Track Record Period:
For the year ended 31 December
2021 2022 2023
Number of reported work-related
accidents 3 nil nil
Accidents rate of our Group (Note) 0.7% nil nil
Note: The accidents rate of our Group is calculated by dividing the number of reported accidents by total number
of production staff as at the end of relevant period. The work-related accidents were related to minor
personal injuries of our employees sustained while handling manual works and light hearing loss caused by
long-term exposure in the noise environment and had no material impact on our Group.
As advised by our PRC Legal Advisers, our Directors confirm that our Group has not been
subject to any material fines/penalties by the government authorities as a result of any
non-compliance with applicable occupational health and work safety laws or regulations during
the Track Record Period and up to the Latest Practicable Date.
Impact of outbreak of COVID-19 on our business
The outbreak of COVID-19 has been spreading globally. COVID-19 is highly infectious
and has resulted in deaths in the PRC and other countries. On 30 January 2020, the World
Health Organisation declared the outbreak of COVID-19 as a public health emergency of
international concern and subsequently characterised COVID-19 as a pandemic on 11 March
2020. The PRC authorities have taken various measures, such as mandatory quarantine for
residents and travelers, lockdown of certain cities and postponement of business units operation
following the Chinese New Year holidays until mid of February 2020.
Due to the restrictions imposed by the Dongguan local government, our Shatian Production
Factory was closed for operation for over a week in early February 2020. Due to the outbreak of
Omicron in Dongguan in March 2022, production activities of our two production factories were
restricted to a maximum of 50% from 15 March 2022 to 21 March 2022 in districts affected by
COVID-19 in Dongguan.
Notwithstanding our business operation had been temporarily affected by the outbreak of
COVID-19 in early February 2020 and in March 2022, our Group was able to achieve an overall
growth in revenue and increase in gross profit margin for the year ended 31 December 2021 as
compared to the corresponding period in 2020. In December 2022 and January 2023, the PRC
government gradually eased restrictive measures on business and social activities and reopened
the borders.
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Impact of the fire accident at our Shatian Warehouse
In March 2021, a fire accident caused by short circuit occurred in our Shatian Warehouse
but there were no casualties. Due to such fire accident, our Group recorded a loss of inventories
in the amount of approximately HK$7.7 million for the year ended 31 December 2021. Our
Shatian Warehouse has also voluntarily suspended its operation since the fire accident.
Dongguan Fire and Rescue Detachment, Shatian Brigade (୷̹ऊԣહ౪˕ඟӍ͞ɽඟ ) has
issued a Fire Accident Identification, which determined that the fire accident was not due to any
negligence on the part of our Group. The Shatian Warehouse had ceased operation after the fire
accident. We have rented another site with more advanced fire safety facilities as a replacement
for the Shatian Warehouse.
Despite the suspension of operation due to the fire accident, the business operation and
financial performance of our Group has not been affected by the fire accident due to (i) no delay
in delivery of products occurred as our Group met the purchase orders by customers with its
existing stock stored in other warehouses; (ii) the commencement of Houjie Production Factory
in 2021 and our other warehouses can provide inventory storage in substitution of Shatian
Warehouse; (iii) our Group received compensation from the insurance company during the year
ended 31 December 2021 in the amount of approximately HK$6.1 million due to the fire
accident.
After the fire accident, our Group has adopted enhanced internal control measures to avoid
similar incidents from occurring again, including improving the fire precaution facilities such as
installing sprinkler system in work station in production facility, implementing emergency
preparation and response management procedure, and preparing the emergency response drill
plan.
ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE
Governance
We acknowledge our responsibilities on environmental protection, social responsibilities
and is aware of the climate-related issues that may have impact on its business operation. We are
committed to comply with the environmental, social and governance (“ ESG”) reporting
requirements upon Listing. We have established an ESG policy (the “ ESG Policy”) in
accordance with the standards of Appendix C2 to the GEM Listing Rules, which outlined, among
others, (i) the appropriate risk governance on ESG matters, including climate-related risks; (ii)
identification of key stakeholders and the communication channels to engage with them; (iii)
ESG governance structure; (iv) ESG strategy formation procedures; (v) ESG risk management
and monitoring; and (vi) the identification of key performance indicators (“ KPIs”), the relevant
measurements and mitigating measures.
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Our ESG policy also sets out the respective responsibility and authority of different parties
in managing the ESG matters. Our Board has an overall responsibility for overseeing and
determining our Group’s environmental, social, and climate-related risks and opportunities
impacting our Group, establishing and adopting the ESG policy and targets of our Group,
reviewing our Group’s performance annually against ESG-related targets and investigating the
reasons for the variance and revising the ESG strategies as appropriate to the Group’s future
development and business strategies.
Our Board has established an ESG working group that comprises of the general manager
and various head of department, including but not limited to our finance department, research
and development, and material engineering department, manufacturing department and
administration and operation support department. The ESG working group serves as a supportive
role to the Board in implementing the agreed ESG policy, targets and strategies; taking
involvement into the annual enterprise risk assessment; conducting materiality assessments of
ESG areas and assess how our Group adapts its business in light of climate change; collecting
ESG data from different parties while preparing for the ESG report; and continuous monitoring
of the implementation of measures to address our Group’s ESG-related risks. The ESG working
group is also responsible for the investigation of deviation from targets and liaise with the
relevant functional department to take prompt rectification actions for such deviation. The ESG
working group has to report to our Board on a quarterly basis via board meetings on the ESG
performance of our Group and the effectiveness of the ESG systems.
We have also engaged independent third-party advisors as our ESG advisor (the “ ESG
Advisor”) to assess our Group’s ESG risks and provide professional advices to our Board when
necessary. The ESG Advisor will also provide professional ESG advice and support to our Board
during its deliberations as needed.
Strategies in addressing ESG-related risks
Our Group will conduct enterprise risk assessment at least once a year to cover the current
and potential risks faced by our Group, 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
assess the risks and review our Group’s existing strategy, target and internal controls, and
necessary improvement will be implemented to mitigate the risks. Our Board, Audit Committee
and the ESG working group will maintain oversight of our Group’s approach to risk
management, including climate-related risks and risks are monitored as part of the standard
operating processes to ensure the appropriate mitigations are in place as part of the regular
management reviews. The decision to mitigate, transfer, accept or avoid a risk is resulted after
our enterprise risk assessment process and directly influence the mitigating steps of those
identified risks. Our Group will incorporate climate-related issues, including physical and
transition risk analysis, into our risk assessment processes and risk appetite setting. If the risk
and opportunities are considered to be material, our Group will make reference to them in the
course of the strategy and financial planning process. Upon annual review of the ESG-related
risks, and our Group’s performance in addressing the risks, we may revise and adjust the ESG
strategies as appropriate.
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For ESG reporting purpose, our Board has also conducted stakeholder engagement through
different communication channels, and materiality assessment on ESG areas to identify the key
ESG areas towards our Group and our stakeholders in accordance with the standards of
Appendix C2 to the GEM Listing Rules. During the materiality assessment, our Group has
identified several key ESG areas, including environmental and resources management, product
quality and product return occupational health and work safety, protection of intellectual
property rights and customer’s data privacy management. We have established a set of ESG
policies to mitigate risks in these areas to ensure that we comply with local laws and
regulations. These key ESG areas may present a variety of risks and opportunities for our Group
and our Group will continue to monitor related performances.
Impacts and mitigating steps to addressing ESG-related risks
Environmental and Resources Management
Our operations are subject to the relevant environmental protection laws and regulations
promulgated by the PRC government, a summary of which is set out in the section headed
“Regulatory Overview – PRC Laws and Regulations – The PRC Laws and Regulations Relating
to Environmental Protection” in this prospectus. We have implemented internal environmental
protection measures and have been accredited with ISO 14001:2015 environmental management
system standard. In addition, the construction of any new production facility or any
improvement or expansion of any existing production project must comply with environmental
impact evaluation regulations. For each production project which shall conduct an environmental
impact evaluation, we submit environmental impact assessment documents for approval by the
relevant environmental authority as required by relevant PRC laws and regulations.
Waste management
During the production process of our products, we generate noise, waste gases, wastewater
and solid waste pollutants. Set forth below are the major governance measures towards our
major environmental related risks.
 Solid waste
We would separate the solid waste into three categories:
– recyclable non-hazardous solid waste such as packaging materials;
– non-recyclable hazardous solid waste such as waste activated carbon and used engine
oil; and
– non-recyclable non-hazardous solid waste.
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We have engaged qualified third party service providers to collect, process and recycle our
waste materials, especially for hazardous solid waste. Routine domestic waste generated from
the daily operation is stored according to the local garbage classification requirements and then
will be transferred to waste treatment plant by the local environment and hygiene authority.
 Wastewater
Industrial wastewater generated during our production process are all recycled by qualified
third party service providers per local emissions requirements during the Track Record Period.
Domestic wastewater is treated by our sewage purification equipment to make sure the
wastewater is discharged after having been treated legally.
 Waste gases
Waste gases generated during our production process are mainly collected and treated by
UV photolysis device, activated carbon adsorption equipment and biotrickling filter before
discharging to a higher atmosphere.
 Noise control
Noise may be generated during the operation of the production equipment. We minimise
our noise emission by constructing sound proofing walls to the factory building, installing sound
proofed windows and doors. Our Group adopts soundproofing and vibration reduction measures
to reduce the level of noise emitted from our machinery and equipment.
Our Directors confirm that we have obtained applicable permits and licenses under PRC
environmental laws and regulations that are material to our operations. See “Business – Legal
compliance, licenses and permits – Licenses and permits” for more details. Our PRC Legal
Advisers confirms that we are in compliance with all material respect with the applicable
environmental laws and regulations in the PRC during the Track Record Period and up to the
Latest Practicable Date. During the Track Record Period, as confirmed by the relevant competent
government authorities, no administrative sanctions, penalties or punishments have been imposed
upon us for material violation of any environmental laws or regulations in the PRC and, so far
as our Directors are aware after making all reasonable enquiries, there was no threatened or
pending action by any PRC environmental government agencies in respect thereof. For FY2021,
FY2022 and FY2023, our annual cost of compliance with applicable environmental protection
rules and regulations was approximately RMB0.7 million, RMB0.2 million and RMB0.6 million,
respectively. We incurred these expenses primarily through purchasing and installing
environmental protection equipment and facilities, monitoring our environmental impact and
recycling hazardous solid waste. Our Group’s budgets for environmental compliance and related
risk mitigation for the financial year ending 31 December 2024 is approximately RMB0.5
million as expenses to meet our Group’s upcoming targets in environmental related issues.
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Resources management
As a responsible corporate citizen, we endeavour to promote sustainability and aim to cease
resources wastage that provokes detrimental harm to the environment.
In our operation, plastic materials is the most significant raw materials we use in our
production process which mainly comprise of raw plastic materials, recycled plastic materials,
re-compound plastic materials and formulated plastic materials. At procurement stage,
preference would be given to potential plastic materials suppliers with certification and
qualification related to environmental protection. We would also apply plastic materials recycled
from our unsold finished goods of tray and tray related products. At production stage, our R&D
and material engineering department possesses expertise and know-how to 1) design and develop
intricate material formulas and 2) conduct cost analysis on those formulas in order to achieve
cost efficiency and monitor wastage. Despite the fact that cost of plastic materials is our major
component of cost of sales that directly varies with revenue, we believe that the above measures
can attain efficient plastic materials consumption with aims more than consuming less and we
strive to consume resources optimally. Going forward, we intend to expand with a view of
sustainability and make our best efforts to control our plastic materials usage levels in the year
ending 31 December 2024 within relevant levels at 90% to 110% compared to that in FY2023.
The table below sets forth the quantitative disclosure of plastic materials consumption
during the Track Record Period.
For the year
ended
31 December
2021
For the year
ended
31 December
2022
For the year
ended
31 December
2023
Plastic materials (tonnes) 6,448.66 6,380.10 4,189.38
Recycled materials (tonnes) 2,377.50 2,190.74 1,396.10
Intensity (tonnes/Revenue HK$’000) 0.03 0.02 0.02
Our energy consumption is mainly derived from electricity consumption for use of
machinery and equipment during our production process. The price fluctuations of electricity can
affect the costs of our business. In the last quarter of 2021, there was shortage of electricity
supply in certain areas in Guangdong Province and generators were used in our Shatian
Production Factory and Houjie Production Factory due to shortage of electricity, which resulted
in higher cost of electricity during such period. The increase in electricity costs was shared
between our Group and the customers by determining the selling price of our products on a
cost-plus basis with reference to the costs of electricity, profit margins, etc., and this will remain
as our major approach to manage any increase in electricity costs going forward. Electricity
consumption is also the main source of our greenhouse gas emissions. We have implemented
measures to increase energy efficiency in our operations to fulfill our environmental and social
responsibility and to reduce our electricity cost.
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Metrics and targets of ESG-related risks
Greenhouse gas (“ GHG”) emissions are closely related to climate change, which presents
businesses with both long-term risks and opportunities. To better understand, quantify and
manage the carbon and climate change related impacts, risks, and opportunities in our operation,
it is integral to measure and disclose our carbon footprint as a first step in our ESG journey.
We conduct GHG emissions inventory with the assistance of the ESG Advisor in
accordance with requirements set forth in the Appendix C2 of the GEM Listing Rules and the
Greenhouse Gas Accounting Standard (GHG Protocol) issued by the World Resources Institute
(WRI) and the World Business Council for Sustainable Development (WBCSD). GHG emissions
mainly consists of scope 1 direct emissions from consumption of diesel by daily use of vehicles,
scope 2 indirect emissions derived from electricity consumption for use of machinery and
equipment during our production process and scope 3 other indirect emissions in our value chain
that mainly arising from purchased goods and services, upstream/downstream transportation and
distribution, business travel, employee commuting, and other categories of activities, all of
which are counted as scope 3 emissions in ESG disclosures, which tends to be reported
voluntarily to avoid double counting. Regarding scope 3 other indirect emissions, carbon
emissions may be emitted by our suppliers and service providers in our value chain that may not
be environmental-friendly. To mitigate our indirect impact through third-party suppliers
(especially for plastics) and service providers, we plan to strengthen our ESG practices and
actively research the carbon footprint of our third-party suppliers and service providers and
enlist environmental protection capability as one of our assessment elements when evaluating
such suppliers and service providers to ensure that our suppliers and service providers are fully
competent in carrying out sustainable operations and exerts continuous effort to minimize
environmental impact. When screening those suppliers and service providers in the future, low
carbon (i.e. evidenced with environmental compliance history and certification in environmental
protection) will be our top priority criteria with evaluation metrics emphasizing environmental
impact, energy and resource utilization, use of renewable energy and other innovative means for
producing a smaller carbon footprint. Besides, we have a long practice of encouraging our
employees to make their travelling and commuting as energy efficient as possible. For instance,
our practice requires our employees to select economy class as a preference for business travel.
We are aware of the significance of reducing our scope 3 other indirect emissions, by
implementing practical measures in our daily operation during the Track Record Period as
mentioned above, which we plan to commence relevant data collection and calculation in
accordance with the Guidance on Climate Disclosures and expand the disclosure of scope 3
other indirect emissions in our ESG report with reference to the latest amendments to the GEM
Listing Rules in the first half of 2025.
Regarding climate-related metrics, assets especially all items under category of “Property,
plant and equipment” and “Inventories’ in the consolidated statements of financial position are
materially exposed to flooding and storms (physical risks). Besides, all items of machineries,
moulds, fixtures, furniture and equipment under category of “Property, plant and equipment” and
“Inventories” in the consolidated statements of financial position are materially exposed to shifts
in customer preferences for our products (transition risks). Other than the budget of
approximately RMB0.5 million for the year ending 31 December 2024 that mainly spend for
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purchasing and installing environmental protection equipment and facilities and conducting
environmental impact evaluation in relation to the expansion of our Houjie Production Factory,
our Directors expect that amount of capital expenditure, financing or investment deployed
towards climate-related risks and opportunities are not significant in light of our measures taken
to address climate-related risk. Please refer to the paragraphs headed “Tackle with climate
change” for details.
The ESG Advisor has assisted us in the collection of ESG data materially relevant to our
business operations in the PRC during the Track Record Period as set out below:
For the year
ended
31 December
2021
For the year
ended
31 December
2022
For the year
ended
31 December
2023
GHG emissions
Scope 1 direct emissions
(tonnes CO
2 equivalent) 278.27 42.40 29.86
Scope 2 indirect emissions
(tonnes CO 2 equivalent) 5,430.84 5,558.39 4,765.28
Total (tonnes CO 2 equivalent) 5,709.11 5,600.79 4,795.14
Intensity (tonnes CO 2 equivalent/
Revenue HK$’000 ) 0.03 0.02 0.03
Energy consumption
Diesel (kWh) 1,139,403.08 173,619.02 122,255.87
Purchased electricity (kWh) 8,901,557.00 9,110,624.20 7,810,656.10
Total (kWh) 10,040,960.08 9,284,243.22 7,932,911.97
Intensity (kWh/Revenue HK$’000 ) 49.48 36.04 41.98
Hazardous waste (kg) 2,630.00 16,506.00 10,155.00
Non-hazardous waste (kg) 657,289.00 839,066.00 410,082.00
Total (kg) 659,919.00 855,572.00 420,237.00
Intensity (kg/Revenue HK$’000 ) 3.25 3.32 2.22
Going forward, we plan to control the consumption of energy and GHG emissions and aim
to maintain relevant levels at 90% to 110% in the year ended 31 December 2024 when compared
with those in FY2023. Besides, we also plan to reduce our generation of waste by 3% in the
year ended 31 December 2024 when compared with those in FY2023. In order to achieve the
above target, we have adopted an array of measures in mitigating GHG emissions, energy
consumption and generation of wastes during the course of our operations, including but not
limited to:
– refining the design of our products to reduce waste generated;
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– implementing recycling policy to ensure solid waste and wastewater will be collected
and recycled by qualified third party service providers;
– adopting green procurement practices to manage scope 3 other indirect emissions from
the upstream supply chain with preference given to suppliers (especially for plastic)
with relevant certificate for environmental protection;
– requiring employees to turn off lights, machinery, equipment, and other electronic
devices when the devices are not in operation and before they leave the premises;
– using lighting products that are more energy-efficient, such as LED lighting and
automatic temperature control air-conditioning system;
– implementing the use of online system for internal administrative procedures to reduce
the use of paper documents and avoid waste of paper by promoting printing on both
sides;
– conducting regular inspection and monitoring of water-pipe and metre to avoid
leakage;
– procuring electronic devices that are more energy efficient, such as those with Grade 1
or 2 energy label; and
– conducting regular inspection and maintenance of vehicles, machinery and equipment
to ensure that they are running at optimal conditions with highest energy efficiency.
Our Group will continue to monitor emission of wastewater, solid waste, noise control and
air pollution control regularly and our human resources department will continue to keep record
of pollutant emissions.
Tackle with climate change
In terms of major climate change related impact that may affect us, we make reference to
the Task Force on Climate-Related Financial Disclosures (“ TCFD”) framework to evaluate the
magnitude of the climate impact.
The potential climate change risks can be categorized into (a) transition risks: being the
risks arising from compliance with the applicable environmental laws and regulations and the
stringent environmental protection standards; and (b) physical risks: being the risks for the
damages arising from acute weather-related events and longer-term chronic shifts in climate
patterns.
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Set forth below is a summary of the climate-related risks our Group identified over the
short, medium and long term.
Risks Sources Potential Impacts
Short term Physical risks – Extreme weather
conditions such as
flooding and storms
– Reduced revenue from
damage to assets and
disruption to supply
chain
– Increased operating
expenses
Long term Transition
risks
– Change in
climate-related
regulations
– Shifts in customer
preferences
– Increased cost of
inventories sold due to
changes in regulations
– Reduced demand for
our products
In response to transition risks, particularly (1) the evolving environmental and climate
regulatory requirements and (2) the shifts in customer preferences that could lead to negative
financial impact such as increase in our environmental compliance costs and decrease in revenue
due to reduced demand for our products, therefore, we have adopted a series of measures to
minimise the risks of environment pollution and non-compliance with the applicable
environmental laws and regulations. For details, please refer to the subsection headed
“Environmental and resources management” in this section.
With respect to physical risks, such as the increase of extreme weather events which may
disrupt our normal operations, destroy our machinery and equipment or cut our supply chain, our
Group implemented various emergency response mechanism and purchase adequate insurance
against natural disasters in order to avoid potential losses. See “Business – Insurance” for
details.
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Customer’ s data privacy management
Maintaining confidentiality of information of our customers such as their product design,
transaction records with our Group and contacts of their employees is one of our top priorities.
We have implemented data protection policies designed to ensure that our employee handle
customer’s information properly. To safeguard the security of our customer’s information and
data integrity of our system, we adopt a variety of rigorous data security practices and
technologies to protect the data. We have appropriate technical and organizational measures in
place to overcome exposure to potential data security risks. Among the efforts we have made,
we take the following measures to ensure our data security practice is solid and beyond what is
necessary.
 Data encryption. We encrypt our data to protect data generated from our business
operations being intercepted and/or tampered with.
 Data system upgrade. We update our operational systems timely and regularly to guard
against cyber-attacks, hackers and other security attacks.
 Restricted data access. Based on the overall IT infrastructure and the restriction on
access to data, our employees can only access data to the extent necessary with proper
authorization.
 Data back-up. To safeguard the security of our customer information and data integrity
of our system, data are protected by regular back-ups.
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Social matters
We have adopted policies on compensation and dismissal, equal opportunities, diversity,
anti-discrimination, and other benefits and welfare. See “Business – Employees” for more
details. We are committed to building a diversified and inclusive working environment. The
following table sets forth the composition of our employees in the PRC by gender and age as at
31 December 2023:
Number
of staff % of total
By gender
Male 214 56
Female 171 44
Total 385 100
By age group
30 or below 64 17
31–40 125 32
41–50 123 32
51 or above 73 19
Total 385 100
For further discussion on the other key ESG areas we have identified, namely, the areas of
product quality and product return, occupational health and work safety and protection of
intellectual property rights, see “Business – Quality control” and “Business – Customers –
Product defect and replacement”, “Business – Health and occupational safety” and “Business –
Intellectual property rights”.
To sum up, we attach great importance to our ESG management and recognise that an
effective and efficient ESG management requires our continuous efforts and investment and
contribution from a variety of departments and subsidiaries. We endeavour to further improve
the environmental and social data metrics. Furthermore, we plan to prepare and launch our first
ESG report in accordance with the standards of Appendix C2 to the GEM Listing Rules which
will include more qualitative and quantitative ESG information and analysis by the first half of
2025.
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LEGAL COMPLIANCE, LICENCES AND PERMITS
Legal compliance
During the Track Record Period, our Group did not pay or make full contributions to the
social insurance plans and the housing provident fund for their employees. Further details are set
out below. During the Track Record Period and up to the Latest Practicable Date, we are not
aware of any material non-compliance or systemic non-compliance with the applicable laws and
regulations that could have a material adverse effect on our business, prospects, financial
conditions or results of operations.
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A. Non-compliance incidents involving the subsidiaries in the PRC
No. Non-compliance incidents Major causes of non-compliance incidents
Legal consequences, potential maximum
penalties and other financial liabilities Rectification action taken/to be taken
Internal control measures to prevent recurrence of the non-compliance
incident
1. During the Track Record
Period, our subsidiaries in
the PRC failed to pay or
make full contributions to
the social insurance plans
and the housing provident
fund for their employees
as required under the PRC
law.
The non-compliance incident occurred primarily
because (i) some of our employees requested us
not to pay or make full contribution to social
insurance for them; and (ii) we provide housing
subsidies or dormitory instead of paying housing
provident funds.
Pursuant to the Social Insurance Law of the PRC
, and other
relevant PRC regulations, for the unpaid social
insurance fee after 1 July 2011, the relevant
governmental authority may require a company
to pay such fee within a prescribed time limit,
along with an additional fine for late payment at
a daily rate of 0.05% of the outstanding social
insurance fee calculated from the date such
social insurance fee become overdue. If the
outstanding social insurance is not made within
the specified time period, our Group may be
imposed a fine ranging from one to three times
of the amount of shortfall in contribution.
Pursuant to the Regulation on the Administration
of Housing Provident Funds, the relevant
housing provident fund administrative center
may request a company that fails to make
contribution to housing provident fund as
requested to make such contribution within a
prescribed time limit, and, if the company fails
to do so, the housing provident fund
administrative center may apply for a court
order for enforcement of such contribution.
Our Directors have assessed that the amounts of our underpayment of social
insurance contribution and the housing provident fund contribution were
approximately HK$864,000 and HK$2,464,000 for the two years ended 31
December 2020 and 2021, respectively. Accordingly, we and the reporting
accountant agreed to make provisions in the amounts of HK$864,000 and
HK$2,464,000, on our financial statements respectively in respect of the
estimated shortfall in social insurance plans and housing provident fund
contributions for the two years ended 31 December 2020 and 2021. We have
undertaken to make up for historical shortfall of social insurance and housing
provident fund contributions as soon as we receive notices from local
governments requiring us to do so. If the relevant authorities request us to pay
the historical outstanding social insurance and housing provident funds
contributions, or any late charges or penalties in respect thereof and the
provisions are insufficient to cover the same, Mr. Tong has undertaken to
indemnify us against any difference in full.
Based on our PRC Legal Advisers’ consultation with Dongguan Human Resources
and Social Security Bureau
# (ღ҅) (the “Bureau”),
being the competent authority providing confirmation, by virtue of the
confirmation dated 14 April 2022 issued by the Bureau and the confirmation
dated 12 April 2022 issued by the Dongguan Housing Provident Fund
Management Center (၍ଣʕː), our Group was not subject to
any penalty in connection with the underpayment of social insurance plans and
housing provident fund contributions during the period from 1 January 2020 to
31 March 2022. We also obtained the confirmations from Dongguan Social
Credit System Construction Coordination Group Office
# (ܔ
܃that our Group was not subject to any penalty in
connection with the underpayment of social insurance plans and housing
provident fund contributions during the period from 2 April 2017 to 8 February
2024. As confirmed by our PRC Legal Advisers, Dongguan Social Credit System
Construction Group Office is a competent authority for providing such
confirmation.
In order to re-comply with the requirement and as advised by our PRC Legal
Advisers during the Listing process, we immediately proceeded to rectify such
non-compliance by making social insurance and housing provident fund
contribution in full since 1 January 2022. Our Directors had no direct or wilful
involvement in the breach. Based on our PRC Legal Advisers’ consultation with
the Bureau, we understand that we had not been under investigation, or subject
to penalty or order to pay the underpayment of social insurance plans by the
Bureau or its subordinated unit due to violation of relevant laws or regulations.
Our PRC Legal Advisers are of the view that, based on the consultation as
described above, the risk of us being subject to any administrative penalty in
respect of this non-compliance incident is remote. Based on the above, our
Directors are of the view that this non-compliance incident would not have any
material adverse impact on our financial condition and business operation.
To prevent recurrence of such non-compliance incident, (i) we have adopted
relevant internal control policy with regard to social insurance and housing
provident fund contribution; (ii) we have designated personnel of human
resources department to closely monitor our ongoing compliance with the
regulations relevant to social insurance and housing provident fund contribution
and oversee the implementation; (iii) our human resources department is
responsible to monitor the status of the contributions to social insurance and
housing provident fund to ensure that we have made these contributions for our
employees on a timely basis in accordance with the applicable laws and
regulations. The records of contribution are properly filed and retained by human
resources department; (iv) we will arrange regular training for our Directors and
senior management on the latest development of the relevant laws and
regulations; and (v) we will continue to communicate with our employees with
regard to the contribution of the employee social insurance and housing
provident fund consistent with the standards stipulated under the applicable PRC
laws and regulations.
Set out below are the enhanced measures: (i) we require our employees to apply
for social insurance and housing provident fund contribution application within
30 days after signing the labour contract; (ii) prior to the payment of the social
insurance/housing provident fund, we will submit relevant application for the
approval by our human resources department and our finance department to
ensure the amount of payment fulfil the legal requirements on a monthly basis.
(iii) we will closely monitor our ongoing compliance with the regulations
relevant to social insurance and housing provident fund contribution and oversee
the implementation; (iv) we will arrange annual training by legal department for
our Directors and senior management on the latest development of the relevant
laws and regulations; (v) we will continue to communicate with our employees
with regard to the contribution of the employee social insurance and housing
provident fund consistent with the standards stipulated under the applicable PRC
laws and regulations; and (vi) we will monitor any update on or change in rules
and regulations, including the social insurance and housing provident fund
contribution requirements, and take necessary action to fulfill the legal
requirement. We will consult relevant external professional parties if necessary.
BUSINESS
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During the Track Record Period and up to the Latest Practicable Date, there had not been
any prosecution initiated against our Group or the current directors of our subsidiaries, nor has
any of them been subjected to any fine relating to the above disclosed incidents of
non-compliance. Pursuant to the Deed of Indemnity, our Controlling Shareholders have
irrevocably undertaken, to fully indemnify our Group, on a joint and several basis, against all
claims, actions, demands, proceedings, judgments, losses, liabilities, damages, costs, charges,
fees, expenses, penalties and fines suffered or incurred or accrued by our Group directly or
indirectly, arising from, as a result of or in connection with any loss and/or penalty resulting
from or in respect of the above incidents of non-compliance. For further details of the
indemnities given by our Controlling Shareholder, please refer to the paragraph headed “E.
Other information – Tax and other indemnities” in Appendix IV to this prospectus.
Having considered the facts and circumstances leading to the non-compliance incidents as
disclosed in this section and our Group’s enhanced internal control measures to minimise the
recurrence of the non-compliance incidents, our Directors are of the view, and the Sole Sponsor
concurs that (i) we have adequate and effective internal control procedures in place in
accordance with the requirements under the GEM Listing Rules; and (ii) the past
non-compliance incidents will not affect the suitability of our Directors to act as directors of a
listed issuer under Rules 5.01 and 5.02 of the GEM Listing Rules, and the suitability for listing
of our Company under Rule 11.06 of the GEM Listing Rules.
Licences and permits
As at the Latest Practicable Date, our Group had obtained the following licences:
Licence Holder Issuing authority
Types of work
covered Issue date Expiry date
Recordation Receipt
for Consignees and
Consigners of
Import and Export
Goods (ऎᗫආ̈
ϗ೯஬ɛ௪
Ϋੂ)
UBoT Electronic
Packing
Dongguan
Customs of
the PRC
Receiving and
sending import and
export of goods
13 August 2021 N/A
Recordation Receipt
for Consignees and
Consigners of
Import and Export
Goods (ऎᗫආ̈
ࣩ
Ϋੂ)
UBoT Enterprise Dongguan
Customs of
the PRC
Receiving and
sending import and
export of goods
25 December
2019
N/A
BUSINESS
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Our Directors confirm that during the Track Record Period and up to the Latest Practicable
Date, we had obtained all necessary licences, approvals, permits and registration required for
carrying on our business operation in all material respects.
LITIGATION AND POTENTIAL CLAIMS
We may from time to time be involved in legal, arbitration or administrative proceedings in
the ordinary course of business. As at the Latest Practicable Date, we were not involved in any
actual or pending legal or arbitration proceedings that we believe would have a material adverse
impact on our financial condition or results of operations. In particular, we were not involved in
any material claims or administrative penalties in relation to our Group made or notified either
by third parties against us or vice versa.
As at the Latest Practicable Date, our Directors were not aware of any current or pending
litigation, claim of arbitration against our Group which could have a material adverse effect on
our financial condition or results of operations.
RISK MANAGEMENT AND INTERNAL CONTROL
Risk Management
It is the responsibility of our Board to oversee and ensure that we maintain sound and
effective internal control and risk management systems to safeguard our Shareholders’
investment and our assets at all times.
During our operations, we are exposed to various risks, details of which have been set out
in the section headed “Risk Factors” in this prospectus. In view of the potential risks faced by
our Group, while our Board oversees and manages the overall risks associated to our business
operation, we also established the Audit Committee to review and supervise the financial
reporting process, risk management and internal control system of our Group. For a detailed
description of the terms of reference and responsibility of our Audit Committee, please refer to
the section headed “Directors and Senior Management – Board committees – Audit Committee”
in this prospectus.
Furthermore, we have formulated and adopted various measures and procedures regarding
risk management of our operations, such as the (i) risk assessment and monitoring on overall
business operations; (ii) financial reporting and disclosure; (iii) production; (iv) cash
management and treasury; and (v) compliance procedures with applicable laws and regulations
on tax, environmental protection, and use of properties. Our management also regularly monitors
the implementation of those measures and procedures from time to time to ensure the soundness
and effectiveness of our risk control system.
BUSINESS
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Internal Control
In preparation for the Listing, we have engaged an external internal control consultant to
conduct an evaluation of our internal control system from 29 November 2021 to 24 December
2021 and a follow-up review from 22 February 2022 to 5 April 2022 and to review our
management of business operations, including our inventory, finance, human resource, IT
general control and review and follow up on the effectiveness of our enhanced internal control
measures. We have formulated new employee handbook in order to ensure effective and
consistent practice on different aspects, including but not limited to recruitment and termination,
probation and cash in advance and disbursements. We have also established written policies and
procedures that covers the financing management. In addition, to promote high ethical standards
and prevent fraudulent behaviours, for example, kickback, offering or accepting bribery, etc., we
adopted an anti-fraud policy and a whistleblowing policy that clearly defines the disallowed
behaviours, elaborates the ways to identify a fraud, provides a whistleblowing channel allowing
all employees to raise suspicious fraud and illustrates the oversight of the Board on the
anti-fraud matters. Based on the above, our Directors are of the view that we have taken
reasonable steps to establish an internal control system and procedures to enhance our control on
both working and management levels.
Our Group has adopted the following measures to ensure continuous compliance with the
GEM Listing Rules upon Listing:
 Our Directors attended training sessions in 29 March 2022 conducted by our legal
advisers as to Hong Kong law on the on-going obligations and duties of a director of a
company whose shares are listed on the Stock Exchange.
 We have agreed to engage Yue Xiu Capital Limited as our compliance adviser upon
Listing to advise and assist our Board on compliance matters in relation to the GEM
Listing Rules and/or other relevant laws and regulations applicable to our Company.
 We have established an audit committee which comprises all independent
non-executive Directors, namely Mr. Chan Oi Fat, Ms. Ma Jay Suk Lin, and Mr. Wong
Lok Man. The audit committee has adopted its terms of reference which sets out
clearly its duties and obligations to, among other things, overseeing the internal
control procedures and accounting and financial reporting matter of our Group, and
ensuring compliance with the relevant laws and regulations. For the biographical
details of the independent non-executive Directors, please refer to the section headed
“Directors and Senior Management” in this prospectus.
BUSINESS
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 When considered necessary and appropriate, we will seek professional advice and
assistance form independent internal control consultants, external legal advisers and/or
other appropriate independent professional advisers with respect to matters related to
our internal controls and legal compliance.
Our Directors confirm that the internal control measures implemented by our Group are
sufficient and could effectively ensure a proper internal control system of our Group.
BUSINESS
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CONTROLLING SHAREHOLDERS
Immediately after completion of the Share Offer and the Capitalisation Issue (without
taking into account any Shares which may be allotted and issued by our Company pursuant to
the exercise of the Offer Size Adjustment Option and the exercise of any options which may be
granted under the Share Option Scheme), 38.625% and 31.50% of the issued share capital of our
Company will be owned by Sino Success (which is wholly-owned by Mr. Tong) and Busy Trade
(which is owned as to 70.2% by Mr. Tang, 5.0% by Ms. Tang, 12.4% by Mr. CL Tang, and
12.4% by Mr. CM Tang, respectively). In view of the above, Sino Success, Mr. Tong, Busy
Trade, Mr. Tang, Ms. Tang, Mr. CL Tang and Mr. CM Tang are a group of controlling
shareholders of our Company under the GEM Listing Rules.
Save as disclosed above, there is no other person who will, immediately following
completion of the Share Offer and the Capitalisation Issue (without taking into account any
Shares which may be allotted and issued by our Company pursuant to the exercise of the Offer
Size Adjustment Option and the exercise of any options which may be granted under the Share
Option Scheme), be entitled to exercise of or control the exercise of 30% or more of the voting
power at the general meetings of our Company.
On 25 March 2022, Mr. Tong and Busy Trade have entered into the Acting in Concert
Confirmation to acknowledge and confirm, among others, that they are parties acting in concert
in respect of UBoT Inc. (HK) during the Track Record Period up to and including the date of the
Acting in Concert Confirmation. Pursuant to the Acting in Concert Confirmation, they further
acknowledged, confirmed and agreed that for so long as (i) Busy Trade remains interested (either
directly or indirectly) in the share capital of UBoT Inc. (HK); and (ii) Mr. Tong remains
interested (either directly or indirectly) in the share capital of UBoT Inc. (HK) and/or the key
management member of UBoT Inc. (HK), they shall continue to act in concert in respect of
UBoT Inc. (HK).
To translate the Agreed Arrangements in UBoT Inc. (HK) into the control of our Company
after the Reorganisation, on 15 September 2023, each of Mr. Tong, Sino Success, Busy Trade,
Mr. Tang, Ms. Tang, Mr. CL Tang and Mr. CM Tang entered into the Listco Concert Deed in
respect of the exercise of their respective powers as shareholders of our Company and to
consolidate their control over our Group. The Listco Concert Deed contains similar terms
relating to the Agreed Arrangements and the parties’ understanding, agreement and arrangement
to act in concert for the material operational, management and financial matters of our Group for
so long as they remain (directly or indirectly) as the Controlling Shareholders.
RELATIONSHIP WITH CONTROLLING SHAREHOLDERS
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--- page 307 ---
INDEPENDENCE FROM OUR CONTROLLING SHAREHOLDERS
Our Directors are satisfied that our Group is capable of operating independently of our
Controlling Shareholders and their respective close associates after the Listing on the basis of
the following:
Management Independence
The day-to-day management and operation of the business of our Group will be the
responsibility of all of our executive Directors and senior management personnels of our
Company. The Board has nine Directors comprising four executive Directors, two
non-executive Directors and three independent non-executive Directors. Mr. Tong, being
our executive Director, chief executive officer and chairman of our Board, is also one of
the ultimate Controlling Shareholders. Save for Mr. Tong, none of the other Directors nor
other members of our senior management is a Controlling Shareholder.
We consider that the Board and senior management will function independently from
our Controlling Shareholders because:
(a) each of our Directors is aware of his/her fiduciary duties as a Director which
require, among other things, that he/she acts for the benefit and in the best
interests of our Company and does not allow any conflict between his/her duties
as a Director and his/her personal interest;
(b) in the event that there is a potential conflict of interest arising out of any
transaction to be entered into between our Group and our Directors or their
respective close associates, unless otherwise permitted by the Articles of
Association, the interested Director(s) will abstain from voting at the relevant
board meeting of our Company in respect of such transaction and will not be
counted in the quorum of the relevant meetings of the Board; and
(c) all independent non-executive Directors, namely Mr. Chan Oi Fat, Ms. Ma Jay
Suk Lin and Mr. Wong Lok Man, are sufficiently experienced and capable of
monitoring the operations of our Group independently of our Controlling
Shareholders.
Operational Independence
Our Group has established our own organisational structure made up of individual
departments, each with specific area of responsibilities for daily operation of our Group.
Our Group has not shared any operational resources, such as office premises, sales and
marketing and general administration resources with our Controlling Shareholders and their
associates. Our Group has also established a set of internal controls to facilitate the
effective operation of our business.
RELATIONSHIP WITH CONTROLLING SHAREHOLDERS
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--- page 308 ---
During the Track Record Period and up to the Latest Practicable Date, our Group has
entered into certain related parties transactions/connected transactions with the associate of
our Controlling Shareholder, Tang’s Family, and such transactions will continue upon
Listing. For details of the related parties transactions and continuing connected
transactions, please refer to the paragraph headed “Financial Information – Related Party
Transactions” and the section headed “Connected Transactions” in this prospectus,
respectively. Save for the lease of premises from the associate of Tang’s Family, being our
Controlling Shareholder, for our production facility (the further details of which are set out
in the section headed “Connected Transactions”), our suppliers and customers are all
independent from our Controlling Shareholders. Given that the tenancy agreements with the
associate of our Controlling Shareholders were entered into after arm’s length negotiation
and on normal commercial terms and the rent payable by our Group under the tenancy
agreements are with reference to the prevailing market rent, our Group will be able to find
suitable property for our production facility if the tenancy agreements are terminated. We
do not rely on our Controlling Shareholders or their associates and we have our
independent access to our suppliers and our clients for the provision of services as well as
an independent management team to handle our day-to-day operations.
Our Directors consider that our Group does not rely on our Controlling Shareholders
or their associates, and can operate independently from our Controlling Shareholders and
their respective close associates.
Financial Independence
Our Group has its own financial management system, internal control and accounting
system, accounting and finance department, independent treasury function for cash receipts
and payments, and the ability to operate independently from our Controlling Shareholders
from a financial perspective.
During the Track Record Period, our Group had obtained borrowings secured by
personal guarantees from and legal charge over property owned by our Controlling
Shareholders and their respective associates. All the personal guarantee of bank loans and
legal charge over property as security will be released on or before Listing and are to be
replaced by the corporate guarantee given by our Company after Listing.
Save as disclosed in this section and the section headed “Financial Information –
Indebtedness – Bank Borrowings”, our Directors confirm that as at the Latest Practicable
Date, our Controlling Shareholders have not provided any other guarantee or loan to our
Group, nor has any other party provided any guarantee in favour of our Group.
In view of our Group’s internal resources and the estimated net proceeds from the
Share Offer, our Directors believe that our Group has sufficient capital for its financial
needs without dependence on our Controlling Shareholders. Our Directors also believe that,
upon Listing, our Group is capable of obtaining financing from external sources
independently without the need of any guarantee or security provided by our Controlling
RELATIONSHIP WITH CONTROLLING SHAREHOLDERS
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--- page 309 ---
Shareholders and their respective close associates after the Listing. Accordingly, our
Directors believe that our Group is able to maintain financial independence from our
Controlling Shareholders and their respective close associates upon Listing.
OTHER BUSINESSES OF OUR CONTROLLING SHAREHOLDERS
Apart from our Group, as at the Latest Practicable Date, none of our Controlling
Shareholders and their respective close associates were conducting any businesses or holding
controlling interest directly or indirectly in companies which are engaged in businesses in
competition or is likely to be in competition with the businesses of our Group directly or
indirectly, and would require disclosure pursuant to Rule 11.04 of the GEM Listing Rules.
In addition, each of our Controlling Shareholders has given certain non-competition
undertakings in favour of our Group. Please see “Deed of Non-Competition” of this section for
details.
DEED OF NON-COMPETITION
Each of our Controlling Shareholders and executive Directors (each a “ Covenantor” and
collectively, the “ Covenantors ”) shall have entered into the Deed of Non-competition in favour
of our Company (for ourselves and as trustee for and on behalf of our subsidiaries) prior to the
Listing, under which each of the Covenantors has irrevocably and unconditionally, jointly and
severally, warranted and undertaken to our Company (for ourselves and as trustee for and on
behalf of our subsidiaries) that:
(a) each of the Covenantors shall not, and shall procure each of his/her/its close
associates and/or companies controlled by him/her/it, whether on his/her/its own
account or in conjunction with or on behalf of any person, firm or company and
whether directly or indirectly, not to, carry on a business which is, or be interested or
involved or engaged in or acquire or hold any rights or interest or otherwise involved
in (in each case whether as a shareholder, partner, agent or otherwise and whether for
profit, reward or otherwise) any business which is similar to or competes or is likely
to compete directly or indirectly with the business currently and from time to time
engaged by our Group (including but not limited to back-end semiconductor transport
media design, development, manufacture and sales of tray and tray related products
and carrier tape as well as provision of MEMS and sensor packaging solutions, and
businesses ancillary to any of the foregoing), in Hong Kong and any other country or
jurisdiction to which our Group markets, supplies or otherwise provides such services
and/or in which any member of our Group carries on business mentioned above from
time to time (the “ Restricted Business ”). Each of the Covenantors has represented
and warranted to our Group that neither he/she/it nor any of his/her/its close
associates is currently interested, involved or engaging, directly or indirectly, in
(whether as a shareholder, partner, agent or otherwise and whether for profit, reward
or otherwise) the Restricted Business otherwise than through our Group;
RELATIONSHIP WITH CONTROLLING SHAREHOLDERS
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--- page 310 ---
(b) if any of the Covenantors and/or any of his/her/its close associates is offered or
becomes aware of any project or new business opportunity (“ New Business
Opportunity ”) that relates to the Restricted Business, whether directly or indirectly,
he/she/it shall: (i) promptly, in any event not later than seven days, notify our
Company in writing of such opportunity and provide such information as is reasonably
required by our Company in order to enable our Company to make an informed
assessment of such New Business Opportunity; and (ii) use his/her/its best endeavours
to procure that such New Business Opportunity is offered to our Company on terms no
less favourable than the terms on which such New Business Opportunity is offered to
him/her/it and/or his/her/its close associates; and
(c) if our Group has not given written notice of our desire to invest in such New Business
Opportunity or has given written notice denying the New Business Opportunity within
30 Business Days (the “ 30-day Offering Period ”) of receipt of notice from the
Covenantor(s), the Covenantor(s) and/or his/her/its close associates shall be permitted
to invest in or participate in the New Business Opportunity on his/her/its own accord.
The Covenantors also agree to extend the 30 Business Days to a maximum of 60
Business Days if our Company requires so by giving a written notice to the
Covenantors within the 30-day Offering Period.
In addition, upon the Listing, each of the Covenantors has also undertaken:
(i) in favour of our Company to provide our Company and our Directors from time to
time (including our independent non-executive Directors) with all information
necessary, including but not limited to monthly turnover records and any other
relevant documents considered necessary by our independent non-executive Directors,
for the annual review by our independent non-executive Directors with regard to
compliance of the terms of the Deed of Non-competition and the enforcement of the
non-competition undertakings in the Deed of Non-competition;
(ii) to provide to our Company, (if necessary) after the end of each financial year of our
Company, a declaration made by each of the Covenantors which shall state whether or
not the Covenantors have during that financial year complied with the terms of the
Deed of Non-competition, and if not, particulars of any non-compliance, which
declaration (or any part thereof) may be reproduced, incorporated, extracted and/or
referred to in the annual report of our Company for the relevant financial year, such
annual declaration shall be consistent with the principles of making voluntary
disclosures in the corporate governance report; and
(iii) to our Group to allow our Directors (including our independent non-executive
Directors), their respective representatives and the auditors to have sufficient access to
the records of the Covenantors and his/her/its close associates to ensure their
compliance with the terms and conditions under the Deed of Non-competition.
RELATIONSHIP WITH CONTROLLING SHAREHOLDERS
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--- page 311 ---
Further, each of the Covenantors has undertaken that during the period in which he remains
as a Director and the 12 months immediately following the date on which he ceases to be a
Director, and during the period in which he/she/it and/or his/her/its close associates, individually
or taken as a whole, remains as a Controlling Shareholder:
(i) he/she/it will not invest or participate in any project or business opportunity that
competes or may compete, directly or indirectly, with the business activities engaged
by our Group from time to time unless pursuant to the provisions stipulated in the
Deed of Non-competition;
(ii) he/she/it will not solicit any existing or then existing employee of our Group for
employment by him/her/it or his/her/its close associates (excluding our Group);
(iii) he/she/it will not without the consent from our Company, make use of any information
pertaining to the business of our Group which may have come to his/her/its knowledge
in his/her/its capacity as our Controlling Shareholder for any purposes; and
(iv) he/she/it will procure his/her/its close associates (excluding our Group) not to invest
or participate in any project or business opportunity mentioned above unless pursuant
to the provisions stipulated in the Deed of Non-competition.
The above undertakings are subject to the exception that any of the Covenantors and their
respective close associates (excluding our Group) are entitled to invest, participate and be
engaged in any Restricted Business or any project or business opportunity, regardless of value,
which has been offered or made available to our Group, provided also that information about the
principal terms thereof has been disclosed to our Company and our Directors, and our Company
shall have, after review and approval by our Directors (including our independent non-executive
Directors without the attendance by any Director with beneficial interest in such project or
business opportunity, in which resolutions have been duly passed by the majority of our
independent non-executive Directors), confirmed our rejection to be involved or engaged, or to
participate, in the relevant Restricted Business and provided also that the principal terms on
which that the Covenantor and/or his/her/its close associates invest, participate or engage in the
Restricted Business are substantially the same as or not more favourable than those disclosed to
our Company. Subject to the above, if the Covenantors and/or their respective close associates
decide to be involved, engaged, or participate in the relevant Restricted Business, whether
directly or indirectly, the terms of such involvement, engagement or participation must be
disclosed to our Company and our Directors as soon as practicable.
Without prejudice to the above, the undertakings do not apply to (a) any interests in the
shares of any members of our Group; or (b) interests in the shares or other securities in any
company which has an involvement in the Restricted Business, provided that such shares or
securities are listed on a recognised stock exchange, and the total number of the shares held by
the Covenantors and/or their respective close associates (excluding our Group) in aggregate does
not exceed 10% of the issued shares of that class of the company in question and the relevant
Covenantor and/or his/her/its respective close associates (excluding our Group) are not entitled
to appoint a majority of the directors of that company and at any time there should exist at least
RELATIONSHIP WITH CONTROLLING SHAREHOLDERS
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--- page 312 ---
another shareholder of that company whose shareholdings in that company should be more than
the total number of shares held by the Covenantors and their respective close associates in
aggregate.
The non-competition undertaking will take effect from the Listing Date and will cease to
have any effect upon the earlier of the date on which (i) the Shares cease to be listed and traded
on GEM or other recognised stock exchange; or (ii) the later of (1) the date falling on the last
day of the 12 months immediately following the date on which the Covenantor ceases to be a
Director, or (2) the Covenantors and his/her/its close associates, individually or taken as a
whole, cease to own, in aggregate, 30% or more of the then total number of Shares in issue
directly or indirectly or cease to be deemed as our Controlling Shareholder and do not have
power to control the Board or there is at least one other independent shareholder other than the
Covenantors and/or his/her/its respective close associates holding more Shares than the
Covenantors and his/her/its respective close associates taken together.
CORPORATE GOVERNANCE MEASURES
In order to strengthen the corporate governance and to effectively monitor the observance
under the Deed of Non-competition in respect of the potential conflict of interests between our
Group and the Covenantors, upon the Listing:
(1) our independent non-executive Directors will review, on an annual basis, compliance
with the Deed of Non-competition given by our Controlling Shareholders;
(2) our Company will disclose the compliance of such non-competition undertaking by
each of our Controlling Shareholders and the details and basis of the decisions on the
matters reviewed by our independent non-executive Directors in relation to the
compliance and enforcement of arrangement of the Deed of Non-competition
(including the New Business Opportunity) in the annual reports or by way of
announcements;
(3) our Controlling Shareholders have undertaken to us that they will provide (i) an
annual written confirmation in respect of their compliance with the terms of the Deed
of Non-competition, (ii) consent (from each of our Controlling Shareholders) to refer
to the said confirmation in our annual reports, and (iii) all information as may
reasonably be requested by us and/or our independent non-executive Directors for our
review and enforcement of the Deed of Non-competition;
(4) our independent non-executive Directors will be responsible for deciding, in the
absence of any executive Director (except as invited by our independent non-executive
Directors to assist them or provide any relevant information, but in no circumstances
shall our executive Director(s), who participate in such meeting, be counted towards
the quorum or allowed to vote in such meeting), whether or not to take up, or whether
or not to allow any Covenantor(s) or his/her/its close associate(s) to participate in, a
New Business Opportunity referred to us under the terms of the Deed of
Non-competition from time to time and if so, any conditions to be imposed;
RELATIONSHIP WITH CONTROLLING SHAREHOLDERS
– 300 –


--- page 313 ---
(5) our Board will ensure reporting any event relating to potential conflict of interests to
our independent non-executive Directors as soon as practicable when it realises or
suspects any event relating to potential conflict of interests may occur during the daily
operations;
(6) following the reporting of any event relating to potential conflict of interests, the
Board will hold a management meeting to review and evaluate the implications and
risk exposures of such event and the compliance of the GEM Listing Rules in order to
monitor any irregular business activities and alert the Board, including our
independent non-executive Directors, to take any precautious actions;
(7) 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 of Association or the GEM Listing Rules, be required to declare his/her/its
interests and, where required, abstain from voting in the relevant board meeting and/or
general meeting on the transaction and not count as quorum where required;
(8) our independent non-executive Directors may appoint independent financial advisers
and other professional advisers as they consider appropriate to advise them on any
matter relating to the non-competition undertaking or connected transaction(s) at the
cost of our Company; and
(9) our Company has appointed Yue Xiu Capital Limited as the compliance adviser which
shall provide our Company with professional advice and guidance in respect of
compliance with the GEM Listing Rules and applicable laws.
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 GEM Listing Rules, including, where appropriate, the reporting, annual
review, announcement and independent shareholders’ approval requirements.
None of the members of our Group has experienced any dispute with its shareholders or
among the shareholders themselves and our Directors believe that each member of our Group
has maintained positive relationship with its shareholders. With the corporate governance
measures including the measures set out above, our Directors believe that the interest of the
Shareholders will be protected.
RELATIONSHIP WITH CONTROLLING SHAREHOLDERS
– 301 –


--- page 314 ---
CONNECTED PERSONS
Busy Trade is one of our Controlling Shareholders and is wholly-owned by Tang’s Family,
among which, 70.2% is owned by Mr. Tang, 5.0% is owned by Ms. Tang, 12.4% is owned by
Mr. CL Tang and 12.4% is owned by Mr. CM Tang. Therefore, each of Busy Trade, Mr. Tang,
Ms. Tang, Mr. CL Tang and Mr. CM Tang, being a Controlling Shareholder, is a connected
person of our Company.
Dongguan Chengtian Zhiye Company Limited* (ʮ̡ )( “ Chengtian
Zhiye”) was a limited liability company established on 5 January 2000 in the PRC. As at the
Latest Practicable Date, Chengtian Zhiye was owned as to 30% by Dongguan Baihui Toys
Company Limited* (ʮ̡)( “ Dongguan Baihui ”), a limited liability company
established on 17 March 2009 in the PRC. As at the Latest Practicable Date, Dongguan Baihui
was wholly-owned by Cansum Industries Limited, a company incorporated in Hong Kong with
limited liability and indirectly and non-wholly owned by Tang’s Family, and therefore, both
Chengtian Zhiye and Dongguan Baihui are associates of each member of Tang’s Family and
connected persons of our Company.
Compass Technology Company Limited (“ Compass Technology ”) is indirectly owned as to
41.4% by Mr. Cheung Chee Wah, our former non-executive Director who resigned on 22 April
2024. Given that Mr. Cheung Chee Wah was a Director in the last 12 months before the Listing
Date, Mr. Cheung Chee Wah is still regarded as a connected person of the Company. Hence,
Compass Technology is an associate of Mr. Cheung Chee Wah and a connected person of our
Company.
(I) CONNECTED TRANSACTIONS
(A) UBoT Enterprise Property Leasing Arrangement
Background and Principal Terms
During the Track Record Period, UBoT Enterprise leased from Chengtian Zhiye a
manufacturing plant located at Chengtian Industrial Zone, Zhenmin Village, Shatian,
Dongguan, the PRC as its production factory and dormitory.
On 27 December 2021, UBoT Enterprise renewed the tenancy and entered into a
new tenancy agreement (the “ UBoT Enterprise Tenancy Agreement ”) with Chengtian
Zhiye as landlord, pursuant to which Chengtian Zhiye agreed to lease a manufacturing
plant located at Chengtian Industrial Zone, Zhenmin Village, Shatian, Dongguan, the
PRC comprising (a) a three-storey factory building B1 of the total gross area of
2,888.6 square metres; (b) a three-storey factory building B12 of the total gross area
of 2,888.6 square metres; and (c) a six-storey staff dormitory of total gross area of
2,629.92 square metres together with the right to use the open area and infrastructures
in the nearby vicinity (collectively the “ UBoT Enterprise Leased Properties ”), at a
monthly rent of RMB123,681 for a term of three years commencing from 1 January
CONNECTED TRANSACTIONS
– 302 –


--- page 315 ---
2022 and ending on 31 December 2024 (both days inclusive), as its production factory
and dormitory. Pursuant to the UBoT Enterprise Tenancy Agreement, UBoT Enterprise
has the right to renew the tenancy agreement by giving written notice to Chengtian
Zhiye on or before 6 months from the expiry date of the UBoT Enterprise Tenancy
Agreement and subject to the terms mutually agreed by the parties.
The UBoT Enterprise Tenancy Agreement was entered into (i) in the ordinary and
usual course of business of our Group, (ii) on arm’s length basis, and (iii) on normal
commercial terms with the rent being determined with reference to, among others, the
prevailing market rates for similar properties in the same vicinity. For the three years
ended 31 December 2023, the annual rent of UBoT Enterprise Leased Properties were
approximately RMB1.7 million, RMB1.3 million and RMB1.4 million, respectively.
Reasons for and Benefits of the Transaction
We have been using the UBoT Enterprise Leased Properties for our production
factory and workers’ dormitory during the Track Record Period. The continuation of
such lease is cost efficient and is beneficial to our operations. In light of the above,
our Directors are of the view that such arrangement is in the best interest of our
Group and our Shareholders as a whole. Notwithstanding the above, our Directors
(including the independent non-executive Directors) are of the view that the
contemplated connected transactions under the UBoT Enterprise Tenancy Agreement
will have no negative impact on our Group, and do not affect our operational
independence. For more details, please see “Relationship with Controlling
Shareholders – Independence from Controlling Shareholders – Operational
Independence”.
GEM Listing Rules Implications
In accordance with IFRS 16, UBoT Enterprise recognised a right-of-use asset on
its balance sheet in connection with the lease of the UBoT Enterprise Leased
Properties. Therefore, the lease of the UBoT Enterprise Leased Properties will be
regarded as an acquisition of a capital asset and an one-off connected transaction of
the Company for the purposes of the GEM Listing Rules. Accordingly, the reporting,
announcement, annual review and independent shareholders’ approval requirements in
Chapter 20 of the GEM Listing Rules will not be applicable.
(B) UBOTIC MEMS Property Leasing Arrangement
Background and Principal Terms
During the Track Record Period, UBOTIC MEMS leased from Chengtian Zhiye a
manufacturing plant located at Chengtian Industrial Zone, Zhenmin Village, Shatin,
Dongguan, the PRC as its production factory.
CONNECTED TRANSACTIONS
– 303 –


--- page 316 ---
On 27 December 2021, UBOTIC MEMS renewed the tenancy and entered into a
new tenancy agreement (the “ UBOTIC MEMS Tenancy Agreement ”) with Chengtian
Zhiye as landlord, pursuant to which Chengtian Zhiye agreed to lease a manufacturing
plant located at Block H, Chengtian Industrial Zone, Zhenmin Village, Shatin,
Dongguan, the PRC comprising a two-storey factory building of the total gross area of
847 square metres together with the open area and infrastructures in the nearby
vicinity (collectively the “ UBOTIC MEMS Leased Property ”), at a monthly rent of
RMB16,870 for a term of three years commencing from 1 January 2022 and ending on
31 December 2024 (both days inclusive), as its production factory. Pursuant to the
UBOTIC MEMS Tenancy Agreement, UBOTIC MEMS has the right to renew the
tenancy agreement by giving written notice to Chengtian Zhiye on or before 6 months
from the expiry date of the UBOTIC MEMS Tenancy Agreement and subject to the
terms mutually agreed by the parties.
The UBOTIC MEMS Tenancy Agreement were entered into (i) in the ordinary
and usual course of business of our Group, (ii) on arm’s length basis, and (iii) on
normal commercial terms with the rent being determined with reference to, among
others, the prevailing market rates for similar properties in the same vicinity. For the
three years ended 31 December 2023, the annual rent of UBOTIC MEMS Leased
Property were approximately RMB193,000, RMB193,000 and RMB193,000,
respectively.
Reasons for and Benefits of the Transaction
We have been using the UBOTIC MEMS Leased Property for our research and
development laboratory and workshop during the Track Record Period. The location of
the UBOTIC MEMS Leased Property is in the same vicinity of UBoT Enterprise
Leased Properties and will facilitate the operation of the production of our Group. The
continuation of such lease is cost efficient and is beneficial to our operations. In light
of the above, our Directors are of the view that such arrangement is in the best
interest of our Group and our Shareholders as a whole. Notwithstanding the above, our
Directors (including the independent non-executive Directors) are of the view that the
contemplated connected transactions under the UBOTIC MEMS Tenancy Agreement
will have no negative impact on our Group, and do not affect our operational
independence. For more details, please see “Relationship with Controlling
Shareholders – Independence from Controlling Shareholders – Operational
Independence”.
CONNECTED TRANSACTIONS
– 304 –


--- page 317 ---
GEM Listing Rules Implications
In accordance with IFRS 16, UBOTIC MEMS recognised a right-of-use asset on
its balance sheet in connection with the lease of the UBOTIC MEMS Leased
Properties. Therefore, the lease of the UBOTIC MEMS Leased Properties will be
regarded as an acquisition of a capital asset and an one-off connected transaction of
the Company for the purposes of the GEM Listing Rules. Accordingly, the reporting,
announcement, annual review and independent shareholders’ approval requirements in
Chapter 20 of the GEM Listing Rules will not be applicable.
(II) FULLY EXEMPT CONTINUING CONNECTED TRANSACTION
(A) Sharing of Electricity Supply
Background and Principal Terms
During the Track Record Period, the factory premises which form part of the
UBoT Enterprise Leased Properties together with the dormitory for the Hong Kong
staff in the factory owned by Dongguan Baihui shared the one and same electricity
meter because the two factories are in the same neighbourhood and the electric power
company which supplies electricity in Chengtian Industrial Zone only provided one
electricity meter for that area. Given that (i) the electricity meter was built in the
premises of the UBoT Enterprise Leased Properties and registered under the name of
UBoT Enterprise; (ii) the main user of the electricity was UBoT Enterprise as
Dongguan Baihui’s consumption of electricity only stems from its dormitory for their
Hong Kong staff; and (iii) additional costs would be required when the parties
separate the electricity meter (including but not limited to additions of
machineries/equipment and renovations), UBoT Enterprise installed a device which
measures the actual electricity consumption by Dongguan Baihui from the main
electricity meter but not otherwise. It was the practice for the staff of UBoT
Enterprise to record the reading of the device on a monthly basis which shows the
actual electricity utilisation of Dongguan Baihui and to pay the electricity bills in
respect of the electricity meter, while Dongguan Baihui would review the records
monthly and make the electricity bills payment to UBoT Enterprise each month (the
“Electricity Sharing Arrangement ”).
UBoT Enterprise will enter into a written agreement (the “ Electricity
Agreement”) with Dongguan Baihui in relation to the electricity supply and sharing
for a term commencing from the date of the Electricity Agreement and ending on 31
December 2026. Pursuant to which, the parties shall agree that the electricity supply
and sharing arrangement will be continued during the term of the Electricity
Agreement and Dongguan Baihui shall pay to UBoT Enterprise such amount of
electricity fees based on its actual electricity utilisation.
CONNECTED TRANSACTIONS
– 305 –


--- page 318 ---
Historical Transaction Amounts, Proposed Annual Caps and Basis of Determination
The historical transaction amounts incurred by Dongguan Baihui under the
Electricity Sharing Arrangement during the three years ended 31 December 2023 and
the proposed annual cap to be contemplated under the Electricity Agreement for the
three years ending 31 December 2026 are set out below:
Approximate historical figures (HK$)
For the year ended
31 December
Proposed annual cap (HK$)
for the year ended 31 December
2021 2022 2023 2024 2025 2026
55,000 58,000 67,000 150,000 150,000 150,000
The proposed annual caps with respect to the Electricity Agreement were
determined by the parties thereto on an arm’s length basis, and based on, among
others, (i) the historical electricity consumption amounts of Dongguan Baihui; (ii) the
possible annual increment in the electricity fee charged by the local electricity power
company; and (iii) possible increment in the electricity consumption by Dongguan
Baihui if and when the economy in the PRC booms after the pandemic. Our Directors
(including independent non-executive Directors) have reviewed the Electricity
Agreement and are of the view that the entering into of the Electricity Agreement will
be in the ordinary and usual course of business and in the interest of our Shareholders
as a whole and the terms therein are normal commercial terms, and are fair and
reasonable.
GEM Listing Rules Implications
The transaction contemplated under the Electricity Agreement will be of
continuing nature and will constitute continuing connected transactions of our
Company. Upon the Listing, the relevant applicable percentage ratios thereunder, on
an annual basis, is less than 5% and the annual consideration is less than
HK$3,000,000. Hence, the transactions contemplated thereunder will be exempt from
the reporting, announcement, circular and independent shareholders’ approval
requirements under Chapter 20 of the GEM Listing Rules.
Common Suppliers used by our Group and Dongguan Baihui
As our Group and Dongguan Baihui are located in the same vicinity, i.e.
Chengtian Industrial Zone, Zhenmin Village, Shatin, Dongguan, the PRC, we used to
source materials, consumable products and services around the vicinity. During Track
Record Period, our Group and Dongguan Baihui shared several common suppliers for
indirect materials, namely pigment powder and polyethylene plastic bags, consumable
products, such as electronic balance and lubricant and glue stain remover and injection
mold machines maintenance service. All of the above mentioned transactions were
CONNECTED TRANSACTIONS
– 306 –


--- page 319 ---
incurred in the ordinary course of business of our Group. During the Track Record
Period, save for the procurement of polyethylene plastic bags, the transaction amounts
for other goods and service incurred by our Group were immaterial.
Set out below are the transaction amounts incurred by our Group for the goods or
services supplied by common suppliers with Dongguan Baihui during the Track
Record Period.
Goods/services FY2021 FY2022 FY2023
Approximately
RMB
Approximately
RMB
Approximately
RMB
Pigment powder 37,000 22,000 13,000
Polyethylene plastic bags 254,000 344,000 226,000
Electronic balance 11,000 10,000 1,600
Lubricant and glue stain
remover 55,000 – 1,500
Injection mold machines
maintenance service – – 1,000
Save as disclosed above, there was no overlap of suppliers nor sharing of
resources between our Group and Dongguan Baihui. Save for (a) Chengtian Zhiye
which entered into (1) the UBoT Enterprise Tenancy Agreement with UBoT Enterprise
and (2) the UBOTIC MEMS Tenancy Agreement with UBOTIC MEMS; and (b)
Dongguan Baihui which entered into the Electricity Sharing Arrangement with UBoT
Enterprise, none of the Shareholders have or had any past or present relationship with
the Company or its subsidiaries, or any of their respective associates.
(B) Product Procurement by Compass Technology
Background and Principal Terms
During the Track Record Period, Compass Technology was one of our customers
which purchased trays from our Group.
UBoT Inc. (HK) will enter into a framework agreement (the “ Framework
Agreement”) with Compass Technology in relation to the sale and purchase of
products manufactured by UBoT Inc. (HK) including trays. Pursuant to the Framework
Agreement, Compass Technology may, from time to time, procure from our Group
certain types of our products including trays in the ordinary course of business. The
terms are to be no less favorable to our Group than those for transactions between
Compass Technology and Independent Third Parties under the same conditions. A term
of the Framework Agreement shall commence on the date of the Framework
Agreement, ending on 21 April 2025.
CONNECTED TRANSACTIONS
– 307 –


--- page 320 ---
Historical Transaction Amounts, Proposed Annual Caps and Basis of Determination
The historical procurement amounts by Compass Technology from our Group
during the three years ended 31 December 2023 and the proposed annual cap to be
contemplated under the Framework Agreement for the period during the term thereof
are set out below:
Approximate historical figures (HK$) Proposed annual cap (HK$)
For the year ended
31 December
For the year
ended
31 December
For the period
from 1 January
2025 to
21 April
2021 2022 2023 2024 2025
430,000 460,000 60,000 900,000 400,000
The proposed annual caps with respect to the Framework Agreement were
determined by the parties thereto on an arm’s length basis, and based on, among
others, (i) the historical procurement amounts of Compass Technology; and (ii)
possible increment in the procurement by Compass Technology if and when the
economy in the PRC and worldwide booms after the pandemic. Our Directors
(including independent non-executive Directors) have reviewed the Framework
Agreement and are of the view that the entering into of the Framework Agreement
will be in the ordinary and usual course of business and in the interest of our
Shareholders as a whole and the terms therein are normal commercial terms, and are
fair and reasonable.
GEM Listing Rules Implications
The transaction contemplated under the Framework Agreement will be of
continuing nature and will constitute continuing connected transactions of our
Company. Upon the Listing, the relevant applicable percentage ratios thereunder, on
an annual basis, is less than 5% and the annual consideration is less than
HK$3,000,000. Hence, the transactions contemplated thereunder will be exempt from
the reporting, announcement, circular and independent shareholders’ approval
requirements under Chapter 20 of the GEM Listing Rules.
CONNECTED TRANSACTIONS
– 308 –


--- page 321 ---
DIRECTORS
Our Board currently consists of four executive Directors, one non-executive Director and
three independent non-executive Directors. The following table sets forth information regarding
our existing Directors:
Name Age Position
Date of joining our
Group
Date of
appointment as
Director Roles and responsibilities
Relationship with
other Director(s) or
senior management
Executive Directors
Mr. Tong Yuen To
(ಷჃᏹ)
55 Executive
Director, chief
executive officer
and chairman of
the Board
1 April 2007 7 February 2022 Responsible for major
decision-making; formulating
and implementation of business
strategies; and overseeing the
overall operation of our Group
None
Mr. Chan Kai Leung
(ڥ)
63 Executive
Director and
Financial
Controller
22 February 2007 22 April 2022 Responsible for overseeing the
financial control of our Group
None
Mr. Shek Kam Pun
(ͩᎀⅳ)
51 Executive
Director
8 February 2006 22 April 2022 Responsible for formulating our
Group’s overall strategic plans
and supervising the sales and
marketing activities of our
Group
None
Mr. Tam Ming Wa
(ശ)
58 Executive
Director
18 February 2006 22 April 2022 Responsible for formulating our
Group’s overall strategic plans
and supervising the
manufacturing operations
None
Non-executive Directors
Mr. Wong Tsz Lun
(ර૔᜝)
40 Non-executive
Director
22 April 2022 22 April 2022 Responsible for providing
guidance on the Group’s
strategy, policy and governance
None
DIRECTORS AND SENIOR MANAGEMENT
– 309 –


--- page 322 ---
Name Age Position
Date of joining our
Group
Date of
appointment as
Director Roles and responsibilities
Relationship with
other Director(s) or
senior management
Independent non-executive
Directors
Mr. Chan Oi Fat
(௓ฌ೯)
52 Independent
non-executive
Director
20 May 2024 20 May 2024 Providing independent advice to
our Board
None
Ms. Ma Jay Suk Lin
(৵ૺᇳ)
51 Independent
non-executive
Director
20 May 2024 20 May 2024 Providing independent advice to
our Board
None
Mr. Wong Lok Man
(ˮᆀ͏)
42 Independent
non-executive
Director
20 May 2024 20 May 2024 Providing independent advice to
our Board
None
During the Track Record Period, Mr. Cheung Chee Wah ( ੵқശ), aged 71, was appointed
as a non-executive Director with effected from 22 April 2022 and Mr. Cheung resigned on 22
April 2024 as he would like to retire from other positions and only spend time in his own
business.
Executive Directors
Mr. Tong Yuen To (ಷჃᏹ) , aged 55, was appointed as Director on 7 February 2022 and
re-designated as executive Director and appointed as our chief executive officer and chairman of
our Board on 22 April 2022. Mr. Tong is responsible for major decision-making; formulating and
implementation of business strategies; and overseeing the overall operation of our Group. He is
the chairman of the nomination committee and a member of the remuneration committee of the
Company. Mr. Tong is also a director of a number of subsidiaries of the Company.
Mr. Tong obtained a Bachelor’s Degree in Mechanical Engineering from University of
Toronto, Canada in June 1991.
Mr. Tong has over 28 years of experience in the semiconductor industry and precision
engineered plastics manufacturing. Mr. Tong joined our Group in April 2007 as the president of
UBoT Inc. (HK) and was subsequently appointed as its director in April 2008. Prior to joining
our Group, Mr. Tong was the vice president of Peak International Limited, previously a
NASDAQ-listed company, responsible for the sales of various regions from 1995 to March 2002.
He was the vice president of sales and marketing and later the president, primarily responsible
for sales and operation in Asia and Europe, of Peak Plastic & Metal Products (International)
Limited, a subsidiary of Peak International Limited and a company incorporated in Hong Kong
DIRECTORS AND SENIOR MANAGEMENT
– 310 –


--- page 323 ---
which is principally engaged in precision engineered plastics manufacturing for the electronics
industry, from March 2002 to May 2004 and from May 2004 to March 2006, respectively.
As at the Latest Practicable Date, Mr. Tong was one of our Controlling Shareholders and he
held the entire issued share capital of Sino Success, which, in turn, holds 51.5% shareholding in
our Company. According to the Acting in Concert Confirmation, Mr. Tong and Busy Trade will
act in concert to exercise their voting rights in our Company upon the Share Offer becoming
unconditional and they together will be interested in a total of 70.125% of the issued share
capital of our Company upon completion of the Share Offer and Capitalisation Issue.
Mr. Tong was a director of the company as shown in the following table before its
dissolution:
Name of company
Place of
incorporation
Principal business
activity
immediately before
dissolution Means of dissolution Date of dissolution
Royal Tech Investment
Development
Limited (ᒺᅃҳ༟೯
ʮ̡)
Hong Kong Never commenced
any business
activity
Dissolved by
deregistration pursuant
to section 291AA of the
predecessor Companies
Ordinance
25 March 2011
Mr. Tong confirmed that to the best of his knowledge, information and belief and having
made all reasonable enquiries, (i) the above company had not been and was not involved in any
material legal proceedings since the date of its incorporation until the date of its dissolution; (ii)
the above company was solvent and had no operation immediately prior to its dissolution; (iii)
there is no wrongful act, misconduct or misfeasance on his part leading to the dissolution of the
above company; and (iv) 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 the above company.
Mr. Chan Kai Leung (ڥ)aged 63, was appointed as an executive Director on 22
April 2022. Mr. Chan is responsible for overseeing the financial control of our Group.
Mr. Chan obtained a Professional Diploma in Management Accountancy from Hong Kong
Polytechnic in November 1984.
Mr. Chan has been in the field of accounting and financing for over 37 years. He joined our
Group in February 2007 as an accountant, responsible for accounting works, and was promoted
to financial controller of UBoT Inc. (HK) in March 2010. Mr. Chan is also a director of a
number of subsidiaries of the Company.
DIRECTORS AND SENIOR MANAGEMENT
–3 1 1–


--- page 324 ---
Prior to joining our Group, Mr. Chan worked at Gammon Construction Limited (formerly
known as Gammon (Hong Kong) Limited), a company engaging in civil, building and
foundations, from July 1984 to May 1987 as a trainee accountant. In May 1987, Mr. Chan joined
Swire Engineering (1988) Limited, a Swire group company in the contracting business, as an
accountant, and he was transferred to Swire Engineering Services Limited in May 1988, where
he worked as an accountant until December 1988. Mr. Chan later rejoined Gammon Construction
Limited as an accountant in December 1988 and was promoted to accounting manager in
February 1997 in which capacity he remained before he resigned in December 2001. From
September 2005 to February 2007, Mr. Chan worked as temporary clerk on non-civil service
contract terms in a department of the government of Hong Kong.
As at the Latest Practicable Date, Mr. Chan was interested in 40 Shares, representing
approximately 2.0% shareholding in our Company. Upon completion of the Share Offer and the
Capitalisation Issue, Mr. Chan will be interested in 7,500,000 Shares, representing approximately
1.5% shareholding in our Company.
Mr. Shek Kam Pun ( ͩᎀⅳ) , aged 51, was appointed as executive Director on 22 April
2022. Mr. Shek is responsible for formulating our Group’s overall strategic plans and
supervising the sales and marketing activities of our Group.
Mr. Shek obtained a Bachelor’s degree in Social Science from The Chinese University of
Hong Kong in December 1996.
Mr. Shek has been in the field of sales and marketing for over 25 years. He joined our
Group in February 2006 as a regional sales manager (Greater China) and was promoted to vice
president of sales and marketing of UBoT Inc. (HK) in July 2016.
Prior to joining our Group, Mr. Shek was a business development manager from November
2000 to December 2001, regional manager from December 2001 to March 2005, and senior sales
manager from April 2005 to February 2006 in Peak Plastic & Metal Products (International)
Limited, primarily responsible for carrying out sales work according to the company’s sales
tasks, formulating and executing of regional sales plan, market development and sales
information management. Mr. Shek joined Omron Hong Kong Limited, a company engaging in
the development, production, sales and distribution of products related to sensing and control
technology, healthcare and medical businesses and electronic components, in November 1997,
with his last position as sales engineer until he left in November 2000. Mr. Shek was primarily
responsible for products promotion in southern China region, sales offices and distributors
management, etc.
As at the Latest Practicable Date, Mr. Shek was interested in 30 Shares, representing
approximately 1.5% shareholding in our Company. Upon completion of the Share Offer and the
Capitalisation Issue, Mr. Shek will be interested in 5,625,000 Shares, representing approximately
1.125% shareholding in our Company.
DIRECTORS AND SENIOR MANAGEMENT
– 312 –


--- page 325 ---
Mr. Tam Ming Wa (ശ) , aged 58, was appointed as executive Director on 22 April
2022. Mr. Tam is responsible for formulating our Group’s overall strategic plans and supervising
the manufacturing operations.
Mr. Tam obtained a Degree of Bachelor of Arts in Business Studies with a major in
International Marketing from the Hong Kong Polytechnic University in September 1989.
Mr. Tam has more than 30 years of experience in the semiconductor industry. He joined our
Group as director of operation to manage the overall factory operation in Shatian, Dongguan, the
PRC in February 2006. Mr. Tam was promoted to vice president of operation of UBoT Inc. (HK)
and UBOTIC in May 2015. He is currently the vice president of operation and manufacturing to
oversee the overall factory operation. Mr. Tam is also a director of a number of subsidiaries of
the Company.
Prior to joining our Group, Mr. Tam was a sales director of Peak Plastic & Metal Products
(International) Limited from January 2004 to February 2006, responsible for managing the sales
and marketing and the business development activities of the company in the North America
region. Mr. Tam worked in ASAT Limited (formerly known as Advanced Semiconductor
Assembly & Test Limited), an IC assembly house and a subsidiary of ASAT Holdings Limited
(previously a NASDAQ-listed company), from May 1993 to January 2004, with his last position
as director of Asia sales, responsible for exploring, managing and driving the sales opportunity
and marketing activities in Asia as well as coordinating in-house resources to support and
maintain high-level customer services and research and development engineering services. Mr.
Tam worked in QPL Limited, a wholly-owned subsidiary of QPL International Holdings Limited
(stock code: 243, the issued shares of which are listed on the Stock Exchange) principally
engaged in lead frame manufacturing, as a customer services executive, responsible for sales and
customers communication and in-house resources coordination from April 1992 to May 1993.
Mr. Tam was an assistant commercial manager for the medical engineering division of Siemens
Limited, a company primarily engaged in automation and digitalization in the process and
manufacturing industries, intelligent infrastructure for buildings and distributed energy systems,
smart mobility solutions for rail and road and medical technology and digital healthcare
services, from December 1989 to April 1992. He was responsible for in-house resources
coordination, commercial and logistic support with various affiliates of the company.
As at the Latest Practicable Date, Mr. Tam was interested in 30 Shares, representing
approximately 1.5% shareholding in our Company. Upon completion of the Share Offer and the
Capitalisation Issue, Mr. Tam will be interested in 5,625,000 Shares, representing approximately
1.125% shareholding in our Company.
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Mr. Tam was a director of the company as shown in the following table before its
dissolution:
Name of company
Place of
incorporation
Principal business
activity
immediately before
dissolution Means of dissolution Date of dissolution
Masswell Enterprises
Limited
Hong Kong Never commenced
any business
activity
Dissolved by striking off
pursuant to section 746
of the Companies
Ordinance
13 July 2018
Mr. Tam confirmed that to the best of his knowledge, information and belief and having
made all reasonable enquiries, (i) the above company had not been and was not involved in any
material legal proceedings since the date of its incorporation until the date of its dissolution; (ii)
the above company was solvent and has ceased operations immediately prior to its dissolution;
(iii) there is no wrongful act, misconduct or misfeasance on his part leading to the dissolution of
the above company; and (iv) 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 the above company.
Non-executive Directors
Mr. Wong Tsz Lun (ර૔᜝) , aged 40, was appointed as our non-executive Director on 22
April 2022. Mr. Wong is responsible for providing guidance on our Group’s strategy, policy and
governance.
Mr. Wong obtained a Bachelor of Commerce from La Trobe University of Melbourne in
Australia in May 2006 and has been a member of the Hong Kong Institute of Certified Public
Accountants since January 2011.
Mr. Wong has over 15 years of experience in the fields of accounting, auditing and
financial management. Prior to joining our Group, Mr. Wong worked for Deloitte Touche
Tohmatsu’s audit department from January 2007 to August 2014, with his last position as a
business development manager responsible for developing and implementing business
development strategies. From October 2015 to December 2017, Mr. Wong later worked as the
company secretary of China Rongzhong Financial Holdings Company Limited (stock code:
3963), a company engaged in the provision of financial leasing services in the PRC and the
issued shares of which are listed on the Stock Exchange. Since August 2018, Mr. Wong has been
the financial controller of China Financial International Investments Limited (stock code: 721), a
company principally engaged in investment holding and investing and the issued shares of which
are listed on the Stock Exchange, and was appointed as its company secretary in January 2021.
As at the Latest Practicable Date, Mr. Wong was not interested in any Shares of our
Company.
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Independent non-executive Directors
Mr. Chan Oi Fat ( ௓ฌ೯) , aged 45, was appointed as our independent non-executive
Director on 20 May 2024. He is the Chairman of the audit committee, a member of each of the
remuneration committee and nomination committee of the Company. Mr. Chan is responsible for
providing independent advice to our Board.
Mr. Chan graduated from the City University of Hong Kong with a bachelor’s degree of
business administration (honours) in accountancy in November 2000.
He has been a member of the Association of Chartered Certified Accountants since
December 2003 and a member of the Hong Kong Institute of Certified Public Accountants since
October 2004. He has also been a life member of the Hong Kong Independent Non-Executive
Director Association since March 2015.
Mr. Chan is the Chief Financial Officer of SML Group Corporation (“ SML Group”). Mr.
Chan has over 20 years of experience in financial management. He joined SML Group in April
2018 as the financial controller, where he was responsible for the financial and accounting
operations of SML Group. He was appointed as the Chief Financial Officer of SML Group in
February 2019 and he is responsible for the financial and accounting operations of SML Group.
Mr. Chan has worked in the audit department of Deloitte Touche Tohmatsu between
September 2000 to January 2008, with his last position prior to his departure as a manager. He
was then employed by Ta Yang Group Holdings Limited, a company listed on the Stock
Exchange (Stock Code: 1991), which is a company principally engaged in manufacturing input
device, in January 2008 as company secretary and qualified accountant and resigned as company
secretary in February 2017 but remained as the group’s financial controller until March 2018.
Since February 2018, Mr. Chan has been the company secretary of China Leon Inspection
Holding Limited, a company listed on the Stock Exchange (Stock Code: 1586), which is a
company principally engaged in providing inspection services of coal in the PRC. Since
November 2020, Mr. Chan has been the company secretary of Raily Aesthetic Medicine
International Holdings Limited, a company listed on the Stock Exchange (Stock Code: 2135),
which is a company principally engaged in providing esthetic medical service in Zhejiang
Province, the PRC.
Mr. Chan has been an independent non-executive director of Shanghai Prime Machinery
Company Limited, a company listed on the Main Board of the Stock Exchange (Stock Code:
2345), which withdrew listing by way of privatisation in January 2021, from June 2014 to
January 2021 and an independent non-executive director of China Saftower International
Holding Group Limited, a company listed on GEM of the Stock Exchange (Stock Code: 8623),
from June 2020 to December 2023.
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Ms. Ma Jay Suk Lin ( ৵ૺᇳ) , aged 51, was appointed as our independent non-executive
Director on 20 May 2024. She is a member of the audit committee of the Company. Ms. Ma is
responsible for providing independent advice to our Board.
Ms. Ma obtained a Degree of Bachelor of Arts from the University of Hong Kong in
November 1995 and a Postgraduate Diploma in Education from the Chinese University of Hong
Kong in July 1998. Ms. Ma completed the Common Professional Examinations of England and
Wales held by the Manchester Metropolitan University in July 2000 and obtained a Postgraduate
Certificate in Laws from the University of Hong Kong in June 2001. She later obtained a Degree
of Bachelor of Laws from the Manchester Metropolitan University in September 2002 and a
Degree of Master of Laws from the University of Hong Kong in December 2005.
Ms. Ma was admitted as a barrister in Hong Kong in September 2001 and has more than 20
years of experience in the legal industry. Ms. Ma served as a Deputy Special Magistrate from
September 2008 to September 2009, and as a consultant on Hong Kong law at Beijing Bastion
Law Firm from December 2018 to December 2021 and since March 2022. Prior to embarking
her legal career, Ms. Ma was a secondary school English teacher and an assistant quantity
surveyor from September 1995 to August 1998 and from September 1998 to August 2000,
respectively.
Ms. Ma has been the chairman of the Appeal Tribunal Panel (Buildings) since December
2018, and was appointed by the Chief Executive of Hong Kong as the Deputy Chairman of the
Administrative Appeals Board of the Chief Secretary for Administration’s Office in June 2023.
Mr. Wong Lok Man (ˮᆀ͏) , aged 42, was appointed as our independent non-executive
Director on 20 May 2024. He is the chairman of the remuneration committee and a member of
each of the audit committee and nomination committee of the Company. Mr. Wong is responsible
for providing independent advice to our Board.
Mr. Wong obtained a Diploma of Business Administration from Sydney Institute of
Business and Technology in May 2003 and a Degree of Bachelor of Commerce – Accounting
from Macquarie University in July 2005.
Mr. Wong has been a member of Institute of Certified Public Accountants since July 2010
with more than 16 years of experience in the accounting and audit industry. He worked as an
Audit Trainee at K. S. Li & Company, a certified public accountant firm in Hong Kong, from
August 2005 to December 2006 and was responsible for the provision of audit and assurance
services. He joined Deloitte Touche Tohmatsu’s audit department as an associate in January 2007
and was promoted to a senior associate and a manager in October 2008 and October 2011,
respectively.
Mr. Wong also has experience working for listed companies in Hong Kong. After leaving
Deloitte Touche Tohmatsu in July 2013, Mr. Wong was the financial controller and company
secretary of L & A International Holdings Limited (stock code: 8195, currently known as
Legendary Group Limited) from October 2013 to May 2016, the financial controller and joint
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company secretary of Kaisun Holdings Limited (stock code: 8203) from August 2020 to April
2021, and has been the financial controller and company secretary of Zhonghua Gas Holdings
Limited (stock code: 8246) since June 2021. Besides, Mr. Wong also served as an independent
non-executive director of China Trustful Group Limited (delisted, former stock code: 8265,
“China Trustful”) from December 2020 and November 2021 and China Financial International
Investments Limited (stock code: 721) from November 2020 to January 2024. According to the
announcements of China Trustful, it was incorporated in Bermuda and the principal business
activities of its group included silverware, electric vehicle and energy businesses. Since the
record and documents of its silverware business were seized by the Ministry of Public Security
of the PRC, China Trustful had failed to publish its 2019 annual results, 2020 first quarterly
results and 2020 interim results, and had failed to dispatch its 2019 annual report, 2020 first
quarterly report and 2020 interim report within the time limit as prescribed in the GEM Listing
Rules, and hence, trading in its shares on the Stock Exchange was suspended on 18 May 2020.
The company was eventually delisted on 12 November 2021 after failing to fulfil the resumption
guidance set by the Stock Exchange. Mr. Wong has confirmed that he was appointed as an
independent non-executive director of China Trustful after the suspension of trading in its shares
on the Stock Exchange and that there was no wrongful act on his part leading to the delisting of
China Trustful.
Disclosure of Relationships as Required under Rule 17.50(2) of the GEM 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 Shareholders of our Company
as at the Latest Practicable Date; (iii) did not hold any other directorships in public listed
companies in the three years prior to the Latest Practicable Date; and (iv) did not have any
interests in any business apart from business of our Group which competes or is likely to
compete, either directly or indirectly, with business of our Group. As at the Latest Practicable
Date, save as disclosed in the section headed “Substantial Shareholders” and the paragraph
headed “C. Further information about Directors, management, staff and experts” in Appendix IV
to this prospectus, each of our Directors did not have any interest in the Shares within the
meaning of Part XV of the SFO.
Please refer to Appendix IV to this prospectus for further information about our Directors,
including details of the interests of our Directors in the Shares and underlying shares of our
Company (within the meaning of Part XV of the SFO) and particular of their service contracts
and remunerations. Except as disclosed in this prospectus, each of our Directors has confirmed
that there is no other matter relating to his/her appointment as a Director that needs to be
brought to the attention of the Shareholders and there is no information which is required to be
disclosed pursuant to Rule 17.50(2) of the GEM Listing Rules.
Each of Mr. Tong, Mr. Chan, Mr. Shek, Mr. Tam, Mr. Wong Tsz Lun, Ms. Ma Jay Suk Lin
and Mr. Wong Lok Man has obtained legal advice from a firm of solicitors qualified to advise on
Hong Kong law on 15 March 2024 and Mr. Chan Oi Fat has obtained legal advice from a firm of
solicitors qualified to advise on Hong Kong law on 23 April 2024, as regards the requirements
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under the GEM Listing Rules that are applicable to him/her as a Director and the possible
consequences of making a false declaration or giving false information to the Stock Exchange.
Each of the Directors has confirmed he/she understood his/her obligations as a director of a
listed issuer.
Board Diversity Policy
Our Group recognises the importance of board diversity to corporate governance and our
Board’s effectiveness. In this regard, we shall adopt a board diversity policy prior to Listing
which sets out the objective and approach to maintain high standards of corporate governance
and enhance effectiveness of our Board.
Pursuant to the proposed board diversity policy, directorship nominees will be evaluated
based on a number of factors, including but not limited to, our specific business need, gender,
age, skill, language, cultural and educational background as well as industry and professional
experience. The decision of the appointment will be based on merit and contribution which the
selected nominees will bring to our Board.
Our nomination committee is responsible for ensuring the board diversity and compliance
with the code provision in connection with the board diversity of the corporate governance code
under Appendix C1 of the GEM Listing Rules. Our Directors will continue applying the
principle of appointments based on merits with reference to our Board Diversity Policy as a
whole and are committed to providing career development for the female staff. Pursuant to our
Board Diversity Policy, our Company intends to promote gender diversity when hiring staff at
mid to senior level such that our Company will have a career pipeline of female members at
senior management level and also potential successors to the Board. According to our Board
Diversity Policy, our Directors intend to offer all-rounded training to female employees whom
we consider to have appropriate professional knowledge of our operation and business,
experience and relevant skills, including but not limited to, business operation, account and
finance, sales and marketing and product expertise. Our Directors are of the view that the
above-mentioned policy will provide a chance for our Board to identify capable female
employees to be nominated as members of the Board in the future with the aim to providing our
Board with a career pipeline of female candidates to achieve gender diversity in our Board in the
long run. In addition, our nomination committee is delegated by our Board to take opportunity to
increase the proportion of female members over time when selecting and making
recommendation on suitable candidates for Board appointments so as to achieve an appropriate
balance of gender diversity with reference to stakeholders’ expectation and international and
local recommended best practices. Our nomination committee will aim to recommend at least
one female Director candidate to the Board for its consideration at least once per year.
Our Board comprises nine members, including four executive Directors, two non-executive
Directors and three independent non-executive Directors. Our Directors have a balanced mix of
knowledge and experience, including business management, accounting and finance, sales and
marketing, operation and product expertise. Taking into account our existing business model and
the mix of skills, knowledge and experience of our Directors, our Directors consider that the
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composition of our Board satisfies our board diversity policy. Our nomination committee will be
responsible for implementing, monitoring and reviewing our board diversity policy from time to
time to ensure its effectiveness.
SENIOR MANAGEMENT
The following table sets out certain information concerning our senior management:
Name Age
Date of
joining
our Group Position Roles and responsibilities
Relationship
with other
Director(s) or
senior
management
Mr. Hui Yu
Ching Andy
(஢ρᆋ)
52 10 January 2011 Director of
Manufacturing
Operations
Leading the tray manufacturing
team to run production and
ensuring quality of products
None
Mr. Loh
Chong Hou
(ᖯ∑ೱ)
54 9 September 2019 Director of
Manufacturing and
Engineering (Tape &
Reel)
Leading new technology
development and directing
ongoing manufacturing operations
for tape and reel
None
Mr. Kwan Kin
Pui (ᗫ਄੃)
59 23 January 2018 Senior Manager (Product
& Technology
Development)
Leading new product & technology
development and directing mass
production of new products
None
Dr. Wang
Huimin
(ˮ౉͏)
67 1 December 2009 Director of Research and
Development and
Materials Engineering
Leading new technology
development in product design,
new mould engineering and
advanced materials including
formulation design and
applications etc.
None
Mr. Hui Yu Ching Andy ( ஢ρᆋ) , aged 52, is the Director of Manufacturing Operations of
UBoT Inc. (HK), primarily responsible for maintaining production operations to fulfill delivery
schedules, leading teams to perform maintenance on all product-related equipment and mould
tools, and working with the engineering team to improve process flows.
Mr. Hui joined in UBoT Inc. (HK) in January 2011 as a procurement manager, the main
responsibility of whom includes leading the purchasing team in monitoring major vendors’
performances such as delivery schedules, quality of goods and price improvements. He was later
transferred to the manufacturing department and worked as the senior manager of manufacturing
from September 2016 to June 2021 before he was promoted to the current position.
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Prior to joining our Group, from December 2004 to March 2010, Mr. Hui worked at China
Most International Limited, a general car accessories agent, with his last position as project
manager and was responsible for products development, manufactures/suppliers communication
and quality management.
In January 1995, Mr. Hui joined his family’s business, Triumph Native Products
(International) Limited, which was principally engaged in the trading of native products such as
walnuts and pumpkin seeds. He was subsequently appointed as its director and company
secretary in May 1996 and January 1998, respectively, as which he remained until the
dissolution of the company in September 2001. In January 1997, he co-founded with a family
member Jethope Industrial Limited, which was principally engaged in the trading of food
products. Mr. Hui also served as its director from April 1997 until its dissolution in May 2004.
Mr. Hui was primarily responsible for these companies’ daily operation.
Mr. Hui was a director of the companies as shown in the following table before their
respective dissolutions:
Name of company
Place of
incorporation
Principal
business activity
immediately
before
dissolution Means of dissolution
Date of
dissolution
Honcorp International
Limited
(ʮ̡)
Hong Kong Never commenced
any business
activity
Dissolved by
deregistration pursuant
to section 291AA of the
predecessor Companies
Ordinance
2 August 2002
Jethope Industrial Limited
(ʮ̡)
Hong Kong Trading Dissolved by
deregistration pursuant
to section 291AA of the
predecessor Companies
Ordinance
28 May 2004
Luckeast Trading (H.K.)
Limited
(׸(ಥ)
ʮ̡)
Hong Kong Trading Dissolved by
deregistration pursuant
to section 291AA of the
predecessor Companies
Ordinance
5 July 2002
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Name of company
Place of
incorporation
Principal
business activity
immediately
before
dissolution Means of dissolution
Date of
dissolution
Score Focus Enterprises
Limited
(ʮ̡)
Hong Kong Never commenced
any business
activity
Dissolved by
deregistration pursuant
to section 291 of the
predecessor Companies
Ordinance
22 November
2002
Triumph Native Products
(International) Limited
(ʮ̡)
Hong Kong Trading Dissolved by
deregistration pursuant
to section 291 of the
predecessor Companies
Ordinance
21 September
2001
Mr. Hui confirmed that to the best of his knowledge, information and belief and having
made all reasonable enquiries, (i) the above companies have not been and were not involved in
any material legal proceedings since the respective dates of their incorporation until the
respective dates of their dissolution; (ii) the above companies were solvent and have ceased
operations immediately prior to their respective dissolutions; (iii) there is no wrongful act,
misconduct or misfeasance on his part leading to the dissolution of the above companies; and
(iv) 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 the above companies.
Mr. Loh Chong Hou (ᖯ∑ೱ) , aged 54, is the Director of Manufacturing and Engineering
(Tape & Reel) of UBoT Inc. (HK), primarily responsible for leading new technology
development and directing ongoing manufacturing operations for tape and reel.
Mr. Loh joined UBoT Inc. (HK) in September 2019 as engineering consultant, and was
promoted to his current position in November 2021. Before joining our Group, Mr. Loh worked
as an executive (station manager) for SBS Transit DTL Pte. Ltd. in Singapore’s public
transportation sector from July 2016 to August 2019. Prior to that, he had over 13 years’
experience of working in various companies in the areas of semiconductor tooling and
equipment, semiconductor packaging material, including a Japanese chemicals manufacturer for
printed circuit board and flex tape industry, and a European medical materials and consumables
manufacturer. He joined Asahi Chemical Research Lab (S) Pte Ltd as a marketing manager in
August 2009, and Saint Gobain (SEA) Pte. Ltd. as an application engineer of the performance
plastics division in August 2015. His tasks ranged from tooling and equipment design, quality
assurance, technical support, sales marketing, and engineering operations.
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Mr. Loh obtained his Bachelor’s Degree in Mechanical Engineering from Western Michigan
University in the United States in December 1997 and his Diploma in Manufacturing
Engineering from Singapore Polytechnic in May 1989.
Mr. Loh was a director of the company as shown in the following table before its
respective dissolution:
Name of company
Place of
incorporation
Principal
business activity
immediately
before
dissolution Means of dissolution
Date of
dissolution
Matrix Lighting Pte. Ltd. Singapore Design,
manufacturing
and trading of
LED lightings
for industrial
and commercial
use
Dissolved by
deregistration pursuant
to section 344A of the
Companies Act 1967 in
Singapore
13 October 2015
Mr. Loh confirmed that to the best of his knowledge, information and belief and having
made all reasonable enquiries, (i) the above companies have not been and were not involved in
any material legal proceedings since the respective dates of their incorporation until the
respective dates of their dissolution; (ii) the above companies were solvent and have ceased
operations immediately prior to their respective dissolutions; (iii) there is no wrongful act,
misconduct or misfeasance on his part leading to the dissolution of the above companies; and
(iv) 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 the above companies.
Mr. Kwan Kin Pui ( ᗫ਄੃) , aged 59, is the Senior Manager (Product & Technology
Development) of UBOTIC, primarily responsible for leading new product and technology
development and directing mass production of new product.
Prior to joining our Group in January 2018, Mr. Kwan already had more than 26 years of
experience in semiconductor assembly, with expertise in advanced integrated circuit packaging
development, particularly in lead frame type packaging and new product introduction to
production ramp-up. From February 2014 to February 2017, he had worked at QPL Limited with
his last position as a customer engineering director. He also worked at UTAC Dongguan Ltd as a
manager from August 2011 to December 2013, and at ASAT Limited (formerly known as
Advanced Semiconductor Assembly & Test Limited) as a product and process development
manager from May 1996 to January 2010. His tasks ranged from process engineering to product
and process development.
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Mr. Kwan obtained his Degree of Bachelor of Engineering from the University of
Birmingham in the United Kingdom in July 1994.
Dr. Wang Huimin (ˮ౉͏) , aged 67, is the Director of Research and Development and
Materials Engineering of UBoT Inc. (HK), primarily responsible for leading new technology
development in product design, new mould engineering and advanced materials including
formulation design and applications etc.
Dr. Wang has more than 25 years of experience in molecule design and materials design &
manufacturing technology, and the prediction of materials’ properties and lifetime. Prior to
joining our Group as engineering director in December 2009, Dr. Wang worked for Lai On
Products Industrial Ltd., a company principally engaged in production of chemical materials
products including clays, toys and fine chemicals, as a technical manager from June 2003 to
November 2009. His duties included research and development of new products, instructing
chemical materials engineers on chemical products manufacturing procedures, setting up cost
effective and functional quality assurance control system of chemical products, etc. He joined
Hong Kong Polytechnic University’s Institute of Textiles and Clothing as a research fellow from
September 2001 to May 2003. He also worked at AquaGen International Pte Ltd as a research
fellow from August 1999 to November 2000, responsible for the research and development of
polymer system to be used in desalination plants and polymeric packaging material in
electronics industry, and as a research associate at the Institute of Materials Research and
Engineering of the National University of Singapore from September 1997 to August 1999.
Dr. Wang also had teaching experiences at the university level. Before joining Shandong
University as a professor of the Chemistry Department in December 1996, Dr. Wang worked on
nano-technology as a visiting scientist in Technical University of Berlin (transliteration of
Technische Universität Berlin) from April 1995 to April 1996, as was appointed as an associate
professor of Zhejiang University in December 1993.
Dr. Wang obtained both his Bachelor’s Degree of Materials Science and Engineering and
Master’s Degree of Engineering from Northwestern Polytechnical University of the PRC in July
1983 and April 1988, respectively. He obtained his Degree of Doctor of Philosophy from
Zhejiang University of the PRC in May 1993. Besides, Dr. Wang also won the second-class
award of the China Aviation Industry Corporation (transliteration ofʈุᐼʮ̡,
formerly known as the Aviation Industry Bureau of the PRC) for the collaborative research
project at Zhejiang University in April 1999 and held and/or applied for 10 patents related to
advanced materials and new technology.
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COMPANY SECRETARY
Ms. Liu Ningyuan ( ᄎឞჃ) , aged 31, was appointed as our company secretary on 3 March
2024. She joined UBoT Inc. (HK) in February 2023 and has been our Group’s assistant financial
controller since then. Ms. Liu is responsible to oversee the finance and accounting team.
Prior to joining our Group, Ms. Liu worked as assistant manager and representative of
Type 1 (dealing in securities) and Type 6 (advising on corporate finance) regulated activities
under SFO of Southwest Securities (HK) Capital Limited from October 2021 to February 2023.
She joined Ernst & Young as senior consultant from November 2020 to August 2021 and worked
as division compliance & risk analyst in Dufry Group from March 2020 to August 2020. Ms. Liu
joined Deloitte Touché Tohmatsu Hong Kong from September 2015 to September 2019 with her
last position as senior auditor. Ms. Liu has been a member of the Hong Kong Institute of
Certified Public Accountants since October 2018 and a member of the Association of Chartered
Certified Accountants since December 2018. She obtained a Bachelor’s Degree majoring in
auditing from Nanjing Auditing University in June 2015.
BOARD COMMITTEES
Audit Committee
We have established an audit committee on 20 May 2024 with written terms of reference in
compliance with Rule 5.28 of the GEM Listing Rules and code provision D.3.3 of the CG Code
as set out in Appendix C1 of the GEM Listing Rules. The audit committee comprises three
members, namely Mr. Chan Oi Fat, Ms. Ma Jay Suk Lin and Mr. Wong Lok Man, all being our
independent non-executive Directors. The audit committee is chaired by Mr. Chan Oi Fat.
The primary duties of the audit committee are to assist our Board in providing an
independent view of the effectiveness of the financial reporting process, risk management and
internal control systems of our Group, to oversee the audit process, to develop and review our
policies and to perform other duties and responsibilities as assigned by our Board.
Remuneration Committee
We have established a remuneration committee on 20 May 2024 with written terms of
reference in compliance with Rule 5.34 of the GEM Listing Rules and code provision E.1.2 of
the CG Code as set out in Appendix C1 of the GEM Listing Rules. The remuneration committee
comprises three members, namely Mr. Wong Lok Man, Mr. Tong and Mr. Chan Oi Fat. The
remuneration committee is chaired by Mr. Wong Lok Man.
The primary duties of the remuneration committee include (but without limitation): (a)
making recommendations to our Directors regarding our policy and structure for the
remuneration of all our Directors and senior management and on the establishment of a formal
and transparent procedure for developing remuneration policies; (b) making recommendations to
our Board on the remuneration packages of our Directors and senior management; (c) reviewing
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and approving the management’s remuneration proposals with reference to our Board’s corporate
goals and objectives; and (d) considering and approving the grant of share options to eligible
participants pursuant to the Share Option Scheme.
Nomination Committee
We have established a nomination committee on 20 May 2024 with written terms of
reference in compliance with Rule 5.36A of the GEM Listing Rules and code provision B.3.1 of
the CG Code as set out in Appendix C1 of the GEM Listing Rules. The nomination committee
comprises three members, namely Mr. Tong, Mr. Chan Oi Fat and Mr. Wong Lok Man. The
nomination committee is chaired by Mr. Tong.
The primary duties of the nomination committee include, among others, reviewing the
structure, size and composition of our Board and selecting or making recommendations on the
selection of individuals nominated for directorships.
CORPORATE GOVERNANCE
Our Directors recognise the importance of incorporating elements of good corporate
governance in the management structures and internal control procedures of our Group for
achieving effective accountability. Our Company has adopted the code provisions stated in the
CG Code as set forth in Appendix C1 of the GEM Listing Rules.
Our Company is committed to the view that our Board should include a balanced
composition of executive and independent non-executive Directors so that there is a strong
independent element on our Board, which can effectively exercise independent judgment.
Our Directors are aware of that upon Listing, we are expected to comply with such code
provision. Any such deviation shall however be carefully considered, and the reasons for such
deviation shall be given in the interim report and the annual report in respect of the relevant
period. We are committed to achieving high standards of corporate governance with a view to
safeguarding the interests of our Shareholders as a whole and will comply with the code
provisions set out in the CG Code in Appendix C1 to the GEM Listing Rules after the Listing.
Save for the deviation from code provision C.2.1 of the CG Code as disclosed below, our
Company’s corporate governance practices have complied with the CG Code.
Code Provision C.2.1 of the CG Code
Pursuant to code provision C.2.1 of the CG Code, the roles of chairman and chief executive
officer should be separate and should not be performed by the same individual. However, we do
not have a separate chairman and chief executive officer and Mr. Tong is currently performing
both roles. With his extensive experience in the semiconductor industry and precision engineered
plastics manufacturing, Mr. Tong is responsible for the overall strategic planning and general
management of our Group and his knowledge and insight has been instrumental to the growth
DIRECTORS AND SENIOR MANAGEMENT
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and expansion of our business since the founding of our Group. Our Board believes that it is in
the best interest of our Group to have Mr. Tong taking up both the role of chairman and chief
executive officer for continued effective management and business development of our Group.
Our Board considers that the balance of power and authority between our Board and our
management can still be maintained under the current structure, and therefore, our Directors
consider that such deviation from the code provision C.2.1 of the CG Code is appropriate under
such circumstance.
REMUNERATION OF DIRECTORS AND SENIOR MANAGEMENT
Our executive Directors, who are also our employees, receive, in their capacity as our
employees, compensation in the form of salary.
The aggregate amount of remuneration including fees, salaries, contributions to pension
schemes and other allowances, benefits in kind and discretionary bonuses which were paid by
our Group to our Directors for the three years ended 31 December 2023 was approximately
HK$7.1 million, HK$6.1 million and HK$6.2 million, respectively.
The aggregate amount of remuneration including fees, salaries, contributions to pension
schemes and other allowances, benefits in kind and discretionary bonuses which were paid by
our Group to the five highest paid individuals including 4 Directors for each of the three years
ended 31 December 2023 was approximately HK$7.9 million, HK$6.9 million and HK$6.9
million, respectively. No remuneration was paid by our Group to the Directors or the five
highest paid individuals as an inducement to join or upon joining our Group or as a
compensation for loss of office in respect of the three years ended 31 December 2023. Further,
none of our Directors waived any remuneration during the same period.
Under arrangements currently in force, the aggregate remuneration (including fees, salaries,
contributions to pension schemes and other allowances and benefits in kind) of our Directors for
the year ending 31 December 2024 is estimated to be not more than HK$6.8 million.
SHARE OPTION SCHEME
We have conditionally adopted the Share Option Scheme on 20 May 2024. For details of
the Share Option Scheme, please refer to the paragraph headed “D. Share Option Scheme” in
Appendix IV to this prospectus.
DIRECTORS AND SENIOR MANAGEMENT
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COMPLIANCE ADVISER
Our Company has appointed Yue Xiu Capital Limited as our compliance adviser pursuant to
Rule 6A.19 of the GEM Listing Rules and Yue Xiu Capital Limited assumes responsibility for
acting as our Company’s compliance adviser. Pursuant to Rule 6A.19 of the GEM Listing Rules,
the compliance adviser will advise us in the following circumstances:
(i) before the publication of any regulatory announcement, circular or financial report;
(ii) where a transaction, which might be a notifiable or connected transaction, is
contemplated, including share issues and share repurchases;
(iii) where we propose to use the proceeds of 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 (if any) or other information in this
prospectus; and
(iv) where the Stock Exchange makes an inquiry to us regarding unusual movements in the
price or trading volume of our listed securities under Rule 17.11 of the GEM Listing
Rules.
The term of the appointment shall commence on the Listing Date and end on the date
which we distribute our annual report 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.
DIRECTORS AND SENIOR MANAGEMENT
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So far as is known to our Directors, immediately following completion of the Share Offer
and the Capitalisation Issue (without taking into account any Shares which may be allotted and
issued by our Company pursuant to the exercise of the Offer Size Adjustment Option and the
exercise any options which may be granted under the Share Option Scheme), the following
persons will have an interest or a short position in the Shares or underlying Shares of our
Company and its associated corporations 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 member of our Group:
LONG POSITION IN OUR SHARES
Name
Capacity/
Nature of interest
As at the
Latest Practicable Date
Immediately prior to
the Share Offer and
the Capitalisation Issue
Immediately after
completion of
the Share Offer
and the Capitalisation Issue
Number of
Share(s) held
Percentage of
shareholding
Number of
Share(s) held
Percentage of
shareholding
Number of
Share(s) held
Percentage of
shareholding
Sino Success (Notes1&3 ) Beneficial owner 1,030 51.5% 1,030 51.5% 193,125,000 38.625%
Concert party
interest
840 42.0% 840 42.0% 157,500,000 31.5%
Mr. Tong (Notes1&3 ) Interest in controlled
corporation
1,030 51.5% 1,030 51.5% 193,125,000 38.625%
Concert party
interest
840 42.0% 840 42.0% 157,500,000 31.5%
Busy Trade (Notes2&3 ) Beneficial owner 840 42.0% 840 42.0% 157,500,000 31.5%
Concert party
interest
1,030 51.5% 1,030 51.5% 193,125,000 38.625%
Mr. Tang (Notes2&3 ) Interest in controlled
corporation
840 42.0% 840 42.0% 157,500,000 31.5%
Concert party
interest
1,030 51.5% 1,030 51.5% 193,125,000 38.625%
Mr. CL Tang (Note 3) Concert party
interest
1,870 93.5% 1,870 93.5% 350,625,000 70.125%
Mr. CM Tang (Note 3) Concert party
interest
1,870 93.5% 1,870 93.5% 350,625,000 70.125%
Ms. Tang (Note 3) Concert party
interest
1,870 93.5% 1,870 93.5% 350,625,000 70.125%
Ms. Wong Mei Yee (Note 4) Interest of spouse 1,870 93.5% 1,870 93.5% 350,625,000 70.125%
Ms. Wong Ching Wa (Note 5) Interest of spouse 1,870 93.5% 1,870 93.5% 350,625,000 70.125%
Ms. Wong Bik Kwan (Note 6) Interest of spouse 1,870 93.5% 1,870 93.5% 350,625,000 70.125%
Mr. Cheng To Yin (Note 7) Interest of spouse 1,870 93.5% 1,870 93.5% 350,625,000 70.125%
Notes:
1. The entire issued share capital of Sino Success is legally and beneficially owned by Mr. Tong. Mr. Tong is
deemed to be interested in the Shares in which Sino Success is interested in under Part XV of the SFO.
SUBSTANTIAL SHAREHOLDERS
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2. The issued share capital of Busy Trade is legally and beneficially owned as to 70.2% by Mr. Tang, 12.4% by Mr.
CL Tang, 12.4% by Mr. CM Tang and 5% by Ms. Tang. Mr. Tang is deemed to be interested in the Shares in
which Busy Trade is interested in under Part XV of the SFO.
3. Pursuant to the concert party deed dated 15 September 2023, entered into among Sino Success, Mr. Tong, Busy
Trade, Mr. Tang, Mr. CL Tang, Mr. CM Tang and Ms. Tang, (a) each of Sino Success and Mr. Tong is deemed to
be interested in 157,500,000 Shares held by Busy Trade, (b) Each of Busy Trade and Mr. Tang is deemed to be
interested in 193,125,000 Shares held by Sino Success, (c) each of Mr. CL Tang, Mr. CM Tang and Ms. Tang is
deemed to be interested in 193,125,000 Shares held by Sino Success and 157,500,000 Shares held by Busy Trade
under Part XV of the SFO.
4. Ms. Wong Mei Yee is the spouse of Mr. Tang and she is deemed to be interested in 350,625,000 Shares that Mr.
Tang is interested in or deemed to be interested in under Part XV of the SFO.
5. Ms. Wong Ching Wa is the spouse of Mr. CL Tang and she is deemed to be interested in 350,625,000 Shares that
Mr. CL Tang is interested in or deemed to be interested in under Part XV of the SFO.
6. Ms. Wong Bik Kwan is the spouse of Mr. CM Tang and she is deemed to be interested in 350,625,000 Shares
that Mr. CM Tang is interested in or deemed to be interested in under Part XV of the SFO.
7. Mr. Cheng To Yin is the spouse of Ms. Tang and he is deemed to be interested in 350,625,000 Shares that Ms.
Tang is interested in or deemed to be interested in under Part XV of the SFO.
Save as disclosed above, our Directors and chief executives are not aware of any other
person who will, immediately following the Share Offer and the Capitalisation Issue (without
taking into account any Shares which may be allotted and issued by our Company pursuant to
the exercise of the Offer Size Adjustment Option and the exercise of any options which may be
granted under the Share Option Scheme), have a beneficial interest or short position in the
Shares or underlying Shares of our Company and its associated corporations 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
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.
SUBSTANTIAL SHAREHOLDERS
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The following is a description of the authorised and issued share capital of our Company in
issue and to be issued as fully paid or credited as fully paid prior to and immediately following
the completion of the Share Offer and the Capitalisation Issue:
Authorised share capital: HK$
50,000,000,000 Shares of HK$0.001 each 50,000,000
Issued and to be issued, fully paid or credited as fully paid:
2,000 Shares in issue as at the date of this prospectus 2
374,998,000 New Shares to be allotted and issued pursuant to
the Capitalisation Issue
374,998
125,000,000 New Shares to be allotted and issued pursuant to
the Share Offer
125,000
500,000,000 Shares in total 500,000
ASSUMPTIONS
The table as shown above assumes the Share Offer becoming unconditional and the
allotment and issue of Shares pursuant thereto and under the Capitalisation Issue is made as
described herein. It does not take into account any Shares which may be allotted and issued
pursuant to the exercise of the Offer Size Adjustment Option and the exercise of any options
which may be granted under the Share Option Scheme and any Shares which may be allotted and
issued or repurchased by our Company pursuant to the general mandate given to our Directors to
allot and issue or repurchase Shares referred to in the paragraphs headed “General Mandate to
Issue Shares” or “General Mandate to Repurchase Shares” in this section, as the case may be.
MINIMUM PUBLIC FLOAT
Pursuant to Rule 11.23(7) of the GEM Listing Rules, at the time of the Listing and at all
times thereafter, our Company must maintain the minimum prescribed percentage of 25% of the
total issued share capital of our Company in the hands of the public (as defined in the GEM
Listing Rules).
SHARE CAPITAL
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RANKING
The Offer Shares will be ordinary shares of our Company and will rank pari passu in all
respects with all the Shares in issue or to be issued as mentioned in this prospectus and will
qualify for all dividends and other distributions declared, paid or made on the Shares in respect
of a record date which falls after the Listing Date (except for the entitlement under the
Capitalisation Issue).
SHARE OPTION SCHEME
Our Company has conditionally adopted the Share Option Scheme. The principal terms of
the Share Option Scheme are summarised in the paragraph headed “D. Share Option Scheme” in
Appendix IV to this prospectus.
GENERAL MANDATE TO ISSUE SHARES
Conditional on the conditions as stated in the section headed “Structure and conditions of
the Share Offer – Conditions of the Share Offer” in this prospectus being fulfilled, our Directors
have been granted a general unconditional mandate to allot, issue and deal with Shares and to
make or grant offers, agreements or options which might require such Shares to be allotted and
issued or dealt with subject to the requirement that the total number of Shares so allotted and
issued or agreed conditionally or unconditionally to be allotted and issued (otherwise than
pursuant to a rights issue, or scrip dividend scheme or similar arrangements, or a specific
authority granted by our Shareholders) shall not exceed:
(a) 20% of the total number of Shares in issue immediately following the completion of
the Share Offer and the Capitalisation Issue (without taking into account of any Shares
which may be allotted and issued by our Company pursuant to the exercise of the
Offer Size Adjustment Option and the exercise of any options which may be granted
under the Share Option Scheme); and
(b) the total 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.
This mandate does not cover Shares to be allotted, issued, or dealt with under a rights issue
or upon the exercise of any options which may be granted under the Share Option Scheme. This
general mandate to issue Shares will remain in effect until:
(a) the conclusion of our Company’s next annual general meeting;
(b) the expiration of the period within which our Company’s next annual general meeting
is required to be held by any applicable laws of the Cayman Islands or the Articles of
Association; or
SHARE CAPITAL
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(c) the time when such mandate is revoked, varied or renewed by an ordinary resolution
of our Shareholders in general meeting,
whichever is the earliest.
For further details of this general mandate, please refer to the paragraph headed “A. Further
information about our Group – 3. Resolutions passed at the Shareholders’ extraordinary general
meeting held on 20 May 2024” in Appendix IV to this prospectus.
GENERAL MANDATE TO REPURCHASE SHARES
Subject to the conditions set forth in the section headed “Structure and conditions of the
Share Offer” in this prospectus being fulfilled, our Directors have been granted a general
mandate to exercise all the powers of our Company to purchase on GEM or on any other stock
exchange 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 as will represent up to
10% of the total number of Shares in issue immediately following completion of the Share Offer
and the Capitalisation Issue (without taking into account of any Shares which may be allotted
and issued by our Company pursuant to the exercise of the Offer Size Adjustment Option and
the exercise of any options which may be granted under the Share Option Scheme).
For further details of this general mandate, please refer to the paragraph headed “A. Further
information about our Group – 6. Repurchase by our Company of its own securities” in
Appendix IV 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 the Articles of
Association, our Company may from time to time by ordinary resolution of shareholders (i)
increase its share capital, (ii) consolidate and divide its capital into shares of larger amount, (iii)
divide its Shares into several classes, (iv) subdivide its Shares into shares of smaller amount,
and (v) cancel any Shares which have not been taken. In addition, our Company may, subject to
the provisions of the 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 III to
this prospectus.
Pursuant to the Companies Act and the terms of the Memorandum and the Articles of
Association, all or any of the special rights attached to the 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) Variation of rights of existing shares or classes of shares” in Appendix III to this prospectus.
SHARE CAPITAL
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You should read the following discussion and analysis in conjunction with our combined
financial statements including the notes thereto, as set forth in the Accountants’ Report
included as Appendix I to this prospectus. The Accountants’ Report has been prepared on the
basis set out in Appendix I to this prospectus and in accordance with our accounting policies
that are in conformity with IFRSs.
Our historical results do not necessarily indicate our performance for any future
periods. The following discussion and analysis of our financial conditions and results of
operations contain forward-looking statements that involve risks and uncertainties. Our
actual results may differ from those discussed below due to a number of factors, including
those set out in the sections headed “Risk factors”, “Forward-looking statements”,
“Business” and elsewhere in this prospectus.
Potential investors should read the whole of the Accountants’ Report set out in Appendix
I to this prospectus and not rely merely on the information contained in this section.
OVERVIEW
Established in 2005, we are a back-end semiconductor transport media manufacturer
engaging in precision manufacturing on engineering plastics casings, in which we derived our
revenue principally from the sale of tray and tray related products during the Track Record
Period. Other than specializing in the design, development, manufacture and sales of tray and
tray related products, we have also included carrier tape in our product categories since 2019. In
addition to back-end semiconductor transport media, we also provided MEMS and sensor
packaging, the revenue from the sales of which accounted for approximately 3.5%, 3.9% and
8.7% for the year ended 31 December 2021, 2022 and 2023, respectively. According to the F&S
Report, we ranked the third among all tray and tray related products manufacturers in the global
back-end semiconductor shipping and transport media industry in 2023.
Our back-end semiconductor transport media products, namely tray and tray related
products, which are containers which store semiconductor components during their production
and delivery processes using mainly precision engineering plastics, and carrier tape, are mainly
used for the protection of semiconductor devices, including power discrete semiconductor
device, optoelectronic, IC and sensors, etc, while our MEMS and sensor packaging provides an
encasement designed to promote the electrical contacts that deliver signals to the circuit board of
an electronic device and also to protect the MEMS and sensors from potentially damaging
external elements and the corrosive effects of age. Supported by our professional R&D and
material engineering department and sales and marketing personnel and customizable
manufacturing platform and design enablement services, we are able to cater a great variety of
customer-specific requests and ease up the timely completion of complex designs that are
optimized in terms of cost and performance. During the Track Record Period, we had developed
over 1,500 product specifications in various dimensions with different thermal, mechanical and
physical properties metrics, which satisfy our customers’ specifications and required quality
standards. Due to the nature of our products, we serve customers from the semiconductor
FINANCIAL INFORMATION
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industry. With over 15 years of development, we have established a broad customer base
including some of the international fabless-foundry semiconductor companies, IDM Companies
and IC assembly and packaging test house. The majority of sales of our Group has been derived
from the sales of tray and tray related products worldwide, especially in Southeast Asia, the PRC
and Taiwan. Further, we have also established sales network in Europe, the U.S., Korea and
Japan. For each of the three years ended 31 December 2023, approximately 35.6%, 35.6% and
36.6% of our revenue was generated from our sales in the Southeast Asia countries, while
approximately 27.3%, 24.3% and 26.1% of our revenue was generated from our sales in the PRC
for each of the relevant year. We also generated approximately 19.3%, 23.0% and 18.0% of our
revenue from our sales in Taiwan for each of the three years ended 31 December 2023.
Benefiting from the fast-growing global semiconductor industry and with our R&D and
product development capabilities, for each of the years ended 31 December 2021, 2022 and
2023, our revenue amounted to approximately HK$202.9 million, HK$257.6 million and
HK$189.0 million, respectively, whereas our gross profit amounted to approximately HK$86.7
million, HK$101.9 million and HK$72.0 million, respectively.
MAJOR FACTORS AFFECTING OUR FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS
Our results of operations, financial condition and year to year comparability of our
financial performance are principally affected by the following factors:
The demand from our customers and the demand for their products
During the Track Record Period, we derived over 90% of our revenue from the sale of
back-end semiconductor transport media products, tray and tray related products and carrier
tape. Our back-end semiconductor transport media products are mainly used during the
production and delivery process of semiconductor devices, including IC chips, modules,
microcontrollers and sensors, etc and we mainly serve customers from the semiconductor
industry including fabless-foundry semiconductor companies, IDM companies and IC
assembly and packaging test companies. Therefore, our business is highly driven by the
semiconductor industry and the demands for our customers’ products. According to the
F&S Report, despite the decrease in global market size of semiconductor industry by sales
value in 2023, it is forecasted to increase at a CAGR of 8.8% from US$595.3 billion in
2024 to US$832.7 billion in 2028. For further details, please refer to the section headed
“Business – Competitive strengths – Our business is semiconductor industry driven and we
will be benefited from the long-term growth of the global semiconductor industry” in this
prospectus. If the performance of the semiconductor industry deteriorates and the demand
for our customers’ products decreases due to unforeseeable reasons, our financial
performance will be adversely affected.
FINANCIAL INFORMATION
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The following table illustrates the hypothetical fluctuations in the revenue on our
profit before tax in FY2021, FY2022 and FY2023, assuming all other factors remained
unchanged.
For the year ended 31 March
2021 2022 2023
Hypothetical
change in revenue
Profit
before tax
Change in
profit
before tax
Profit
before tax
Change in
profit
before tax
Profit
before tax
Change in
profit
before tax
HK$’000 % HK$’000 % HK$’000 %
+10% 52,139 63.7 52,755 95.4 25,553 283.9
+5% 41,991 31.9 39,876 47.7 16,104 142.0
0 31,844 0.0 26,998 0.0 6,656 0
-5% 21,697 -31.9 14,120 -47.7 -2,792 -142.0
-10% 11,549 -63.7 1,242 -95.4 -12,241 –283.9
Cost of raw materials
Our cost of raw material represents our major component of cost of sales that
accounted for approximately 47.5%, 47.3% and 41.8% of our cost of sales for the year
ended 31 December 2021, 2022 and 2023 respectively. Our major raw materials comprised
PPO, ABS, recycled material, re-compound material and formulated material. The purchase
price of our raw materials are generally determined with reference to the prevailing market
conditions, which may be subject to a number of factors, such as the market demand in the
semiconductor industry and other industries, supply chain, shipping logistics issue and
upstream cost of production according to the F&S Report and are beyond our control. Our
profit margins and results of operations may be directly and materially affected by the price
fluctuations if any.
FINANCIAL INFORMATION
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The following table illustrates the hypothetical fluctuations in the cost of raw
materials on our profit before tax for the year ended 31 December 2021, 2022 and 2023,
assuming all other factors remained unchanged.
For the year ended 31 December
2021 2022 2023
Hypothetical
change in cost of
raw materials
Profit
before tax
Change in
profit
before tax
Profit
before tax
Change in
profit
before tax
Profit
before tax
Change in
profit
before tax
HK$’000 % HK$’000 % HK$’000 %
+10% 26,326 (17.3) 19,636 (27.3) 1,762 (73.5)
+5% 29,085 (8.7) 23,317 (13.6) 4,209 (36.8)
0 31,844 – 26,998 – 6,656 –
-5% 34,603 8.7 30,679 13.6 9,103 36.8
-10% 37,362 17.3 34,360 27.3 11,550 73.5
Cost of labour
Our labour cost amounted to approximately 19.4%, 20.6% and 21.1% of our cost of
sales for the year ended 31 December 2021, 2022 and 2023, respectively. Our production
process is labour-intensive. As at the Latest Practicable Date, over 60.0% of our employees
are responsible for our manufacturing function in the PRC. According to the F&S Report,
the average monthly salary of production and equipment operators in the manufacturing
industry in the PRC has increased at a CAGR of 7.1% from 2019 to 2023 and it is
forecasted to further increase at a CAGR of 6.4% from 2024 to 2028. Should the labour
costs continue to increase, our results of operations may be materially affected.
FINANCIAL INFORMATION
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The following table illustrates the hypothetical fluctuations in the cost of labour on
our profit before tax for the years ended 31 December 2021, 2022 and 2023, assuming all
other factors remain unchanged:
For the year ended 31 December
2021 2022 2023
Hypothetical
change in cost of
labour
Profit
before tax
Change in
profit
before tax
Profit
before tax
Change in
profit
before tax
Profit
before tax
Change in
profit
before tax
HK$’000 % HK$’000 % HK$’000 %
+10% 29,569 (7.1) 23,796 (11.8) 4,186 (37.1)
+5% 30,895 (3) 25,397 (5.9) 5,421 (18.6)
0 31,844 – 26,998 – 6,656 –
-5% 32,792 3 28,599 5.9 7,891 18.6
-10% 34,119 7.1 30,200 11.8 9,126 37.1
Our reputation, customer relationships and market presence
We derived over 90% of our revenue from the sales of tray and tray related products
during the Track Record Period. According to the F&S Report, among all the tray and tray
related products manufacturers in the back-end semiconductor transport media industry, we
ranked the third in the globe in 2023 in terms of sales revenue, with a market share of
approximately 8.4%. Our Directors consider our success depends heavily on our
long-established relationship with our customers. We have maintained over 10 years of
business relationship with our five largest customers during the Track Record Period and
approximately 60.9%, 58.4% and 54.9% of our revenue was attributable to our five largest
customers in each of the three years ended 31 December 2023, respectively. For further
details regarding our customers, please refer to the section headed “Business – Customers”
in this prospectus. There is no assurance that we shall always be able maintain such
favourable reputation and customer relationship, we may not be able to maintain our
revenue from the sales of tray and tray related products and hence our market share during
the Track Record Period.
We also maintained a broad market presence. During the Track Record Period, our
revenue was derived from Southeast Asia, the PRC, Taiwan, the United States, Europe,
Hong Kong, Korea and Japan, in which over 35% of our revenue was derived from
Southeast Asia and over 18.0% was derived from Taiwan. Approximately 27.3%, 24.3% and
26.1% of our revenue for each of the three years ended 31 December 2023 was derived
from the PRC, respectively. If our performance in any of these jurisdictions deteriorates,
our financial conditions may be materially and adversely affected.
FINANCIAL INFORMATION
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Production capacity and utilisation rate
Our results of operations are significantly affected by the production capacity and
utilisation rate of our production facilities. We believe that the expansion of our production
facilities will enable us to increase the sales volume of our products, which in turn
significantly broaden our market reach and continue to drive our growth of business in the
foreseeable future. Please refer to the paragraphs headed “Business – Business Strategies –
Increase our production capacity and capabilities by promoting automation of our
production process, upgrading our production facilities and acquiring requisite machineries”
in this prospectus. In addition, the utilisation rates of our production facilities have
significant impact on our gross profit margin. A high utilisation rate allows the fixed costs
to be more widely apportioned and enables us to enhance our operating efficiency and
achieve economies of scale and hence improve our gross profit margin. As the
manufacturing overheads component of our cost of sales is relatively fixed in nature and
not directly correlated with changes in production level, we stand to benefit from higher
production levels and utilisation rates. We may face lower gross profit margin and
accordingly lower profitability if we fail to achieve economies of scale through higher
production level and utilisation rate.
For the year ended 31 December 2021, 2022 and 2023, our utilisation rate of tray and
tray related products of our Shatian Production Factory were 95.4%, 89.1% and 65.2% and
our utilisation rate of tray and tray related products of our Houjie Production Factory were
89.5%, 101.9% and 76.5% respectively. For our carrier tape products, our utilisation rate
were 10.0%, 17.2% and 17.3% for the year ended 31 December 2021, 2022 and 2023. The
utilisation rate of our MEMS and sensor products packaging solution (flow sensor module)
of our Shatian Production Factory for the year ended 31 December 2021, 2022 and 2023
were 89.2%, 97.1% and 82.3% respectively. The utilisation rate of MEMS and sensor
products packaging solution (ERAQFN) of our Shatian Production Factory for the year
ended 31 December 2021, 2022 and 2023 were 37.7%, 102.5% and 102.5% respectively.
The fluctuation of the utilisation rate was generally in line with the fluctuation in customer
demands of the products. For details, please refer to the sections headed “Business –
Production capacity and utilisation” in this prospectus.
BASIS OF PRESENTATION
Our Company was incorporated in the Cayman Islands as an exempted company with
limited liability under the Companies Act of the Cayman Islands on 7 February 2022. In
preparation of the Listing, we underwent the Reorganisation, the details of which are more fully
set out in the paragraph headed “History, Development and Reorganisation – Reorganisation” in
this prospectus.
The Company is an investment holding company. The principal activities of the operating
companies becoming the Company’s subsidiaries now comprising our Group, are research and
development, manufacturing and sales of back-end semiconductor transport media and MEMS
and sensor packaging (the “ Listing Business ”).
FINANCIAL INFORMATION
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Pursuant to the Reorganisation described above, the Company became the holding company
of the companies now comprising our Group on 20 April 2022. 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 recapitalisation of the Listing Business with no change
in management of such business and the ultimate Controlling Shareholders of the Listing
Business remain the same. And the Company is considered as the acquiree for accounting
purposes.
Accordingly, for the purpose of this prospectus, the consolidated financial information has
been prepared and presented as a continuation of the consolidated financial statements of the
operating companies, with the assets and liabilities of our Group recognised and measured at the
carrying amounts of the Listing Business under the combined financial statements of the
Operating Companies for all periods presented.
The consolidated statements of profit or loss and other comprehensive income, consolidated
statements of changes in equity and combined statements of cash flows for the Track Record
Period include the results, changes in equity and cash flows of the Listing Business as if our
Group structure after the Reorganisation had been in existence throughout the Track Record
Period.
The consolidated statements of financial position of our Group as at 31 December 2021, 31
December 2022 and 31 December 2023 have been prepared to present the assets and liabilities
of the Listing Business as if our Group structure after the Reorganisation had been in existence
throughout the Track Record Period, the Listing Business had always been operated by our
Group and the current group structure had been in existence at those dates taking into account
the respective date of incorporation, where applicable.
Our consolidated financial information has been prepared in accordance with IFRS
Accounting Standards (“ IFRSs”), which comprise all standards and interpretations approved by
the International Accounting Standards Board (“ IASB”). Our consolidated financial information
also complies with the applicable disclosure provisions of the GEM Listing Rules and with the
disclosure requirements of the Companies Ordinance. For more information on the basis of
presentation of the financial information included herein, please refer to Note 2 to the
Accountants’ Report as set out in Appendix I to this prospectus.
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MATERIAL ACCOUNTING POLICY INFORMATION
The material accounting policy information applied in the preparation of our consolidated
financial information are set out in Note 4 to the Accountants’ Reports as set out in the
Appendix I to this prospectus. Set out below are the more important accountant policies:
Revenue from contracts with customers
Our Group recognises revenue when (or as) a performance obligation is satisfied, i.e.
when “control” of the goods or services underlying the particular performance obligation is
transferred to the customer.
A performance obligation represents a good or service (or a bundle of goods or
services) that is distinct or a series of distinct goods or services that are substantially the
same.
Revenue is recognised at a point in time when the customer obtains control of the
distinct good or service.
A contract asset represents our Group’s right to consideration in exchange for goods or
services that our Group has transferred to a customer that is not yet unconditional. It is
assessed for impairment in accordance with IFRS 9. In contrast, a receivable represents our
Group’s unconditional right to consideration, i.e. only the passage of time is required
before payment of that consideration is due.
A contract liability represents our Group’s obligation to transfer goods or services to a
customer for which our Group has received consideration (or an amount of consideration is
due) from the customer.
Leases
A contract is, or contains, a lease of the contract conveys the right to control the use
of an identified asset for a period of time in exchange for consideration.
As a lessee
Short-term leases
Our Group applies the short-term lease recognition exemption to leases of exhibition
halls and warehouses that have a lease term of 12 months or less from the commencement
date and do not contain a purchase option. Lease payments on short-term leases are
recognised as expense on a straight-line basis over the lease term.
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Right-of-use assets
Right-of-use assets are measured at cost, less any accumulated depreciation and
impairment losses, and adjusted for any remeasurement of lease liabilities.
Right-of-use assets are depreciated on a straight-line basis over the shorter of its
estimated useful life and the lease term.
Our Group presents right-of-use assets as a separate line item on the consolidated
statements of financial position.
Refundable rental deposits
Refundable rental deposits paid are accounted under IFRS 9 and initially measured at
fair value. Adjustments to fair value at initial recognition are considered as additional lease
payments and included in the cost of right-of-use assets.
Lease liabilities
At the commencement date of a lease, our Group recognises and measures the lease
liability at the present value of lease payments that are unpaid at that date. In calculating
the present value of lease payments, our Group uses the incremental borrowing rate at the
lease commencement date if the interest rate implicit in the lease is not readily
determinable.
The lease payments include fixed payments (including in-substance fixed payments)
less any lease incentives receivable.
After the commencement date, lease liabilities are adjusted by interest accretion and
lease payments.
Our Group remeasures lease liabilities (and makes a corresponding adjustment to the
related right-of-use assets) whenever the lease term has changed or there is a change in the
assessment of exercise of a purchase option, in which case the related lease liability is
remeasured by discounting the revised lease payments using a revised discount rate at the
date of reassessment.
Our Group presents lease liabilities as a separate line item on the consolidated
statements of financial position.
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Lease modifications
Except for COVID-19-related rent concessions in which our Group applied the
practical expedient, our Group accounts for a lease modification as a separate lease if:
 the modification increases the scope of the lease by adding the right to use one
or more underlying assets; and
 the consideration for the leases increases by an amount commensurate with the
stand-alone price for the increase in scope and any appropriate adjustments to
that stand-alone price to reflect the circumstances of the particular contract.
For a lease modification that is not accounted for as a separate lease, our Group
remeasures the lease liability, less any lease incentive receivables, based on the lease term
of the modified lease by discounting the revised lease payments using a revised discount
rate at the effective date of the modification.
Our Group accounts for the remeasurement of lease liabilities by making
corresponding adjustments to the relevant right-of-use asset.
Changes in the basis for determining the future lease payments as a result of interest rate
benchmark reform
For changes in the basis for determining the future lease payments as a result of
interest rate benchmark reform, our Group applies the practical expedient to remeasure the
lease liabilities by discounting the revised lease payments using the unchanged discount
rate and makes a corresponding adjustment to the related right-of-use assets. A lease
modification is required by interest rate benchmark reform if, and only if, both of these
conditions are met:
 the modification is necessary as a direct consequence of interest rate benchmark
reform; and
 the new basis for determining the lease payments is economically equivalent to
the previous basis (i.e. the basis immediately preceding the modification).
COVID-19-related rent concessions
In relation to rent concessions that occurred as a direct consequence of the COVID-19
pandemic, our Group has elected to apply the practical expedient not to assess whether the
change is a lease modification if all of the following conditions are met:
 the change in lease payments results in revised consideration for the lease that is
substantially the same as, or less than, the consideration for the lease
immediately preceding the change;
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 any reduction in lease payments affects only payments originally due on or
before 30 June 2022; and
 there is no substantive change to other terms and conditions of the lease.
A lessee applying the practical expedient accounts for changes in lease payments
resulting from rent concessions the same way it would account for the changes applying
IFRS 16 if the changes are not a lease modification. Forgiveness or waiver of lease
payments are accounted for as variable lease payments. The related lease liabilities are
adjusted to reflect the amounts forgiven or waived with a corresponding adjustment
recognised in the profit or loss in the period in which the event occurs.
Foreign currencies
In preparing the historical financial information of our Group, transactions in
currencies other than the functional currency of that entity (foreign currencies) are
recognised at the rates of exchanges prevailing on the dates of the transactions. At the end
of the reporting period, monetary items denominated in foreign currencies are retranslated
at the rates prevailing at that date. Non-monetary items carried at fair value that are
denominated in foreign currencies are retranslated at the rates prevailing on the date when
the fair value was determined. Non-monetary items that are measured in terms of historical
cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the
retranslation of monetary items, are recognised in profit or loss in the period in which they
arise.
For the purposes of presenting the historical financial information of our Group, the
assets and liabilities of our Group’s operations are translated into the presentation currency
of our Group (i.e. HK$) using exchange rates prevailing at the end of each reporting
period. Income and expenses items are translated at the average exchange rates for the
period, unless exchange rates fluctuate significantly during that period, in which case the
exchange rates at the date of transactions are used. Exchange differences arising, if any, are
recognised in other comprehensive income and accumulated in equity under the heading of
translation reserve.
Exchange differences relating to the retranslation of our Group’s net assets in Chinese
Renminbi (“RMB”) and Singaporean dollars (“ SGD”) to our Group’s presentation currency
(i.e. HK$) are recognised directly in other comprehensive income and accumulated in
translation reserve. Such exchange differences accumulated in the translation reserve may
be reclassified to profit or loss subsequently.
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Goodwill and fair value adjustments on identifiable assets acquired arising on an
acquisition of a foreign operation are treated as assets and liabilities of that foreign
operation and translated at the rate of exchange prevailing at the end of each reporting
period. Exchange differences arising are recognised in other comprehensive income.
Property, plant and equipment
Property, plant and equipment are stated in the consolidated statements of financial
position at cost less subsequent accumulated depreciation and subsequent accumulated
impairment losses, if any.
Properties in the course of construction for production, supply or administrative
purposes are carried at cost, less any recognised impairment loss. Costs include
professional fees and, for qualifying assets, borrowing costs capitalised in accordance with
our Group’s accounting policy. Such properties are classified to the appropriate category of
property, plant and equipment when completed and ready for intended use. Depreciation of
these assets, on the same basis as other property assets, commences when the assets are
ready for their intended use.
Depreciation is recognised so as to write off the cost of items of property, plant and
equipment less their residual values over their estimated useful lives, using the straight-line
method. The estimated useful lives, residual values and depreciation method are reviewed
at the end of each reporting period, with the effect of any changes in estimate accounted
for on a prospective basis.
An item of property, plant and equipment is derecognised upon disposal or when no
future economic benefits are expected to arise from the continued use of the asset. Any
gain or loss arising on disposal or retirement of an item of property, plant and equipment is
determined as the difference between the sales proceeds and the carrying amount of the
asset and is recognised in profit or loss.
MATERIAL ACCOUNTING ESTIMATES AND ASSUMPTIONS
The preparation of consolidated financial information in conformity with IFRSs requires
the use of certain material accounting estimates. It also requires management to exercise its
judgement in the process of applying our Group’s accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are
material to the our consolidated financial information are disclosed in Note 5 to the
Accountants’ Report as set out in Appendix I to this prospectus.
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We believe that the following material accounting estimates and assumptions involve the
most material or subjective judgments and estimate used in the preparation of our consolidated
financial information:
Current and deferred income taxes
Material judgement is required in determining the provision for income tax. There are
many transactions and calculations for which the ultimate 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 difference will impact the income tax
and deferred tax provision in the period in which such determination is made.
Deferred tax assets relating to certain temporary differences and tax losses are
recognised when management considers to be probable that future taxable profit will be
available against which the temporary differences or tax losses can be utilised. The
outcome of their actual utilisation may be different.
For details, please refer to the subsection headed “Taxation” in Note 4 to the
Accountants’ Report as set out in Appendix I to this prospectus.
Net realisable value of inventories
Net realisable value of inventories is the estimated selling prices in the ordinary
course of business less estimated selling expenses. These estimates are based on the current
market condition and the historical experience of selling products of similar nature. It could
change significantly as a result of changes in economic conditions in places where our
Group operates and changes in customer taste and competitor actions in response to
changes in market conditions. Management reassesses these estimates at each reporting
date.
Provision of ECL for trade receivables
Trade receivables with credit-impaired are assessed for expected credit loss (“ ECL”)
individually. In addition, our Group uses practical expedient in estimating ECL on trade
receivables which are not assessed individually using a provision matrix. The provision
rates are based on aging of debtors as groupings of various debtors taking into
consideration the Group’s historical default rates and forward-looking information that is
reasonable and supportable available without undue costs or effort. At every reporting date,
the historical observed default rates are reassessed and changes in the forward-looking
information are considered. The provision of ECL is sensitive to changes in estimates.
FINANCIAL INFORMATION
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HISTORICAL FINANCIALS
Prior to the Track Record Period, we recorded accumulated losses of approximately HK$8.6
million as at 1 January 2021. The accumulated loss as at 1 January 2021 was primarily due to
the accumulated loss of UBOTIC of approximately HK$53.9 million as at 1 January 2021, which
were primarily attributable to the high initial R&D and sales, marketing and business
development expenses for MEMS and sensor packaging. According to the F&S Report, MEMS
and sensor packaging industry is considered a highly specialised industry which requires
sophisticated and long product development cycle, extensive technical know-how and
considerable investment in corresponding machinery. Our Group, as a participant in the MEMS
and sensor packaging industry, made considerable investments at the initial stage of business for
product development which included (i) purchase of machineries and equipment; (ii) recruitment
of engineers with high calibre; and (iii) application of patents, as well as (iv) expenses in our
sales and marketing efforts to promote the products developed. Further, the initial rate of return
of the R&D products developed by UBOTIC is relatively low as considerable time was used in
exploring suitable markets for their commercialisation. Our Directors believe that a sophisticated
and long R&D cycle is often required from product development and commercialisation of
products and consider our investment in MEMS and sensor packaging is prudent and reasonable.
The net loss position of UBOTIC from 2010 to 2019 reflected our continuous efforts to
innovate products of high commercial value and explore profitable markets to commercial our
products developed in the initial stage of business of UBOTIC. As a result of our ongoing effort
in building the client base and market presence of UBOTIC, its financial performance has turned
around to be profit-making since 2020. Our Directors also consider that UBOTIC has reached a
more mature stage and currently is able to harvest from the products successfully developed
from the R&D projects throughout the years and bring profits to our Group.
The accumulated loss as at 1 January 2021 was also partly attributable to the accumulated
loss of UBoT Enterprise which the loss was primarily caused by the upfront investment made in
the Houjie Production Factory, including but not limited to rent and construction and
reinforcement work, prior to the commencement of its operation in June 2021, and certain costs
in relation to the R&D projects for MEMS and sensor packaging being continuously borne by
UBoT Enterprise.
Our Group recorded a drop in net profit for the year ended 31 December 2023 of
approximately HK$16.7 million or approximately 76.9% as compared to the year ended 31
December 2022. Our Directors are of the view that the decrease in profitability in the year ended
31 December 2023 was because our operating expenses remained at similar level at
approximately HK$53.7 million as compared to that of approximately HK$55.4 million in the
year ended 31 December 2022, when our revenue decreased for approximately HK$68.6 million
or approximately 26.6% and our gross profit decreased for approximately HK$29.9 million or
approximately 29.7% during the corresponding periods. Our profit for the year was affected by
(i) total operating expenses, which are less variable in nature and accounted for 21.5% and
28.4% to our total revenue for the year ended 31 December 2022 and 2023, respectively.
Particularly, our selling and distribution expenses as a percentage to our gross profit increased
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--- page 359 ---
from 24.6% for the year ended 31 December 2022 to 29.6% for the year ended 31 December
2023, while our administrative expenses as a percentage to our gross profit increased from
25.6% for the year ended 31 December 2022 to 38.4% for the year ended 31 December 2023;
(ii) the effect of non-recurring listing expenses of approximately HK$5.3 million which
accounted for approximately 7.3% of our gross profit; and (iii) the increase in finance costs of
approximately 16.8% from approximately HK$4.1 million for the year ended 31 December 2022
to approximately HK$4.8 million for the year ended 31 December 2023 as a result of the high
interests environment in the year ended 31 December 2023.
Our Directors consider that there was no major obstacle or changes in the operation of our
business in the year ended 31 December 2023. For the year ended 31 December 2023, the
decrease in gross profit of approximately 29.7% was substantially in line with the decrease in
revenue of approximately 26.6% as compared to the year ended 31 December 2022. The gross
profit margin during the Track Record Period was 42.7%, 39.6% and 38.1%, respectively. Our
Directors are of the view that the proportion of our fixed costs increased as our revenue
decreased temporarily as our operating expenses, such as staff costs and benefits, travelling
expenses, professional fees, depreciation and bank charges are not directly related to sales
volume and therefore do not change proportionally to the drop in sales volume and revenue. We
expect our total operating expense as a percentage to our total revenue and gross profit will
decrease as our business picks up given it is expected that the semiconductor industry will
maintain a relatively high overall growth rate going forward. Further, in view of the long term
growth of the semiconductor industry, our Directors are of the view that the temporary
slowdown in demand in the year ended 31 December 2023 will not carry long term effect that
necessitates adjustments in our operating scale and product development plans and that our
continuous input is beneficial for our Group and Shareholders as a whole in the long term.
Please also refer to the paragraphs headed “Business – Business Sustainability” in this
prospectus for details.
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RESULTS OF OPERATIONS
The following table presents the results of operations of our Group during the Track Record
Period, which are derived from the consolidated statements of profit or loss and other
comprehensive income as set out in the Accountants’ Report in Appendix I to this prospectus.
Y ear ended 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Revenue 202,948 257,565 188,969
Cost of sales (116,272) (155,687) (116,989)
Gross profit 86,676 101,878 71,980
Other income 74 947 145
Other gains and losses 1,070 (5,967) (2,174)
(Provision for) reversal of impairment
losses on financial assets (76) (354) 493
Administrative expenses (23,827) (26,091) (27,640)
Selling and distribution expenses (22,742) (25,074) (21,282)
Research and development expenses (4,104) (4,270) (4,822)
Finance costs (3,209) (4,096) (4,784)
Listing expenses (2,018) (9,975) (5,260)
Profit before taxation 31,844 26,998 6,656
Income tax expense (5,448) (5,200) (1,618)
Profit for the year 26,396 21,798 5,038
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Non-IFRS Measures
Adjusted profit for the year
In addition to the IFRS measures in our consolidated financial information, we also use the
non-IFRS financial measure of adjusted profit for the year (Non-IFRS measures), to evaluate our
operating performance. We believe that this non-IFRS measure provides useful information to
investors in understanding and evaluating our consolidated results of operations in the same
manner as our management by eliminating potential impacts of the listing expenses relating to
the Share Offer and in comparing financial results across accounting periods and to those of our
peer companies. The following table sets forth the reconciliation between the profit for the year
and the adjusted profit (Non-IFRS measures) for the years indicated:
Y ear ended 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Profit for the year 26,396 21,798 5,038
Listing expenses 2,018 9,975 5,260
Adjusted profit for the year (Non-IFRS
measures) (1) 28,414 31,773 10,298
Note:
(1) Adjusted profit for the year (Non-IFRS measures) is calculated by profit for the year excluding listing
expenses. The term adjusted profit for the year (Non-IFRS measures) is not defined under IFRS.
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SELECTED LINE ITEMS IN THE CONSOLIDATED STATEMENTS OF PROFIT OR
LOSS AND OTHER COMPREHENSIVE INCOME
Revenue
During the Track Record Period, our revenue was mainly generated from the sales of tray
and tray related products. Our total revenue amounted to approximately HK$202.9 million,
HK$257.6 million and HK$189.0 million for the year ended 31 December 2021, 2022 and 2023
respectively. The increase in the revenue from approximately HK$202.9 million for the year
ended 31 December 2021 to approximately HK$257.6 million for the year ended 31 December
2022 was mainly attributable to the increase in the revenue generated from the PRC market with
significant increase in sales volume and slight increase in average selling price for tray and tray
related products. Our revenue decreased by approximately HK$68.6 million from approximately
HK$257.6 million for the year ended 31 December 2022 to approximately HK$189.0 million for
the year ended 31 December 2023. The decrease in revenue was mainly attributable to the
decrease in sales volume of our tray and tray related products in the PRC, Taiwan and the
United States as a result of the temporary slowdown in the semiconductor industry in 2023 due
to factors such as geopolitical tensions and the global macroeconomic downturn. In particular,
the CAC’s ban on operators of key infrastructure in the PRC to procure semiconductors from
one of our major customers based in the United States had contributed to our deteriorated
financial performance in the year. The market size of the global semiconductor industry
decreased by approximately 8.1% in 2023. During the Track Record Period, the sales volume for
tray and tray related products in the PRC increased by approximately 12.7% from approximately
7.1 million for the year ended 31 December 2021 to approximately 8.0 million for the year
ended 31 December 2022 and decreased by approximately 16.3% to approximately 6.7 million
for the year ended 31 December 2023. The average selling price of tray and tray related products
in the PRC also slightly increased from RMB6.51 (approximately HK$7.83 at the then prevailing
exchange rate) for the year ended 31 December 2021 to RMB6.77 (approximately HK$7.83 at
the then prevailing exchange rate) for the year ended 31 December 2022 while we recorded a
slightly lower average selling price of tray and tray related products in the PRC of RMB6.63
(approximately HK$7.30 at the then prevailing exchange rate) for the year ended 31 December
2023, which was maintained at a lower level than that in the overseas countries at HK$8.06,
HK$9.03 and HK$8.70 for the respective years given the competition in price in the PRC as a
market strategy to maintain our market presence in the PRC. The increase in the average selling
price of tray and tray related products in the year ended 31 December 2022 was because we sold
more customised products in the year with higher unit price which were more sought-after along
with the market growth while the decrease in the average selling price of tray and tray-related
products in the year ended 31 December 2023 was because less customers requested our
customised products with higher unit price in the year as a result of market downturn and
lukewarm market sentiments.
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By product category
Our major products can be grouped into three categories, namely (i) tray and tray related;
(ii) MEMS and sensor packaging; and (iii) carrier tape. The table below sets forth the breakdown
of our revenue by our product categories during the Track Record Period:
Y ear ended 31 December
2021 2022 2023
Revenue % of total Revenue % of total Revenue % of total
HK$’000 % HK$’000 % HK$’000 %
Product category
Tray and tray related 195,429 96.3 246,954 95.9 172,250 91.2
MEMS and sensor packaging 7,152 3.5 10,092 3.9 16,508 8.7
Carrier tape 367 0.2 519 0.2 211 0.1
Total 202,948 100.0 257,565 100.0 188,969 100.0
Sales of tray and tray related products generated a substantial portion of our revenue,
accounting for approximately 96.3%, 95.9% and 91.2% of our total revenue for the year ended
31 December 2021, 2022 and 2023, respectively.
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By geographical locations
For each of the three years ended 31 December 2023, approximately 35.6%, 35.6% and
36.6% of our sales was derived from sales in Southeast Asia, respectively, while we also sold
our products to the PRC, Taiwan, Hong Kong, Korea and Japan and overseas markets including
the United States and Europe. The following table sets forth our revenue from geographical
locations for the year indicated:
Y ear ended 31 December
2021 2022 2023
Revenue % of total Revenue % of total Revenue % of total
HK$’000 % HK$’000 % HK$’000 %
Southeast Asia 72,219 35.6 91,694 35.6 69,152 36.6
Singapore 11,994 5.9 13,003 5.0 7,054 3.7
Malaysia 20,330 10.0 21,497 8.3 19,893 10.5
Indonesia 811 0.4 1,184 0.5 33 0.0
(Note)
Philippines 25,909 12.8 40,600 15.8 23,017 12.2
Thailand 13,175 6.5 15,410 6.0 19,155 10.2
PRC 55,495 27.3 62,647 24.3 49,342 26.1
Taiwan 39,195 19.3 59,159 23.0 33,982 18.0
The United States 16,782 8.3 20,059 7.8 4,906 2.6
Europe 3,433 1.7 8,248 3.2 14,027 7.4
Hong Kong, Korea and Japan 15,824 7.8 15,758 6.1 17,560 9.3
Total 202,948 100.0 257,565 100.0 188,969 100.0
Note: The percentage is minimal and represents less than 0.1% of our total revenue.
During the Track Record Period, Southeast Asia, which mainly included the Philippines,
Malaysia, Indonesia, Thailand and Singapore, was our largest market by geographical location,
accounting for approximately 35.6%, 35.6%, and 36.6% of our total revenue for the year ended
31 December 2021, 2022 and 2023, respectively. Our revenue generated from the Southeast Asia
market increased by approximately HK$19.5 million or 27.0% from approximately HK$72.2
million for the year ended 31 December 2021 to approximately HK$91.7 million for the year
ended 31 December 2022. Such increase was primarily attributable to (i) the continuous effect
from the acquisition of business of Customer D took place in 2021 and (ii) the increase in orders
placed by Customer B as such customer expanded its business scale by inventing a new model
of computer memory in November 2021 and increased their demand for our products since the
beginning of 2022. Furthermore, our Group established business relationship with a new
Indonesia-based branch of an existing customer and obtained more orders from such customer.
Our revenue generated from the Southeast Asia market decreased by approximately HK$22.5
million or 24.5%, from approximately HK$91.7 million for the year ended 31 December 2022 to
approximately HK$69.2 million for the year ended 31 December 2023. Such decrease was
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mainly attributable to the decrease in order intake from Customer D who adjusted its inventory
policy and moderated its orders in light of deteriorated demand for its products in Asia in the
period.
The sales of our products in the PRC contributed to approximately 27.3%, 24.3% and
26.1% of our total revenue for the years ended 31 December 2021, 2022 and 2023, respectively.
Our revenue generated in the PRC increased by approximately HK$7.1 million, or 12.8%
from approximately HK$55.5 million for the year ended 31 December 2021 to approximately
HK$62.6 million for the year ended 31 December 2022. Such increase was mainly driven by (i)
the increased sales orders from our existing customers in the PRC as a result of our expanded
range of product and service offering arose from our R&D initiatives and the expansion of
business scale of our customers; and (ii) new customers in the PRC engaged as a result of our
ongoing sales and marketing efforts during the year ended 31 December 2022, which increased
from 56 for the year ended 31 December 2021 to 68 for the year ended 31 December 2022. Our
growth in business scale in the PRC in FY2022 was also attributable to the favourable factors
brought forth by the trade war between the United States and China. For further details, please
refer to the section headed “Industry Overview – Market Outlook in Selected Regions – Growth
outlook of the back-end semiconductor transport media industry in the PRC” in this prospectus.
Our revenue generated in the PRC decreased by approximately HK$13.3 million, or 21.2% from
approximately HK$62.6 million for the year ended 31 December 2022 to approximately
HK$49.3 million for the year ended 31 December 2023. Such decrease was mainly attributable
to the general decrease in orders received from our major customers (including Customer C)
especially in the first quarter of 2023 which was primarily due to the temporary slowdown in the
semiconductor industry in 2023 due to factors such as geopolitical tensions and the global
macroeconomic downturn, which was partially offset by the expansion of customer base in the
PRC in the year ended 31 December 2023. During the year ended 31 December 2023, we had 27
new PRC customers as compared to the year ended 31 December 2022.
The sales of our products in Taiwan contributed to approximately 19.3%, 23.0% and 18.0%
of our total revenue for the year ended 31 December 2021, 2022 and 2023, respectively. Our
revenue generated in Taiwan increased by approximately increased by approximately HK$20.0
million, or 51.0%, from approximately HK$39.2 million for the year ended 31 December 2021 to
approximately HK$59.2 million for the year ended 31 December 2022. Such increase was mainly
attributable to the increase in orders placed by Customer A arising from its business growth and
one of our customers based in Taiwan, which acted as subcontractor for Customer B, increased
its purchase orders as a result of the expansion in scale of Customer B in the corresponding
period. Our revenue generated in Taiwan decreased by approximately HK$25.2 million, or 42.6%
for the year ended 31 December 2023, from approximately HK$59.2 million for the year ended
31 December 2022 to approximately HK$34.0 million for the year ended 31 December 2023.
Such decrease was mainly attributable to (i) the decrease in orders from Customer A in Taiwan
which experienced a decline in demand from its downstream customers as a result of the
temporary slowdown in the semiconductor industry in 2023 and (ii) the decrease in orders placed
by our customer in Taiwan which acted as a subcontractor for Customer B as there was a decline
in demand for the products of Customer B in the year.
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The sales of our products in the United States contributed to approximately 8.3%, 7.8% and
2.6% of our total revenue for the year ended 31 December 2021, 2022 and 2023, respectively.
Our revenue generated in the United States increased by approximately HK$3.3 million, or
19.6% from approximately HK$16.8 million for the year ended 31 December 2021 to
approximately HK$20.1 million for the year ended 31 December 2022. Such increase was
primarily attributable to the increase in orders from Customer B which were delivered in the
United States. Our revenue generated in the United States amounted to approximately HK$4.9
million for the year ended 31 December 2023. Such decrease was mainly attributable to the
decrease in demand from one of our major customers in the United States as a result of the
CAC’s ban on operators of key infrastructure in the PRC to procure semiconductors from such
customer based in the United States since the second quarter of 2023. For details, please refer to
the paragraphs headed “Business – Impact of the Trade War on our business” in this prospectus.
The sales of our products in Europe contributed to approximately 1.7%, 3.2% and 7.4% of
our total revenue for the year ended 31 December 2021, 2022 and 2023, respectively. Our
revenue generated in Europe increased by approximately HK$4.8 million, or 141.2% from
approximately HK$3.4 million for the year ended 31 December 2021 to approximately HK$8.2
million for the year ended 31 December 2022. Such increase was attributable to the increase in
orders received from Customer D for our MEMS and sensor packaging which were delivered in
Europe during the year ended 31 December 2022. Our revenue generated in Europe increased by
approximately HK$5.8 million from approximately HK$8.2 million for the year ended 31
December 2022 to approximately HK$14.0 million for the year ended 31 December 2023. Such
increase was primarily attributable to the increase in orders placed by our existing customers as
we obtained new product qualifications for MEMS and sensor packaging.
The sales of our products in Hong Kong, Korea and Japan contributed to approximately
7.8%, 6.1% and 9.3% of our total revenue for the year ended 31 December 2021, 2022 and 2023,
respectively. Our revenue generated from Hong Kong, Korea and Japan remained stable at
approximately HK$15.8 million for the year ended 31 December 2021 and 2022. Our revenue
generated from Hong Kong, Korea and Japan increased slightly from approximately HK$15.8
million for the year ended 31 December 2022 to approximately HK$17.6 million for the year
ended 31 December 2023, primarily due to the increase in orders in Japan of approximately
HK$3.1 million for tray and tray related products as a result of the business expansion of a
customer in Japan for the year ended 31 December 2023.
FINANCIAL INFORMATION
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--- page 367 ---
Cost of sales
Our cost of sales primarily consists of cost of raw material, labour cost and manufacturing
overhead. During the Track Record Period, the breakdown of our cost of sales was as follows:
Y ear ended 31 December
2021 2022 2023
HK$’000 % HK$’000 % HK$’000 %
Raw material 55,176 47.5 73,623 47.3 48,939 41.8
Labour cost 22,572 19.4 32,023 20.6 24,699 21.1
Manufacturing overhead 38,524 33.1 50,041 32.1 43,351 37.1
Total 116,272 100.0 155,687 100.0 116,989 100.0
Our cost of sales amounted to approximately HK$116.3 million, HK$155.7 million and
HK$117.0 million for each of the year ended 31 December 2021, 2022 and 2023, respectively.
Our cost of sales represented approximately 57.3%, 60.4% and 62.0% of our total revenue for
each of the year ended 31 December 2021, 2022 and 2023, respectively.
Our cost of raw materials of approximately HK$55.2 million, HK$73.6 million and
HK$48.9 million for each of the year ended 31 December 2021, 2022 and 2023, respectively,
primarily consisted of the costs of raw plastic materials, recycled plastic materials and
re-compound plastic materials. The fluctuation in cost of raw materials was generally in line
with the fluctuation in our sales amount. Our Directors consider that our cost of raw material
consumed is affected by multiple factors such as the change in unit price of raw materials, the
yield rate of our production facilities and product mix required by our customers that it may not
be directly proportional to the increase or decrease in revenue and/or sales volume of our
products in the same period.
Our labour cost of approximately HK$22.6 million, HK$32.0 million and HK$24.7 million
for each of the year ended 31 December 2021, 2022 and 2023, respectively, primarily consisted
of the salaries for our manufacturing staff.
Our manufacturing overhead of approximately HK$38.5 million, HK$50.0 million and
HK$43.4 million for each of the year ended 31 December 2021, 2022 and 2023, respectively,
primarily comprised depreciation expenses of property, plant and equipment, water and
electricity, depreciation of right-of-use assets, packaging materials and consumables.
Please refer to the paragraph headed “Year to year comparison of results of operations” in
this section for a discussion of material changes in our Group’s cost of sales during the Track
Record Period.
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Gross profit and gross profit margin
The following table sets forth the breakdown of our gross profit and gross profit margin by
our product categories and geographical location during the Track Record Period:
Y ear ended 31 December
2021 2022 2023
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
Gross
profit
Gross
profit
margin
HK$’000 % HK$’000 % HK$’000 %
Product category
Tray and tray related 84,284 43.1 96,622 39.1 63,431 36.8
MEMS and sensor packaging 2,276 31.8 5,051 50.0 8,466 51.3
Carrier tape 116 31.6 205 39.5 83 39.3
Total 86,676 42.7 101,878 39.6 71,980 38.1
Y ear ended 31 December
2021 2022 2023
Gross
profit
Gross profit
margin
Gross
profit
Gross profit
margin
Gross
profit
Gross profit
margin
HK$’000 % HK$’000 % HK$’000 %
Geographical location
Southeast Asia 31,695 43.9 39,150 42.7 26,609 38.5
Singapore 5,677 47.3 5,208 40.1 2,806 39.8
Malaysia 7,622 37.5 6,630 30.8 6,416 32.3
Indonesia 217 26.7 180 15.1 6 19.8
Philippines 13,200 50.9 22,823 56.2 11,855 51.5
Thailand 4,979 37.8 4,309 28.0 5,526 28.8
PRC 23,436 42.2 20,213 32.3 14,104 28.6
Taiwan 17,002 43.4 23,733 40.1 13,488 39.7
The United States 6,324 37.7 8,476 42.3 2,532 51.6
Europe 1,281 37.3 4,035 48.9 6,880 49.0
Hong Kong, Korea and Japan 6,938 43.8 6,271 39.8 8,367 47.6
Total 86,676 42.7 101,878 39.6 71,980 38.1
FINANCIAL INFORMATION
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--- page 369 ---
For the years ended 31 December 2021, 2022 and 2023, our gross profit was approximately
HK$86.7 million, HK$101.9 million and HK$72.0 million, respectively. Gross profit from the
sale of tray and tray related products amounted to approximately HK$84.3 million, HK$96.6
million and HK$63.4 million, respectively. Gross profit from the sale of MEMS and sensor
packaging amounted to approximately HK$2.3 million, HK$5.1 million and HK$8.5 million,
respectively and gross profit from the sale of carrier tape accounted for approximately
HK$116,000, HK$205,000 and HK$83,000, respectively.
Please refer to the paragraph headed “Year to year comparison of results of operations” in
this section for a discussion of material changes in our Group’s gross profit and gross profit
margin during the Track Record Period.
Other income
The table below sets forth the breakdown of our Group’s other income during the Track
Record Period:
Y ear ended 31 December
2021 2022 2023
HK$’000 % HK$’000 % HK$’000 %
Government grants 56 75.7 919 97.0 56 38.6
Interest income 11 14.9 15 1.6 11 7.6
Sundry income 7 9.5 13 1.4 78 53.8
Total 74 100.0 947 100.0 145 100.0
Our Group’s other income mainly comprises government grants which represented subsidies
in response to COVID-19 for employment of the staff from the governments of Singapore, Hong
Kong and PRC, respectively. For the year ended 31 December 2021, the government grants in
the amount of approximately HK$56,000 represented the subsidies from the Job Support Scheme
from the Singapore government. For the year ended 31 December 2022, we recorded government
grants in the amount of approximately HK$0.9 million, which represented the government grant
from the Employment Support Scheme from the Hong Kong government and other government
subsidies from the PRC government. For the year ended 31 December 2023, we recorded
government grants in the amount of approximately HK$56,000 which represented government
subsidies from the PRC government. Please refer to the paragraph headed “Year to year
comparison of results of operations” in this section for a discussion of material changes in our
Group’s other income during the Track Record Period.
FINANCIAL INFORMATION
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--- page 370 ---
Other gains and losses
The table below sets forth the breakdown of our Group’s other gains and losses during the
Track Record Period:
Y ear ended 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Gain/(loss) on exchange differences, net 2,266 (6,403) (2,556)
Gain on fair value change of financial
assets at fair value through profit or
loss 416 349 411
Compensation income due to a fire
accident 6,111 – –
Loss of inventories due to fire accident (7,723) – –
Gain/(loss) on disposal for property, plant
and equipment – 87 (29)
1,070 (5,967) (2,174)
Our Group’s other gains and losses mainly comprises net gain/loss on exchange differences,
gain on fair value change of financial assets at fair value through profit or loss, compensation
income due to a fire accident and loss of inventories due to fire accident. Other gains amounted
to approximately HK$1.1 million for the year ended 31 December 2021, and we recorded other
losses of approximately HK$6.0 million for the year ended 31 December 2022, and we recorded
other losses of approximately HK$2.2 million for the year ended 31 December 2023.
For the year ended 31 December 2021, we recorded fair value gain on financial assets in
the amount of approximately HK$0.4 million and such gain represented the cash value of the life
insurance policy. For the year ended 31 December 2021, loss of inventories and compensation
income were due to a fire accident that occurred in our Shatian Warehouse in March 2021,
which is one-off in nature. Such fire accident caused damages to certain inventories in the
Shatian Warehouse with carrying amount of approximately HK$7.7 million. Our Group also
received compensation from the insurance company during the year ended 31 December 2021 in
the amount of approximately HK$6.1 million due to the fire accident.
For the year ended 31 December 2022, other losses were mainly attributable to the net loss
on exchange differences in the amount of approximately HK$6.0 million and such loss was
mainly due to the depreciation in Renminbi in FY2022.
For the year ended 31 December 2023, other losses were mainly attributable to the net loss
on exchange differences in the amount of approximately HK$2.6 million and such loss was
mainly due to the depreciation in Renminbi in FY2023.
FINANCIAL INFORMATION
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--- page 371 ---
Please refer to the paragraph headed “Year to year comparison of results of operations” in
this section for a discussion of material changes in our Group’s other gains and losses during the
Track Record Period.
Selling and distribution expenses
The table below sets forth the breakdown of our Group’s selling and distribution expenses
during the Track Record Period:
Y ear ended 31 December
2021 2022 2023
HK$’000 % HK$’000 % HK$’000 %
Shipping and
Freight-outbound fees 7,417 32.6 7,281 29.0 4,018 18.9
Bonded warehouse expenses 3,244 14.3 3,754 15.0 3,613 17.0
Travelling expenses 757 3.3 737 2.9 1,170 5.5
Business development
expenses 2,993 13.2 3,221 12.9 3,107 14.6
Depreciation expenses 352 1.6 288 1.1 75 0.4
Office expenses 1,805 7.9 1,722 6.9 1,776 8.3
Marketing expenses –––– 4 2 0 .2
Salary and commission 6,174 27.1 8,071 32.2 7,481 35.1
Total 22,742 100.0 25,074 100.0 21,282 100.0
Our Group’s selling and distribution expenses mainly comprises shipping and
freight-outbound fees, bonded warehouse expenses, business development expenses and salary
and commission. Our Group’s selling and distribution expenses of approximately HK$22.7
million, HK$25.1 million and HK$21.3 million, representing 11.2%, 9.7% and 11.3% of our total
revenue for the financial year ended 31 December 2021, 2022 and 2023, respectively.
Our shipping and freight-outbound fee of approximately HK$7.4 million, HK$7.3 million
and HK$4.0 million for the year ended 31 December 2021, 2022 and 2023, respectively,
primarily consisted of logistics fee to freight forwarder for delivery of our products.
Our bonded warehouse expenses of approximately HK$3.2 million, HK$3.8 million and
HK$3.6 million for the year ended 31 December 2021, 2022 and 2023, respectively, primarily
consisted of the rental of our oversea consignment warehouses.
Our business development expenses of approximately HK$3.0 million, HK$3.2 million and
HK$3.1 million for the year ended 31 December 2021, 2022 and 2023, respectively, primarily
consisted of promotion and entertainment expenses incurred by our sales and marketing
personnel.
FINANCIAL INFORMATION
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--- page 372 ---
Our salary and commission of approximately HK$6.2 million, HK$8.1 million and HK$7.5
million for the year ended 31 December 2021, 2022 and 2023, respectively, which remained
stable during the year ended 31 December 2021, 2022 and 2023, primarily consisted of the
salary and commission paid to our sales and marketing personnel.
Please refer to the paragraph headed “Year to year comparison of results of operations” in
this section for a discussion of material changes in our Group’s selling and distribution expenses
during the Track Record Period.
Administrative expenses
The table below sets forth the breakdown of our Group’s administrative expenses during the
Track Record Period:
Y ear ended 31 December
2021 2022 2023
HK$’000 % HK$’000 % HK$’000 %
Staff cost and benefits 17,436 73.2 19,030 73.0 20,645 74.7
Travelling expenses 150 0.6 291 1.1 769 2.8
Depreciation 712 3.0 714 2.7 840 3.0
Government rent and rates
and building management
fee 1,761 7.4 20 0.1 37 0.1
Professional fee 1,223 5.1 1,968 7.5 2,465 8.9
Bank charges 1,033 4.3 1,287 4.9 944 3.4
Office expenses 754 3.2 1,386 5.3 988 3.6
Others 758 3.2 1,395 5.4 952 3.5
Total 23,827 100.0 26,091 100.0 27,640 100.0
Our Group’s administrative expenses mainly comprises staff cost and benefits, government
rent and rates and building management fee and professional fee. Our administrative expenses
amounted to approximately HK$23.8 million, HK$26.1 million and HK$27.6 million for each of
the year ended 31 December 2021, 2022 and 2023, respectively. As a percentage of our total
revenue, our administrative expenses accounted for approximately 11.7%, 10.1% and 14.6%
during the Track Record Period.
Our staff cost and benefits of approximately HK$17.4 million, HK$19.0 million and
HK$20.6 million for each of the year ended 31 December 2021, 2022 and 2023, respectively,
primarily consisted of wages and salaries, pension scheme contributions, other staff benefits and
emoluments for our executive Directors and remained stable during the Track Record Period.
FINANCIAL INFORMATION
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--- page 373 ---
Our government rent and rates and building management fee of approximately HK$1.8
million, HK$20,000 and HK$37,000 for each of the year ended 31 December 2021, 2022 and
2023, respectively, primarily consisted of office expenses, repair and maintenance, telephone
expenses and factory management fee.
Our professional fee of approximately HK$1.2 million, HK$2.0 million and HK$2.5 million
for each of the year ended 31 December 2021, 2022 and 2023, respectively, primarily consisted
of audit fee and consultancy fee for factory renovation.
Our office expenses of approximately HK$0.8 million, HK$1.4 million and HK$1.0 million
for each of the year ended 31 December 2021, 2022 and 2023, respectively, primarily consisted
of the utilities of our Hong Kong Office.
Other expenses of approximately HK$0.8 million, HK$1.4 million and HK$1.0 million for
each of the year ended 31 December 2021, 2022 and 2023, respectively, primarily consisted of
sundry and general office expenses which also includes the tax surcharge for instalment
payment. Our other expenses remained stable for the year ended 31 December 2021 and 2023.
The increase in the year ended 31 December 2022 was primarily due to an one-off cleaning fee
for the warehouse after the fire accident.
Please refer to the paragraph headed “Year to year comparison of results of operations” in
this section for a discussion of material changes in our Group’s administrative expenses during
the Track Record Period.
Finance costs
The table below sets forth the breakdown of our Group’s finance costs during the Track
Record Period:
Y ear ended 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Interest on:
– Bank borrowings and bank overdrafts 1,805 2,748 3,732
– Lease liabilities 1,404 1,348 1,052
3,209 4,096 4,784
During the Track Record Period, our finance costs were attributable to the interests on bank
borrowings and bank overdrafts our Group obtained to fund our business operations and the
interest on lease liabilities. Our finance costs amounted to approximately HK$3.2 million,
HK$4.1 million and HK$4.8 million for each of the year ended 31 December 2021, 2022 and
2023, respectively. For each of the year ended 31 December 2021, 2022 and 2023, our interest
FINANCIAL INFORMATION
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--- page 374 ---
on bank borrowings and bank overdrafts amounted to approximately HK$1.8 million, HK$2.7
million and HK$3.7 million, respectively, while the interest on lease liabilities amounted to
HK$1.4 million, HK$1.3 million and HK$1.1 million, respectively, both of which remained
relatively stable during the Track Record Period. For further details regarding our bank
borrowings, please refer to the paragraph headed “Indebtedness” below in this section.
Research and development expenses
During the Track Record Period, our research and development expenses were attributable
to retaining R&D and material engineers and engaging engineering consultants. Our research and
development expenses amounted to approximately HK$4.1 million, HK$4.3 million and HK$4.8
million for each of the year ended 31 December 2021, 2022 and 2023, respectively. For further
details regarding our research and development expenses, please refer to the paragraph headed
“Year to year comparison of results of operations” in this section for a discussion of material
changes in our Group’s research and development expenses during the Track Record Period.
Income tax expense (credit)
Y ear ended 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Income tax expense (credit) comprises:
Hong Kong Profits Tax (Note 1)
– Current year 5,434 6,154 970
– Underprovision in prior years – – 769
PRC Enterprise Income Tax (“ EIT”) (Note 2)
– Current year – 44 16
Singapore Corporate Income Tax
– Current year – 44 45
Deferred tax 14 (1,042) (182)
5,448 5,200 1,618
Notes:
1. Under the two-tiered profits tax rates regime of Hong Kong Profit Tax, the first HK$2 million of profits of the
qualifying group entity will be taxed at 8.25%, and profits above HK$2 million will be taxed at 16.5%. The
profits of group entities not qualifying for the two-tiered profits tax rates regime will continue to be taxed at a
flat rate of 16.5%. Accordingly, for the Track Record Period, the Hong Kong Profits Tax of the qualifying group
entity is calculated at 8.25% on the first HK$2 million of the estimated assessable profits and at 16.5% on the
estimated assessable profits above HK$2 million.
FINANCIAL INFORMATION
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--- page 375 ---
2. Under the Law of the PRC on EIT (the “ EIT Law”) and Implementation Regulation of the EIT Law, the tax rate
of the PRC subsidiaries is 25% for the Track Record Period, except for certain of the subsidiaries are qualified as
small and micro enterprises. For the year ended 31 December 2022, small and micro enterprises were entitled to
tax rates of 2.5% on taxable income for the first RMB1,000,000 and tax rate of 5% on taxable income for the
subsequent RMB1,000,000 to RMB3,000,000. For the year ended 31 December 2023, small and micro enterprises
were entitled to tax rates of 5% on taxable income for the first RMB3,000,000.
Y ear ended 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Profit before taxation 31,844 26,998 6,656
Tax at applicable tax rate of 16.5% 5,254 4,455 1,098
Tax effect of income not taxable for tax
purpose (1,086) (184) (155)
Tax effect of expenses not deductible for tax
purpose 1,455 1,506 1,097
Others (Note) – – (1,014)
Tax concession (10) (412) (12)
Tax effect on two-tiered tax rate (165) (165) (165)
Underprovision in prior years – – 769
Income tax expense for the year 5,448 5,200 1,618
Note: The amount represents the temporary differences between the carrying amounts of right-of-use assets and lease
liabilities as at 31 December 2023. The temporary differences in respect of the carrying amounts between
right-of-use assets and lease liabilities were not significant as at 31 December 2021, 2022 and 2023.
Our Group recorded effective tax rates of approximately 17.1%, 19.3% and 24.3% for the
years ended 31 December 2021, 2022 and 2013, respectively. The effective tax rate for the year
ended 31 December 2021 was generally in line with the statutory profits tax rate of 16.5%. The
effective tax rates for years ended 31 December 2022 and 2023 were higher than the statutory
tax rate of 16.5%, which was primarily attributable to the tax effects of non-deductible expenses
incurred during the years ended 31 December 2022 and 2023.
Historical Offshore Profits Claim and relevant tax provisions made
UBoT Inc. (HK) had lodged the Offshore Profits Claim on its whole trading profits arising
from its business operations on the grounds that the relevant business transactions were effected
outside Hong Kong from the years of assessment 2008/09 to 2021/22. The Offshore Profits
Claim was formally withdrawn by UBoT Inc. (HK) in July 2023.
The IRD had been reviewing UBoT Inc. (HK)’s Offshore Profits Claim and had been
issuing follow-up enquiry letters to UBoT Inc. (HK) to challenge its offshore profits claim
position. The IRD had issued the Protective Assessments to UBoT Inc. (HK) for time-barred
FINANCIAL INFORMATION
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--- page 376 ---
years from the year of assessment 2008/09 up to the year of assessment 2016/17. Before the
Withdrawal, though UBoT Inc. (HK) had lodged objections on the Protective Assessments with
the IRD, UBoT Inc. (HK) also purchased tax reserve certificates, made relevant tax payments in
accordance with the protective Profits Tax assessments by installments, and made respective tax
provision in the relevant years of assessment based on the stringent approach adopted by the
IRD, with the assistance and advice from the independent Tax Consultant to cooperate with the
IRD.
As advised by the Tax Consultant, the tax provisions made at the material time has duly
taken into account the potential profits tax liabilities arising from the tax issues in dispute
between the IRD and UBoT Inc. (HK), and therefore is adequate in case the IRD disallows
UBoT Inc. (HK)’s offshore profits claim for the relevant years of assessment. For more details,
please refer to the paragraphs headed “Business – Historical Offshore Profits Claim and
depreciation allowance” in this prospectus.
The profit/(loss) before tax contributed by UBoT Inc. (HK) during the Track Record Period
was approximately HK$28,635,000, HK$29,214,000 and HK$(5,896,000) for the year ended 31
December 2021, 2022 and 2023 respectively, accounting for approximately 89.9%, 108.2% and
(88.6%) of the profit before tax of our Group for the corresponding year, respectively. The net
profit contributed by UBoT Inc. (HK) was more than 100% of the profit before tax of our Group
for the year ended 31 December 2022 mainly because UBoT Enterprise incurred losses before
tax in the relevant period and such loss offset part of the net profit contributed by UBoT Inc.
(HK) in calculating net profits on group level. For details, please refer to the paragraphs headed
“Profitability of UBoT Enterprise” in this section below.
Profitability of UBoT Enterprise
UBoT Enterprise incurred losses before tax of approximately HK$3.4 million and HK$6.0
million for FY2021 and FY2022 and profit before tax of approximately HK$2.7 million for
FY2023, respectively, while UBoT Inc. (HK) recorded profits before tax of HK$28.6 million and
HK$29.2 million for FY2021 and FY2022 and loss before tax of HK$5.9 million for FY2023,
respectively.
As confirmed by our Directors and the Reporting Accountants, for the year ended 31
December 2021, UBoT Enterprise recorded a net loss approximately HK$3.4 million which
mainly arose from (i) loss of inventories due to the fire accident occurred in our Shatian
Warehouse in March 2021; (ii) the administrative expenses incurred in relation to the
commencement of operation of the Houjie Production Factory; and (iii) the appreciation of
Renminbi which adversely affected the revenue generated from the related party transactions
between UBoT Enterprise and UBoT Inc. (HK) due to the settlement currency were Hong Kong
dollars or US Dollars.
Given that the fluctuation of the exchange rate would affect the financial performance of
UBoT Enterprise and unpredictability of the trend of the exchange rate, our Directors adjusted
the settlement currency of the related party transactions between UBoT Enterprise and UBoT
FINANCIAL INFORMATION
– 364 –


--- page 377 ---
Inc. (HK) from Hong Kong dollars to Renminbi in January 2022 in order to eliminate the impact
of the fluctuation of the exchange rate. For the year ended 31 December 2022, UBoT Enterprise
recorded a net loss of approximately HK$6.0 million which mainly arose from (i) the increase in
the price of raw materials in the PRC as the suppliers of our Group increased the price to offset
the exchange difference from the depreciation of Renminbi as the PRC suppliers mainly sourced
raw materials from overseas companies; and (ii) loss in exchange difference of approximately
RMB1.9 million arose from its short-term amounts due to UBoT Inc. (HK) for operational
purpose on its current accounts as the value of Renminbi depreciated against other currencies
during the period.
YEAR TO YEAR COMPARISON OF RESULTS OF OPERATIONS
Y ear ended 31 December 2023 compared to year ended 31 December 2022
Revenue
Our revenue decreased by approximately 26.6% from approximately HK$257.6 million for
the year ended 31 December 2022 to approximately HK$189.0 million for the year ended 31
December 2023. The decrease was primarily due to the decrease in sales order of tray and tray
related products by approximately 26.4% from approximately 28.4 million units in FY2022 to
approximately 20.9 million units in FY2023 mainly attributable to a decrease in order intake
from (i) our customers in the PRC and Southeast Asia due to the temporary slowdown in the
semiconductor industry in 2023 due to factors such as geopolitical tensions and the global
macroeconomic downturn; (ii) our sale in the United States as the orders received from one of
our major customers decreased significantly as a result of the CAC’s ban on operators of key
infrastructure in the PRC to procure semiconductors from such customer based in the United
States since the second quarter of 2023 and; (iii) the decrease in orders placed by the customers
in Taiwan as a result of decline in demand for such products. In particular, the market size of the
global semiconductor industry decreased by approximately 8.1% in 2023. The decrease in
revenue was partially offset by an increase in sales of our MEMS and sensor packaging. Our
Directors consider that such decrease was attributed by the slowdown in the semiconductor
industry in the year ended 31 December 2023 due to factors such as geopolitical tensions and
the global macroeconomic downturn, which was a short-term adjustment of the semiconductor
industry and is not expected to be long-term in nature. Please refer to the section headed
“Industry Overview – Global Market Size of Semiconductor Industry” for more details.
Cost of sales
Our cost of sales decreased by approximately 24.9% from approximately HK$155.7 million
for the year ended 31 December 2022 to approximately HK$117.0 million for the year ended 31
December 2023. The decrease was the combined effect of the decrease in our cost of raw
materials, labour costs and manufacturing overhead during the year ended 31 December 2023
which was in line with the consequential reduction in our production activities from our
decrease in sales. Our cost of sales for the year ended 31 December 2023 showed a smaller
FINANCIAL INFORMATION
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--- page 378 ---
extent of decrease as compared to our decrease in revenue primarily because part of our
manufacturing overheads remained at similar level despite the decrease in production level.
Gross profit and gross profit margin
Our gross profit decreased by approximately 29.7% from approximately HK$101.9 million
for the year ended 31 December 2022 to approximately HK$72.0 million for the year ended 31
December 2023 and our gross profit margin decreased slightly from 39.6% for the year ended 31
December 2022 to 38.1% for the year ended 31 December 2023. The decrease in our gross profit
for the year ended 31 December 2023 was in line with our decrease in sales order of tray and
tray related products. The decrease in gross profit margin was mainly because we sold less
customised products with relatively higher unit price in order to cater to our customers’ business
needs, which was partially mitigated by the increase in proportion of sales volume for MEMS
and sensor packaging for the year ended 31 December 2023, which had relatively a higher gross
profit margin.
Other income
Our other income decreased by approximately 84.7% from approximately HK$0.9 million
for the year ended 31 December 2022 to approximately HK$0.1 million for the year ended 31
December 2023. The decrease was primarily due to the decrease in government grants due to no
one-off COVID-19 related subsidies was granted including (i) the Employment Support Scheme
launched by the Hong Kong government; and (ii) the Job Support Scheme launched by
Singapore government received.
Other gains and losses
We recorded other losses of approximately HK$6.0 million for year ended 31 December
2022 and approximately HK$2.2 million for the year ended 31 December 2023. The change was
primarily due to the decrease in the net loss in exchange differences in the amount of HK$2.6
million due to the depreciation of Renminbi during the year.
Selling and distribution expenses
Our selling and distribution expenses decreased by approximately 15.1% from
approximately HK$25.1 million for the year ended 31 December 2022 to approximately
HK$21.3 million for the year ended 31 December 2023. The decrease was the combined effect
of the decrease in our shipping and freight-outbound fee after the negative effects from the
COVID-19 pandemic which caused the increase in fees further subsided, which was partially
offset by the increase in travelling expenses with the uplift of most of the travel restrictions in
2023 as we continued our sales and marketing effort despite the slowdown of the market during
the year.
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Administrative expenses
Our administrative expenses slightly increased by approximately 5.7% from approximately
HK$26.1 million for the year ended 31 December 2022 to approximately HK$27.6 million for
the year ended 31 December 2023. This was mainly because (i) our staff costs and benefits
increased as we engaged experienced personnel for business development in Southeast Asia and
(ii) the increase in travelling expenses associated with the establishment of our Shanghai Office.
Finance costs
Our finance costs increased by approximately 16.8% from approximately HK$4.1 million
for the year ended 31 December 2022 to approximately HK$4.8 million for the year ended 31
December 2023. The increase was primarily attributable to the increase in applicable interest
rate of our bank borrowings due to the increase in HIBOR following the decision made by the
Hong Kong Monetary Authority in respect of the upward adjustment of the base rate to
approximately 4.75% to 5.75% in 2023 as compared to 0.75% to 4.75% in 2022 as a result of
the rise in the benchmark federal funds rate during the relevant period.
Research and development expenses
Our research and development expenses increased by approximately 12.9% from
approximately HK$4.3 million for the year ended 31 December 2022 to approximately HK$4.8
million for the year ended 31 December 2023. The increase was primarily attributable to the
increase in product development requests for our carrier tape products as we continued our
product development efforts in the year.
Profit for the year
As a result of the foregoing, our profit for the year decreased by approximately 76.7% from
approximately HK$21.8 million for the year ended 31 December 2022 to approximately HK$5.0
million for the year ended 31 December 2023. The decrease in profitability in the year ended 31
December 2023 was because our operating expenses remained at similar level as compared to
the year ended 31 December 2022 when our revenue decreased for approximately 26.6%. Our
profit for the year was affected by our selling and distribution expenses of approximately
HK$21.3 million and administrative expenses of approximately HK$27.6 million, which are less
variable in nature and accounted for approximately 29.6% and 38.4% for our gross profit,
respectively, as well as the effect of one-off listing expenses of approximately HK$5.3 million
and accounted for approximately 7.3% of our gross profit. Our net profit margin has decreased
from 8.5% for the year ended 31 December 2022 to 2.7% for the year ended 31 December 2023.
For details, please refer to the paragraphs headed “Financial Information – Historical
Financials”.
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Non-IFRS measures – Adjusted profit and adjusted profit margin for the year
Our adjusted profit (Non-IFRS measures) for the year decreased by approximately 67.6%
from approximately HK$31.8 million for the year ended 31 December 2022 to approximately
HK$10.3 million for the year ended 31 December 2023 as a result of our decrease in sales of
tray and tray related products in the year. Our adjusted profit margin (Non-IFRS measures)
decreased from approximately 12.3% for the year ended 31 December 2022 to approximately
5.5% for the year ended 31 December 2023, which was in line with our decrease in our gross
profit margin.
Y ear ended 31 December 2022 compared to year ended 31 December 2021
Revenue
Our revenue increased by approximately 26.9% from approximately HK$202.9 million for
the year ended 31 December 2021 to approximately HK$257.6 million for the year ended 31
December 2022. The increase was primarily due to the increase in sales orders from our
customers as a result of (i) expansion of business scale of our customers; (ii) our expanded
range of product and service offering arose from our R&D efforts and (iii) the global recovery
from the COVID-19 pandemic, and the engagement of new customers during the year ended 31
December 2022 as a result of our ongoing sales and marketing efforts. Given that our products
and services are in complementary demand with the products offered by our customers, the
expansion of business by our customers generally positively affects the demand for our products
and services.
Cost of sales
Our cost of sales increased by approximately 33.9% from approximately HK$116.2 million
for the year ended 31 December 2021 to approximately HK$155.7 million for the year ended 31
December 2022. The increase was the combined effect of the increase in our cost of raw
materials, labour cost and manufacturing overhead during the year ended 31 December 2022 in
line with our growth in sales volume. The increase in our cost of raw materials was mainly
attributable to the increase in our sales volume and the increase in price of our raw materials.
The increase in our labour cost was primarily because we employed more staff in connection
with the commencement of operation of the Houjie Production Factory in June 2021 and the
effect of the acquisition of UBOTIC MEMS into our Group in 2022.
Gross profit and gross profit margin
Our gross profit increased by approximately 17.5% from approximately HK$86.7 million
for the year ended 31 December 2021 to approximately HK$101.9 million for the year ended 31
December 2022 and our gross profit margin decreased from 42.7% for the year ended 31
December 2021 to 39.6% for the year ended 31 December 2022. The increase in our gross profit
was due to our increase in sales volume and revenue and economies of scale were achieved as
labour cost and manufacturing overhead remained relatively stable and we sold more customised
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products with a relatively higher unit price in the year while the decrease in gross profit margin
was primarily due to the increase in the price of raw materials which was partially offset by the
increase in our average selling price.
Other income
Our other income increased by over 1,179.7% from approximately HK$74,000 for the year
ended 31 December 2021 to approximately HK$0.9 million for the year ended 31 December
2022. The increase was primarily due to the increase in government grant from the Employment
Support Scheme from the Hong Kong government in the amount of approximately HK$0.6
million and other government subsidies from the PRC government in the amount of
approximately HK$0.2 million.
Other gains and losses
We recorded to other losses of approximately HK$6.0 million for the year ended 31
December 2022 as compared to other gains of approximately HK$1.1 million for the year ended
31 December 2021. The change was due to the increase in the net loss in exchange differences
in the amount of approximately HK$6.4 million due to the depreciation in Renminbi in FY2022.
Selling and distribution expenses
Our selling and distribution expenses increased 10.3% from approximately HK$22.7 million
for the year ended 31 December 2021 to approximately HK$25.1 million for the year ended 31
December 2022. The increase was the combined effect of: (i) the increase in our bonded
warehouse expenses which was attributable to the increase in rates of bonded warehouses and
the increase in our sales volume; (ii) the increase in our salary and commission arising from the
increase in sales commission for sales representative in line with our growth in sales, which was
partially offset by (iii) the decrease in our shipping and freight-outbound fee after the negative
effects from the COVID-19 pandemic gradually subsided.
Administrative expenses
Our administrative expenses increased from approximately HK$23.8 million for the year
ended 31 December 2021 to approximately HK$26.1 million for the year ended 31 December
2022. For the year ended 31 December 2022, despite the decrease in our government rent and
rates and building management fee as our Group stopped engaging building management service
in our production facilities, our administrative expenses increased as compared to the year ended
31 December 2021 because of the increase in our staff costs and benefits as the headcount of our
Group increased and the one-off expense of cleaning fee for the warehouse after the fire
accident.
FINANCIAL INFORMATION
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Finance costs
Our finance costs increased by approximately 27.6% from approximately HK$3.2 million
for the year ended 31 December 2021 to approximately HK$4.1 million for the year ended 31
December 2022. The increase was primarily attributable to the increase in applicable interest
rate of our bank borrowings during the relevant period.
Research and development expenses
Our research and development expenses increased by approximately 4.0% from
approximately HK$4.1 million for the year ended 31 December 2021 to HK$4.3 million for the
year ended 31 December 2022. The increase was primarily attributable to the pay rise for certain
key engineers and recruitment costs for research and development staff in the PRC.
Profit for the year
Our profit for the year decreased by approximately 17.4% from approximately HK$26.4
million for the year ended 31 December 2021 to approximately HK$21.8 million for the year
ended 31 December 2022 primarily because of the effect of the listing expenses which are of a
non-recurring nature. Our net profit margin decreased from 13.0% for the year ended 31
December 2021 to 8.5% for the year ended 31 December 2022.
Non-IFRS measures – Adjusted profit and adjusted profit margin for the year
Our adjusted profit (Non-IFRS measures) for the year increased by approximately 11.8%
from approximately HK$28.4 million for the year ended 31 December 2021 to approximately
HK$31.8 million for the year ended 31 December 2022 after removing the effect of the listing
expenses which are of a non-recurring nature. Such increase was in line with our increase with
our gross profit as mentioned above. Our adjusted profit margin (Non-IFRS measures) decreased
from approximately 14.0% for the year ended 31 December 2021 to approximately 12.3% for the
year ended 31 December 2022, which was in line with our decrease in our gross profit margin.
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NET CURRENT ASSETS AND CURRENT LIABILITIES
We recorded net current liabilities of approximately HK$11.7 million as at 31 December
2021 and net current assets of approximately HK$6.7 million and HK$9.8 million as at 31
December 2022 and 31 December 2023, respectively. The following table sets forth a breakdown
of our current assets, current liabilities, and net current assets/liabilities as at the dates indicated:
As at 31 December
As at
31 March
2021 2022 2023 2024
HK$’000 HK$’000 HK$’000 HK$’000
(unaudited)
Current assets
Inventories 60,113 60,701 65,588 62,713
Trade and other receivables,
deposits and prepayments 63,215 63,320 51,717 53,797
Financial assets at fair value
through profit or loss 12,968 13,335 13,748 13,878
Amount due from a director 10,620 6,318 6,318 3,192
Amount due from a related
company 2,954 – – –
Time deposits ––––
Bank balances and cash 2,323 5,900 1,073 1,214
152,193 149,574 138,444 134,794
Current liabilities
Trade and other payables 75,648 52,741 55,828 54,619
Contract liabilities 340 62 20 16
Income tax provision 20,927 25,390 14,171 9,815
Bank overdrafts 3,261 – 2,932 2,973
Lease liabilities 10,097 7,002 7,670 7,748
Bank borrowings 53,599 57,680 48,064 46,875
163,872 142,875 128,685 122,046
Net current (liabilities) assets (11,679) 6,699 9,759 12,748
Our current assets during the Track Record Period mainly consists of inventory, trade and
other receivables, deposits and prepayments, financial assets at fair value through profit or loss
and amount due from a director of approximately HK$60.1 million, HK$63.2 million, HK$13.0
million and HK$10.6 million as at 31 December 2021, approximately HK$60.7 million, HK$63.3
million, HK$13.3 million and HK$6.3 million as at 31 December 2022, and approximately
FINANCIAL INFORMATION
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HK$65.6 million, HK$51.7 million, HK$13.7 million and HK$6.3 million as at 31 December
2023. Our current liabilities during the Track Record Period mainly consists of trade and other
payables, bank borrowings and income tax provision of approximately HK$75.6 million,
HK$53.6 million and HK$20.9 million as at 31 December 2021, approximately HK$52.7 million,
HK$57.7 million and HK$25.4 million as at 31 December 2022, and approximately HK$55.8
million, HK$48.1 million and HK$14.1 million as at 31 December 2023, respectively.
Our Directors confirm that we had no default or delay in payment of trade and non-trade
payables and borrowings, and/or breaches of covenants during the Track Record Period that
would have a material impact on our business, financial conditions and results of operations. We
will keep on monitoring liquidity requirements on a regular basis to ensure that sufficient
working capital is maintained. Our net current liabilities position as at 31 December 2021 was
partly because we have used short-term bank loans and other borrowings to finance our capital
expenditure and in particular, HK$12.6 million of bank borrowings would be practically repaid
over one year after 31 December 2021, based on the repayment schedule and has been classified
as current liabilities as they had a repayment on demand clause. The level of our net current
liabilities as at 31 December 2021 was also subject to the effect of income tax provision of
approximately HK$20.9 million in relation to the historical Offshore Profits Claim made before
the Withdrawal.
Our net current assets increased from approximately HK$9.8 million as at 31 December
2023 to HK$12.7 million (unaudited) as at 31 March 2024, which was primarily due to the
decrease in income tax provisions of approximately HK$4.4 million.
DESCRIPTION ON MAJOR COMPONENTS OF STATEMENTS OF FINANCIAL
POSITION
Property, plant and equipment
During the Track Record Period, our property, plant and equipment consisted mainly of
plant and machineries, moulds, fixture, furniture and equipment, leasehold improvements and
construction in progress. As at 31 December 2021, 2022 and 2023, the book value of our
property, plant and equipment were approximately HK$37.2 million, HK$41.2 million and
HK$44.0 million, respectively. Such increase was mainly because we acquired more moulds for
the production of our tray and tray related products.
FINANCIAL INFORMATION
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Inventories
Inventories primarily comprise raw materials, work in progress and finished goods. The
following table sets out the breakdown at our inventories as at the dates indicated which were
stated at cost, as well as our inventory turnover days for the periods indicated:
As at 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Raw materials 22,921 17,052 14,546
Work in progress 5,709 10,819 11,808
Finished goods 31,483 32,830 39,234
60,113 60,701 65,588
Our inventories remained stable, amounting to approximately HK$60.7 million as at 31
December 2022, as compared to approximately HK$60.1 million as at 31 December 2021. Our
inventories as at 31 December 2023 increased to approximately HK$65.6 million due to the
increase in finished goods from approximately HK$32.8 million as at 31 December 2022 to
approximately HK$39.2 million as at 31 December 2023 due to the prolonged distribution
schedule requested by our customer with the decrease in demand of the end customers for their
products.
The following table sets forth the inventory turnover days for the periods indicated:
Y ear ended 31 December
2021 2022 2023
Inventory turnover days
(1) 155 142 197
Note:
(1) Inventory turnover days is derived by dividing the average of inventory at the beginning of the period and
inventory at the end of the period (both net of provision) by the cost of sales for the relevant period and
then multiplied by the number of calendar days in that period.
Inventory turnover days slightly decreased to 142 days as at 31 December 2022 as
compared to 155 days as at 31 December 2021 as a result of the adjustment to inventory control
of our Group since the alleviation of the COVID-19 pandemic. Inventory turnover days
increased to 197 days as at 31 December 2023 due to the increase in inventory level arising
from the prolonged distribution schedule requested by our customers with the decrease in
demand of the end customers for their products and the decrease in cost of sales level because of
lower production volume. As at 31 December 2023, approximately 33.0% of finished goods was
FINANCIAL INFORMATION
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held in our overseas bonded warehouses under consignment arrangement. As at the Latest
Practicable Date, over 90% of the inventories are supported by the purchase order.
The following table sets forth the ageing analysis of our Group’s inventories:
As at 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Raw materials: Within 30 days 9,766 7,374 4,747
31–60 days 1,147 1,982 2,236
61–90 days 1,430 804 926
91–180 days 1,388 2,782 1,373
181–270 days 136 894 820
271–365 days 336 662 796
Over 365 days 8,718 2,554 3,648
22,921 17,052 14,546
Work in progress: Within 30 days 5,709 10,819 11,808
5,709 10,819 11,808
Finished goods: Within 30 days 16,912 13,114 14,859
31–60 days 5,514 8,110 7,406
61–90 days 2,590 2,777 2,632
91–180 days 3,247 3,615 5,862
181–270 days 1,756 2,224 2,436
271–365 days 454 1,143 3,323
Over 365 days 1,010 1,847 2,716
31,483 32,830 39,234
Total 60,113 60,701 65,588
As at 31 March 2024, approximately HK$40.8 million, accounting for approximately 62.2%
of our inventories as at 31 December 2023, was consumed or sold. Our Group has an inventory
policy to build sufficient inventory level to meet the demand of our overseas customers and to
avoid any disruption in the supply chain. Our Directors confirm that during the Track Record
Period there had not been recoverability issue for the inventories. Given that the unsold finished
goods are supported by customer’s demand forecast and impairment on overhead costs and direct
labour costs has been made, our Directors are of the view that sufficient inventory provision has
been made.
FINANCIAL INFORMATION
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Trade and other receivables, deposits and prepayments
Trade Receivables
During the Track Record Period, our trade receivables primarily represented trade
receivables from our customers for our products provided in ordinary course of business,
amounted to approximately HK$40.7 million and HK$41.1 million, net of allowance for credit
losses as at 31 December 2021 and 2022 respectively. Such increase was mainly due to the
increase in sales. Our trade receivables amount to approximately HK$32.7 million as at 31
December 2023. Such decrease was mainly attributable to decrease in sales. A provision of ECL
of HK$76,000 and HK$354,000 was provided for the years ended 31 December 2021 and 2022,
respectively and a reversal of ECL of HK$493,000 was recognised for the year ended 31
December 2023.
Ageing analysis of trade receivables
Our Group’s trading terms with customers include both on cash and on credit. The credit
term, if any, generally ranges from 0 to 90 days during the Track Record Period. For new
customers, payment in advance is normally required. Our Group seeks to maintain strict control
over its outstanding receivables. Overdue balances are reviewed regularly by our Directors.
The aging analysis of trade receivables, net of allowance for doubtful debts, based on the
invoice date, is as follows:
As at 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Within 30 days 20,858 19,835 13,807
31 days to 60 days 13,336 14,466 11,591
61 days to 90 days 5,506 5,623 5,788
91 days to 180 days 958 1,189 1,284
Over 180 days 8 – 272
Total 40,666 41,113 32,742
As at 1 January 2021, trade receivables from contracts with customers amounted to
approximately HK$29.9 million, net of allowance for doubtful debts.
At the end of the accounting period ending 31 December 2021, 2022 and 2023 respectively,
we reviewed trade receivables for evidence of impairment on both an individual and a collective
basis by past due basis. The provision of ECL for receivables is recognised based on the credit
history of its customers, indication of financial difficulties, default in payments, and current
market conditions. After the assessment performed by the management of the Company, a
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provision of ECL of approximately HK$0.1 million and HK$0.4 million was provided for the
years ended 31 December 2021 and 2022, respectively and a reversal of ECL of approximately
HK$0.5 million was recognised for the year ended 31 December 2023 due to the decrease of
gross carrying amount of trade receivables, which is a result of settlement of outstanding trade
receivables as at 31 December 2022 during the year ended 31 December 2023 and the decrease
in outstanding trade receivables at 31 December 2023. The management of the Company
consider that the trade debtors are of good credit quality.
Trade receivables turnover days
The following table sets out for the periods presented the turnover of our average trade
receivables:
Y ear ended 31 December
2021 2022 2023
Trade receivables turnover days
(Note) 63 58 71
Note: Trade receivables turnover days for a period equals the average of the opening and closing trade
receivables less the allowance for credit losses divided by revenue for the same period and multiplied by
the number of calendar days in that period.
Our trade receivables turnover days was 63 days, 58 days and 71 days respectively for the
years ended 31 December 2021 and 2022 and 2023. For the year ended 31 December 2023, our
trade receivables turnover days had increased to 71 days, which was mainly because our Group
extended the credit terms of Customer D from 45 days to 60 days as per their request since 1
January 2023.
Our trade receivables as at 31 December 2023 amounted to approximately HK$32.7
million, of which HK$31.1 million, or 95.0%, were subsequently settled as at 31 March 2024.
FINANCIAL INFORMATION
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Prepayments, deposits and other receivables
During the Track Record Period, our prepayments, deposits and other receivables mainly
represented other receivables and deposits, tax reserve certificate and prepaid expenses. As at 31
December 2021, 2022 and 2023, our prepayments, deposits and other receivables remained
stable, amounting to approximately HK$23.6 million, HK$24.1 million and HK$21.9 million,
respectively.
As at 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Other receivables and deposits 2,892 3,408 4,635
Value added tax recoverable 2,418 2,885 2,274
Other receivable from insurance
company 4,111 – –
Prepayments paid to suppliers 2,502 2,946 3,682
Prepaid expenses 4,180 4,576 4,855
Prepayments for listing expenses 497 404 1,438
Deferred issue costs 673 3,515 5,038
Tax reserve certificate 6,372 6,372 –
Total 23,645 24,106 21,922
HK$7.5 million, or 34.2% our prepayments, deposits and other receivables as at 31
December 2023 were subsequently settled as at 31 March 2024.
Financial assets at fair value through profit or loss
The financial assets at fair value through profit or loss represent unlisted investment in life
insurance contracts for Mr. Tong. UBoT Inc. (HK) is the beneficiary of such investments. The
carrying amounts represent the cash surrender value of the policies and approximate to their fair
values at the end of the reporting period.
During the Track Record Period, the financial assets at fair value through profit or loss was
approximately HK$13.0 million, HK$13.3 million, HK$13.7 million as at 31 December 2021,
2022 and 2023.
Amount due from related parties
The amount due from related parties consists of the amount due from a director and amount
due from a related company. The amount due from a director was approximately HK$10.6
million, HK$6.3 million and HK$6.3 million as at 31 December 2021, 2022 and 2023,
respectively. Such amount represents amount due from Mr. Tong, our executive Director and
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controlling shareholder primarily due to provision of funding to UBOTIC, HK$4.8 million of
which will be offset after UBOTIC MEMS entering into our Group and the rest will be offset
before Listing. The amount due from a related company was approximately HK$3.0 million, nil
and nil as at 31 December 2021, 2022 and 2023. Such amount represents amount due from
UBOTIC MEMS, which was controlled by Mr. Tong until our Group has acquired it from Mr.
Tong on 31 March 2022, which had been offset after UBOTIC MEMS entered into our Group.
As at 31 December 2021 and 2022 and 2023, all of our amounts due from related parties
were non-trade nature, unsecured, interest-free and repayable on demand.
Our Directors confirm that all the amounts (including the non trade balances) due from
related companies will be fully settled before Listing. For further details, please refer to Note 20
of the Accountants’ Report as set out in Appendix I to this prospectus.
Bank balances and cash
Our bank balances and cash increased from approximately HK$2.3 million as at 31
December 2021 to approximately HK$5.9 million as at 31 December 2022 and decreased to
approximately HK$1.1 million as at 31 December 2023. For details, please refer to the
paragraph headed “Indebtedness” in this section.
Certain of the cash and bank balances denominated in RMB were placed with banks in the
PRC. RMB is not freely convertible to other currencies. Under the PRC’s Foreign Exchange
Control Regulations and Administration of Settlement and Sales and Payment of Foreign
Exchange Regulations, our Group is permitted to exchange RMB for foreign currencies through
banks that are authorised to conduct foreign exchange business.
Trade and other payables
Trade payables
During the Track Record Period, our trade payables mainly represented trade payables to
our suppliers. The following sets forth our trade payables as at 31 December 2021, 2022 and
2023 respectively:
As at 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Trade payables
– third parties 44,699 33,050 36,495
– UBOTIC MEMS 6,863 – –
51,562 33,050 36,495
FINANCIAL INFORMATION
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Our trade payables decreased from approximately HK$51.6 million as at 31 December 2021
to approximately HK$33.1 million as at 31 December 2022 because the trade payables to
UBOTIC MEMS had been offset since we acquired UBOTIC MEMS in March 2022. Our trade
payables remained relatively stable at approximately HK$36.5 million as at 31 December 2023.
The credit period on purchases from suppliers is ranging from 0–120 days or payable upon
delivery.
Aging analysis of trade payables
The following table sets forth a summary of ageing of our trade payables based on the
invoice date is as follows:
As at 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Within 30 days 12,941 13,044 4,384
31 days to 60 days 8,421 7,652 5,299
61 days to 90 days 1,668 6,944 2,427
91 days to 180 days 2,762 3,212 12,531
181 days to 270 days 7,607 579 8,728
271 days to 365 days 3,521 608 2,472
Over 365 days 14,642 1,011 654
Total 51,562 33,050 36,495
The trade payables are short-term and hence the carrying values of the trade payables are
considered to be a reasonable approximation of fair value.
Trade payables turnover days
The following table sets out for the periods presented the turnover of our average account
payables:
Y ear ended 31 December
2021 2022 2023
Trade payables turnover days
(Note) 163 99 108
Note: Trade payables turnover days for a period equals the average of the opening and closing trade payables
balance divided by cost of sales for the same period and multiplied by the number of calendar days in that
period.
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The trade payables turnover days decreased from 163 days for the year ended 31 December
2021 to 99 days for the year ended 31 December 2022 primarily due to increased payments were
made according to business terms. The trade payables turnover days for the year ended 31
December 2023 remained relatively stable at 108 days.
Our trade payables as at 31 December 2023 amounted to approximately HK$36.5 million,
of which approximately HK$7.3 million, or 20.0%, had been settled as at 31 March 2024.
Payroll and retirement benefit plan payables
During the Track Record Period, our payroll and retirement benefit plan payables mainly
represented payroll and retirement benefit plan for our staff, amounting to approximately
HK$10.5 million as at 31 December 2021. Our payroll and retirement benefit plan payables
increased to approximately HK$10.9 million as at 31 December 2022, which was mainly
attributable to the increase in staff salary and benefits of our Group during the year ended 31
December 2022. Our payroll and retirement benefit plan payables decreased to approximately
HK$7.5 million as at 31 December 2023 as a result of the decrease in salary of the PRC staff as
a result of the reduction in production activities.
Accrued expenses
During the Track Record Period, our accrued expenses mainly represented audit fee,
consultancy fees and daily operation fee, such as sales point expenses and manufacturing
overhead. As at 31 December 2021, our accrued expenses amounted to approximately HK$4.4
million. Our accrued expenses decreased to approximately HK$3.8 million as at 31 December
2022, which was mainly attributable to the decrease in accrued consultancy fees. Our accrued
expenses decreased to approximately HK$3.4 million as at 31 December 2023 as a result of the
decrease in the one-off cleaning fee for the warehouse after the fire accident.
Accrued listing expenses
Accrued listing expenses were expenses in relation to the Listing, which were
approximately HK$1.7 million as at 31 December 2021, approximately HK$1.1 million as at 31
December 2022 and approximately HK$3.1 million as at 31 December 2023.
Payables for acquisition of property, plant and equipment
Our payables for acquisition of property, plant and equipment amounted to approximately
HK$3.9 million as at 31 December 2021. Our payables for acquisition of property, plant and
equipment decreased to approximately HK$0.8 million as at 31 December 2022, which was
mainly attributable to our settlement of payables during the year ended 31 December 2022. Our
payables for acquisition of property, plant and equipment increased to approximately HK$0.8
million as at 31 December 2023, which was mainly due to our investments in moulds for
production based on the number of new specifications.
FINANCIAL INFORMATION
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Other payables
During the Track Record Period, our other payables represented commission to sales
representatives and shipping fee to forwarder. Our other payables amounted to approximately
HK$3.6 million as at 31 December 2021. Our other payables decreased to approximately HK$3.0
million as at 31 December 2022, which was mainly attributable to the decrease in the payables
of shipping fees to forwarder, which is in line with our decrease in shipping and
freight-outbound fees. Our other payables increased to approximately HK$4.5 million as at 31
December 2023, which was mainly due to the accumulated commission of the sales
representative which has yet to be settled as at 31 December 2023.
Income tax provision
Our Group’s income tax provision has been provided at the applicable Hong Kong tax rate
of 16.5%. Prior to the Withdrawal, UBoT Inc. (HK) had submitted the Offshore Profits Claim,
and the income tax provision reflected management’s best estimation. Following the Withdrawal,
the income tax provision was adjusted to align substantially with the profits tax assessments
issued by the IRD.
Our income tax provision amounted to approximately HK$20.9 million as at 31 December
2021, comprising of (i) approximately HK$15.5 million carried forward from prior years for the
assessment years from 2008/09 to 2020/21; and (ii) an income tax provision of HK$5.4 million
made during the year.
Our income tax provision increased from approximately HK$20.9 million as at 31
December 2021 to approximately HK$25.4 million as at 31 December 2022, representing an
increase of approximately HK$4.5 million or 21.3%. Such increase was mainly attributable to a
tax provision of approximately HK$6.1 million made for the year ended 31 December 2022,
which was partially offset by a tax installment payment of approximately HK$1.8 million.
Our income tax provision decreased from approximately HK$25.4 million as at 31
December 2022 to approximately HK$14.2 million as at 31 December 2023, representing a
decrease of approximately HK$11.2 million or 44.2%. Such decrease was primarily attributable
to (i) the tax installment payment of approximately HK$6.7 million; and (ii) the utilisation of
tax reserve certificates purchased amounted to approximately HK$6.4 million to offset against
the final tax assessments for the assessment years 2008/09 to 2016/17 issued and assessed by the
IRD in August 2023 after the Withdrawal.
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LIQUIDITY AND FINANCIAL RESOURCES
Overview
During the Track Record Period, our Group’s operations were generally funded through
cash generated from our operations and bank borrowings. Our Directors believe that in the long
run and after the Listing, our operations will continue to be funded by cash generated from our
operations and bank borrowings.
Cash flow of our Group
The following table is a summary of our consolidated statements of cash flows for the
years indicated:
Selected consolidated statements of cash flows
Y ear ended 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Operating cash flow before
movement in working capital 47,973 47,278 28,515
Net cash from operating activities 8,186 34,312 27,780
Net cash used in investing activities (7,819) (14,208) (14,134)
Net cash used in financing activities (5,432) (13,187) (21,364)
Net (decrease) increase in cash and
cash equivalents (5,065) 6,917 (7,718)
Effect of foreign exchange rate
changes (616) (79) (41)
Cash and cash equivalent at the
beginning of the year 4,743 (938) 5,900
Cash and cash equivalent at the end
of the year (938) 5,900 (1,859)
Cash flow from operating activities
During the Track Record Period, the cash inflows from our operating activities were
primarily derived from the payments made by our customers for our products, while cash
outflows for our operating activities were primarily attributable to (i) the purchase of raw
materials from our suppliers and the increase in finished goods for coping with the demand
FINANCIAL INFORMATION
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from customers; (ii) the settlement of listing expenses; (iii) the settlement of our rental
expenses; (iv) the payment of our staff costs; and (v) payments for other working capital
needs.
For the year ended 31 December 2023, we had net cash from operating activities of
approximately HK$27.8 million. This represents our profit before tax of approximately
HK$6.7 million, adjusted mainly by (i) depreciation of property, plant and equipment of
approximately HK$10.8 million; (ii) depreciation of right-of-use asset of approximately
HK$6.5 million; (iii) finance cost of approximately HK$4.8 million; (iv) changes in
working capital items that positively affected the operating cash flows, including the
increase in trade and other payables of approximately HK$4.4 million and the decrease in
trade and other receivables, deposits and prepayments of approximately HK$6.2 million;
(v) changes in working capital items that negatively affected the operating cash flows,
including the increase in inventories of approximately HK$4.6 million; and (vi) Hong Kong
profit tax paid of approximately HK$6.7 million.
For the year ended 31 December 2022, we had net cash from operating activities of
approximately HK$34.3 million. This represents our profit before tax of approximately
HK$27.0 million, adjusted mainly by (i) depreciation of property, plant and equipment of
approximately HK$8.9 million; (ii) depreciation of right-of-use asset of approximately
HK$6.9 million; (iii) finance cost of approximately HK$4.1 million; (iv) changes in
working capital items that positively affected the operating cash flows, including the
decrease in inventories of approximately HK$2.9 million and the decrease in trade and
other receivables, deposits and prepayments of approximately HK$1.5 million; (v) changes
in working capital items that negatively affected the operating cash flows, including the
decrease in trade and other payables of approximately HK$15.3 million; and (vi) income
tax paid of approximately HK$1.8 million.
For the year ended 31 December 2021, we had net cash from operating activities of
approximately HK$8.2 million. This represents our profit before tax for the year of
approximately HK$31.8 million, adjusted mainly by (i) depreciation of property, plant and
equipment of approximately HK$8.1 million; (ii) depreciation of right-of-use asset of
approximately HK$6.6 million; (iii) finance cost of approximately HK$3.2 million; (iv)
changes in working capital items that positively affected the operating cash flows,
including the increase in trade and other payables of approximately HK$3.4 million; (v)
changes in working capital items that negatively affected the operating cash flows, mainly
including (a) the increase in inventories of approximately HK$21.4 million for coping with
the demand of our customers; and (b) the increase in trade and other receivables, deposits
and prepayments of approximately HK$19.7 million, (i) approximately HK$4.1 million of
which represents the remaining outstanding compensation income due to the fire accident
from the insurance company; (ii) approximately HK$1.5 million of which represents an
increase in prepayments paid to suppliers mainly resulting from the acquisition of property,
plant and equipment in the PRC; (iii) approximately HK$2.1 million of which represents an
increase in prepaid expenses mainly resulting from repair and maintenance of the mould
tooling; and (vi) income tax paid of approximately HK$2.1 million.
FINANCIAL INFORMATION
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Cash flow used in investing activities
For the year ended 31 December 2023, we had net cash used in investing activities of
approximately HK$14.1 million. The cash had primarily been spent on (i) purchase of
property, plant and equipment of approximately HK$13.3 million; and (ii) deposits paid for
acquisition of property, plant and equipment of approximately HK$1.4 million.
For the year ended 31 December 2022, we had net cash used in investing activities of
approximately HK$14.2 million. The cash had primarily been spent on (i) purchase of
property, plant and equipment of approximately HK$14.3 million; and (ii) advance to a
director of approximately HK$5.1 million, offset by the (i) repayment from a director of
approximately HK$4.1 million; and (ii) repayment from a related company of
approximately HK$2.3 million.
For the year ended 31 December 2021, we had net cash used in investing activities of
approximately HK$7.8 million. The cash had primarily been spent on (i) purchase of
property, plant and equipment of approximately HK$13.7 million; (ii) advance to a related
company of approximately HK$3.3 million; and (iii) advance to a director of approximately
HK$2.8 million, offset by the (i) repayment from a related company of approximately
HK$7.5 million; and (ii) repayment from a director of approximately HK$4.5 million.
Cash flow from/(used in) financing activities
For the year ended 31 December 2023, we had net cash used in financing activities of
approximately HK$21.4 million. New bank borrowings raised of approximately HK$182.8
million positively affected the cash flows from financing activities. The primary reasons
that negatively affected the cash flows from financing activities were (i) repayment of bank
borrowings of approximately HK$192.4 million; (ii) repayment of lease liabilities of
approximately HK$7.2 million; and (iii) interest paid of approximately HK$3.7 million.
For the year ended 31 December 2022, we had net cash used in financing activities of
approximately HK$13.2 million. New bank borrowings raised of approximately HK$240.5
million positively affected the cash flows from financing activities. The primary reasons
that negatively affected the cash flows from financing activities were (i) repayment of bank
borrowings of approximately HK$236.3 million; (ii) repayment of lease liabilities of
approximately HK$11.3 million; and (iii) interest paid of approximately HK$2.7 million.
For the year ended 31 December 2021, we had net cash used in financing activities of
approximately HK$5.4 million. New bank borrowings raised of approximately HK$147.8
million positively affected the cash flows from financing activities. The primary reasons
that negatively affected the cash flows from financing activities were (i) repayment of bank
borrowings of approximately HK$144.3 million, (ii) repayment of lease liabilities of
approximately HK$6.7 million, and (iii) interest paid of approximately HK$1.8 million.
FINANCIAL INFORMATION
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We recorded negative cash and cash equivalent at the end of the year in the amount of
approximately HK$0.9 million for the year ended 31 December 2021 mainly due to the
non-recurring cash outflow due to the application for Listing and expansion plan and we
recorded sufficient positive operating cash flow before movement in working capital of
HK$48.0 million for year ended 31 December 2021. Our cash and cash equivalent at the
end of 31 December 2021 would have remained positive if our cash outflow for listing
expenses in the amount of approximately HK$1.4 million, which is non-recurring in nature,
is excluded. In addition, the negative cash and cash equivalent for the year ended 31
December 2021 was attributable to the investing activities in which purchase of new
machinery, which was non-recurring in nature, was made for the commencement of
operation of the Houjie Production Factory in order to increase production capacities and
expand our scale of operation. We also recorded a negative cash and cash equivalent of
approximately HK$1.9 million for the year ended 31 December 2023 mainly due to a
non-recurring cash outflow resulting from the tax payment associated with the Withdrawal.
Our Directors are of the view that it is critical and beneficial for our Group to raise fund
through the Share Offer for the long term development of the business operation of our
Group.
NET CURRENT LIABILITIES/ASSETS AND WORKING CAPITAL SUFFICIENCY
As at 31 December 2021, we had net current liabilities of approximately HK$11.7 million.
We recorded net current assets of approximately HK$6.7 million and HK$9.8 million as at 31
December 2022 and 31 December 2023. Our net current liabilities position as at 31 December
2021 was partly because we have used bank loans and other borrowings to finance our capital
expenditure and in particular, HK$12.6 million of bank borrowings would be repaid over 1 year
after 31 December 2021, based on the repayment schedule and has been classified as current
liabilities as they had a repayment on demand clause. The level of our net current liabilities as at
31 December 2021 was also subject to the effect of income tax provision of approximately
HK$14.6 million as at 31 December 2021 in relation to the historical Offshore Profits Claim
made before the Withdrawal. The decrease in net current liabilities from 31 December 2021 to
the net current asset position as at 31 December 2022 and 31 December 2023 was primarily due
to the decrease in trade and other payables. For further details, please see the section headed
“Financial Information – Net Current Assets and Current Liabilities”. In management of liquidity
risk, we regularly monitor our liquidity requirements and our compliance with lending and our
compliance with lending covenants, to ensure that we maintain sufficient reserves of cash and
adequate committed lines of funding from major financial institutions to meet our liquidity
requirements in the short and longer term. We did not experience any liquidity shortage during
the Track Record Period.
We have carried out a review of our cash flow forecast for the twelve months period
following the date of this prospectus. Based on such forecast, our management believes that
adequate sources of liquidity exist to fund our working capital and future capital expenditures
requirements, and other liabilities and commitments as they become due.
FINANCIAL INFORMATION
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Our Directors are of the opinion that, and the Sponsor concurs that, taking into
consideration our Group’s financial resources presently available to us, including (i) anticipated
cash flow from our operating activities; (ii) existing bank balances and cash of approximately
HK$1.1 million as at 31 December 2023; (iii) the unutilised banking facilities of approximately
HK$18.4 million as at 31 December 2023; (iv) the conditional interim dividend of HK$19.3
million declared on 31 March 2022 and 15 March 2024 respectively which is expected to be
distributed after Listing; and (v) the estimated net proceeds from the Share Offer, our Group has
sufficient working capital for its present requirements, for at least the next 12 months from the
date of this prospectus.
Improvement Measures
To improve our working capital and liquidity position, we will continue to review regularly
and update our liquidity and funding policies to ensure that it is aligned with our business plan
and financial position. We will also prepare cash flow and funding summaries on a regular basis
to monitor our cash flow relating to our receipt of payments from customers, operating costs,
financing, repayments of loans, purchase of property, plant and equipment, tax payables and
other expenses. Our Directors and senior management hold regular meetings to review the
working capital and liquidity management. In order to enhance our working capital management,
we will manage the level of our liquid assets to ensure the availability of sufficient cash flows
to meet any unexpected cash requirements arising from our business. We would carefully
consider our cash position and ability to obtain further financing when arranging payment for
major business plans and transactions. Moreover, we will assess available resources to finance
our business needs on an ongoing basis. Further, we would continue to maintain stable
relationship with our principal banks so as to timely obtain/renew bank borrowings and on
acceptable terms to our Group. We recorded net current liabilities as at 31 December 2021. Our
net current liabilities position has substantially improved to a net current assets position as at 31
December 2022 and 2023.
Saved as disclosed in this prospectus, our Directors are not aware of any other factors that
would have a material impact on our Group’s liquidity. Details of the funds necessary to meet
our existing operations and to fund our future plans are set out in the section headed “Future
Plans and Use of Proceeds” in this prospectus.
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INDEBTEDNESS
The following table sets forth the breakdown of our indebtedness as at 31 December 2021,
2022, 2023 and 31 March 2024, being the latest practicable date for the purpose of this
indebtedness in this prospectus:
As at 31 December
As at
31 March
2021 2022 2023 2024
HK$’000 HK$’000 HK$’000 HK$’000
(unaudited)
Bank overdrafts 3,261 – 2,932 2,973
Bank borrowings 38,164 40,587 34,658 32,520
Bank borrowings – trade
receivables financing 15,435 17,093 13,406 14,355
Lease liabilities 34,215 28,012 22,412 21,336
91,075 85,692 73,408 71,184
Apart from the amount included in the bank borrowings – trade receivables financing of
HK$11,567,000 as at 31 March 2024 which are secured and unguaranteed, all the remaining
bank overdraft and bank borrowings are secured and guaranteed, whereas the lease liabilities are
unsecured and unguaranteed.
FINANCIAL INFORMATION
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Bank borrowings
As at 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Bank borrowings:
Secured 38,164 40,587 34,658
Trade receivables financing 15,435 17,093 13,406
53,599 57,680 48,064
The carrying amounts of the above
borrowings that contain a repayment on
demand clause (shown under current
liabilities) but repayable:
(Note)
Within one year 41,002 48,551 41,743
Within a period of more than one year but
not exceeding two years 3,475 2,810 1,750
Within a period of more than two years
but not exceeding five years 4,908 6,319 4,571
Over five years 4,214 – –
53,599 57,680 48,064
Note: The amounts due are based on scheduled repayment dates set out in the loan agreements.
Bank borrowings carry variable interest at 0.9% to 9.1% per annum during the years ended
31 December 2021, 2022 and 2023. The weighted average effective interest rate on bank
borrowings as at 31 December 2021, 2022 and 2023 was 3.1%, 6.8% and 7.2% per annum,
respectively. The Group’s bank borrowings carry interests at margins over Hong Kong Interbank
Offer Rate (“HIBOR”), London Interbank Offer Rate (“ LIBOR”), the bank’s US$ best lending
rate or the bank’s HK$ best lending rate, as appropriate.
Bank borrowing with carrying amount of HK$8,600,000, HK$6,200,000 and HK$3,800,000
as at 31 December 2021, 2022 and 2023, respectively, is under the SME Loan Guarantee Scheme
operated by HMC Insurance Limited (“ HKMCI”) and is secured by HKMCI and Mr. Tong’s
personal guarantee.
FINANCIAL INFORMATION
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Bank borrowings with carrying amount of HK$29,564,000, HK$34,387,000 and
HK$30,858,000 as at 31 December 2021, 2022 and 2023, respectively, are secured by:
 Legal charge over a property owned by Mr. Tong’s company (not in our Group) (Note) ;
 Life insurance policy entered into by a subsidiary of our Company; and
 Unlimited guarantees from Mr. Tong’s company (not in our Group) (Note) , UBOTIC, Mr.
Tong, Mr. Tang and Mr. CL Tang.
Subsequent to 31 December 2023, our Group has further renewed its banking facilities
particularly in trade receivables financing, such that they have become secured and unguaranteed
or secured and guaranteed.
Based on the indicative term sheet provided by the relevant bank, our Directors confirm
that the guarantees provided by related parties, including the legal charge over a property owned
by Mr. Tong’s company, the unlimited guarantees provided by Mr. Tong’s company (not in our
Group)
(Note) and the unlimited guarantees provided by a subsidiary of our Group, Mr. Tong, Mr.
Tang and Mr. CL Tang, are expected to be released and replaced by an unlimited corporate
guarantee from our Company, on the conditions that, among others: (1) the Shares are
successfully listed on GEM; and (2) Mr. Tong shall remain as the chairman of the Board and
maintain full control over the management and business of our Group; and Mr. Tong, Mr. Tang
and Mr. CL Tang or the companies owned by them shall at all times remain the largest
shareholders of the Company.
Note: Such company is principally engaged in property holding. Save and except and the provision of legal charge over
the property held by and unlimited guarantee from such company as security for our Group’s bank facility, such
company and our Group did and does not have any past or present relationships (including, without limitation,
business, trust, financing, fund flow or otherwise) or any sharing of resources or management, with our Company
or its subsidiaries, or any of their respective associates.
Apart from the amount included in the bank borrowings – trade receivables financing of
HK$15,435,000, HK$17,093,000 and HK$13,406,000, as at 31 December 2021, 2022 and 2023
which are unsecured and unguaranteed, all the remaining bank overdraft and bank borrowings
are secured and guaranteed, whereas the lease liabilities are unsecured and unguaranteed. The
Directors confirm that there was no material covenant on any of our outstanding debt and there
was no breach of any covenant during the Track Record Period and up to the Latest Practicable
Date. Our Directors further confirm that our Group did not experience any difficulty in obtaining
bank loans and other borrowings, default in payment of bank loans and other borrowings or
breach of covenants during the Track Record Period and up to the Latest Practicable Date, and
there has not been any material change in our indebtedness since the Latest Practicable Date up
to the date of this prospectus.
FINANCIAL INFORMATION
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Lease liabilities
The following table sets forth our lease liabilities as at the respective dates indicates:
As at 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Lease liabilities payable
Within one year 10,097 7,002 7,670
Within a period of more than one
year, but not exceeding two
years 5,818 6,447 5,128
Within a period of more than two
years, but not exceeding five
years 13,238 14,194 9,613
Over five years 5,062 369 –
34,215 28,012 22,411
Less: Amount due for settlement
within 12 months shown
under current liabilities (10,097) (7,002) (7,670)
Amount due for settlement after 12
months shown under non-current
liabilities 24,118 21,010 14,741
The weighted average incremental borrowing rates applied to lease liabilities was 4.7%,
4.5% and 4.82% for the years ended 31 December 2021, 2022 and 2023, respectively.
Contingent liabilities
As at 31 March 2024, being the latest practicable date for the purpose of the indebtedness
statement, our Group did not have any other significant contingent liabilities or guarantees.
Disclaimer
As at 31 March 2024, being the latest practicable date for the purpose of the indebtedness
statement, apart from intra-group liabilities, our Group did not have any loan capital issued and
outstanding or agreed to be issued, bank overdrafts, loans or other similar indebtedness,
liabilities under acceptances (other than normal trade bills) or acceptable credits, debentures,
mortgages, charges, hire purchase commitments, guarantees, material covenants, or other
material contingent liabilities.
FINANCIAL INFORMATION
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CAPITAL EXPENDITURE
During the Track Record Period, our capital expenditure has principally consisted of plant
and machineries, moulds, fixtures, furniture and equipment, leasehold improvements and
construction in progress, details of which are set forth in the table below for the period
indicated:
For the year ended 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Machineries 6,028 1,247 1,759
Moulds 2,620 10,611 10,465
Fixtures, furniture and equipment 795 785 487
Leasehold improvements 266 1,053 211
Construction in progress 4,021 603 596
Total 13,730 14,299 13,518
During the Track Record Period, our capital expenditure amounted to approximately
HK$13.7 million, HK$14.3 million and HK$13.5 million for the years ended 31 December 2021,
2022 and 2023, respectively.
RELATED PARTY TRANSACTIONS
Our related party transactions during the Track Record Period, which were based on normal
commercial terms are summarized in Note 31 to the Accountants’ Report set out in Appendix I
to this prospectus. During the Track Record Period, none of our expenses and income were
settled/collected by any related parties or other third parties; and no costs and expenses relating
to our operations were borne by any related parties or other third parties without being
recharged.
CONTINGENT LIABILITIES
As at the close of business on the Latest Practicable Date, we did not have any material
contingent liabilities.
FINANCIAL INFORMATION
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LISTING EXPENSES
Based on the mid-point of the Offer Price stated in this prospectus and assuming that the
Offer Size Adjustment Option is not exercised, the total estimated listing expenses in connection
with the Share Offer are expected to be approximately HK$37.4 million or 54.4% of the gross
proceeds from the Share Offer, among which, approximately HK$12.2 million is directly
attributable to the issue of new Shares and will be charged to equity upon completion of the
listing, and approximately HK$8.0 million has been charged or is expected to be charged to our
consolidated statements of profit and loss and other comprehensive income. Our listing expenses
are categorized into underwriting-related expenses, which consists of underwriting fee and
commission (including SFC transaction levy, Stock Exchange trading fee and AFRC transaction
levy) of approximately HK$5.2 million and non-underwriting-related expenses of approximately
HK$32.2 million. The non-underwriting-related expenses can be further classified into (i) fees
and expenses for legal advisors and reporting accountants of approximately HK$18.0 million;
and (ii) other fees and expenses of approximately HK$14.2 million. During the Track Record
Period, we incurred listing expenses of HK$2.0 million, HK$10.0 million and HK$5.3 million
respectively.
OFF-BALANCE SHEET ARRANGEMENT
As at the Latest Practicable Date, we had not entered into any off-balance sheet
arrangement.
DISTRIBUTABLE RESERVES
As at the Latest Practicable Date, our Company had no distributable reserves available for
distribution to our Shareholders.
DIVIDENDS AND DIVIDEND POLICY
No dividend has been paid or declared by the Company since its incorporation until 15
March 2024. During the Track Record Period, our Group had declared dividends as follows:
(a) On 31 March 2022, UBoT Inc. (HK) conditionally declared an interim dividend of
HK$0.33 per share of UBoT Inc. (HK) amounting in the aggregate of HK$11,220,000.
The dividend payable to one of the ultimate Controlling Shareholders, Mr. Tong, will
be settled through partially offsetting the amount due from Mr. Tong in the amount of
HK$5,778,000 as per the unaudited management account as at 28 February 2022. Such
dividend would become unconditional upon Listing and the dividends declared to the
other shareholders in the amount of HK$5,442,000 will be settled by cash (using the
Group’s internally generated funds before Listing).
(b) On 15 March 2024, UBoT Inc. (HK) conditionally declared an interim dividend of
HK$0.24 per share of UBoT Inc. (HK) amounting in the aggregate of HK$8,160,000
to its sole shareholder, namely Abundant Wealth. On 15 March 2024, Abundant Wealth
FINANCIAL INFORMATION
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conditionally declared an interim dividend of HK$8,160 per share of Abundant Wealth
amounting in the aggregate of HK$8,160,000 to its sole shareholder, i.e. our Company.
On 15 March 2024, the Company declared conditionally an interim dividend of HK
$4,080 per Share amounting in the aggregate of HK$8,160,000 to its shareholders.
Part of the dividend payable to Sino Success, one of the ultimate Controlling
Shareholders and wholly owned company of Mr. Tong, will be settled by offsetting the
amount due from Mr. Tong in the amount of HK$540,000 as per the unaudited
management account as at 31 December 2023. Save for the said HK$540,000, all the
other dividends declared to shall be payable to the shareholders of the Company will
be settled by cash (using the Group’s internally generated funds before Listing). Such
dividend would become unconditional upon Listing.
In determining the amount of the above interim dividend, our Directors have taken into
account the level of our Group’s retained earnings, the expected cash flow and our Group’s
assets and liabilities and consider that the amount of the above interim dividend represents a fair
and reasonable return to our Controlling Shareholders. Save as the above, our Group did not
declare and pay any dividends to the then shareholders during the years ended 31 December
2021, 2022 and 2023.
Our Company does not have a formal dividend policy or fixed dividend distribution ratio.
The decision to declare or pay dividend in the future as well as the amount of any dividend will
be contingent upon several factors, including the result of our operation, cash flow, financial
condition and other relevant factors as deemed by our Board.
KEY FINANCIAL RATIOS
The following table sets forth the key financial ratios of our Group during the Track
Record Period:
For the year ended/
as at 31 December
Notes 2021 2022 2023
Current ratio 1 0.9 1.1 1.1
Quick ratio 2 0.6 0.6 0.6
Gearing ratio 3 1.8 1.0 0.8
Return on equity 4 84.2% 39.1% 8.2%
Return on assets 5 12.0% 9.9% 2.5%
Interest coverage 6 10.9 times 7.6 times 2.4 times
Gross profit margin 7 42.7% 39.6% 38.1%
Net profit margin 8 13.0% 8.5% 2.7%
Notes:
1. Current ratio is calculated by dividing total current assets by total current liabilities.
FINANCIAL INFORMATION
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2. Quick ratio is calculated by dividing current assets (net of inventories) by total current liabilities.
3. Gearing ratio is calculated by dividing total debts by total equity. Our total debts include bank borrowings
and bank overdrafts.
4. Return on equity is calculated by dividing profit for the year by total equity and multiplying the resulting
value by 100%.
5. Return on assets is calculated by dividing profit for the year by total assets and multiplying the resulting
value by 100%.
6. Interest coverage is calculated by dividing profit before interest and tax by finance costs.
7. Gross profit margin is calculated by dividing gross profit by revenue and multiplying the resulting value
by 100%. Gross profit equals revenue minus cost of sales.
8. Net profit margin is calculated by dividing profit for the year by revenue and multiplying the resulting
value by 100%.
Current ratio and quick ratio
Our current ratio was 0.9, 1.1 and 1.1 as at 31 December 2021, 2022 and 2023,
respectively. Our quick ratio was 0.6, 0.6 and 0.6 as at 31 December 2021, 2022 and 2023,
respectively. The general trend of increase in the current ratio reflected the decrease in trade and
other payables. The quick ratio remained stable.
Gearing ratio
Our gearing ratio was approximately 1.7, 1.0 and 0.8 as at 31 December 2021, 2022 and
2023, respectively. The decrease in the gearing ratio during the Track Record Period was mainly
because of the increase in total equity and the decrease in total debts due to the decrease in bank
borrowings.
Return on equity
Return on equity for the year ended 31 December 2021 was approximately 70.0%. Return
on equity for the year ended 31 December 2022 decreased to approximately 35.1%. The decrease
was mainly because of the increase in total equity. Return on equity for the year ended 31
December 2023 decreased to approximately 8.2% mainly because of our decrease in profit for
the year.
Return on assets
Return on assets for the year ended 31 December 2021 was approximately 12.0%. Return
on assets for the year ended 31 December 2022 decreased to approximately 9.9%. Such decrease
was mainly because on the decrease in profit for the year which was mainly due to the effect of
the one-off listing expenses. Return on assets decreased to approximately 2.5% for the year
ended 31 December 2023. Such decease was mainly because of our decrease in profit for the
year.
FINANCIAL INFORMATION
– 394 –


--- page 407 ---
Interest coverage
Interest coverage was 10.9 times for the year ended 31 December 2021, which decreased to
approximately 7.6 times for the year ended 31 December 2022. Such decrease was primarily
because of the decrease in profit before interest and tax and the increase in finance costs for the
relevant period. Interest coverage further decreased to approximately 2.4 times for the year
ended 31 December 2023 due to decrease in profit before interest and tax and increase in
finance costs.
Gross profit margin
Our gross profit margin decreased from 42.7% for the year ended 31 December 2021 to
39.6% for the year ended 31 December 2023 and remained stable at 38.1% for the years ended
31 December 2023. For a discussion of the factors affecting our gross profit margin, please refer
to the paragraph headed “Year to year comparison of results of operations – Gross profit and
gross profit margin” in this section.
Net profit margin
Our net profit margin decreased from 13.0% to 8.5% and further decreased to 2.7% for
each of the years ended 31 December 2021, 2022 and 2023, respectively. For a discussion of the
factors affecting our net profit margin, please refer to the paragraph headed “Year to year
comparison of results of operations – Profit for the year” in this section.
QUANTITATIVE AND QUALITATIVE ANALYSIS ABOUT MARKET RISKS
Our Group is exposed to foreign currency risk, credit risk, liquidity risk and interest rate
risk in the normal course of business. For further details of our financial risk management,
please refer to Note 30 of the accountants’ report set out in Appendix I to this prospectus. Our
Group’s overall risk management programme focuses on the unpredictability of financial markets
and seeks to minimise potential adverse effects on our Group’s financial performance. Our
Directors believe that overall strategy remains unchanged during the Track Record Period.
UNAUDITED PRO FORMA ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS
Please refer to the section headed “Unaudited pro forma financial information” in Appendix
II to this prospectus for details.
DISCLOSURE REQUIRED UNDER CHAPTER 17 OF THE GEM LISTING RULES
Our Directors confirm that, as at the Latest Practicable Date, there were no circumstances
that would give rise to a disclosure requirement under Rules 17.15 to 17.21 of the GEM Listing
Rules.
FINANCIAL INFORMATION
– 395 –


--- page 408 ---
NO MATERIAL ADVERSE CHANGE
Subsequent to the Track Record Period and up to the Latest Practicable Date, UBoT Inc.
(HK) withdrew the Offshore Profits Claim from the IRD. For details, please refer to the section
headed “Business – Historical Offshore Profits Claim and Depreciation Allowance” in this
prospectus. Our Directors confirm that, up to the date of this prospectus, there has been no
material adverse change to our financial, operational and/or trading position since 31 December
2023, being the date to which our most recent audited consolidated financial information were
prepared, and since that date, there has been no event up to the Latest Practicable Date that
would materially affect the information shown in our consolidated financial information included
in the Accountants’ Report of our Group set out in Appendix I to this prospectus.
FINANCIAL INFORMATION
– 396 –


--- page 409 ---
FUTURE PLANS
For a detailed description of our future plans, please refer to the section headed “Business
– Business strategies” in this prospectus.
USE OF PROCEEDS
Assuming an Offer Price of HK$0.55 per Offer Share, being the mid-point of the Offer
Price range between HK$0.50 and HK$0.60 and assuming the Offer Size Adjustment Option is
not exercised, we estimate to receive net proceeds from the Share Offer of approximately
HK$31.4 million, after deducting the estimated underwriting fee and other related expenses
payable by us in connection with the Listing.
We intend to use the net proceeds of the Share Offer as follows:
(a) approximately HK$24.5 million (or approximately 78.2% of the total net proceeds)
will be used for increasing our production capacity and capabilities, out of which we
intend to spend:
 approximately HK$21.4 million (or approximately 68.4% of the total net
proceeds will be used for upgrading our production facilities in the PRC, out of
which we intend to spend:
(i) approximately HK$17.0 million (or approximately 54.4% of the total net
proceeds on the production of trays and tray related products for (i)
upgrading our existing injection moulding machines with robotic arms and
crushing machines; (ii) setting up a control room with automated
machineries for crushing recycled trays and blending material; (iii)
upgrading our warehouse in Houjie Production Factories; (iv) purchasing
automated machineries and equipment;
(ii) approximately HK$1.0 million (or approximately 3.2% of the total net
proceeds on the production of carrier tape for the purchase of one fully
automated rotary carrier tape manufacturing line, two semi-automated
flatbed carrier tape machines and ancillary supporting systems, equipment
and mould tools and renovation of the production area;
(iii) approximately HK$3.4 million (or approximately 10.8% of the total net
proceeds on the production of MEMS and sensor packaging for (i)
increasing production capacities of our Shatian Production Factory by
acquiring automated machineries and equipment;
 approximately HK$3.1 million (or approximately 9.8% of the total net proceeds
with be used for implementing production in the Philippines for carrier tape by
acquiring three fully automated rotary carrier tape manufacturing line, six
FUTURE PLANS AND USE OF PROCEEDS
– 397 –


--- page 410 ---
semi-automated flatbed carrier tape machines and ancillary supporting systems,
equipment and mould tools and renovating the production site as our Directors
consider that the costs of implementing production, in particular labour costs, in
the Philippines are relatively lower in Southeast Asia and such location will be
beneficial for our sales to our major customers based in the Southeast Asia;
(b) approximately HK$1.9 million (or approximately 6.2% of the total net proceeds) will
be used for intensifying our sales and marketing efforts in the global market including
PRC market, out of which we intend to spend:
 approximately HK$0.8 million (or approximately 2.5% of the total net proceeds)
for recruiting two sales representatives in each of Shenzhen and Chengdu, the
PRC, being the two new sales points in the PRC and setting up workplace for the
sales representatives in each of such location;
 approximately HK$0.5 million (or approximately 1.7% of the total net proceeds)
for recruiting one sales representative in Boston, the United States;
 approximately HK$0.6 million (or approximately 2.0% of the total net proceeds)
for recruiting two sales representatives for technical support function in each of
Malaysia and the Philippines in support of the sales and marketing function by
providing customer services, quality assurance and technical support to the
customers;
(c) approximately HK$1.3 million (or approximately 4.2% of the total net proceeds) will
be used for purchasing ERP system and upgrading the information system in support
of the ERP system;
(d) approximately HK$1.0 million (or approximately 3.1% of the total net proceeds) will
be used for the strengthening our R&D and material engineering capabilities, out of
which we intend to spend:
 approximately HK$0.7 million (or approximately 2.1% of the total net proceeds)
for the recruitment of a total of five personnel as research engineers, material
specialists and mould design engineers; and
 approximately HK$0.3 million (or approximately 1.0% of the total net proceeds)
for the purchase of mould design software; and
(e) approximately HK$2.6 million (or approximately 8.3% of the total net proceeds) will
be used for general working capital.
FUTURE PLANS AND USE OF PROCEEDS
– 398 –


--- page 411 ---
If the Offer Price is fixed at HK$0.60 per Offer Share, being the high-end of the Offer
Price range and assuming the Offer Size Adjustment Option is not exercised, the net proceeds
from the Share Offer will increase to approximately HK$37.2 million. If the Offer Price is fixed
at HK$0.50 per Offer Share, being the low-end of the Offer Price range, the net proceeds will
decrease to approximately HK$25.5 million. Under such circumstances, we will adjust the
allocation of the intended use of the net proceeds for the above purposes on a pro rata basis.
If the Offer Size Adjustment Option is exercised in full and assuming an Offer Price of
HK$0.55 per Offer Share, being the mid-point of the Offer Price range, we estimate that the net
proceeds from the Share Offer will be approximately HK$40.9 million, after deducting the
estimated underwriting fee and other related expenses payable by us in connection with the
Listing. If the Offer Price is set at the high-end or low-end of the Offer Price range, the net
proceeds of the Share Offer, including the proceeds from the exercise of the Offer Size
Adjustment Option, will increase to approximately HK$47.6 million or decrease to HK$34.3
million, respectively. Under such circumstances, we will adjust the allocation of the intended use
of the net proceeds for the above purposes on a pro rata basis.
To the extent that the net proceeds from the Share Offer are not immediately used for the
above purposes and to the extent permitted by applicable law and regulations, we intend to
deposit the net proceeds into short-term interest-bearing accounts at licensed commercial banks
and/or other authorised financial institutions (as defined under the SFO or applicable laws and
regulations in other jurisdictions). We will make an appropriate announcement if there is any
change to the above proposed use of proceeds or if any amount of the proceeds with be used for
general corporate purpose. In the event that we would require additional financing apart from the
net proceeds from the Share Offer for our future plans, the shortfall will be financed by our
internal resources generated from the net cash from operating activities and/or bank financing,
as appropriate.
IMPLEMENTATION PLANS
The implementation plans for each of the six-month periods until 31 December 2026 for
carrying out our business strategies are set out below. The following implementation plans are
formulated on the bases and assumptions set out in the paragraph headed “Bases and key
assumptions” below in this section and are subject to uncertainties, variables and unexpected
factors. There is no assurance that the implementation plans will materialize in accordance with
the timetable below or that our business objectives will be accomplished at all.
FUTURE PLANS AND USE OF PROCEEDS
– 399 –


--- page 412 ---
From the Listing Date to 31 December 2024
Business strategies Implementation plans
HK$’000
(Approximately)
Increasing our production capacity
and capabilities
 Upgrading our production
facilities in the PRC
– Production of trays and tray
related products
 Installing robotic arms on 23 of
our injection moulding machines
 Installing crushing machines on 27
of our injection moulding machines
 Setting up a control room with
automated machineries for crushing
recycled trays and blending
material
 Upgrading our warehouse in Houjie
Production Factory with automated
machineries and equipment
3,024
Intensifying our sales and
marketing efforts in the global
market including PRC market
 Recruiting 2 sales personnel in
each of Shenzhen and Chengdu,
the PRC and setting up workplace
for the sales representatives
810
Strengthening our R&D and
material engineering capabilities
 Installing mould design software 327
General working capital 1,306
5,467
FUTURE PLANS AND USE OF PROCEEDS
– 400 –


--- page 413 ---
For the six months ended 30 June 2025
Business strategies Implementation plans
HK$’000
(Approximately)
Increasing our production capacity
and capabilities
 Upgrading our production
facilities in the PRC
– Production of trays and tray
related products
 Purchasing 6 three-dimensional
visual inspection systems
 Purchasing 5 sets of injection
moulding machines with automated
ancillary equipment such as robotic
arms
4,572
– MEMS and sensor packaging  Purchasing one molding system
machine
 Purchasing one automatic optical
inspection machine
1,920
Intensifying our sales and
marketing efforts in the global
market including PRC market
 Recruiting sales representative in
Boston, the United States
251
Purchasing ERP system and
upgrading the information
system
 Installing and maintaining ERP
system
 Upgrading of information system
in support of the ERP system
751
Strengthening our R&D and
material engineering capabilities
 Recruiting 2 mould tooling design
engineers
189
General working capital 1,306
8,991
FUTURE PLANS AND USE OF PROCEEDS
– 401 –


--- page 414 ---
For the six months ended 31 December 2025
Business strategies Implementation plans
HK$’000
(Approximately)
Increasing our production capacity
and capabilities
 Upgrading our production
facilities in the PRC
– Production of trays and tray
related products
 Purchasing 35 automated loading
robotic systems and 4 electric lift
trucks
 Purchasing 5 sets of injection
moulding machines with automated
ancillary equipment such as robotic
arms
4,533
– Production of carrier tape  Purchasing one fully automated
rotary carrier tape manufacturing
line
 Purchasing two semi-automated
flatbed carrier tape machines
 Purchasing ancillary supporting
systems and equipment such as
vision inspection system, punching
system and raw material filtration
system
 Renovating the production area
1,006
– MEMS and sensor packaging  Purchasing one die attach machine 1,476
Intensifying our sales and
marketing efforts in the global
market including PRC market
 Recruiting sales representative in
Boston, the United States
251
FUTURE PLANS AND USE OF PROCEEDS
– 402 –


--- page 415 ---
Business strategies Implementation plans
HK$’000
(Approximately)
Purchasing ERP system and
upgrading the information
system
 Installing and maintaining ERP
system
 Upgrading of information system
in support of the ERP system
568
Strengthening our R&D and
material engineering capabilities
 Recruiting 1 material engineer
 Installing mold design software
189
8,991
FUTURE PLANS AND USE OF PROCEEDS
– 403 –


--- page 416 ---
For the six months ended 30 June 2026
Business strategies Implementation plans
HK$’000
(Approximately)
Increasing our production capacity
and capabilities
 Upgrading our production
facilities in the PRC
– Production of trays and tray
related products
 Purchasing 5 sets of injection
moulding machines with automated
ancillary equipment such as robotic
arms
2,456
 Implementing production in the
Philippines for carrier tape
 Purchasing 1 fully automated
rotary carrier tape manufacturing
line
 Purchasing 2 semi-automated
flatbed carrier tape machines
 Purchasing ancillary supporting
systems and equipment such as
vision inspection system, punching
system and raw material filtration
system
 Renovating the production area
1,378
Intensifying our sales and
marketing efforts in the global
market including PRC market
 Recruiting sales representatives for
technical support function in
Malaysia and the Philippines
317
Strengthening our R&D and
material engineering capabilities
 Recruiting 1 material engineer 131
4,281
FUTURE PLANS AND USE OF PROCEEDS
– 404 –


--- page 417 ---
For the six months ended 31 December 2026
Business strategies Implementation plans
HK$’000
(Approximately)
Increasing our production capacity
and capabilities
 Upgrading our production
facilities in the PRC
– Production of trays and tray
related products
 Purchasing 5 sets of injection
moulding machines with automated
ancillary equipment such as robotic
arms
2,456
 Implementing production in the
Philippines for carrier tape
 Purchasing 2 fully automated
rotary carrier tape manufacturing
line
1,685
 Purchasing 4 semi-automated
flatbed carrier tape machines
 Purchasing ancillary supporting
systems and equipment such as
vision inspection system and
quality control inspection smart
scope
Intensifying our sales and
marketing efforts in the global
market including PRC market
 Recruiting sales representatives for
technical support function in
Malaysia and the Philippines
317
Strengthening our R&D and
material engineering capabilities
 Recruiting 1 material engineer 131
4,588
FUTURE PLANS AND USE OF PROCEEDS
– 405 –


--- page 418 ---
In summary, for the period from the Listing Date to 31 December 2026, we expect to make
use of the net proceeds from the Share Offer as below:
From
the Listing
Date to
31 December
2024
From
1 January
2025 to
30 June
2025
From
1 July
2025 to
31 December
2025
From
1 January
2026 to
30 June
2026
From
1 July
2026 to
31 December
2026
Total amount
of proceeds
expected to
be expended
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Intended use of proceeds
Increasing our production
capacity and capabilities
 Upgrading our production
facilities in the PRC
– Production of trays and
tray related products 3,024 4,572 4,533 2,456 2,456 17,041
– Production of carrier tapes – – 1,006 – – 1,006
– MEMS and sensor
packaging – 1,920 1,476 – – 3,397
 Implementing production in
the Philippines for carrier
tape – – – 1,378 1,685 3,063
Intensifying our sales and
marketing efforts in the
global market including PRC
market 810 251 251 317 317 1,946
Purchasing ERP system and
upgrading the information
system – 751 568 – – 1,320
Strengthening our R&D and
material engineering
capabilities 327 189 189 131 131 967
General working capital 1,306 1,306 – – – 2,612
5,467 8,991 8,024 4,281 4,588 31,352
FUTURE PLANS AND USE OF PROCEEDS
– 406 –


--- page 419 ---
Bases and Assumptions
The implementation plans are based on the following bases and key assumptions:
(a) there will be no material change in the funding requirement for each of our Group’s
future plans as set out in this prospectus;
(b) our Group will have sufficient financial resources to meet the intended capital
expenditure and business development requirements during the period to which our
future business strategies relate;
(c) there will be no material changes in the existing political, legal, fiscal, social or
economic conditions in Hong Kong, the PRC, Singapore, or in any other places in
which any member of our Group carries on its business or intends to carry on its
business;
(d) there will be no material change in existing laws and regulations, or other
governmental policies relating to our Group, or in the political, economic or market
conditions in which our Group operates;
(e) our Group will be able to retain key staff in the management and other major
operational departments;
(f) there will be no change in the effectiveness of the licenses, permits and qualifications
obtained by our Group;
(g) there will be no material changes in the bases or rates of taxation applicable to the
activities of our Group;
(h) our Group will be able to maintain our existing business relationships with our
customers and suppliers;
(i) there will be no disasters, natural, political or otherwise, which would materially
disrupt the businesses or operations of our Group;
(j) our business operation will not be materially affected by the risk factors as stipulated
in the section headed “Risk Factors” in this prospectus; and
(k) the Share Offer will be completed in accordance with and as described in the section
headed “Structure and conditions of the Share Offer”.
FUTURE PLANS AND USE OF PROCEEDS
– 407 –


--- page 420 ---
REASONS FOR THE LISTING
Our Directors are of the view that the Listing is strategically beneficial to the long term
development of our Group by enabling us to capture more business opportunities, providing
additional avenues to raise capital in the long run and reinforcing our corporate recognition and
image. Our Group considers that it is critical for our Group to raise fund through the Share
Offer for the following reasons:
 We will be able to increase our production capacities to capture more opportunities in
the global market including the PRC market with the additional funds through the
Share Offer. As we serve customers from the semiconductor industry by providing
JEDEC tray, carrier tapes and MEMS and sensor packaging, our business is highly
driven by the semiconductor industry. According to the F&S Report, both the
semiconductor industry and the semiconductor shipping and transport media industry
has been growing and are expected to continue to grow. The global market size of
semiconductor industry by sales value increased at a CAGR at 6.3% from 2019 to
2023 and is forecasted to increase at a CAGR of 8.8% from 2024 to 2028. The global
and the PRC market size of back-end semiconductor transport media industry has
increased at a CAGR of 7.8% and 3.6% from 2019 to 2022 but showed a decrease of
17.3% and 14.8% in 2023, respectively, and is forecasted to increase at a CAGR of
7.8% and 9.7% from 2024 to 2028, respectively. In view of the positive industry
outlook, it is necessary for our Group to increase our production capacities to capture
the market growth. During the Track Record Period, our production capacity for our
tray and tray related products at our two production factories has been substantially
utilised. Therefore, we intend to upgrade our manufacturing facilities in the PRC by
upgrading our existing production facilities with automated functions and purchasing
automated machineries.
We will be able to capture the growth in market demand and demand from its
customers in the MEMS and sensor packaging industry. According to the F&S Report,
the global market size by revenue of MEMS and sensor packaging industry has
increased from US$4,361.2 million to US$6,409.8 million from 2019 to 2023
representing a CAGR of approximately 10.1%. It is expected to grow at CAGR of
approximately 5.2% to reach approximately US$8,481.3 million in 2028. Meanwhile,
there has been an increase in customers’ demand for MEMS and sensor packaging,
given that UBOTIC has developed into a more mature stage for which the Company
heavily invested in R&D costs at UBOTIC’s early stage of business and the products
developed including semi-hermetic sensor packaging (ERAQFN) and flow sensor
module could be commercialised in the market. As at the Latest Practicable Date, the
products developed altogether have been qualified by over 10 international customers,
which provides a stable client base for our Group in relation to its MEMS and sensor
packaging. The utilisation rate for flow sensor module has reached 97.1% for the year
ended 31 December 2022 and 82.3% for the year ended 31 December 2023 and that of
semi-hermetic sensor packaging (ERAQFN) has even reached 102.5% for both of the
FUTURE PLANS AND USE OF PROCEEDS
– 408 –


--- page 421 ---
year ended 31 December 2022 and 2023. In view of this, it is necessary for our Group
to expand the production capacities and capabilities for MEMS and sensor packaging
such that UBOTIC has the capacity to take up further purchase orders.
We will be able to diversify the operational risk by having an additional production
facility given that our existing two production factories are all located in the PRC in
light of the rapidly changing political environment.
 The Listing can further provide a long term platform for equity fund raising. During
the Track Record Period, we were capable of expanding our scale of operation by
using the internally generated funds and bank borrowings. Nonetheless, we believe our
Group may be placed under undue financial burden if our internal funds are
predominately used for implementing our business strategies in the future. As at 31
March 2024, our bank balances and cash were negative of approximately HK$1.8
million (unaudited). The additional funds raised through the Share Offer is therefore
important to support the long term development of our business operation. It is
expected that the current banking facilities will not be sufficient to fund the
implementation of our business strategies. Our Directors consider that our Group’s
current financial resources will only be sufficient to support our Group’s existing
operations for the next 12 months from the date of this prospectus, and we will need
to raise funds through the Share Offer to facilitate the implementation of our business
strategies as stated in the paragraphs headed “Business – Business Strategies” in this
prospectus.
 Our Directors believe that with a public listing status, our brand recognition can be
broadened and our competitiveness and credibility can be strengthened. The increased
level of information transparency subsequent to the Listing would allow our existing
and prospective customers, suppliers and the general public to gain public access to
our corporate information and financial position, which can in turn boost up our brand
awareness and their confidence in our Group. Our Directors believe that the enhanced
corporate awareness can help us to attract more new customers and business
opportunities.
FUTURE PLANS AND USE OF PROCEEDS
– 409 –


--- page 422 ---
PUBLIC OFFER UNDERWRITERS
Yue Xiu Securities Company Limited
Alpha Financial Group Limited
CIS Securities Asset Management Limited
Conrad Investment Services Limited
Emperor Securities Limited
Glory Sun Securities Limited
Livermore Holdings Limited
Plutus Securities Limited
Quam Securities Limited
Sinomax Securities Limited
Tiger Brokers (HK) Global Limited
TradeGo Markets Limited
UNDERWRITING ARRANGEMENTS AND EXPENSES
Public Offer
Public Offer Underwriting Agreement
Pursuant to the Public Offer Underwriting Agreement, our Company is offering initially
12,500,000 Public Offer Shares (subject to reallocation) for subscription on and subject to the
terms and conditions of this prospectus.
Subject to the Stock Exchange granting the listing of, and permission to deal in, the Shares
in issue and to be issued pursuant to the Public Offer (including any additional Shares) as
mentioned in this prospectus and to certain other conditions set out in the Public Offer
Underwriting Agreement, the Public Offer Underwriters have severally agreed to subscribe or
procure subscriptions for their respective applicable proportions of the Public Offer Shares now
being offered but which are not taken up under the Public Offer on the terms and conditions of
this prospectus and the Public Offer Underwriting Agreement.
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 are subject to termination if,
at any time before 8:00 a.m. on the Listing Date:
(a) there develops, occurs, exists or comes into force:
(i) any change or development involving a prospective change, or any event or
series of events resulting in or representing a change or development, or
prospective change or development, in local, national, regional or international
financial, political, military, industrial, economic, currency market, fiscal,
UNDERWRITING
– 410 –


--- page 423 ---
regulatory or market conditions (including, without limitation, conditions in
stock and bond markets, money and foreign exchange markets and inter-bank
markets, a 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 devaluation of
the Hong Kong dollar or the Renminbi against any foreign currencies) in or
affecting Hong Kong, China, the United States, any member of the European
Union, Singapore, Japan, the United Kingdom, the Cayman Islands, the BVI or
any other jurisdiction relevant to any member of our Group (collectively the
“Relevant Jurisdictions ”); or
(ii) any new laws, rules, statutes, ordinances, regulations, guidelines, opinions,
notices, circulars, orders, judgements, decrees or rulings of any governmental
authority (the “ Law”) or change or development involving a prospective change
in existing Laws or any change or development involving a prospective change in
the interpretation or application of the Law by any court or other competent
authority in any of the Relevant Jurisdictions; or
(iii) any event or series of events in the nature of force majeure (including, without
limitation, acts of government, strikes, lock-outs, fire, explosion, flooding,
epidemics, pandemics, outbreak of diseases, breakdown in computer or
communication or telecommunication network or system, civil commotion, riot,
public disorder, acts of war, acts of terrorism (whether or not responsibility has
been claimed), acts of God, accident or interruption or delay in transportation) in
or affecting any of the Relevant Jurisdictions; or
(iv) any local, national, regional or international outbreak or escalation of hostilities
(whether or not war is or has been declared) or other state of emergency,
declaration of a national or international emergency or war, or calamity or crisis
in or affecting any of the Relevant Jurisdictions; or
(v) (1) any moratorium, suspension of, or restriction or limitation on, trading in
shares or securities generally on the Stock Exchange, the New York Stock
Exchange, the American Stock Exchange, the NASDAQ National Market, the
London Stock Exchange, the Shanghai Stock Exchange, the Shenzhen Stock
Exchange or the Tokyo Stock Exchange, or (2) a general moratorium on
commercial banking activities in New York (imposed at Federal or New York
State level or other competent authority), London, any member of the European
Union, Japan, Hong Kong or China, declared by the relevant authorities, or a
disruption in commercial banking activities or foreign exchange trading or
securities settlement or clearance services in or affecting any of the Relevant
Jurisdictions; or
(vi) the imposition of economic sanctions, in whatever form, directly or indirectly,
by, or for, the United States or by any member of the European Union on any of
the Relevant Jurisdictions; or
UNDERWRITING
–4 1 1–


--- page 424 ---
(vii) any material change or prospective material change in taxation or exchange
controls, currency exchange rates or foreign investment regulations in any of the
Relevant Jurisdictions (including without limitation a devaluation of the Hong
Kong dollar against any foreign currencies) or the implementation of any
exchange control in any of the Relevant Jurisdictions; 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” in this
prospectus; or
(ix) the commencement by any state, governmental, judicial, law enforcement agency,
regulatory or political body or organisation (collectively the “ Organisations ”) of
any action, proceedings, investigation or enquiry, or any sanction, penalty or
reprimand imposed or issued by any of the Organisations, against any member of
our Group or any Director or an announcement by any of the Organisations that
it intends to take any such action; or
(x) any litigation or claim being threatened or instigated against any member of our
Group or any Director; or
(xi) a Director 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
(xii) the chairman or chief executive officer of our Company vacating his office; or
(xiii) a contravention by any member of our Group of the Companies Ordinance, the
GEM Listing Rules or any applicable Law; or
(xiv) a prohibition on our Company for whatever reason from allotting or selling the
Offer Shares under the terms of the Share Offer; or
(xv) non-compliance of this prospectus (or any other documents used in connection
with the subscription and purchase of the Public Offer Shares) or any aspect of
the Share Offer with the Companies Ordinance, the GEM Listing Rules or any
other applicable Law; or
(xvi) other than with the approval of the Overall Coordinator, the issue or requirement
to issue by our Company of a supplement or amendment to this prospectus (or to
any other documents used in connection with the subscription or sale of the Offer
Shares) under the Companies Ordinance, the GEM Listing Rules or any
requirement or request of the Stock Exchange and/or the SFC; or
UNDERWRITING
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(xvii) a valid demand by any creditor for repayment or payment of any indebtedness of
any member of our Group or in respect of which any member of our Group is
liable before its stated maturity; or
(xviii) any material loss or material damage sustained by any member of our Group
(howsoever caused and whether or not the subject of any insurance or claim
against any person); or
(xix) a petition is presented for the winding up or liquidation of any member of our
Group or bankruptcy of any Director, or any member of our Group or any
Director makes any composition or arrangement with its or his creditors or enters
into a scheme of arrangement, or any resolution is passed for the winding up of
any member of our Group, or a provisional liquidator, receiver or manager is
appointed to take over all or part of the assets or undertaking of any member of
our Group or any Director or any analogous matter occurs in respect of any
member of our Group or any Director,
and which, in any such case and in the sole and absolute opinion of the Overall
Coordinator (for itself and on behalf of the Public Offer Underwriters),
(1) is or will or may or is likely to be materially adverse to, or materially and
prejudicially affect, the business, management, general affairs, financial or
trading position or prospects of our Group as a whole; or
(2) has or will have or may have or is likely to have an adverse effect on the
success, marketability or pricing of the Share Offer or the level of applications
under the Share Offer; or
(3) makes or will or may make or is likely to make it impracticable, inadvisable or
inexpedient to proceed with the Public Offer and/or the Share Offer or the
delivery of the Offer Shares on the terms and in the manner contemplated by this
prospectus; or
(4) makes or will or may make or is likely to make it impracticable, inadvisable or
inexpedient for any part of the Public Offer Underwriting Agreement (including
underwriting), the Public Offer (including processing of applications and/or
payments pursuant to the Public Offer or pursuant to the underwriting thereof) to
be performed or implemented as envisaged; or
(b) there has come to the notice of the Overall Coordinator or any of the Public Offer
Underwriters after the date of the Public Offer Underwriting Agreement:
(i) any statement or information, or any matter or circumstance that renders or could
render any statement or information, contained in this prospectus, the formal
notice and/or any notices, announcements, advertisements, communications or
UNDERWRITING
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other documents issued or used by or on behalf of our Company in connection
with the Share Offer (including any supplement or amendment to any of the
documents) (collectively, the “ Offer Documents ”) was or has or may become,
untrue, incorrect or misleading in any respect or that any estimate, forecast,
expression of opinion, intention or expectation expressed in any Offer Document
is not or may not be, in the sole and absolute opinion of the Overall Coordinator,
fair and honest and based on reasonable assumptions; or
(ii) any matter or circumstance has arisen or has been discovered which would or
might, had it arisen or been discovered immediately before the date of this
prospectus and not having been disclosed in this prospectus, constitute an
omission from any of the Offer Documents and/or in any notices, announcements,
advertisements, communications or other documents issued or used by or on
behalf of our Company in connection with the Share Offer (including any
supplement or amendment thereto); or
(iii) any breach of, or any event rendering untrue, incorrect or misleading in any
respect, any of the warranties or confirmations given by our Company, our
executive Directors in the Public Offer Underwriting Agreement and the Placing
Underwriting Agreement; or
(iv) any breach of any of the obligations, warranties or undertakings of our Company,
our Controlling Shareholders or our executive Directors under the Public Offer
Underwriting Agreement and the Placing Underwriting Agreement; or
(v) any event, act or omission which gives or may give or is likely to give rise to
any liability of any of our Controlling Shareholders, executive Directors and our
Company pursuant to the indemnity provisions under the Public Offer
Underwriting Agreement and the Placing Underwriting Agreement; or
(vi) any information, matter or event which in the sole and absolute opinion of the
Overall Coordinator (for itself and on behalf of the Public Offer Underwriters)
that would cast any serious doubt on the integrity or reputation of any Director
or the reputation of our Group; or
(vii) any material adverse change or development or prospective material adverse
change or development in the conditions, business, general affairs, management,
prospects, assets, liabilities, shareholders’ equity, profits, losses, operating
results, the financial or trading position or performance of any member of our
Group; or
UNDERWRITING
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(viii) approval by the Stock Exchange of the listing of, and permission to deal in, the
Shares is refused or not granted, other than subject to customary conditions, on
or before the date of approval of the Listing, or if granted, the approval is
subsequently withdrawn, qualified (other than by customary conditions) or
withheld; or
(ix) our Company withdraws any of the Offer Documents (and any other documents
used in connection with the contemplated subscription and sale of the Offer
Shares) or the Public Offer; or
(x) any person (other than the Overall Coordinator and any of the Public Offer
Underwriters) has withdrawn or sought to withdraw its consent to being named in
any of the Offer Documents or to the issue of any of the Offer Documents.
Undertakings
Undertakings to the Stock Exchange under the GEM Listing Rules
(A) Undertaking by us
Under Rule 17.29 of the GEM Listing Rules, we have undertaken to the Stock Exchange
that we will not issue any further Shares or securities convertible into our 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 our securities will be
completed within six months from the commencement of dealing), except pursuant to the
Capitalisation Issue and the Share Offer (including the exercise of any options which may be
granted under the Share Option Scheme) or for the circumstances provided under Rule 17.29 of
the GEM Listing Rules.
(B) Undertaking by our Controlling Shareholders
In accordance with Rule 13.16A(1)(a) of the GEM Listing Rules, each of our Controlling
Shareholders has undertaken to the Stock Exchange and our Company that except pursuant to the
Share Offer, he/she/it will not: (a) in the period commencing on the date by reference to which
disclosure of his/her/its shareholding in our Company is made in this prospectus and ending on
the date which is six months from the Listing Date, dispose of, nor enter into any agreement to
dispose of or otherwise create any options, rights, interest or encumbrances in respect of, any of
our Shares in respect of which he/she/it is shown by this prospectus to be the beneficial owners;
or (b) in the period of six months following the expiry of the period referred to in paragraph (1)
above dispose of, nor enter into any agreement to dispose of or otherwise create any options,
rights, interest or encumbrances in respect of, any of our Shares referred to in paragraph (A)
above if, immediately following such disposal or upon the exercise or enforcement of such
options, rights, interest or encumbrances, he/she/it ceases to be a controlling shareholder (as
defined in the GEM Listing Rules) of our Company.
UNDERWRITING
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Pursuant to Rule 13.19 of the GEM Listing Rules, each of our Controlling Shareholders has
undertaken to the Stock Exchange and our Company that within the period commencing on the
date by reference to which disclosure of his/her/its shareholding in our Company is made in this
prospectus and ending on the date which is 12 months from the Listing Date, he/she/it will:
(a) in the event that he/she/it pledges or charges any direct or indirect interest in our
Shares or other securities of our Company under Rule 13.18(1) of the GEM Listing
Rules or pursuant to any right or waiver granted by the Stock Exchange pursuant to
Rule 13.18(4) of the GEM Listing Rules, inform our Company immediately thereafter,
disclosing the details specified in Rule 17.43(1) to (4) of the GEM Listing Rules; and
(b) having pledged or charged any interest in our Shares, inform our Company
immediately in the event that he/she/it becomes aware that the pledgee or chargee has
disposed of or intends to dispose of such interest and of the number of Shares
affected.
We will also inform the Stock Exchange as soon as we have been informed of the above
matters (if any) by any of our Controlling Shareholders and disclose such matters in accordance
with the publication requirements under Rule 17.43 of the GEM Listing Rules as soon as
possible after being so informed by our Controlling Shareholders.
Undertakings under the Public Offer Underwriting Agreement
(A) Undertaking by us
We have undertaken to each of the Sole Sponsor, the Overall Coordinator, the Joint Global
Coordinators, the Joint Bookrunners, the Joint Lead Managers and the Public Offer Underwriters
that at any time from the date of the Public Offer Underwriting Agreement up to and up to the
date and ending on, and including, the date that is six months after the Listing Date (the “ First
Six-Month Period ”), our Company will not (except for the issue of Shares under the
Capitalisation Issue and the Share Offer) without the prior written consent of the Overall
Coordinator (for itself and on behalf of the Public Offer Underwriters) (unless in compliance
with the requirements set out in the GEM Listing Rules):
a. offer, accept subscription for, pledge, charge, mortgage, allot, issue, sell, assign,
contract to allot, issue or sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant or agree to grant any option, right or warrant to
purchase or subscribe for, lend or otherwise transfer or dispose of, or otherwise
transfer or dispose of or create any 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, or
UNDERWRITING
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repurchase, any of our share capital or securities of our Company or any interest in
our securities or any voting right or any other right attaching thereto (including but
not limited any securities convertible into, exercisable or exchangeable for, or that
represent the right to receive such share capital or securities or any interest in our
share or debt capital); 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 such share or debt capital or
securities or any interest in our securities or any voting right or any other right
attaching thereto; or
c. offer or agree or contract to enter or enter into any transaction with the same
economic effect as any transaction described in (a) or (b) above; or
d. publicly announce any intention to enter into any transaction described in (a), (b) or
(c) above, whether any of the foregoing transactions described in (a), (b) or (c) above
is to be settled by delivery of share capital or such other securities, in cash or
otherwise.
We further agree that in the event of an issue or a disposal of any Shares, securities or any
interest of our securities or any voting right or any other right attaching thereto during the
period of six months commencing on the date on which the First Six-Month Period expires (the
“Second Six-Month Period ”), we will take all reasonable steps to ensure that such an issue or a
disposal will not create a disorderly or false market for our Shares.
(B) Undertaking by our Controlling Shareholders
Each of our Controlling Shareholders has undertaken to our Company, the Sole Sponsor,
the Overall Coordinator and the Public Offer Underwriters that, except for the issue of Shares
pursuant to the Share Offer and the Capitalisation Issue, our Controlling Shareholders will not,
without the prior written consent of the Overall Coordinator (for itself and on behalf of the
Public Offer Underwriters), at any time:
(i) during the First Six-Month Period:
(a) offer, pledge, charge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or grant, contract to sell, grant or agree to grant
any option, right or warrant to purchase or subscribe for, lend, make any short
sale or otherwise transfer or dispose of (nor enter into any agreement to transfer
or dispose of or otherwise create any options, rights, interest or encumbrances in
respect of), either directly or indirectly, conditionally or unconditionally, or cause
us to repurchase, any of our share or debt capital or our other securities or any
interest in our share or debt capital or any voting right or any other right
attaching thereto (including but not limited to any securities that are convertible
UNDERWRITING
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into or exercisable or exchangeable for, or that represent the right to receive, any
of our share or debt capital or our other securities or any interest in our share or
debt capital whether now owned or subsequently acquired, owned directly by our
Controlling Shareholders (including holding as a custodian) or with respect to
which our Controlling Shareholders has beneficial ownership (collectively, the
“Lock-up Shares ”)). The foregoing restriction is expressly agreed to preclude
our Controlling Shareholders from engaging in any hedging or other transaction
which is designed to or which reasonably could be expected to lead to or result
in a sale or disposition of the Lock-up Shares even if such Shares would be
disposed of by someone other than our Controlling Shareholders. Such prohibited
hedging or other transactions would include without limitation any short sale or
any purchase, sale or grant of any right (including without limitation any put or
call option) with respect to any of the Lock-up Shares or with respect to any
security that includes, relates to, or derives any significant part of its value from
such Shares; 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 of our share or debt
capital or our other securities or any interest in our share or debt capital or any
voting right or any other right attaching thereto; or
(c) offer or agree or contract to enter or enter into any transaction with the same
economic effect as any transaction described in (i)(a) or (i)(b) above; or
(d) publicly announce any intention enter into, any transaction described in (i)(a),
(i)(b) or (i)(c) above,
whether any transaction described in (i)(a), (i)(b) or (i)(c) above is to be settled by
delivery of Shares or such other securities in cash or otherwise; and
(ii) during the Second Six-Month Period enter into any of the transactions in paragraphs
(i)(a), (i)(b) or (i)(c) above or agree or contract to or publicly announce any intention
to enter into any such transactions if, immediately following such transfer or disposal
or upon the exercise or enforcement of such options, rights, interest or encumbrances,
our Controlling Shareholders will cease to be our Controlling Shareholders. Each of
our Controlling Shareholders further agrees that in the event of a disposal of any
Shares, securities or any interest of our securities or any voting right or any other
right attaching thereto after the Second Six-Month Period, our Controlling
Shareholders will take all reasonable steps to ensure that such a disposal will not
create a disorderly or false market for our Shares.
UNDERWRITING
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Each of our Controlling Shareholder has undertaken to each of our Company, the Sole
Sponsor, the Overall Coordinator and the Public Offer Underwriter(s) that at any time during the
period from the commencement of the First Six-Month Period to the date on which the Second
Six-Month Period expires, he/she/it shall:
(a) if he/she/it pledges or charges or otherwise creates encumbrances over any Shares or
securities of our Company or interests therein in respect of which he/she/it is the
beneficial owner, whether directly or indirectly, immediately inform each of our
Company, the Overall Coordinator and the Public Offer Underwriter(s) in writing of
any such pledges or charges or encumbrances and the number of Shares or securities
of our Company so pledged or charged or encumbered; and
(b) if he/she/it receives any indication, either verbal or written, from any pledgee or
chargee or encumbrance or such third party that any of the pledged, charged,
encumbered Shares or other securities of our Company will be disposed of,
immediately inform each of our Company, the Overall Coordinator and the Public
Offer Underwriter(s) in writing of any such indication.
Indemnity
We and our Controlling Shareholders have agreed to indemnify the Public Offer
Underwriter(s) for 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 us under the Public Offer Underwriting Agreement.
Placing
In connection with the Placing, it is expected that our Company will enter into the Placing
Underwriting Agreement with, among other parties, the Placing Underwriter(s) on or before the
Price Determination Date, on terms and conditions that are substantially similar to the Public
Offer Underwriting Agreement as described above. It is expected that under the Placing
Underwriting Agreement, the Placing Underwriter(s) will severally agree to subscribe and/or
purchase or procure subscribers and/or purchasers for the Placing Shares being offered pursuant
to the Placing.
Potential investors should note that if the Placing Underwriting Agreement is not entered
into on or before the Price Determination Date or is terminated, the Share Offer will not
proceed.
Commissions and expenses
The Underwriters will receive a commission of 5.0% of the aggregate Offer Price payable
for the Offer Shares initially offered under the Share Offer (the “ Fixed Fee”), out of which they
will pay any sub-underwriting commissions.
UNDERWRITING
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The commissions payable to the Underwriters will be borne by our Company in relation to
the new Shares to be issued under the Share Offer. Our Company may also in its sole discretion
pay the Underwriters an additional incentive fee of up to 1.0% of the Offer Price multiplied by
the total number of the Offer Shares (the “ Discretionary Fee ”). The ratio of the Fixed Fee and
the Discretionary Fee payable to all Capital Market Intermediaries is therefore 83.3:16.7. The
incentive fee is discretionary in nature and the payment of such is subject to the sole discretion
of the Company.
The aggregate commissions (inclusive of any discretionary incentive fees), together with
listing fees, SFC transaction levy, Stock Exchange trading fee and AFRC transaction levy in
respect of the new Shares offered by us, legal and other professional fees and printing and other
expenses relating to the Share Offer, are estimated to be approximately HK$4.1 million
(assuming an Offer Price of HK$0.55, which is the Mid-point of the indicative Offer Price
range) in total and are payable by us.
Underwriters’ interest in our Group Other than disclosed in the preceding paragraph and the
obligations under the Underwriting Agreements, none of the Underwriters has any shareholding
interests in any member of our Group or any right (whether legally enforceable or not) to
subscribe for or to nominate persons to subscribe for securities in any member of our Group.
Sole Sponsor independence
The Sole Sponsor satisfies the independence criteria applicable to sponsors as set out in
Rule 6A.07 of the GEM Listing Rules.
UNDERWRITING
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THE SHARE OFFER
The Share Offer comprises:
(i) the Public Offer of an aggregate of initially 12,500,000 Public Offer Shares (subject to
reallocation as mentioned below) in Hong Kong; and
(ii) the Placing of initially 112,500,000 Placing Shares (subject to reallocation and the
Offer Size Adjustment Option as mentioned below).
Investors may apply for the Offer Shares under the Public Offer or, if qualified to do so,
apply for or indicate an interest for the Offer Shares under the Placing, but may not do both. The
Offer Shares will represent 25% of the enlarged issued share capital of our Company
immediately after completion of the Share Offer and the Capitalisation Issue, assuming that the
Offer Size Adjustment Option is not exercised. If the Offer Size Adjustment Option is exercised
in full, the Offer Shares will represent approximately 27.7% of the issued share capital of our
Company immediately following the completion of the Share Offer. The number of Offer Shares
to be offered under the Public Offer and the Placing, respectively, may be subject to reallocation
as mentioned below.
CONDITIONS OF THE SHARE OFFER
Acceptance of all applications for the Offer Shares pursuant to the Share Offer will be
conditional on, inter alia:
 the Stock Exchange granting the listing of, and permission to deal in, the Shares in
issue and to be issued pursuant to the Share Offer including Shares which may be
allotted and issued upon exercise of the Offer Size Adjustment Option and the option
which may be granted under the Share Option Scheme and Capitalisation Issue and
such listing and permission not subsequently having been revoked prior to the
commencement of dealings in the Shares on the Stock Exchange;
 the Offer Price having been duly determined; and
 the obligations of the Underwriter(s) under the Underwriting Agreements becoming
and remaining unconditional (including, if relevant, as a result of the waiver of any
conditions by the Overall Coordinator, on behalf of the Underwriter(s)) and not having
been terminated in accordance with the terms of the Underwriting Agreements,
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 the date which is 30 days after the date of this prospectus.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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If the above conditions are not fulfilled or waived prior to the times and dates specified,
the Share Offer will lapse and the Stock Exchange will be notified immediately. We will cause a
notice of the lapse of the Share Offer to be published by us on the Stock Exchange’s website at
www.hkexnews.hk and on our Company’s website at www.ubot.com.hk on the next day
following such lapse. In such eventuality, all application monies will be returned, without
interest, on the terms set out in “How to Apply for the Public Offer Shares”. In the meantime,
the application monies will be held in separate bank account(s) with the receiving bank(s) or
other bank(s) in Hong Kong licensed under the Banking Ordinance (Chapter 155 of the Laws of
Hong Kong) (as amended).
Share certificates for the Offer Shares are expected to be issued on Friday, 31 May
2024 but will only become valid evidence of title on the Listing Date 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 Share certificates
or prior to the Share certificates becoming valid evidence of title do so entirely at their own
risk.
THE PUBLIC OFFER
Number of Shares Initially Offered
We are initially offering 12,500,000 Public Offer Shares at the Offer Price, representing
10% of the Shares initially available under the Share Offer, for subscription by the public in
Hong Kong. Subject to reallocation of Offer Shares between the Placing and the Public Offer,
the number of Shares initially offered under the Public Offer will represent approximately 2.5%
of our Company’s enlarged issued share capital immediately after completion of the Share Offer
and the Capitalisation Issue, and without taking into account Shares which may be issued upon
exercise of options as may be granted under the Share Option Scheme and assuming that the
Offer Size Adjustment Option is not exercised.
The Public Offer is open to members of the public in Hong Kong as well as to institutional,
professional and other investors. Professional investors generally include brokers, dealers,
companies (including fund managers) whose ordinary business involves dealing in shares and
other securities and corporate entities which regularly invest in shares and other securities.
Completion of the Public Offer is subject to the conditions as set out in the paragraph
headed “Conditions of the Share Offer” in this section.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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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.
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 Friday, 31 May 2024 through a variety of channels as described in paragraph
headed “How to Apply for the Public Offer Shares – B. Publication of results”.
Multiple or suspected multiple applications and any application for more than 100% of the
Public Offer Shares initially comprised in the Share Offer (that is 12,500,000 Public Offer
Shares) are liable to be rejected.
Reallocation
The allocation of the Shares between the Public Offer and the Placing is subject to
adjustment. If the Placing is fully subscribed or oversubscribed and the number of Shares validly
applied for in the Public Offer represents (i) 15 times or more but less than 50 times, (ii) 50
times or more but less than 100 times, and (iii) 100 times or more, of the number of Shares
initially available under the Public Offer, then Offer Shares will be reallocated to the Public
Offer from the Placing. As a result of the reallocation, the total number of Shares available
under the Public Offer will be increased to 37,500,000 Shares, 50,000,000 Shares and
62,500,000 Shares, respectively, representing approximately 30% (in the case of (i)), 40% (in the
case of (ii)) and 50% (in the case of (iii)), respectively, of the total number of Shares initially
available under the Share Offer. In such cases, the number of Shares allocated in the Placing
will be correspondingly reduced, in such manner as the Overall Coordinator deems appropriate.
If the Public Offer Shares are not fully subscribed, the Overall Coordinator has the
authority to reallocate all or any unsubscribed Public Offer Shares to the Placing, in such
proportions as the Overall Coordinator deems appropriate. In addition, the Overall Coordinator
may reallocate Offer Shares from the Placing to the Public Offer to satisfy valid applications
under the Public Offer.
The Offer Shares to be offered in the Public Offer and the Placing may be reallocated as
between these offerings at the discretion of the Overall Coordinator.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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The Overall Coordinator may, at its discretion, reallocate Offer Shares initially allocated
for the Placing to the Public Offer to satisfy valid applications in accordance with Chapter 4.14
of the Guide for New Listing Applicants as follows:
In accordance with Chapter 4.14 of the Guide for New Listing Applicants, if: (i) the
Placing Shares are undersubscribed and the Public Offer Shares are fully subscribed or
oversubscribed irrespective of the number of times; or (ii) the Placing Shares are fully
subscribed or oversubscribed and the Public Offer Shares are oversubscribed by less than 15
times of the number of Public Offer Shares initially available under the Public Offer, provided
that the Offer Price would be set at the lower of indicative offer price or the bottom of the offer
price range, the maximum number of shares permitted under the Public Offer shall be the lesser
of (i) double of initial allocation to the Public Offer, representing 20% of the number of the
Offer Shares initially available under the Share Offer, or (ii) 30% of the total Offer Shares
available under the Share Offer (the “ Allocation Cap ”). As such, in such circumstances, up to
12,500,000 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
25,000,000 Offer Shares, representing 20.00% of the number of the Offer Shares initially
available under the Share Offer.
The Offer Shares to be offered in the Public Offer and the Placing may be reallocated as
between these offerings at the discretion of the Overall Coordinator (for itself and on behalf of
the Underwriters). The Overall Coordinator may reallocate Offer Shares from the Placing to the
Public Offer to satisfy valid applications under the Public Offer, in such proportions as the
Overall Coordinator may, in its sole and absolute discretion, determine, subject to the
requirements under Chapter 4.14 of the Guide for New Listing Applicants.
If the Public Offer is not fully subscribed, the Overall Coordinator may reallocate all or
some unsubscribed Public Offer Shares to the Placing, in such proportions as the Overall
Coordinator may, in its sole and absolute discretion, determine. In that case, the Allocation Cap
will not be triggered.
Where the Placing Shares are undersubscribed, if the Public Offer Shares are also
undersubscribed, the Share Offer will not proceed unless the Underwriters would subscribe 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.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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THE PLACING
Number of 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 112,500,000 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 22.5% of our Company’s enlarged issue share capital
immediately after the completion of the Share Offer and the Capitalisation Issue, but without
taking into account Shares which may be upon exercise of options granted under the Share
Option Scheme and assuming that the Offer Size Adjustment Option is not exercised.
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 “Pricing” 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 of the Shares on the Stock Exchange. 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 Overall Coordinator 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 Overall Coordinator 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.
The total number of Offer Shares to be issued or sold pursuant to the Placing may change
as a result of the clawback arrangement and/or any reallocation of Offer Shares between the
Public Offer and the Placing as described in the subsection headed “– The Public Offer –
Reallocation” in this section above.
PRICING
The Offer Price is expected to be fixed by agreement between the Overall Coordinator (on
behalf of the Underwriters) and us on the Price Determination Date. The Price Determination
Date is expected to be on Thursday, 30 May 2024.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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The Offer Price will be not more than HK$0.60 per Offer Share and is currently expected
not to be less than HK$0.50 per Offer Share, unless otherwise announced, as further explained
below. Prospective investors should be aware that the Offer Price to be determined on the Price
Determination Date may be, but is not expected to be, lower than the indicative Offer Price
range stated in this prospectus. If, for any reason, the Offer Price is not agreed on or before
6:00 p.m., on Thursday, 30 May 2024 between the Overall Coordinator (on behalf of the
Underwriters) and us, the Share Offer will not proceed and will lapse.
Applicants under the Public Offer are required to pay, on application, the maximum Offer
Price of HK$0.60 per Public Offer Share plus brokerage of 1%, SFC transaction levy of
0.0027%, AFRC transaction levy of 0.00015% and Stock Exchange trading fee of 0.00565%. If
the Offer Price, as finally determined on the Price Determination Date, is lower than the
maximum Offer Price, we will refund the respective difference (including brokerage, SFC
transaction levy, AFRC transaction levy and the Stock Exchange trading fee attributable to the
surplus application monies) to successful applicants, without interest. Further details are set out
in the section headed “How to Apply for the Public Offer Shares”.
The Overall Coordinator (for itself and on behalf of the Underwriters) may, where
considered appropriate, based on the level of interest expressed by prospective investors during
the book-building process, and with the consent of the Company, reduce the Offer Price Range
and/or the number of Offer Shares below that stated in this prospectus at any time on or before
the morning of the last day for making applications under the Public Offer. In this case, we will,
as soon as practicable after the decision to make the reduction (and in any event no later than
the morning of the last day for making applications under the Public Offer), cause to be
published on the websites of the Stock Exchange and the Company at www.hkexnews.hk and
www.ubot.com.hk , respectively, an announcement, to cancel the offer and relaunch the offer at
the revised number of Offer Shares and/or the revised Offer Price range and to comply with the
requirements under Rule 14.23 of the GEM Listing Rules (which include the issue of a
supplemental prospectus or a new prospectus (as appropriate)).
The Company will also, as soon as practicable following the decision to make such change,
issue a supplemental or new prospectus updating investors of the change in the number of Offer
Shares and/or the indicative Offer Price range, and giving investors at least three business days
to consider the new information. The supplemental or new prospectus should include at least the
following information: (i) updated Offer Price range and market capitalisation; (ii) updated
listing timetable and underwriting obligations; (iii) updated price/earnings multiple, unaudited
pro forma and adjusted net tangible assets; and (iv) updated use of proceeds and confirmation of
the working capital adequacy based on the revised estimated proceeds.
Upon the issue of such announcement or supplemental prospectus (as appropriate), the
revised number of Offer Shares and/or the revised Offer Price Range will be final and
conclusive, and the Offer Price, if agreed upon between us and the Overall Coordinator (for
itself and on behalf of the Public Offer Underwriters) will be determined within the revised
Offer Price Range.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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Before making applications for the Public Offer Shares, applicants should have regard to
the possibility that any announcement or supplemental prospectus (as appropriate) of a reduction
in the indicative Offer Price Range and/or number of Offer Shares may not be made until the
day which is the last day for making applications under the Public Offer.
If you have already submitted an application for the Public Offer Shares before the last day
for lodging applications under the Public Offer, you will not be allowed to subsequently
withdraw your application. If there is any change to the offer size due to change in the number
of Offer Shares initially offered in the Share Offer (other than pursuant to the exercise of the
Offer Size Adjustment Option and/or reallocation mechanism as disclosed in this prospectus), or
change to the Offer Price which leads to the resulting price falling outside the indicative offer
price range as stated in this prospectus, or if the Company becomes aware that there has been a
significant change affecting any matter contained in this prospectus or a significant new matter
has arisen, the inclusion of information in respect of which would have been required to be in
this prospectus if it had arisen before this prospectus was issued, after the issue of this
prospectus and before the commencement of dealings in our Shares as prescribed under
Rule 14.23 of the GEM Listing Rules, we are required to cancel the Share Offer and relaunch
the offer and issue a supplemental prospectus or a new prospectus and complete the requisite
associated settlement processes on the FINI platform afresh.
In the event of a reduction in the number of Offer Shares, the Overall Coordinator (for
itself and on behalf of the other Underwriters) may, at its discretion, reallocate the number of
Offer Shares to be offered in the Public Offer and the Placing in accordance with Chapter 4.14
of the Guide for New Listing Applicants and paragraph 4 of the Practice Note 6 of the GEM
Listing Rules, provided that the number of Public Offer Shares comprised in the Public Offer
will not be less than 10% of the total number of Offer Shares available under the Share Offer.
Subject to the foregoing paragraph, the Offer Shares to be offered in the Public Offer and the
Offer Shares to be offered in the Placing may, in certain circumstances, be reallocated between
these offerings at the discretion of the Overall Coordinator (for itself and on behalf of the other
Underwriters).
In the absence of a notice of reduction, the number of Offer Shares will not be reduced and
the Offer Price, if agreed upon between us and the Overall Coordinator (for itself and on behalf
of the Underwriters), will not be set outside the indicative Offer Price Range.
Announcement of the Offer Price and Basis of Allocations
The Offer Price, level of applications in the Public Offer, level of indications of interest in
the Placing, and basis of allocations of the Public Offer Shares are expected to be made
available through a variety of channels in the manner described in the paragraphs headed “How
to Apply for the Public Offer Shares – B. Publication of Results”.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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OFFER SIZE ADJUSTMENT OPTION
In connection with the Share Offer, our Company is expected to grant the Offer Size
Adjustment Option to the Placing Underwriters, exercisable by the Overall Coordinator on
behalf of the Placing Underwriters, to cover over allocations under the Placing (if any).
Pursuant to the Offer Size Adjustment Option, our Company may be required to allot and
issue, at the final Offer Price, up to an aggregate of 18,750,000 additional new Shares,
representing 15% of the Offer Shares initially available under the Share Offer. The Offer Size
Adjustment Option can only be exercised by the Overall Coordinator at any time before 5:00
p.m. on the business day immediately preceding the date of the announcement of the results of
allocations and the basis of allocation of the Public Offer Shares; otherwise it will lapse. The
Shares to be issued pursuant to the exercise of the Offer Size Adjustment Option will not be
used for price stabilisation purpose and are not subject to the Securities and Futures (Price
Stabilising) Rules of the SFO (Chapter 571W of the Laws of Hong Kong).
If the Offer Size Adjustment Option is exercised in full, the additional Offer Shares will
represent approximately 15% of the enlarged issued share capital of our Company in issue
following completion of the Capitalisation Issue, the Share Offer and the exercise of the Offer
Size Adjustment Option but without taking into account any Shares which may be issued upon
the exercise of any options that may be granted under the Share Option Scheme. The additional
net proceeds that we would receive if the Offer Size Adjustment Option is exercised in full
(assuming the Offer Price of HK$0.55 per Share (being the mid-point of the indicative Offer
Price range)) are estimated to be approximately HK$10.3 million, which would be applied to the
respective uses as disclosed in the section headed “Future Plans and Use of Proceeds” on a
pro-rata basis. Whether or not the Offer Size Adjustment Option has been exercised will be
disclosed in the announcement of the results of allocations.
NO OVERSEAS REGISTRATION
The documents issued and to be issued in connection with the Share Offer will not be
registered under applicable securities legislation of any jurisdiction other than Hong Kong.
SHARES WILL BE ELIGIBLE FOR ADMISSION INTO CCASS
Application has been made to the Stock Exchange for the listing of and permission to deal
in our Shares in issue and to be issued as mentioned in this prospectus. Subject to the granting
of the listing of, and permission to deal in, our Shares on GEM and the compliance with the
stock admission requirements of HKSCC, our 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 our Shares on GEM or such other date as determined by HKSCC.
All activities under CCASS are subject to the General Rules of HKSCC and HKSCC Operational
Procedures in effect from time to time. All necessary arrangement has been made for our Shares
to be admitted into CCASS.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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DEALING ARRANGEMENTS
Assuming that the Share Offer becomes unconditional at or before 8:00 a.m. in Hong Kong
on Monday, 3 June 2024, it is expected that dealings in Shares on the Stock Exchange will
commence at 9:00 a.m. on Monday, 3 June 2024.
The Shares will be traded in board lots of 5,000 Shares each.
UNDERWRITING ARRANGEMENTS
The Share Offer is fully underwritten by the Underwriters under the terms of the
Underwriting Agreements, subject to agreement on the Offer Price between the Overall
Coordinator (on behalf of the Underwriters) and us on the Price Determination Date.
The terms of the Underwriting Agreements are summarised in “Underwriting”.
STRUCTURE AND CONDITIONS OF THE SHARE OFFER
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IMPORTANT NOTICE TO INVESTORS OF PUBLIC OFFER SHARES
FULLY ELECTRONIC APPLICATION PROCESS
We have adopted a fully electronic application process for the Public Offer and below
are the procedures for application.
This prospectus is available at the website of the Stock Exchange at www.hkexnews.hk
under the “HKEXnews > New Listings > New Listing Information ” section, and our website
at www.ubot.com.hk.
The contents of this prospectus are identical to the prospectus as registered with the
Registrar of Companies in Hong Kong pursuant to Section 342C of the Companies (Winding Up
and Miscellaneous Provisions) Ordinance.
Set out below are the 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 prospectus is available online at the website addresses above.
A. APPLICATION FOR PUBLIC OFFER SHARES
1. Who can apply
You 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; and
 have a Hong Kong address (for the eWhite Form service only).
Unless permitted by the GEM Listing Rules or a waiver and/or consent has been
granted by the Stock Exchange to us, you cannot apply for any Public Offer Shares if you
or the person(s) for whose benefit you are applying for:
 are an existing Shareholder or close associates; or
 are a Director or any of his/her close associates.
2. Application channels
The Public Offer period will begin at 9:00 a.m. on Friday, 24 May 2024 and end
at 12:00 noon on Wednesday, 29 May 2024 (Hong Kong time).
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
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To apply for Public Offer Shares, you may use one of the following application
channels:
Application
Channel Platform Target Investors Application Time
eWhite Form
service
www.ewhiteform.com.hk
Enquiries: +852 2153 1688
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 Friday, 24
May 2024 to 11:30 a.m. on
Wednesday, 29 May 2024,
Hong Kong time.
The latest time for completing
full payment of application
monies will be 12:00 noon
on Wednesday, 29 May
2024, Hong Kong time.
HKSCC EIPO
Channel
Your broker or custodian who
is a HKSCC Participant will
submit an EIPO application
on your behalf through
HKSCC’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 eWhite 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 eWhite Form service, once you complete payment in
respect of any application instructions given by you or for your benefit through the eWhite
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 authorized to give those instructions as an agent.
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
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For the avoidance of doubt, giving an application instruction under the eWhite 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 eWhite Form service, you are deemed to have authorized the
eWhite Form service provider to apply on the terms and conditions in this prospectus, as
supplemented and amended by the terms and conditions of the eWhite 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 authorized 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.
For those applying through HKSCC EIPO Channel, an actual application will be
deemed to have been made for any application instructions given by you or for your benefit
to HKSCC (in 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.
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
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--- page 445 ---
3. Information required to apply
You must provide the following information with your application:
For Individual Applicants For Corporate Applicants
 Full name(s)
2 as shown on your
identity document
 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)
2 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 eWhite Form service, you are required to provide a valid e-mail
address, a contact telephone number and a Hong Kong Address. You are also required to declare that
the identity information provided by you follows the 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.
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 in accordance with market
practice.
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
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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 Overall Coordinator, as our agent, have discretion to
consider whether to accept it on any conditions we think fit, including evidence of the
attorney’s authority.
Failing to provide any required information may result in your application being
rejected.
4. Permitted number of Public Offer Shares for application
Board lot size : 5,000
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$0.60 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.
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
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--- page 447 ---
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 eWhite Form
service, you may refer to the table below for the
amount payable for the number of Shares you have
selected. You must pay the respective maximum
amount payable on application in full upon
application for Public Offer Shares.
NUMBER OF SHARES THAT MAY BE APPLIED FOR AND PAYMENTS
(HK$0.60 per Offer Share)
No. of Offer
Shares
applied for
Amount
payable on
application /
successful
allotment
No. of Offer
Shares
applied for
Amount
payable on
application /
successful
allotment
No. of Offer
Shares
applied for
Amount
payable on
application /
successful
allotment
HK$ HK$ HK$
5,000 3,030.25 150,000 90,907.66 2,000,000 1,212,102.00
10,000 6,060.51 200,000 121,210.20 2,500,000 1,515,127.50
15,000 9,090.76 250,000 151,512.76 3,000,000 1,818,153.00
20,000 12,121.02 300,000 181,815.30 4,000,000 2,424,204.00
25,000 15,151.28 350,000 212,117.86 5,000,000 3,030,255.00
30,000 18,181.54 400,000 242,420.40 6,250,000 3,787,818.76
35,000 21,211.79 450,000 272,722.96 7,500,000 4,545,382.50
40,000 24,242.05 500,000 303,025.50 8,750,000 5,302,946.26
45,000 27,272.30 750,000 454,538.26 10,000,000 6,060,510.00
50,000 30,302.56 1,000,000 606,051.00 11,250,000 6,818,073.76
75,000 45,453.83 1,250,000 757,563.76 12,500,000
(1) 7,575,637.50
100,000 60,605.10 1,500,000 909,076.50
(1) Maximum number of Public Offer Shares you may apply for.
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
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(2) The amount payable is inclusive of brokerage, SFC transaction levy, the Stock Exchange trading fee and AFRC
transaction levy. If your application is successful, brokerage will be paid to the Exchange Participants (as defined
in the GEM Listing Rules) or to the eWhite Form Service Provider (for applications made through the
application channel of the eWhite Form Service Provider) while the SFC transaction levy, the Stock Exchange
trading fee and the AFRC transaction levy will be paid to the SFC, the Stock Exchange and the AFRC,
respectively.
5. Multiple applications prohibited
You or your joint applicant(s) shall not make more than one application for your own
benefit, except where you are a nominee and provide the information of the underlying
investor in your application as required under the paragraph headed “– A. Application for
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 eWhite 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 eWhite Form service or HKSCC EIPO
Channel, you or the person(s) for whose benefit you have made the application shall not
apply for any Public Offer Shares.
6. Terms and conditions of an application
By applying for Public Offer Shares through the eWhite 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 Overall Coordinator, 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 designated website of
the eWhite 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;
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
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(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 none of our Company, the Sole Sponsor, the Overall Coordinator, the
Joint Global Coordinators, the Joint Bookrunners, the Joint Lead Managers, the
Underwriters, the Capital Market Intermediaries, any of their or our Company’s
respective directors, officers, employees, partners, agents, advisors and any other
parties involved in the Share Offer (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;
(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 Branch
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;
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
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--- page 450 ---
(x) confirm that you are aware of the situations specified in the paragraph headed
“– C. Circumstances in which you 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;
(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 and the Overall Coordinator 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;
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
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--- page 451 ---
(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 Branch 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.
B. PUBLICATION OF RESULTS
Results of allocation
You can check whether you are successfully allocated any Public Offer Shares
through:
Platform Date/Time
Applying through eWhite Form service or HKSCC EIPO Channel:
Website The designated results of allocation at
www.ewhiteform.com.hk/results
with a “search by ID Number”
function.
The full list of (i) wholly or partially
successful applicants using the
eWhite Form service and HKSCC
EIPO Channel, and (ii) the number
of Public Offer Shares conditionally
allotted to them, among other things,
will be displayed at
https://www.ewhiteform.com.hk/
eAnnouncement/.
24 hours, from 11:00 p.m. on Friday,
31 May 2024 to 12:00 midnight on
Friday, 7 June 2024 (Hong Kong
time)
The Stock Exchange’s website at
www.hkexnews.hk and our website
at www.ubot.com.hk which will
provide links to the above mentioned
websites of the Hong Kong Branch
Share Registrar.
No later than 11:00 p.m. on Friday, 31
May 2024 (Hong Kong time).
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
– 439 –


--- page 452 ---
Platform Date/Time
Telephone +852 2153 1688 – 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
Monday, 3 June 2024 to Friday, 7
June 2024 (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 Thursday, 30 May 2024 (Hong Kong time).
HKSCC Participants can log into FINI and review the allotment result from 6:00 p.m.
on Thursday, 30 May 2024 (Hong Kong time) on a 24-hour basis and should report any
discrepancies on allotments to HKSCC as soon as practicable.
Allocation announcement
We expect to announce the results of the final Offer Price, the level of indications of
interest in the 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.ubot.com.hk by no later than 11:00 p.m. on Friday, 31 May 2024
(Hong Kong time).
C. CIRCUMSTANCES IN WHICH YOU WILL NOT BE ALLOCATED PUBLIC OFFER
SHARES
You 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:
Your 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 Overall Coordinator, 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.
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
– 440 –


--- page 453 ---
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. You may refer
to the paragraph headed “– A. Application for Public Offer Shares – 5. Multiple
applications prohibited” in this section on what constitutes multiple applications;
 your application instruction is incomplete;
 your payment (or confirmation of funds, as the case may be) is not made
correctly;
 the Underwriting Agreements do not become unconditional or are terminated;
 we or the Overall Coordinator believe that by accepting your application, it or
we would violate applicable securities or other laws, rules or regulations.
5. If there is money settlement failure for allotted Shares:
Based on the arrangements between HKSCC Participants and HKSCC, HKSCC
Participants will 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.
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
– 441 –


--- page 454 ---
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
for by you through the broker or custodian may be affected to the extent of the settlement
failure. In the extreme case, you will not be allocated any 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 OF SHARE CERTIFICATES AND REFUND OF APPLICATION MONIES
You 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.
Share certificates will only become valid at 8:00 a.m. on Monday, 3 June 2024 (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.
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
– 442 –


--- page 455 ---
The following sets out the relevant procedures and time:
eWhite Form service HKSCC EIPO Channel
Despatch/collection of Share certificate 1
For application of Public
Offer Shares
Your Share certificate(s) will be
sent to the address specified in
your application instructions by
ordinary post at your own risk
Time: Friday, 31 May 2024
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.
Refund mechanism for surplus application monies paid by you
Date Monday, 3 June 2024 Subject to the arrangement
between you and your broker
or custodian
Responsible party Hong Kong Branch Share
Registrar
Your broker or custodian
Application monies paid
through single bank
account
e-Refund payment instructions to
your designated bank account
Your broker or custodian will
arrange refund to your
designated bank account
subject to the arrangement
between you and itApplication 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
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
Listing Date rendering it impossible for the relevant share certificates to be dispatched to HKSCC in a timely
manner, the Company shall procure the Hong Kong Branch Share Registrar to arrange for delivery of the
supporting documents and share certificates in accordance with the contingency arrangements as agreed between
them. You may refer to “– E. Severe weather arrangements” in this section.
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
– 443 –


--- page 456 ---
E. SEVERE WEATHER ARRANGEMENTS
The opening and closing of the application lists
The application lists will not open or close on Wednesday, 29 May 2024 if, there is:
 a tropical cyclone warning signal number 8 or above;
 a black rainstorm warning; and/or
 an “extreme conditions” announcement issued after a super typhoon (“ Extreme
Conditions”),
(collectively, “ Severe Weather Signals ”),
in force in Hong Kong at any time between 9:00 a.m. and 12:00 noon on Wednesday, 29
May 2024.
Instead they will open between 11:45 a.m. and 12:00 noon and/or close at 12:00 noon
on the next business day which does not have Severe Weather Signals in force at any time
between 9:00 a.m. and 12:00 noon.
Prospective investors should be aware that a postponement of the opening/closing of
the application lists may result in a delay in the listing date. Should there be any changes
to the dates 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.ubot.com.hk of the revised timetable.
If a Severe Weather Signal is hoisted on Friday, 31 May 2024, the Hong Kong Branch
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 Monday, 3 June 2024.
If a Severe Weather Signal is hoisted on Friday, 31 May 2024:
 for physical share certificates of 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 Friday, 31
May 2024 or on Monday, 3 June 2024).
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.
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
– 444 –


--- page 457 ---
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 date 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.
You 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.
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 banks
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.
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
– 445 –


--- page 458 ---
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
Your personal data may be used, held, processed, and/or stored (by whatever means)
for the following purposes:
 processing your application and refund cheque and e-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;
 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
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
– 446 –


--- page 459 ---
 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 banks 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, in each case 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);
 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 GEM 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).
HOW TO APPLY FOR THE PUBLIC OFFER SHARES
– 447 –


--- page 460 ---
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
– 448 –


--- page 461 ---
The following is the text of a report set out on pages I-1 to I-66 received from the
Company’ s reporting accountants, Moore CP A Limited, Certified Public Accountants, Hong
Kong, for the purpose of inclusion in this document.
ACCOUNTANTS’ REPORT ON HISTORICAL FINANCIAL INFORMATION TO THE
DIRECTORS OF UBOT HOLDING LIMITED AND YUE XIU CAPITAL LIMITED
Introduction
We report on the historical financial information of UBoT Holding Limited (the
“Company”) and its subsidiaries (together, the “Group”) set out on pages I-4 to I-66, which
comprises the consolidated statements of financial position of the Group as at 31 December
2021, 2022, and 2023, the statements of financial position of the Company as at 31 December
2022 and 2023 and the consolidated statements of profit or loss and other comprehensive
income, the consolidated statements of changes in equity and the consolidated statements of cash
flows of the Group for each of the three years ended 31 December 2023 (the “Track Record
Period”) and a summary of 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-66 forms an integral part of this report, which has been
prepared for inclusion in the document of the Company dated 24 May 2024 (the “Prospectus”) in
connection with the initial listing of shares of the Company on the GEM of The Stock Exchange
of Hong Kong Limited (the “Stock Exchange”).
Directors’ responsibility for the Historical Financial Information
The directors of the Company are responsible for the preparation of the Historical Financial
Information that gives a true and fair view in accordance with the basis of preparation and
presentation set out in note 2 to the Historical Financial Information, and for such internal
control as the directors of the Company determine is necessary to enable the preparation of the
Historical Financial Information that is free from material misstatement, whether due to fraud or
error.
APPENDIX I ACCOUNTANTS’ REPORT
– I-1 –


--- page 462 ---
Reporting accountants’ 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 (the “HKICPA”). This standard requires that we comply with ethical standards and
plan and perform our work to obtain reasonable assurance about whether the Historical Financial
Information is free from material misstatement.
Our work involved performing procedures to obtain evidence about the amounts and
disclosures in the Historical Financial Information. The procedures selected depend on the
reporting accountants’ judgment, 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 accountants consider internal control relevant to the entity’s
preparation of the Historical Financial Information that gives a true and fair view in accordance
with the basis of preparation and presentation set out in note 2 to the Historical Financial
Information in order to design procedures that are appropriate in the circumstances, but not for
the purpose of 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 of the Company, as well as
evaluating the overall presentation of the Historical Financial Information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Opinion
In our opinion, the Historical Financial Information gives, for the purposes of the
accountants’ report, a true and fair view of the Group’s financial position as at 31 December
2021, 2022, and 2023, of the Company’s financial position as at 31 December 2022 and 2023
and of the Group’s financial performance and cash flows for the Track Record Period in
accordance with the basis of preparation and presentation set out in note 2 to the Historical
Financial Information.
APPENDIX I ACCOUNTANTS’ REPORT
– I-2 –


--- page 463 ---
Report on matters under the Rules Governing the Listing of Securities on GEM of the
Stock Exchange and the Companies (Winding Up and Miscellaneous Provisions) Ordinance
Adjustments
In preparing the Historical Financial Information, no adjustments to the Underlying
Financial Statements as defined on page I-4 have been made.
Dividends
We refer to note 13 to the Historical Financial Information which contains information
about the dividends declared by the Companies’ subsidiaries comprising the Group in respect of
the Track Record Period and states that no dividends have been paid or declared by the
Company since its incorporation.
No historical financial statements for the Company
No financial statements have been prepared for the Company since its date of
incorporation.
Moore CPA Limited
Certified Public Accountants
Registered Public Interest Entity Auditors
Lai Hung Wai
Practising Certificate Number: P06995
Hong Kong
24 May 2024
APPENDIX I ACCOUNTANTS’ REPORT
– I-3 –


--- page 464 ---
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
accountants’ report.
The financial statements of the Group for the Track Record Period, on which the Historical
Financial Information is based, were audited by Moore CPA Limited in accordance with
International Standards on Auditing issued by the International Auditing and Assurance
Standards Board (“IAASB”) (“Underlying Financial Statements”).
The Historical Financial Information is presented in Hong Kong dollar (“HK dollar” or
“HK$”) and all values are rounded to the nearest thousand (HK$’000) except when otherwise
indicated.
APPENDIX I ACCOUNTANTS’ REPORT
– I-4 –


--- page 465 ---
CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Y ear ended 31 December
2021 2022 2023
Notes HK$’000 HK$’000 HK$’000
Revenue 6 202,948 257,565 188,969
Cost of sales (116,272) (155,687) (116,989)
Gross profit 86,676 101,878 71,980
Other income 7 74 947 145
Other gains and losses 8 1,070 (5,967) (2,174)
(Provision for) reversal of impairment
losses on financial assets (76) (354) 493
Administrative expenses (23,827) (26,091) (27,640)
Selling and distribution expenses (22,742) (25,074) (21,282)
Research and development expenses (4,104) (4,270) (4,822)
Finance costs 9 (3,209) (4,096) (4,784)
Listing expenses (2,018) (9,975) (5,260)
Profit before taxation 10 31,844 26,998 6,656
Income tax expense 11 (5,448) (5,200) (1,618)
Profit for the year, attributable to owners
of the Company 26,396 21,798 5,038
Other comprehensive (expense) income
Item that may be reclassified to profit or
loss:
Exchange differences arising on
translation of foreign operations (1,056) 2,643 548
Other comprehensive (expense) income
for the year (1,056) 2,643 548
Total comprehensive income for the year,
attributable to owners of the Company 25,340 24,441 5,586
Earnings per share
Basic (HK cents) 14 7.0 5.8 1.5
APPENDIX I ACCOUNTANTS’ REPORT
– I-5 –


--- page 466 ---
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at 31 December
2021 2022 2023
Notes HK$’000 HK$’000 HK$’000
Non-current assets
Property, plant and equipment 15 37,243 41,151 44,028
Right-of-use assets 16 28,945 26,174 18,355
Deferred tax assets 26 – 1,015 1,167
Deposits and prepayments 18 1,096 1,899 2,947
67,284 70,239 66,497
Current assets
Inventories 17 60,113 60,701 65,588
Trade and other receivables, deposits and
prepayments 18 63,215 63,320 51,717
Financial assets at fair value through
profit or loss 19 12,968 13,335 13,748
Amount due from a director 20 10,620 6,318 6,318
Amount due from a related company 20 2,954 – –
Time deposits 21 – – –
Bank balances and cash 21 2,323 5,900 1,073
152,193 149,574 138,444
Current liabilities
Trade and other payables 22 75,648 52,741 55,828
Contract liabilities 23 340 62 20
Income tax provision 20,927 25,390 14,171
Bank overdrafts 21 3,261 – 2,932
Lease liabilities 24 10,097 7,002 7,670
Bank borrowings 25 53,599 57,680 48,064
163,872 142,875 128,685
Net current (liabilities) assets (11,679) 6,699 9,759
Total assets less current liabilities 55,605 76,938 76,256
APPENDIX I ACCOUNTANTS’ REPORT
– I-6 –


--- page 467 ---
As at 31 December
2021 2022 2023
Notes HK$’000 HK$’000 HK$’000
Non-current liabilities
Lease liabilities 24 24,118 21,010 14,742
Deferred tax liabilities 26 137 137 137
24,255 21,147 14,879
Net assets 31,350 55,791 61,377
Capital and reserves
Share capital 27 15,788 –* –*
Reserves 15,562 55,791 61,377
Total equity 31,350 55,791 61,377
* Amount less than HK$1,000
APPENDIX I ACCOUNTANTS’ REPORT
– I-7 –


--- page 468 ---
STATEMENTS OF FINANCIAL POSITION
The Company
As at 31 December
2022 2023
Notes HK$’000 HK$’000
Non-current asset
Investment in a subsidiary 32 –* –*
Current asset
Bank balances – 88
Prepayments 18 3,980 6,476
3,980 6,564
Current liabilities
Accruals 22 1,159 1,074
Amounts due to subsidiaries 20 3,397 6,080
4,556 7,154
Net current liabilities (576) (590)
Net liabilities (576) (590)
Capital and reserves
Share capital 27 –* –*
Reserves 27 (576) (590)
Capital deficiencies (576) (590)
* Amount less than HK$1,000
APPENDIX I ACCOUNTANTS’ REPORT
– I-8 –


--- page 469 ---
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to owner of the Company
Share capital
Other
reserve
Translation
reserve
(Accumulated
losses)
retained
profits Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
(Note 27) (Note)
At 1 January 2021 15,788 – (1,192) (8,586) 6,010
Profit for the year – – – 26,396 26,396
Other comprehensive expense
for the year – – (1,056) – (1,056)
At 31 December 2021 15,788 – (2,248) 17,810 31,350
Profit for the year – – – 21,798 21,798
Other comprehensive income
for the year – – 2,643 – 2,643
Effect of Reorganisation (as defined
on note 2) (15,788) 15,788 – – –
At 31 December 2022 – 15,788 395 39,608 55,791
Profit for the year – – – 5,038 5,038
Other comprehensive income
for the year – – 548 – 548
At 31 December 2023 – 15,788 943 44,646 61,377
* Amount less than HK$1,000
Note: Other reserve represents the difference between the amount of share capital of the Company issued, and the share
capital of UBoT Inc. (HK) (as defined in note 2) exchanged in connection with the Reorganisation (as defined in
note 2).
APPENDIX I ACCOUNTANTS’ REPORT
– I-9 –


--- page 470 ---
CONSOLIDATED STATEMENTS OF CASH FLOWS
Y ear ended 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
OPERATING ACTIVITIES
Profit before taxation 31,844 26,998 6,656
Adjustments for:
Interest income (11) (15) (11)
Depreciation of property, plant and equipment 8,125 8,896 10,819
Depreciation of right-of-use assets 6,554 6,863 6,481
Provision for (reversal of) impairment losses on
financial assets 76 354 (493)
Finance costs 3,209 4,096 4,784
Gain on fair value change of financial assets at fair
value through profit or loss (416) (349) (411)
(Gain) loss on disposal of property, plant and
equipment – (87) 29
Net changes in allowance for inventories (1,408) 522 661
Operating cash flow before movement in working
capital 47,973 47,278 28,515
Movements in working capital:
(Increase) decrease in inventories (21,418) 2,929 (4,560)
(Increase) decrease in trade and other receivables,
deposits and prepayments (19,672) 1,524 6,152
Increase (decrease) in trade and other payables 3,410 (15,348) 4,378
Increase (decrease) in contract liabilities 11 (277) (41)
Net cash generated from operations 10,304 36,106 34,444
Income tax paid (2,118) (1,794) (6,664)
NET CASH FROM OPERATING ACTIVITIES (note) 8,186 34,312 27,780
INVESTING ACTIVITIES
Purchase of property, plant and equipment (13,730) (14,299) (13,312)
Acquisition of subsidiaries – (35) –
Deposits paid for acquisition of property, plant and
equipment – (580) (1,372)
Proceeds from disposal of property, plant and
equipment – 87 539
Interest received 11 15 11
Advance to a director (2,800) (5,078) –
Repayment from a director 4,500 4,139 –
Advance to a related company (3,298) (707) –
Repayment from a related company 7,498 2,250 –
APPENDIX I ACCOUNTANTS’ REPORT
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Y ear ended 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
NET CASH USED IN INVESTING ACTIVITIES (7,819) (14,208) (14,134)
FINANCING ACTIVITIES
Interest paid (1,805) (2,748) (3,732)
New bank borrowings raised 147,753 240,490 182,795
Repayment of bank borrowings (144,324) (236,299) (192,380)
Repayment of lease liabilities (6,691) (11,283) (7,163)
Issue costs paid (365) (3,347) (884)
NET CASH USED IN FINANCING ACTIVITIES (5,432) (13,187) (21,364)
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIV ALENTS (5,065) 6,917 (7,718)
EFFECT OF FOREIGN EXCHANGE RATE
CHANGES (616) (79) (41)
CASH AND CASH EQUIV ALENTS AT BEGINNING
OF THE YEAR 4,743 (938) 5,900
CASH AND CASH EQUIV ALENTS AT
END OF THE YEAR (938) 5,900 (1,859)
Represented by
Bank balances and cash 2,323 5,900 1,073
Bank overdrafts (3,261) – (2,932)
(938) 5,900 (1,859)
Note: Included in net cash from operating activities with cash outflow of HK$1,097,000, HK$10,394,000 and
HK$4,580,000 for the years ended 31 December 2021, 2022, and 2023, respectively, represented payments of
listing expenses during the year.
APPENDIX I ACCOUNTANTS’ REPORT
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NOTES TO HISTORICAL FINANCIAL INFORMATION
1. GENERAL INFORMATION
The Company was incorporated and registered as an exempted company with limited liability in the Cayman
Islands under the Companies Act (as revised) of the Cayman Islands on 7 February 2022. The addresses of the
registered office and the principal place of business of the Company are set out in the section headed “Corporate
Information” to the Prospectus.
The Company is an investment holding company. The principal activities of the Operating Companies
becoming the Company’s subsidiaries now comprising the Group (collectively referred to as the “Group”), are
research and development, manufacturing and sales of back-end semiconductor transport media and
Micro-Electro-Mechanical-System (“MEMS”) and sensor packaging (the “Listing Business”).
The Historical-Financial Information is expressed in HK$, which is different from the functional currency of the
Company, United States dollars (“US$”). The directors of the Company consider that presenting the Historical
Financial Information in HK$ is preferable when controlling and monitoring the performance and financial position of
the Group.
2. GROUP REORGANISATION AND BASIS OF PREPARATION AND PRESENTATION OF THE
HISTORICAL FINANCIAL INFORMATION
In preparing for the Listing of the shares of the Company on GEM of the Stock Exchange, the entities in the
Group underwent a group reorganisation (the “Reorganisation”) which involves interspersing the Company and other
investment holding companies between UBoT Incorporated Limited (“UBoT Inc. (HK)”), and UBOTIC Company
Limited (“UBOTIC”) with the then shareholders.
Prior to the Reorganisation, the principal operating company, UBoT Inc. (HK), was held as to 46.5% by Mr.
Tong Yuen To (“Mr. Tong”), who is a director, chairman and chief executive officer of the Company, 42% by Busy
Trade Limited (“Busy Trade”), a company incorporated in Hong Kong, which is owned by Mr. Tang Ming, Ms. Tang
Wai Ling, Mr. Tang Chak Leung and Mr. Tang Chak Man (collectively as “Tang Family”), Mr. Tong and the Tang
Family have always been acting in concert in respect of the operations of the Listing Business and therefore they are
regarded as the Listing Business ultimate controlling shareholders (the “Controlling Shareholders”) and the remaining
11.5% were owned by five individuals. On 21 March 2022, one of the five individuals holding 5% of equity interest in
UBoT Inc. (HK) disposed his shareholding to Mr. Tong at a cash consideration of HK$1,000,000. Completion of the
said transfer took place on the same date. Immediately after the said transfer, UBoT Inc. (HK) was owned by Mr. Tong
and Busy Trade as to 51.5% and 42%, respectively, and the remaining four individuals of 6.5%.
There are four wholly-owned subsidiaries held under UBoT Inc. (HK), namely,ʮ̡,୷Ꮄ
ʮ̡, both are limited liability companies established in the People’s Republic of China (the
“PRC”), UBOTIC, a company incorporated in Hong Kong with limited liability, and UBoT Incorporated Pte. Limited, a
company incorporated in Singapore with limited liability. UBoT Inc. (HK), together with its four wholly-owned
subsidiaries collectively referred to as (the “Operating Companies”), and its particulars are set out in note 32. Prior to
the incorporation of Company and the completion of the Reorganisation, the Listing Business was carried out by the
Operating Companies. Upon the completion of the Reorganisation, the Operating Companies were transferred and
indirectly held by the Company.
The principal steps of the Reorganisation are as follows:
(i) Abundant Wealth Group Limited (“Abundant Wealth”) and Sino Key Enterprises Limited (“Sino Key”)
were incorporated in the BVI with limited liability on 26 November 2021 and 17 November 2021,
respectively. On incorporation, each of Abundant Wealth and Sino Key has an authorised share capital of
50,000 shares with a par value of US$1 each, of which one share was allotted and issued, credited as fully
paid to the Company on the same date at par value. Accordingly, Abundant Wealth and Sino Key have
become wholly owned subsidiaries of the Company since their incorporation.
APPENDIX I ACCOUNTANTS’ REPORT
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(ii) On 20 April 2022, Abundant Wealth entered into a share sale and purchase agreement with all shareholders
of UBoT Inc. (HK) so that all shareholders of UBoT Inc. (HK) transferred the entire issued share capital
of UBoT Inc. (HK) to Abundant Wealth in consideration of the Company to allot and issue a total of 1,000
shares in its issued share capital to Sino Success Ventures Limited (“Sino Success”) (at the direction of
Mr. Tong, whom is the sole shareholder of Sino Success) of 515 shares (representing 51.5% equity
interests in the Company), Busy Trade of 420 shares (representing 42% equity interests in the Company)
and the other shareholders of 65 shares (representing 6.5% equity interests in the Company).
(iii) On 20 April 2022, Sino Key entered into a share sale and purchase agreement with all shareholders of
UBoT Inc. (HK) so that UBoT Inc. (HK) transferred the entire issued share capital of UBOTIC to Sino
Key in consideration of the Company to allot and issue a total of 999 shares in its issued share capital to
Sino Success of 514 shares (representing 51.5% equity interests in the Company), Busy Trade of 420
shares (representing 42% equity interests in the Company) and the other shareholders of 65 shares
(representing 6.5% equity interests in the Company).
Pursuant to the Reorganisation described above, the Company became the holding company of the companies
now comprising the Group on 20 April 2022. 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 recapitalisation of the
Listing Business with no change in management of such business and the ultimate Controlling Shareholders of the
Listing Business remain the same. And the Company is considered as the acquiree for accounting purposes.
Accordingly, for the purpose of this report, the Historical Financial Information has been prepared and presented as a
continuation of the consolidated financial statements of the Operating Companies, with the assets and liabilities of the
Group recognised and measured at the carrying amounts of the Listing Business under the consolidated financial
statements of the Operating Companies for all periods presented.
The consolidated statements of profit or loss and other comprehensive income, consolidated statements of
changes in equity and consolidated statements of cash flows for the Track Record Period include the results, changes in
equity and cash flows of the Listing Business as if our group structure after the Reorganisation had been in existence
throughout the Track Record Period, or since their respective dates of incorporation, where it is a shorter period.
The consolidated statements of financial position of the Group as at 31 December 2020 and 31 December 2021
have been prepared to present the assets and liabilities of the Listing Business as if the Group structure after the
Reorganisation had been in existence throughout the Track Record Period, the Listing Business had always been
operated by the Group and the current group structure had been in existence at those dates taking into account the
respective date of incorporation, where applicable.
3. APPLICATION OF IFRSs
The Historical Financial Information has been prepared in accordance with IFRS Accounting Standards
(“IFRSs”), which comprise all standards and interpretations approved by the International Accounting Standards Board
(the “IASB”).
All IFRSs effective for the accounting period commencing from 1 January 2023, including relevant transitional
provisions, have been early adopted by the Group in the preparation of the Historical Financial Information throughout
the Track Record Period.
The Historical Financial Information has been prepared under the historical cost convention, except for financial
assets at fair value through profit or loss which have been measured at fair value at each reporting date.
APPENDIX I ACCOUNTANTS’ REPORT
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Issued but not yet effective IFRSs
The Group has not applied the following new and revised IFRSs, that have been issued but are not yet
effective, in this Historical Financial Information. The Group intends to adopt them, if applicable, when they
become effective.
Amendments to IFRS 10
and IAS 28
Sale or Contribution of Assets between an Investor and its Associate or Joint
Venture 1
Amendments to IFRS 16 Lease Liability in a Sale and Leaseback 2
Amendments to IFRS 18 Presentation and Disclosure in Financial Statements 4
Amendments to IAS 1 Classification of Liabilities as Current or Non-current 2
Amendments to IAS 1 Non-current Liabilities with Covenants 2
Amendments to IAS 7
and IFRS 7
Supplier Finance Arrangements 2
Amendments to IAS 21 Lack of Exchangeability 3
1 No mandatory effective date yet determined but available for adoption.
2 Effective for annual periods beginning on or after 1 January 2024.
3 Effective for annual periods beginning on or after 1 January 2025.
4 Effective for annual periods beginning on or after 1 January 2027.
The Group is in the process of making an assessment of the impact of these new and revised IFRSs upon
initial application. So far, the Group has expected that these standards will not have a significant effect on the
Group’s financial performance and financial position.
4. MATERIAL ACCOUNTING POLICY INFORMATION
The Historical Financial Information has been prepared in accordance with the following accounting policies
which conform with IFRS issued by the IASB. For the purpose of preparation of the Historical Financial Information,
information is considered material if such information is reasonably expected to influence decisions made by primary
users. In addition, the Historical Financial Information includes applicable disclosures required by the Rules Governing
the Listing of Securities on GEM the of Stock Exchange and by the Hong Kong Companies Ordinance.
The Historical Financial Information has been prepared on the historical cost basis except for financial assets at
fair value through profit or loss that are measured at fair values at the end of each reporting period, as explained in the
accounting policies as set out below. Historical cost is generally based on the fair value of the consideration given in
exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date, regardless of whether that price is directly observable
or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes
into account the characteristics of the asset or liability if market participants would take those characteristics into
account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure
purposes in the Historical Financial Information is determined on such a basis, except for leasing transactions that are
within the scope of IFRS 16 “Leases”, and measurements that have some similarities to fair value but are not fair
value, such as net realisable value in IAS 2 “Inventories” or value in use in IAS 36 “Impairment of Assets”.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based
on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to
the fair value measurement in its entirety, which are described as follows:
 Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the
entity can access at the measurement date;
 Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the
asset or liability, either directly or indirectly; and
 Level 3 inputs are unobservable inputs for the asset or liability. The principal accounting policies adopted
are set out below.
APPENDIX I ACCOUNTANTS’ REPORT
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Consolidation
The Historical Financial Information incorporates the financial statements of the companies controlled by
the Group.
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there
are changes to one or more of the three elements of control listed above.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when
the Group loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed
of during the year are included in the consolidated statements of profit or loss and other comprehensive income
from the date the Group gains control until the date when the Group ceases to control the subsidiary.
Profit or loss and each item of other comprehensive income are attributed to the owners of the Company
and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the
Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit
balance.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies in line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions
between members of the Group are eliminated in full on combination.
Business combinations
Acquisitions of businesses 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.
Revenue from contracts with customers
The Group recognises revenue when (or as) a performance obligation is satisfied, i.e. when “control” of
the goods or services underlying the particular performance obligation is transferred to the customer.
A performance obligation represents a good or service (or a bundle of goods or services) that is distinct or
a series of distinct goods or services that are substantially the same.
Revenue is recognised at a point in time when the customer obtains control of the distinct good or service.
A contract asset represents the Group’s right to consideration in exchange for goods or services that the
Group has transferred to a customer that is not yet unconditional. It is assessed for impairment in accordance
with IFRS 9. In contrast, a receivable represents the Group’s unconditional right to consideration, i.e. only the
passage of time is required before payment of that consideration is due.
A contract liability represents the Group’s obligation to transfer goods or services to a customer for which
the Group has received consideration (or an amount of consideration is due) from the customer.
Leases
Definition of a lease
A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset
for a period of time in exchange for consideration.
APPENDIX I ACCOUNTANTS’ REPORT
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As a lessee
Short-term leases
The Group applies the short-term lease recognition exemption to leases of exhibition halls and warehouses
that have a lease term of 12 months or less from the commencement date and do not contain a purchase option.
Lease payments on short-term leases are recognised as expense on a straight-line basis over the lease term.
Right-of-use assets
Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and
adjusted for any remeasurement of lease liabilities.
Right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and
the lease term.
The Group presents right-of-use assets as a separate line item on the consolidated statements of financial
position.
Refundable rental deposits
Refundable rental deposits paid are accounted under IFRS 9 and initially measured at fair value.
Adjustments to fair value at initial recognition are considered as additional lease payments and included in the
cost of right-of-use assets.
Lease liabilities
At the commencement date of a lease, the Group recognises and measures the lease liability at the present
value of lease payments that are unpaid at that date. In calculating the present value of lease payments, the
Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the
lease is not readily determinable.
The lease payments include fixed payments (including in-substance fixed payments) less any lease
incentives receivable.
After the commencement date, lease liabilities are adjusted by interest accretion and lease payments.
The Group remeasures lease liabilities (and makes a corresponding adjustment to the related right-of-use
assets) whenever the lease term has changed or there is a change in the assessment of exercise of a purchase
option, in which case the related lease liability is remeasured by discounting the revised lease payments using a
revised discount rate at the date of reassessment.
The Group presents lease liabilities as a separate line item on the consolidated statements of financial
position.
Lease modifications
Except for COVID-19-related rent concessions in which the Group applied the practical expedient, the
Group accounts for a lease modification as a separate lease if:
 the modification increases the scope of the lease by adding the right to use one or more underlying
assets; and
 the consideration for the leases increases by an amount commensurate with the stand-alone price for
the increase in scope and any appropriate adjustments to that stand-alone price to reflect the
circumstances of the particular contract.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 477 ---
For a lease modification that is not accounted for as a separate lease, the Group remeasures the lease
liability, less any lease incentive receivables, based on the lease term of the modified lease by discounting the
revised lease payments using a revised discount rate at the effective date of the modification.
The Group accounts for the remeasurement of lease liabilities by making corresponding adjustments to the
relevant right-of-use asset.
Changes in the basis for determining the future lease payments as a result of interest rate benchmark reform
For changes in the basis for determining the future lease payments as a result of interest rate benchmark
reform, the Group applies the practical expedient to remeasure the lease liabilities by discounting the revised
lease payments using the unchanged discount rate and makes a corresponding adjustment to the related
right-of-use assets. A lease modification is required by interest rate benchmark reform if, and only if, both of
these conditions are met:
 the modification is necessary as a direct consequence of interest rate benchmark reform; and
 the new basis for determining the lease payments is economically equivalent to the previous basis
(i.e. the basis immediately preceding the modification).
COVID-19-related rent concessions
In relation to rent concessions that occurred as a direct consequence of the COVID-19 pandemic, the
Group has elected to apply the practical expedient not to assess whether the change is a lease modification if all
of the following conditions are met:
 the change in lease payments results in revised consideration for the lease that is substantially the
same as, or less than, the consideration for the lease immediately preceding the change;
 any reduction in lease payments affects only payments originally due on or before 30 June 2022;
and
 there is no substantive change to other terms and conditions of the lease.
A lessee applying the practical expedient accounts for changes in lease payments resulting from rent
concessions the same way it would account for the changes applying IFRS 16 if the changes are not a lease
modification. Forgiveness or waiver of lease payments are accounted for as variable lease payments. The related
lease liabilities are adjusted to reflect the amounts forgiven or waived with a corresponding adjustment
recognised in the profit or loss in the period in which the event occurs.
Foreign currencies
In preparing the Historical Financial Information of each individual group entity, transactions in currencies
other than the functional currency of that entity (foreign currencies) are recognised at the rates of exchanges
prevailing on the dates of the transactions. At the end of the reporting period, monetary items denominated in
foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value
that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value
was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not
retranslated.
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary
items, are recognised in profit or loss in the period in which they arise.
APPENDIX I ACCOUNTANTS’ REPORT
– I-17 –


--- page 478 ---
For the purposes of presenting the Historical Financial Information, the assets and liabilities of the
Group’s operations are translated into the presentation currency of the Group (i.e. HK$) using exchange rates
prevailing at the end of each reporting period. Income and expenses items are translated at the average exchange
rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange
rates at the date of transactions are used. Exchange differences arising, if any, are recognised in other
comprehensive income and accumulated in equity under the heading of translation reserve.
Exchange differences relating to the retranslation of the Group’s net assets in Chinese Renminbi (“RMB”)
and Singaporean dollars (“SGD”) to the Group’s presentation currency (i.e. HK$) are recognised directly in other
comprehensive income and accumulated in translation reserve. Such exchange differences accumulated in the
translation reserve may be reclassified to profit or loss subsequently.
Goodwill and fair value adjustments on identifiable assets acquired arising on an acquisition of a foreign
operation are treated as assets and liabilities of that foreign operation and translated at the rate of exchange
prevailing at the end of each reporting period. Exchange differences arising are recognised in other
comprehensive income.
Borrowing costs
All borrowing costs that are not directly attributable to the acquisition, construction or production of
qualifying assets are recognised in profit or loss in the period in which they are incurred.
Retirement benefit costs
Payments made to Mandatory Provident Fund (“MPF”) and state-managed retirement benefit schemes are
recognised as expense when employees have rendered service entitling them to the contributions.
Employees of the Group are covered by various government-sponsored defined-contribution pension plans
under which the employees are entitled to a monthly pension based on certain formulas. The relevant government
agencies are responsible for the pension liability to these employees when they retire. The Group contributes on
a monthly basis to these pension plans for the employees which are determined at a certain percentage of their
salaries. Under these plans, the Group has no obligation for post-retirement benefits beyond the contribution
made. Contributions to these plans are expensed as incurred.
Employees of the Group are entitled to participate in various government supervised housing funds,
medical insurance and other employee social insurance plan. 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 period. Contributions to these
plans are expensed as incurred.
Short-term employee benefits
Short-term employee benefits are recognised at the undiscounted amount of the benefits expected to be
paid as and when employees rendered the services. All short-term employee benefits are recognised as an
expense unless another IFRS requires or permits the inclusion of the benefits in the cost of an asset.
Liabilities for wages and salaries, including non-monetary benefits and accumulating annual leave that are
expected to be settled wholly within 12 months after the end of the period in which the employees render the
related service are recognised in respect of employees’ services up to the end of the reporting period and are
measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as
current employee benefit obligations in the consolidated statements of financial position.
Employee entitlements to sick leave and maternity leave are not recognised until the time of leave.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 479 ---
Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the year. Taxable profit differs from “profit before
taxation” because of income or expense that are taxable or deductible in other years and items that are never
taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or
substantively enacted by the end of each reporting period.
Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities
in the Historical Financial Information and the corresponding tax base used in the computation of taxable profit.
Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are
generally recognised for all deductible temporary difference to the extent that it is probable that taxable profits
will be available against which those deductible temporary differences can be utilised. Such deferred tax assets
and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a
business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the
accounting profit.
The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to
the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the
asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in
which the liability is settled or the asset is realised, based on tax rate (and tax laws) that have been enacted or
substantively enacted by the end of each reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow
from the manner in which the Group expects, at the end of each reporting period, to recover or settle the carrying
amount of its assets and liabilities.
For the purposes of measuring deferred tax for leasing transactions in which the Group recognises the
right-of-use assets and related lease liabilities, the Group first determines whether the tax deduction is
attributable to the right-of-use assets or lease liabilities.
For leasing transactions in which the tax deductions are attributable to the lease liabilities, the Group
applies IAS 12 Income Taxes requirements to the lease liabilities and the related assets as a whole. The Group
recognises a deferred tax asset related to lease liabilities to the extent that it is probable that taxable profit will
be available against which the deductible temporary difference can be utilised and a deferred tax liability for all
taxable temporary differences.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax
assets against current tax liabilities and when they relate to income taxes levied to the same taxable entity by the
same taxation authority.
Property, plant and equipment
Property, plant and equipment are stated in the consolidated statements of financial position at cost less
subsequent accumulated depreciation and subsequent accumulated impairment losses, if any.
Properties in the course of construction for production, supply or administrative purposes are carried at
cost, less any recognised impairment loss. Costs include professional fees and, for qualifying assets, borrowing
costs capitalised in accordance with the Group’s accounting policy. Such properties are classified to the
appropriate category of property, plant and equipment when completed and ready for intended use. Depreciation
of these assets, on the same basis as other property assets, commences when the assets are ready for their
intended use.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 480 ---
Depreciation is recognised so as to write off the cost of items of property, plant and equipment less their
residual values over their estimated useful lives, using the straight-line method. The estimated useful lives,
residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any
changes in estimate accounted for on a prospective basis.
An item of property, plant and equipment is derecognised upon disposal or when no future economic
benefits are expected to arise from the continued use of the asset. Any gain or loss arising on disposal or
retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds
and the carrying amount of the asset and is recognised in profit or loss.
Research and development expenses
Expenditure on research activities is recognised as an expense in the period in which it is incurred.
Inventories
Inventories are stated at the lower of cost and net realisable value. Costs of inventories are determined on
a weighted average method. Net realisable value represents the estimated selling price for inventories less all
estimated costs of completion and costs necessary to make the sale. Costs necessary to make the sale include
incremental costs directly attributable to the sale and non-incremental costs which the Group must incur to make
the sale.
Contingent liabilities
A contingent liability is a present obligation arising from past events but is not recognised because it is
not probable that an outflow of resources embodying economic benefits will be required to settle the obligation
or the amount of the obligation cannot be measured with sufficient reliability.
Where the Group is jointly and severally liable for an obligation, the part of the obligation that is expected
to be met by other parties is treated as a contingent liability and it is not recognised in the consolidated financial
statements.
The Group assesses continually to determine whether an outflow of resources embodying economic
benefits has become probable. If it becomes probable that an outflow of future economic benefits will be
required for an item previously dealt with as a contingent liability, a provision is recognised in the consolidated
financial statements in the reporting period in which the change in probability occurs, except in the extremely
rare circumstances where no reliable estimate can be made.
Financial instruments
Financial assets and financial liabilities are recognised when a group entity becomes a party to the
contractual provisions of the instrument. All regular way purchases or sales of financial assets are recognised and
derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that
require delivery of assets within the time frame established by regulation or convention in the market place.
Financial assets and financial liabilities are initially measured at fair value except for trade receivables
arising from contracts with customers which are initially measured in accordance with IFRS 15. Transaction
costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other
than financial assets or financial liabilities at fair value through profit or loss (“FVTPL”)) are added to or
deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.
The effective interest method is a method of calculating the amortised cost of a financial asset or financial
liability and of allocating interest income and interest expense over the relevant period. The effective interest
rate is the rate that exactly discounts estimated future cash receipts and payments (including all fees and points
paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or
discounts) through the expected life of the financial asset or financial liability, or, where appropriate, a shorter
period, to the net carrying amount on initial recognition.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 481 ---
Financial assets
Classification and subsequent measurement of financial assets
Financial assets that meet the following conditions are subsequently measured at amortised cost:
 the financial asset is held within a business model whose objective is to collect contractual cash
flows; and
 the contractual terms give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
All other financial assets are subsequently measured at fair value.
Amortised cost and interest income
Interest income is recognised using the effective interest method for financial assets measured
subsequently at amortised cost. Interest income is calculated by applying the effective interest rate to the gross
carrying amount of a financial asset, except for financial assets that have subsequently become credit-impaired.
For financial assets that have subsequently become credit-impaired, interest income is recognised by applying the
effective interest rate to the amortised cost of the financial asset from the next reporting period. If the credit risk
on the credit-impaired financial instrument improves so that the financial asset is no longer credit-impaired,
interest income is recognised by applying the effective interest rate to the gross carrying amount of the financial
asset from the beginning of the reporting period following the determination that the asset is no longer
credit-impaired.
Financial assets at FVTPL
Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair
value gains or losses recognised in profit or loss. The net gain or loss recognised in profit or loss includes any
dividend or interest earned on the financial asset and is included in the “other gains and losses” line item.
Impairment of financial assets
The Group performs impairment assessment under expected credit loss (“ECL”) model on financial assets
(including trade and other receivables and deposits, amount due from a director, amount due from a related
company, time deposits and bank balances) which are subject to impairment assessment under IFRS 9. The
amount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition.
Lifetime ECL represents the ECL that will result from all possible default events over the expected life of
the relevant instrument. In contrast, 12-month ECL (“12m ECL”) represents the portion of lifetime ECL that is
expected to result from default events that are possible within 12 months after the reporting date. Assessment is
done based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors,
general economic conditions and an assessment of both the current conditions at the reporting date as well as the
forecast of future conditions.
The Group always assesses lifetime ECL for trade receivables.
For all other financial instruments, the Group measures the loss allowance equal to 12m ECL, unless when
there has been a significant increase in credit risk since initial recognition, in which case the Group recognises
lifetime ECL. The assessment of whether lifetime ECL should be recognised is based on significant increases in
the likelihood or risk of a default occurring since initial recognition.
(i) Significant increase in credit risk
In assessing whether the credit risk has increased significantly since initial recognition, the Group
compares the risk of a default occurring on the financial instrument as at the reporting date with the risk
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 482 ---
of a default occurring on the financial instrument as at the date of initial recognition. In making this
assessment, the Group considers both quantitative and qualitative information that is reasonable and
supportable, including historical experience and forward-looking information that is available without
undue cost or effort.
In particular, the following information is taken into account when assessing whether the credit risk
has increased significantly:
 significant deterioration in external market indicators of credit risk, e.g. a significant increase
in the credit spread, the credit default swap prices for the debtor;
 an actual or expected significant deterioration in the financial instrument’s external (if
available) or internal credit rating;
 existing or forecast adverse changes in business, financial or economic conditions that are
expected to cause a significant decrease in debtor’s ability to meet its debt obligations;
 an actual or expected significant deterioration in the operating results of the debtor; and
 an actual or expected significant adverse change in the regulatory, economic, or technological
environment of the debtor that results in a significant decrease in the debtor’s ability to meet
its debt obligations.
Irrespective of the outcome of the above assessment, the Group presumes that the credit risk has
increased significantly since initial recognition when contractual payments are more than 30 days past due,
unless the Group has reasonable and supportable information that demonstrates otherwise.
The Group regularly monitors the effectiveness of the criteria used to identify whether there has
been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are
capable of identifying significant increase in credit risk before the amount becomes past due.
(ii) Definition of default
For internal credit risk management, the Group considers an event of default occurs when
information developed internally or obtained from external sources indicates that the debtor is unlikely to
pay its creditors, including the Group, in full (without taking into account any collaterals held by the
Group).
Irrespective of the above, the Group considers that default has occurred when a financial asset is
more than 90 days past due unless the Group has reasonable and supportable information to demonstrate
that a more lagging default criterion is more appropriate.
(iii) Credit-impaired financial assets
A financial asset is credit-impaired when one or more events that have a detrimental impact on the
estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is
credit-impaired includes observable data about the following events:
 significant financial difficulty of the issuer or the borrower;
 a breach of contract, such as a default or past due event;
 the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s
financial difficulty, having granted to the borrower a concession(s) that the lender(s) would
not otherwise consider; or
APPENDIX I ACCOUNTANTS’ REPORT
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 it is becoming probable that the borrower will enter bankruptcy or other financial
reorganisation.
(iv) Write-off policy
The Group writes off a financial asset when there is information indicating that the counterparty is
in severe financial difficulty and there is no realistic prospect of recovery, for example, when the
counterparty has been placed under liquidation or has entered into bankruptcy proceedings, or in the case
of trade receivable, when the amounts are over two years past due, whichever occurs sooner. Financial
assets written off may still be subject to enforcement activities under the Group’s recovery procedures,
taking into account legal advice where appropriate. A written off constitutes a derecognition event. Any
subsequent recoveries are recognised in profit or loss.
(v) Measurement and recognition of ECL
The measurement of ECL is a function of the probability of default, loss given default (i.e. the
magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability
of default and loss given default is based on historical data and forward-looking information. Estimation of
ECL reflects an unbiased and probability-weighted amount that is determined with the respective risks of
default occurring as the weights. The Group uses a practical expedient in estimating ECL on trade
receivables using a provision matrix taking into consideration historical credit loss experience and
forward-looking information that is available without undue cost or effort.
Generally, the ECL is the difference between all contractual cash flows that are due to the Group in
accordance with the contract and the cash flows that the Group expects to receive, discounted at the
effective interest rate determined at initial recognition.
Lifetime ECL for trade receivables are considered on a collective basis taking into consideration
past due information and relevant credit information such as forward-looking macroeconomic information.
For collective assessment, the Group takes into consideration the following characteristics when
formulating the grouping:
 Past-due status;
 Nature, size and industry of debtors; and
 External credit ratings where available.
The grouping is regularly reviewed by the management of the Group to ensure the constituents of
each group continue to share similar credit risk characteristics.
Interest income is calculated based on the gross carrying amount of the financial asset unless the financial
asset is credit-impaired, in which case interest income is calculated based on amortised cost of the financial
asset.
The Group recognises an impairment gain or loss in profit or loss for all financial instruments by adjusting
their carrying amount with the exception of trade receivables where the correspondence adjustment is recognised
through a loss allowance account.
Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset
expire.
On derecognition of a financial asset measured at amortised cost, the difference between the asset’s
carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 484 ---
Financial liabilities and equity instruments
Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of a group entity after
deducting all of its liabilities. Equity instruments issued by the group entities are recognised at the proceeds
received, net of direct issue costs.
Financial liabilities at amortised cost
Financial liabilities (including trade and other payables, bank overdrafts and bank borrowings) are
subsequently measured at amortised cost, using the effective interest method.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged,
cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and
the consideration paid and payable is recognised in profit or loss.
Changes in the basis for determining the contractual cash flows as a result of interest rate benchmark reform
For changes in the basis for determining the contractual cash flows of a financial asset or financial
liability to which the amortised cost measurement applies as a result of interest rate benchmark reform, the
Group applies the practical expedient to account for these changes by updating the effective interest rate, such
change in effective interest rate normally has no significant effect on the carrying amount of the relevant
financial asset or financial liability.
A change in the basis for determining the contractual cash flows is required by interest rate benchmark
reform if and only if, both these conditions are met:
 the change is necessary as a direct consequence of interest rate benchmark reform; and
 the new basis for determining the contractual cash flows is economically equivalent to the previous
basis (i.e. the basis immediately preceding the change).
5. MATERIAL ACCOUNTING JUDGEMENT AND KEY SOURCES OF ESTIMATION UNCERTAINTY
In the application of the Group’s accounting policies, which are described in note 4, management is required to
make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and associated assumptions are based on historical experience and other
factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of
the revision and future periods if the revision affects both current and future periods.
Material judgement in applying accounting policies
The following is the material judgement, apart from those involving estimations (see below), that the
directors of the Company have made in the process of applying the Group’s accounting policies and that have the
most significant effect on the amounts recognised in the Historical Financial Information.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 485 ---
Current and deferred income taxes
Material judgement is required in determining the provision for income tax. There are many transactions
and calculations for which the ultimate 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 difference
will impact the income tax and deferred tax provision in the period in which such determination is made.
Deferred tax assets relating to certain temporary differences and tax losses are recognised when
management considers to be probable that future taxable profit will be available against which the temporary
differences or tax losses can be utilised. The outcome of their actual utilisation may be different.
In regard to tax matters in Hong Kong, UBoT Inc. (HK) claimed all its trading profits derived from its
business operations (i.e. sales of back-end semiconductor transport media) as offshore in nature and not subject
to profits tax in Hong Kong for the years of assessment of 2008/09 to 2021/22. Hence, UBoT Inc. (HK) lodged
offshore profits claims for all its trading profits arising from its business operations since incorporation on the
grounds that the relevant business transactions were effected outside Hong Kong (“Offshore Profits Claim”).
Prior to the Track Record Period, the Inland Revenue Department of Hong Kong (“IRD”) issued enquiry
letters since April 2010 to enquire about UBoT Inc. (HK)’s Offshore Profits Claim for the years of assessment
2006/07 onwards.
The management of the Company, based on independent Tax Consultant’s evaluation of UBoT Inc. (HK)’s
eligibility for Offshore Profits Claim, which considered the balance of fact, was of the opinion that UBoT Inc.
(HK) had sufficient grounds on the basis that given the majority of its transactions were negotiated outside of
Hong Kong and other complicated and inextricable offshore elements (such as the involvement of overseas sales
representatives, having manufacturing activities in the PRC and arrangement and the inspection and delivery of
finished goods were conducted outside Hong Kong) involved, to claim its trading profits as offshore sourced and
not subject to Hong Kong’s profits tax, subject to the review and agreement of the IRD. Nevertheless, it was
worth noting that at all relevant time, the IRD had been reviewing UBoT Inc. (HK)’s Offshore Profits Claim and
issuing follow-up enquiry letters to UBoT Inc. (HK) to challenge its Offshore Profits Claim position.
To address and cooperate with the inquiries raised by the IRD and to defend its tax position (i.e. Offshore
Profits Claim in relation to the trading profits), UBoT Inc. (HK) provided various information and supporting
documents to the IRD from time to time and lodged objections under the rights entitled to each taxpayer to all
the relevant tax assessments issued within the specified time limit. However, the IRD had not yet agreed to
UBoT Inc. (HK)’s submissions, and these tax matters were yet to be settled between the IRD and UBoT Inc.
(HK) for a considerably long period of time (i.e. from April 2006). Under these circumstances, the IRD issued
protective Profits Tax assessments to UBoT Inc. (HK) for time-barred years from the year of assessment 2008/09
up to the year of assessment 2016/17 (where year of assessment 2016/17 was issued in February 2023),
disregarding Offshore Profits Claim and disallowing 30% pooling depreciation allowance claimed on certain
machineries and equipment. UBoT Inc. (HK) lodged objections entitled to the respective protective Profits Tax
assessments issued by the IRD, purchased tax reserve certificates, made relevant tax payments in accordance
with the protective Profits Tax assessments by installments, and made respective tax provision in the relevant
years of assessment based on the stringent approach adopted by the IRD, with the assistance and advice from the
independent Tax Consultant.
The mentioned tax provisions duly considered the potential profits tax liabilities arising from these tax
matters between the IRD and UBoT Inc. (HK), and were therefore considered as adequate in case the IRD
disallowed UBoT Inc. (HK)’s Offshore Profits Claim and disallowed 30% pooling depreciation allowance
claimed on certain machineries and equipment for the relevant years of assessment.
During the year ended 31 December 2023, for the purpose of reducing the amount of time, manpower and
resources consumed in retrieving the information/documents requested/to be requested by the IRD and to
expedite the finalization of the matters, UBoT Inc. (HK) formally withdrew the Offshore Profits Claim with the
IRD in July 2023 (the “Withdrawal”). Accordingly, the IRD issued all of the profits tax assessments for the
relevant years of assessment on the basis that 100% of the trading profits of UBoT Inc. (HK) are subject to
APPENDIX I ACCOUNTANTS’ REPORT
– I-25 –


--- page 486 ---
profits tax in Hong Kong as a result of the Withdrawal, which represented the final amount of the profits tax
payable to the IRD.
Based on the protective assessments issued by the IRD before the Withdrawal, the total profits tax
liabilities as assessed by the IRD for the years of assessment 2008/09 to 2016/17 were approximately
HK$22,232,000, which was fully settled before the year ended 31 December 2023 by utilising tax reserve
certificates purchased of approximately HK$6,372,000 included in other receivables, previous tax payments of
approximately HK$14,664,000 made before the Withdrawal and the remaining amount of approximately
HK$1,196,000 which has been settled by instalment subsequent to the year ended 31 December 2023. After the
Withdrawal, the IRD issued revised profits tax assessments for the years of assessment 2008/09 to 2016/17 in the
sum of approximately HK$1,261,000, of which approximately HK$1,090,000 was settled during the year ended
31 December 2023 and remaining amount of HK$171,000 settled subsequent to the year ended 31 December
2023. For the years of assessment 2017/18 to 2021/22, the total profits tax liabilities were approximately
HK$10,618,000, of which approximately HK$3,270,000 was settled during the year ended 31 December 2023,
and the remaining balance will be settled by installments agreed with the IRD and was included in the income
tax provision under current liabilities as at 31 December 2023.
Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and other key sources of estimation
uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next financial year.
Net realisable value of inventories
Net realisable value of inventories is the estimated selling prices in the ordinary course of business less
estimated selling expenses. These estimates are based on the current market condition and the historical
experience of selling products of similar nature. It could change significantly as a result of changes in economic
conditions in places where the Group operates and changes in customer taste and competitor actions in response
to changes in market conditions. Management reassesses these estimates at each reporting date.
Provision of ECL for trade receivables
Trade receivables with credit-impaired are assessed for ECL individually.
In addition, the Group uses practical expedient in estimating ECL on trade receivables which are not
assessed individually using a provision matrix. The provision rates are based on aging of debtors as groupings of
various debtors taking into consideration the Group’s historical default rates and forward-looking information
that is reasonable and supportable available without undue costs or effort. At every reporting date, the historical
observed default rates are reassessed and changes in the forward-looking information are considered.
The provision of ECL is sensitive to changes in estimates. The information about the Group’s trade
receivables and ECL are disclosed in notes 18 and 30, respectively.
APPENDIX I ACCOUNTANTS’ REPORT
– I-26 –


--- page 487 ---
6. REVENUE AND SEGMENT INFORMATION
(i) Disaggregation of revenue from contracts with customers
Y ear ended 31 December
2021 2022 2023
Notes HK$’000 HK$’000 HK$’000
Type of goods – at a point in time
Sales of tray and tray related products a 195,429 246,954 172,250
Sales of carrier tape a 367 519 211
Sales of MEMS and sensor products
packaging b 7,152 10,092 16,508
202,948 257,565 188,969
Geographical markets
Southeast Asia 72,219 91,694 69,152
People’s Republic of China (“PRC”) 55,495 62,647 49,342
Taiwan 39,195 59,159 33,982
United States of America 16,782 20,059 4,906
Europe 3,433 8,248 14,027
Hong Kong, Korea and Japan 15,824 15,758 17,560
202,948 257,565 188,969
Notes:
(a) These revenue has been classified as revenue under back-end semiconductor transport media
segment in the segment information.
(b) These revenue has been classified as revenue under MEMS and sensor packaging segment in the
segment information.
(ii) Performance obligations for contracts with customers
Revenue is recognised when control of the goods has transferred to customers, being when the goods have
been shipped to the designated location (delivery). Following the delivery, the customer has full discretion over
the manner of distribution and price to sell the goods, has the primary responsibility when on selling the goods
and bears the risks of obsolescence and loss in relation to the goods. The normal credit term is 90 days upon
delivery.
There is no remaining performance obligations (unsatisfied or partially unsatisfied) as at the end of each
the reporting period.
APPENDIX I ACCOUNTANTS’ REPORT
– I-27 –


--- page 488 ---
(iii) Segment information
Information reported to the chief executive of the Company, being the chief operating decision maker, for
the purposes of resource allocation and assessment of segment performance focuses on types of goods or services
delivered or provided. This is also the basis upon which the Group is organised. No operating segments
identified by the chief operating decision maker have been aggregated in arriving at the reportable segments of
the Group.
The Group’s reportable and operating segments under IFRS 8 “Operating Segments” are as follows:
 Back-end semiconductor transport media – Manufacture and sale of back-end semiconductor
transport media products, including JEDEC tray, carrier tape and other accessories
 MEMS and sensor packaging – Manufacture and sale of MEMS and sensor products packages
The following is an analysis of the Group’s revenue and results from reportable and operating segments:
For the year ended 31 December 2021
Back-end
semiconductor
transport
media
MEMS and
sensor
packaging Elimination Consolidated
HK$’000 HK$’000 HK$’000 HK$’000
Revenue
External sales 195,796 7,152 – 202,948
Segment profit 50,901 342 – 51,243
Other gains and losses 2,682
Bank interest income 11
Central administrative costs (18,207)
Finance costs (1,867)
Listing expenses (2,018)
Profit before taxation 31,844
APPENDIX I ACCOUNTANTS’ REPORT
– I-28 –


--- page 489 ---
Back-end
semiconductor
transport
media
MEMS and
sensor
packaging Elimination Consolidated
HK$’000 HK$’000 HK$’000 HK$’000
Assets
Segment assets 237,736 2,617 (50,471) 189,882
Property, plant and equipment 488
Right-of-use assets 242
Financial assets at fair value
through profit or loss 12,968
Amount due from a director 10,620
Amount due from a related
company 2,954
Bank balances and cash 2,323
Consolidated assets 219,477
Liabilities
Segment liabilities 102,361 58,052 (50,471) 109,942
Bank borrowings 53,599
Bank overdrafts 3,261
Income tax provision 20,927
Deferred tax liabilities 137
Lease liabilities 261
Consolidated liabilities 188,127
Back-end
semiconductor
transport
media
MEMS and
sensor
packaging Elimination Consolidated
HK$’000 HK$’000 HK$’000 HK$’000
Amounts included in the measure
of segment profit or loss or
segment assets:
Additions to non-current assets 13,575 155 – 13,730
Depreciation of property, plant
and equipment 8,059 66 – 8,125
(Reversal) of allowance for
inventories (1,408) – – (1,408)
Impairment losses on trade
receivables recognised in profit
or loss 70 6 – 76
Research and development
expenses 4,104 – – 4,104
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 490 ---
For the year ended 31 December 2022
Back-end
semiconductor
transport
media
MEMS and
sensor
packaging Elimination Consolidated
HK$’000 HK$’000 HK$’000 HK$’000
Revenue
External sales 247,473 10,092 – 257,565
Inter-segment sales 2 119 (121) –
247,475 10,211 (121) 257,565
Segment profit 60,338 4,008 – 64,346
Other gains and losses (6,054)
Bank interest income 15
Central administrative costs (18,576)
Finance costs (2,758)
Listing expenses (9,975)
Profit before taxation 26,998
Back-end
semiconductor
transport
media
MEMS and
sensor
packaging Elimination Consolidated
HK$’000 HK$’000 HK$’000 HK$’000
Assets
Segment assets 236,157 6,269 (50,415) 192,011
Property, plant and equipment 471
Right-of-use assets 763
Deferred tax assets 1,015
Financial assets at fair value
through profit or loss 13,335
Amount due from a director 6,318
Bank balances and cash 5,900
Consolidated assets 219,813
Liabilities
Segment liabilities 78,941 51,530 (50,415) 80,056
Bank borrowings 57,680
Income tax provision 25,390
Deferred tax liabilities 137
Lease liabilities 759
Consolidated liabilities 164,022
APPENDIX I ACCOUNTANTS’ REPORT
– I-30 –


--- page 491 ---
Back-end
semiconductor
transport
media
MEMS and
sensor
packaging Elimination Consolidated
HK$’000 HK$’000 HK$’000 HK$’000
Amounts included in the measure
of segment profit or loss or
segment assets:
Additions to non-current assets 13,738 1,977 – 15,715
Depreciation of property, plant
and equipment 8,558 338 – 8,896
Allowance for inventories 522 – – 522
Impairment losses on trade
receivables recognised in profit
or loss 326 28 – 354
Research and development
expenses 4,270 – – 4,270
For the year ended 31 December 2023
Back-end
semiconductor
transport
media
MEMS and
sensor
packaging Elimination Consolidated
HK$’000 HK$’000 HK$’000 HK$’000
Revenue
External sales 172,461 16,508 – 188,969
Inter-segment sales 4 – (4) –
172,465 16,508 (4) 188,969
Segment profit 30,339 6,669 – 37,008
Other gains and losses (2,145)
Bank interest income 11
Central administrative costs (19,227)
Finance costs (3,731)
Listing expenses (5,260)
Profit before taxation 6,656
APPENDIX I ACCOUNTANTS’ REPORT
– I-31 –


--- page 492 ---
Back-end
semiconductor
transport
media
MEMS and
sensor
packaging Elimination Consolidated
HK$’000 HK$’000 HK$’000 HK$’000
Assets
Segment assets 223,186 6,557 (48,852) 180,891
Property, plant and equipment 340
Right-of-use assets 1,404
Deferred tax assets 1,167
Financial assets at fair value
through profit or loss 13,748
Amount due from a director 6,318
Bank balances and cash 1,073
Consolidated assets 204,941
Liabilities
Segment liabilities 76,242 49,462 (48,856) 76,848
Bank borrowings 48,064
Bank overdrafts 2,932
Income tax provision 14,171
Deferred tax liabilities 137
Lease liabilities 1,412
Consolidated liabilities 143,564
Back-end
semiconductor
transport
media
MEMS and
sensor
packaging Elimination Consolidated
HK$’000 HK$’000 HK$’000 HK$’000
Amounts included in the measure
of segment profit or loss or
segment assets:
Additions to non-current assets 13,252 266 – 13,518
Depreciation of property, plant
and equipment 10,391 428 – 10,819
Allowance for inventories 661 – – 661
Reversal of impairment losses on
trade receivables recognised in
profit or loss 464 29 – 493
Research and development
expenses 4,822 – – 4,822
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 493 ---
(iv) Geographical information
Information about the Group’s non-current assets is presented based on the location of the assets.
As at 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Hong Kong 1,030 1,234 1,792
PRC (excluding Hong Kong) 64,747 66,470 62,242
Southeast Asia 398 176 53
United States of America 13 10 7
66,188 67,890 64,094
Note: Non-current assets excluded financial instruments and deferred tax assets.
(v) Information about major customers
The revenue from customers individually contributing over 10% of the total revenue of the Group during
each of the year in the Track Record Period is as follows:
Y ear ended 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Customer I
Revenue from back-end semiconductor
transport media 41,777 48,444 31,379
Revenue from MEMS and sensor
packaging – 229 108
41,777 48,673 31,487
Customer II
Revenue from back-end semiconductor
transport media 20,750 27,028 –*
Customer III
Revenue from back-end semiconductor
transport media 20,454 –* –*
Customer IV
Revenue from back-end semiconductor
transport media 24,094 –* –*
Customer V
Revenue from back-end semiconductor
transport media –* 26,219 11,198
Revenue from MEMS and sensor
packaging –* 3,807 10,539
–* 30,026 21,737
107,075 105,727 53,224
* The revenue from these customers did not contribute over 10% of the total revenue of the Group
during that period.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 494 ---
7. OTHER INCOME
Y ear ended 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Government grants (note a) 56 919 56
Interest income 11 15 11
Sundry income 7 13 78
74 947 145
Notes:
(a) The government grants mainly represent:
i. employment for the staff in Singapore arose from the Job Support Scheme (“JSS”) introduced by the
Singapore government in response to COVID-19 pandemic of HK$56,000, HK$35,000 and nil for
the year ended 31 December 2021, 2022 and 2023, respectively. The JSS provided wage support to
employers, helping enterprises retain their local employees (Singapore citizens and permanent
residents). There are no unfulfilled conditions and other contingencies attached to the receipts of
those subsidies;
ii. employment for the staff in Hong Kong of nil, HK$624,000 and nil for the year ended 31 December
2021, 2022 and 2023, respectively, in respect of Employment Support Scheme provided by the
Government of the Hong Kong Special Administrative Region in response to COVID-19 pandemic;
and
iii. employment for the staff in the PRC of nil, HK$193,000 and HK$56,000 for the year ended 31
December 2021, 2022 and 2023, respectively, in respect of training subsidies for employees staying
on the job provided by the local government of the PRC.
8. OTHER GAINS AND LOSSES
Y ear ended 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Gain (loss) on exchange differences, net 2,266 (6,403) (2,556)
Gain on fair value change of financial assets
at fair value through profit or loss 416 349 411
Compensation income due to a fire accident
(note) 6,111 – –
Loss of inventories due to fire accident (note) (7,723) – –
Gain (loss) on disposal of property, plant and
equipment – 87 (29)
1,070 (5,967) (2,174)
Note: During the year ended 31 December 2021, a fire accident occurred in the warehouse located in the PRC
which caused damaged to certain inventories, the carrying amount of the damaged inventories amounted to
HK$7,723,000 were written off. The insurance claim income for this fire accident of HK$6,111,000 was
accepted by the insurance company in December 2021 and all the claims have been received in January
2022.
APPENDIX I ACCOUNTANTS’ REPORT
– I-34 –


--- page 495 ---
9. FINANCE COSTS
Y ear ended 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Interests on:
– Bank borrowings and overdrafts 1,805 2,748 3,732
– Lease liabilities 1,404 1,348 1,052
3,209 4,096 4,784
10. PROFIT BEFORE TAXATION
Profit before taxation has been arrived at after charging (crediting):
Y ear ended 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Auditors’ remuneration 705 671 641
Depreciation of property, plant and equipment 8,125 8,896 10,819
Depreciation of right-of-use assets 6,554 6,863 6,481
Total depreciation 14,679 15,759 17,300
Directors’ remuneration (note 12) 7,076 6,131 6,168
Other staff costs
– Salaries and other benefits 50,064 59,834 47,768
– Retirement benefit scheme contributions
(note i) 5,590 6,336 6,732
Total staff costs (note ii) 62,730 72,301 60,668
Cost of inventories recognised as costs of
sales (note iii) 116,272 155,687 116,989
Net changes in allowance for inventories
(included in cost of sales) (1,408) 522 661
Listing expenses 2,018 9,975 5,260
APPENDIX I ACCOUNTANTS’ REPORT
– I-35 –


--- page 496 ---
Notes:
(i) The employees of the Group in the PRC are members of state-managed defined contribution scheme
operated by the PRC Government. The Group is required to contribute a specified percentage of payroll
costs as determined by local government authority to the scheme to fund the benefits. The only obligation
of the Group with respect to the retirement benefits scheme is to make the specified contribution under the
scheme.
(ii) Other staff costs of HK$35,423,000, HK$43,506,000 and HK$40,023,000 were capitalised as cost of
inventories for the year ended 31 December 2021, 2022 and 2023, respectively, the remaining staff costs
were recognised in administrative expenses, selling and distribution expenses and research and
development expenses.
(iii) Cost of inventories included (i) cost of materials amounting to HK$55,176,000, HK$73,622,000 and
HK$49,549,000 for the year ended 31 December 2021, 2022 and 2023, respectively.
11. INCOME TAX EXPENSE (CREDIT)
Y ear ended 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Income tax expense (credit) comprises:
Hong Kong Profits Tax
– Current year 5,434 6,154 970
– Underprovision in prior years – – 769
PRC Enterprise Income Tax (“EIT”)
– Current year – 44 16
Singapore Corporate Income Tax
– Current year – 44 45
Deferred tax (note 26) 14 (1,042) (182)
5,448 5,200 1,618
(i) Hong Kong
Under the two-tiered profits tax rates regime of Hong Kong Profit Tax, the first HK$2 million of profits of
the qualifying group entity will be taxed at 8.25%, and profits above HK$2 million will be taxed at 16.5%. The
profits of group entity not qualifying for the two-tiered profits tax rates regime will continue to be taxed at a flat
rate of 16.5%. Accordingly, for the Track Record Period, the Hong Kong Profits Tax of the qualifying group
entity is calculated at 8.25% on the first HK$2 million of the estimated assessable profits and at 16.5% on the
estimated assessable profits above HK$2 million.
(ii) PRC
Under the Law of the PRC on EIT (the “EIT Law”) and Implementation Regulation of the EIT Law, the
tax rate of the PRC subsidiaries is 25% for the Track Record Period, except for certain of the subsidiaries are
qualified as small and micro enterprises. For the year ended 31 December 2022, small and micro enterprises
entitled to tax rates of 2.5% on taxable income for the first RMB1,000,000 and tax rate of 5% on taxable income
for the subsequent RMB1,000,000 to RMB3,000,000. For the year ended 31 December 2023, small and micro
enterprises entitled to tax rates of 5% on taxable income for the first RMB3,000,000.
APPENDIX I ACCOUNTANTS’ REPORT
– I-36 –


--- page 497 ---
(iii) Singapore
Singapore Corporate Income Tax is calculated at 17% in accordance with the relevant laws and regulations
in Singapore for the Track Record Period.
Y ear ended 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Profit before taxation 31,844 26,998 6,656
Tax at applicable tax rate of 16.5%
(note a) 5,254 4,455 1,098
Tax effect of income not taxable for tax
purpose (note c) (1,086) (184) (155)
Tax effect of expenses not deductible
for tax purpose (note d) 1,455 1,506 1,097
Others (note b) – – (1,014)
Tax concession (10) (412) (12)
Tax effect on two-tiered tax rate (165) (165) (165)
Underprovision in prior years – – 769
Income tax expense for the year 5,448 5,200 1,618
Notes:
(a) 16.5% is used as majority of the income tax provision is arising from Hong Kong.
(b) The amount represents the temporary differences between the carrying amounts of right-of-use assets
and lease liabilities as at 31 December 2023 as disclosed in Note 26. The temporary differences in
respect of the carrying amounts between right-of-use assets and lease liabilities were not significant
as at 31 December 2021, 2022 and 2023.
(c) The amount mainly represents the compensation income from fire accident (note 8), government
grants, gain on fair value change of financial assets at fair value through profit or loss, reversal of
impairment losses on financial assets and interest income that are not taxable for tax purpose.
(d) The amount mainly represents the accounting depreciation, listing expenses, provision for
impairment losses on financial assets, and other miscellaneous expenses that are not deductible for
tax purpose.
APPENDIX I ACCOUNTANTS’ REPORT
– I-37 –


--- page 498 ---
12. DIRECTORS’ AND CHIEF EXECUTIVE’S EMOLUMENTS AND EMPLOYEES’ REMUNERATION
Directors’ and chief executive’s emoluments
Mr. Wong Tsz Lun and Mr. Cheung Chee Wah were appointed as non-executive directors of the Company
on 22 April 2022. Mr. Chan Oi Fat, Ms. Ma Jay Suk Lin and Mr. Wong Lok Man were appointed as independent
non-executive directors of the Company subsequently on 20 May 2024.
The emoluments paid or payable to the directors and chief executive of the Company (including
emoluments for services as employees/directors of the entities comprising the Group prior to becoming the
directors of the Company) during the Track Record Period are as follows:
Y ear ended 31 December 2021
Salaries,
allowances
and benefits
in kind
(note (iv))
Discretionary
bonus
(note (ii))
Contributions
to MPF Total
HK$’000 HK$’000 HK$’000 HK$’000
Executive Directors
Mr. Tong (note (i)) 2,503 900 18 3,421
Mr. Chan Kai Leung 815 350 18 1,183
Mr. Shek Kam Pun 1,241 150 18 1,409
Mr. Tam Ming Wa 945 100 18 1,063
5,504 1,500 72 7,076
Y ear ended 31 December 2022
Salaries,
allowances
and benefits
in kind
(note (iv))
Discretionary
bonus
(note (ii))
Contributions
to MPF Total
HK$’000 HK$’000 HK$’000 HK$’000
Executive Directors
Mr. Tong (note (i)) 2,699 – 18 2,717
Mr. Chan Kai Leung 894 – 18 912
Mr. Shek Kam Pun 1,428 – 18 1,446
Mr. Tam Ming Wa 1,038 – 18 1,056
Non-executive Directors
M r . W o n g T s z L u n ––––
Mr. Cheung Chee Wah (note (iv)) ––––
6,059 – 72 6,131
APPENDIX I ACCOUNTANTS’ REPORT
– I-38 –


--- page 499 ---
Y ear ended 31 December 2023
Salaries,
allowances
and benefits
in kind
(note (iv))
Discretionary
bonus
(note (ii))
Contributions
to MPF Total
HK$’000 HK$’000 HK$’000 HK$’000
Executive Directors
Mr. Tong (note (i)) 2,580 215 18 2,813
Mr. Chan Kai Leung 864 72 18 954
Mr. Shek Kam Pun 1,008 84 18 1,110
Mr. Tam Ming Wa 1,208 65 18 1,291
Non-executive Directors
M r . W o n g T s z L u n ––––
Mr. Cheung Chee Wah (note (iv)) ––––
5,660 436 72 6,168
Notes:
(i) Mr. Tong acts as chief executive of the Company with effect from 7 February 2022 and his
emoluments disclosed above included those for services rendered by him as the chief executive in
management of the affairs of the group entities.
(ii) The discretionary bonus is determined by reference to the duties and responsibilities of the relevant
individual within the Group and the Group’s performance.
(iii) No other retirement benefits were paid to directors in respect of their respective services in
connection with the management of the affairs of the Company or its subsidiaries undertaking.
(iv) Mr. Cheung Chee Wah resigned on 22 April 2024.
(v) The executive directors’ emoluments shown above were for their services in connection with the
management affairs of the Group.
During the Track Record Period, no remuneration was paid by the Group to any director of the Company
as an inducement to join or upon joining the Group or as compensation for loss of office. None of the directors
of the Company waived any remuneration during the Track Record Period.
APPENDIX I ACCOUNTANTS’ REPORT
– I-39 –


--- page 500 ---
Employees’ remuneration
During the Track Record Period, included in the remunerations of the five highest paid individuals are 4, 4
and 4 directors whose remunerations are disclosed above.
The remunerations in respect of the remaining 1, 1 and 1 highest paid individual during the Track Record
Period are as follows:
Y ear ended 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Salaries, allowances and discretionary
bonuses 780 780 780
Contributions to MPF 18 18 18
798 798 798
During the Track Record Period, the remunerations of the five highest paid individuals, including
directors, are within following bands:
Y ear ended 31 December
2021 2022 2023
Number of
employees
Number of
employees
Number of
employees
Emolument bands
Nil to HK$1,000,000 1 2 2
HK$1,000,001 to HK$1,500,000 3 2 2
HK$2,500,001 to HK$3,000,000 – 1 1
HK$3,000,001 to HK$3,500,000 1 – –
During the Track Record Period, no remuneration was paid by the Group to the five highest paid
individuals of the Group as an inducement to join or upon joining the Group or as compensation for loss of
office.
APPENDIX I ACCOUNTANTS’ REPORT
– I-40 –


--- page 501 ---
13. DIVIDENDS
No dividend has been paid or declared by the Company since its incorporation. On 31 March 2022, subject to the
Listing of the Company as the condition, UBoT Inc. (HK) has declared conditionally an interim dividend of HK$0.33
per share of UBoT Inc. (HK) amounting in the aggregate of HK$11,220,000. Once become unconditional, the dividend
payable of HK$5,778,000, to one of the ultimate Controlling Shareholders, Mr. Tong, will be settled through offsetting
the amount due from Mr. Tong before Listing. The dividends declared to the other shareholders will be settled by cash
(using internally generated funds) before Listing. Considering the interim dividend is conditional to the Listing, no
dividend payable was recognised during the Track Record Period and would only recognised when the interim dividend
becomes unconditional. On 15 March 2024, UBoT Inc. (HK) conditionally declared an interim dividend of HK$0.24 per
share of UBoT Inc. (HK) amounting in the aggregate of HK$8,160,000 to its sole shareholder, namely Abundant
Wealth. On 15 March 2024, Abundant Wealth conditionally declared an interim dividend of HK$8,160 per share of
Abundant Wealth amounting in the aggregate of HK$8,160,000 to its sole shareholder, the Company. On 15 March
2024, the Company declared conditionally an interim dividend of HK$4,080 per share amounting in the aggregate of
HK$8,160,000 to its shareholders. Part of the dividend payable to Sino Success, one of the ultimate Controlling
Shareholders and wholly owned company of Mr. Tong, will be settled by offsetting the amount due from Mr. Tong in
the amount of HK$539,654. All the other dividends declared to shall be payable to the shareholders of the Company
will be settled by cash (using the internally generated funds) before Listing.
The rate of dividend and number of shares ranking for dividend are not presented as such information is not
meaningful having regard to the purpose of this report.
Other than the above, no dividend has been paid or declared by other companies comprising the Group during the
Track Record Period.
14. EARNINGS PER SHARE
The calculation of the basic earnings per share for the three years ended 31 December 2023 based on the profit
attributable to owners of the Company during the Track Record Period, and on 375,000,000 shares in issue on the
assumption that the Reorganisation as detailed in note 2 and Capitalisation Issue as detailed in the section headed
“Share Capital” in the Prospectus has been effective on 1 January 2021.
No diluted earnings per share are presented for the Track Record Period as there were no potential ordinary
shares in issue.
APPENDIX I ACCOUNTANTS’ REPORT
– I-41 –


--- page 502 ---
15. PROPERTY, PLANT AND EQUIPMENT
Machineries Moulds
Fixtures,
furniture and
equipment
Leasehold
improvements
Construction
in progress Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
COST
At 1 January 2021 41,047 74,160 23,053 8,122 606 146,988
Additions 6,028 2,620 795 266 4,021 13,730
Transfers 639 27 12 120 (798) –
Exchange realignment 885 679 154 172 66 1,956
At 31 December 2021 48,599 77,486 24,014 8,680 3,895 162,674
Additions 1,247 10,611 785 1,053 603 14,299
Acquisition of subsidiaries
(note 35) 297 1,037 63 19 – 1,416
Disposals (1,556) – – (103) – (1,659)
Transfers 65 – 19 3,340 (3,424) –
Exchange realignment (2,606) (2,214) (448) (575) (223) (6,066)
At 31 December 2022 46,046 86,920 24,433 12,414 851 170,664
Additions 1,759 10,465 487 211 596 13,518
Disposals (5,335) – (184) – – (5,519)
Transfers – – – 824 (824) –
Transfer from right-of-use assets 2,324 –––– 2,324
Exchange realignment (949) (1,048) (170) (295) (24) (2,486)
At 31 December 2023 43,845 96,337 24,566 13,154 599 178,501
DEPRECIATION
At 1 January 2021 31,052 57,109 21,348 6,766 – 116,275
Charge for the year 2,690 4,646 546 243 – 8,125
Exchange realignment 555 219 119 138 – 1,031
At 31 December 2021 34,297 61,974 22,013 7,147 – 125,431
Eliminated on disposals (1,556) – – (103) – (1,659)
Change for the year 2,614 5,220 637 425 – 8,896
Exchange realignment (1,599) (849) (335) (372) – (3,155)
At 31 December 2022 33,756 66,345 22,315 7,097 – 129,513
Change for the year 2,580 6,507 627 1,105 – 10,819
Eliminated on disposals (4,787) – (164) – – (4,951)
Transfer from right-of-use assets 407 –––– 4 0 7
Exchange realignment (611) (433) (128) (143) – (1,315)
At 31 December 2023 31,345 72,419 22,650 8,059 – 134,473
CARRYING V ALUES
At 31 December 2021 14,302 15,512 2,001 1,533 3,895 37,243
At 31 December 2022 12,290 20,575 2,118 5,317 851 41,151
At 31 December 2023 12,500 23,918 1,916 5,095 599 44,028
APPENDIX I ACCOUNTANTS’ REPORT
– I-42 –


--- page 503 ---
The above items of property, plant and equipment are depreciated on a straight-line basis over the useful lives at
the following rates per annum:
Machineries 10–33.3%
Moulds 12.5–20%
Fixtures, furniture and office equipment 10–33.3%
Leasehold improvements 12.5–20%
16. RIGHT-OF-USE ASSETS
Leased
properties/
Machineries
HK$’000
COST
At 1 January 2021 38,268
Additions 3,455
Extension of lease term arising from a change in the non-cancellable period of a lease
(note a) 5,442
Early termination of a lease (note b) (1,374)
Exchange realignment 1,093
At 31 December 2021 46,884
Additions 4,246
Extension of lease term arising from a change in the non-cancellable period of a lease
(note a) 2,364
Early termination of a lease (note b) (882)
Exchange realignment (3,422)
At 31 December 2022 49,190
Additions 1,271
Extension of lease term arising from a change in the non-cancellable period of a lease
(note a) 81
Early termination (188)
Reduction upon completion/derecognition upon end of lease term (1,089)
Transfer to property, plant and equipment (2,324)
Exchange realignment (1,297)
At 31 December 2023 45,644
DEPRECIATION
At 1 January 2021 11,776
Provided for the year 6,554
Early termination of a lease (note b) (693)
Exchange realignment 302
At 31 December 2021 17,939
Provided for the year 6,863
Early termination of a lease (note b) (478)
Exchange realignment (1,308)
At 31 December 2022 23,016
Provided for the year 6,481
Early termination (110)
Reduction upon completion/derecognition upon end of lease term (1,089)
Transfer to property, plant and equipment (407)
Exchange realignment (602)
At 31 December 2023 27,289
APPENDIX I ACCOUNTANTS’ REPORT
– I-43 –


--- page 504 ---
Leased
properties/
Machineries
HK$’000
CARRYING V ALUES
At 31 December 2021 28,945
At 31 December 2022 26,174
At 31 December 2023 18,355
Notes:
(a) During the Track Record Period, certain lease properties with no extension options have their lease terms
extended after agreeing with the landlords.
(b) During the years ended 31 December 2021, 2022 and 2023, a leased property has been early terminated
without any penalty.
Included in right-of-use assets with carrying values of HK$2,426,000, HK$2,004,000 and nil are machineries as
at 31 December 2021, 2022 and 2023, respectively.
The Group leases factories, machineries, offices and warehouse premises during the Track Record Period. Lease
contracts are entered into for fixed term of 2 to 10 years, without any extension nor termination options. Lease terms
are negotiated on an individual basis and contain a wide range of different terms and conditions. In determining the
lease term and assessing the length of the non-cancellable period, the Group applies the definition of a contract and
determines the period for which the contract is enforceable.
During the years ended 31 December 2021, 2022 and 2023, expenses relating to short-term leases were
HK$261,000, HK$343,000 and HK$459,000, respectively.
During the years ended 31 December 2021 and 2022 and 2023, expenses relating to leases of low-value assets,
excluding short-term leases of low-value assets, were HK$9,000, HK$32,000 and nil, respectively.
During the years ended 31 December 2021, 2022 and 2023, total cash outflows for the leases of the Group were
HK$6,961,000, HK$11,658,000 and HK$6,111,000, respectively.
17. INVENTORIES
As at 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Raw materials 22,921 17,052 14,546
Work in progress 5,709 10,819 11,808
Finished goods 31,483 32,830 39,234
60,113 60,701 65,588
APPENDIX I ACCOUNTANTS’ REPORT
– I-44 –


--- page 505 ---
18. TRADE AND OTHER RECEIV ABLES, DEPOSITS AND PREPAYMENTS
The Group The Company
As at 31 December As at 31 December
2021 2022 2023 2022 2023
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Trade receivables 41,497 42,275 33,400 – –
Less: Allowance for credit losses (831) (1,162) (658) – –
40,666 41,113 32,742 – –
Other receivables and deposits (note a) 2,892 3,408 4,635 – –
Value added tax recoverable 2,418 2,885 2,274 – –
Other receivable from insurance company
(note b) 4,111––––
Prepayments paid to suppliers 2,502 2,946 3,682 – –
Prepaid expenses 4,180 4,576 4,855 61 –
Prepayments for listing expenses 497 404 1,438 404 1,438
Deferred issue costs 673 3,515 5,038 3,515 5,038
Tax reserve certificate (note c) 6,372 6,372–––
23,645 24,106 21,922 3,980 6,476
Less: Rental deposits under non-current
assets (1,096) (1,334) (1,236) – –
Less: Prepayment for acquisition of
property, plant and equipment
under non-current assets – (565) (1,711) – –
Amount shown under current assets 63,215 63,320 51,717 3,980 6,476
Notes:
(a) Included in other receivables and deposits of HK$211,000, HK$10,000 and HK$54,000 as at 31 December
2021, 2022 and 2023 respectively, represented amount due fromʮ̡ (“Dongguan
Baihui”). Dongguan Baihui is wholly-owned by Tang Family. The amount represented the electricity bills
paid on behalf for Dongguan Baihui by the Group for the electricity utilised by Dongguan Baihui as the
electric power company only provided one electricity meter for the area where Dongguan Baihui’s and the
Group’s factories are located. Details has been disclosed in note 31(d).
(b) Amount represented the remaining outstanding compensation income due to the fire accident from the
insurance company as disclosed in note 8. The amount has been fully settled by the insurance company in
January 2022.
(c) During the year ended 31 December 2023, the tax reserve certificate purchased was used to set off against
the final profits tax assessments for the years of assessment 2008/09 to 2016/17 issued and assessed by the
IRD in August 2023.
APPENDIX I ACCOUNTANTS’ REPORT
– I-45 –


--- page 506 ---
The Group grants credit terms to customers for a period ranging from 90 days from the invoice date for trade
receivables. The following is an aged analysis of trade receivables, net of allowance for doubtful debts, presented based
on the invoice date at the end of each reporting period:
As at 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Within 30 days 20,858 19,835 13,807
31 days to 60 days 13,336 14,466 11,591
61 days to 90 days 5,506 5,623 5,788
91 days to 180 days 958 1,189 1,284
Over 180 days 8 – 272
40,666 41,113 32,742
As at 1 January 2021, trade receivables from contracts with customers amounted to HK$29,875,000, net of
allowance for credit losses.
ECL of trade receivables
At the end of the reporting period, the Company reviews trade receivables for evidence of impairment on
both an individual and a collective basis by past due basis. The provision of ECL for receivables is recognised
based on the credit history of its customers, indication of financial difficulties, default in payments, and current
market conditions. After the assessment performed by the management of the Company, a provision of ECL of
HK$76,000, HK$354,000 was provided for the years ended 31 December 2021 and 2022, respectively and a
reversal of ECL of HK$493,000 was recognised for 2023, and the management of the Company consider that the
trade debtors are of good credit quality.
Trade receivables that are not impaired
The ageing analysis of trade receivables (net of provision of ECL) that are neither individually nor
collectively considered to be impaired are as follows:
As at 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Neither past due nor impaired 33,207 32,702 23,909
Past due but not impaired
Less than 1 month past due 5,868 7,014 6,957
1 to 3 months past due 1,571 1,078 1,529
Over 3 months 20 319 347
40,666 41,113 32,742
The Group’s trade receivables balances that are past due over 90 days are not considered as in default
based on good repayment records for those customers and long-term/continuous business with the Group. As at
31 December 2021, 2022 and 2023, the Group does not charge interest nor hold any collateral over the balances.
The following were the Group’s trade receivables financing with banks as at 31 December 2021 and 2022
and 2023. As the Group has still retained the significant risks and rewards, it continues to recognise the full
carrying amount and has recognised the cash received on the transfer as the bank borrowings (see note 25).
These financial assets are carried at amortised cost in the consolidated statements of financial position.
APPENDIX I ACCOUNTANTS’ REPORT
– I-46 –


--- page 507 ---
The trade receivables financing with banks at each of the end of reporting period was as follows:
As at 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Carrying amount of trade receivables
financing 18,722 19,122 15,196
Carrying amount of associated
borrowings (note 25) (15,435) (17,093) (13,406)
Net position 3,287 2,029 1,790
19. FINANCIAL ASSETS AT FAIR V ALUE THROUGH PROFIT OR LOSS
The financial assets at fair value through profit or loss represent unlisted investment in life insurance contracts
for Mr. Tong. UBoT Inc. (HK) is the beneficiary of such investments. The carrying amounts represent the cash
surrender value of the policies and approximate to their fair values at the end of the reporting period.
The fair values of this life insurance contracts at the end of each of the reporting period were estimated by
making reference to the cash surrender value set out in the insurance contracts. The cash surrender value represents the
discounted payout the insuree would receive if they opt to withdraw any funds up to the basis of the policy, after
deducting the surrender charge imposed by the insurer, and such cash surrender value, although of a life insurance
policy nature, is an asset that the Group (i.e. the insuree) can control at its discretion, and the contracts can be
converted into cash within one month or less when the contracts are surrendered.
Since the insurance contracts are used as security and formed a part of obtaining the bank facilities (note 25)
granted to the subsidiary of the Group, these related insurance contracts are expected to be realised upon settlement of
the bank borrowings when needed. In view of the bank borrowings contained a repayment on demand clause (note 25)
are classified as current liabilities, the presentation of such relevant insurance contracts is consistent with the bank
borrowings.
20. AMOUNT(S) DUE FROM (TO) A RELATED COMPANY/DIRECTOR/SUBSIDIARIES
The Group
Maximum amounts outstanding
As at 31 December During the year ended 31 December
2021 2022 2023 2021 2022 2023
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Amount due from a director
– Mr. Tong 10,620 6,318 6,318 12,161 11,577 6,318
Amount due from a related company
– UBOTIC MEMS (as defined below) 2,954 – – 7,760 2,954 –
All the amounts shown above are non-trade nature, unsecured, interest-free and repayable on demand.୷
ʮ̡ (Dongguan UBOTIC MEMS Co., Ltd.*) (“UBOTIC MEMS”) was controlled by
Mr. Tong until the Group has acquired it from Mr. Tong on 20 April 2022 as stated in note 35.
* For identification purpose only
APPENDIX I ACCOUNTANTS’ REPORT
– I-47 –


--- page 508 ---
The Company
Amounts due to subsidiaries are non-trade nature, unsecured, interest-free and repayable on demand.
The amount due from Mr. Tong of HK$5,778,000 will offset simultaneously with the interim dividend
declared by UBoT Inc. (HK) before Listing (note 13). The remaining outstanding amount due from Mr. Tong will
be settled by cash before Listing.
The amount due from UBOTIC MEMS is eliminated upon the acquisition of UBOTIC MEMS on 20 April
2022 as disclosed in note 35 as UBOTIC MEMS would become a subsidiary of the Group.
Further details on the Group’s credit policy and credit risk analysis arising from amounts due from a
director and related company are set out in note 30.
21. TIME DEPOSITS/BANK BALANCES AND CASH/BANK OVERDRAFTS
Bank balances/time deposits
Bank balances are interest-free or at nominal rate as at 31 December 2021, 2022 and 2023.
Details of impairment assessment of bank balances and time deposits are set out in note 30.
Bank overdrafts
Bank overdrafts carry interest at market rates at 6% and 6.8% per annum as at 31 December 2021 and
2023, respectively.
22. TRADE AND OTHER PAYABLES
The Group The Company
As at 31 December As at 31 December
2021 2022 2023 2022 2023
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Trade payables
– third parties 44,699 33,050 36,495 – –
– UBOTIC MEMS 6,863––––
51,562 33,050 36,495 – –
Payroll and retirement benefit plan
payables 10,472 10,909 7,499 85 –
Accrued expenses 4,378 3,837 3,411 – –
Accrued listing expenses 1,727 1,074 3,061 1,074 3,061
Accrued shipping and freight-outbound
fees 1,410 1,024 1,264 – –
Payables for acquisition of property, plant
and equipment 3,939 828 829 – –
Others 2,160 2,019 3,269 – –
Total 75,648 52,741 55,828 1,159 3,061
The credit period on purchases from suppliers is ranging from 0–120 days or payable upon delivery.
APPENDIX I ACCOUNTANTS’ REPORT
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The following is an aging analysis of trade payables presented based on the invoice date at the end of each
reporting period:
As at 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Within 30 days 12,941 13,044 4,384
31 days to 60 days 8,421 7,652 5,299
61 days to 90 days 1,668 6,944 2,427
91 days to 180 days 2,762 3,212 12,531
181 days to 270 days 7,607 579 8,728
271 days to 365 days 3,521 608 2,472
Over 365 days 14,642 1,011 654
51,562 33,050 36,495
23. CONTRACT LIABILITIES
Contract liabilities mainly included prepayments received from customers when they sign the sale and purchase
agreements which are recognised as contract liabilities. They are expected to be recognised as revenue within one year
upon receipt at the beginning of the year, they were recognised as revenue in current period upon the satisfaction of
performance obligation, i.e. the delivery of goods to customers.
As at 1 January 2021, contract liabilities amounted to HK$329,000.
24. LEASE LIABILITIES
As at 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Lease liabilities payable
Within one year 10,097 7,002 7,670
Within a period of more than one year, but
not exceeding
two years 5,818 6,447 5,128
Within a period of more than two years, but
not exceeding five years 13,238 14,194 9,613
Over five years 5,062 369 –
34,215 28,012 22,411
Less: Amount due for settlement within 12
months shown under current liabilities (10,097) (7,002) (7,670)
Amount due for settlement after 12 months
shown under non-current liabilities 24,118 21,010 14,741
The weighted average incremental borrowing rates applied to lease liabilities was 4.7%, 4.5% and 4,82% for the
years ended 31 December 2021, 2022 and 2023, respectively.
APPENDIX I ACCOUNTANTS’ REPORT
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25. BANK BORROWINGS
As at 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Bank borrowings:
Secured 38,164 40,587 34,658
Trade receivables financing (note 18) 15,435 17,093 13,406
53,599 57,680 48,064
The carrying amounts of the above borrowings
that contain a repayment on demand clause
(shown under current liabilities)
but repayable*:
Within one year 41,002 48,551 41,743
Within a period of more than one year but
not exceeding two years 3,475 2,810 1,750
Within a period of more than two years but
not exceeding five years 4,908 6,319 4,571
Over five years 4,214 – –
53,599 57,680 48,064
* The amounts due are based on scheduled repayment dates set out in the loan agreements.
Bank borrowings carry variable interest at 0.9% to 9.1% per annum during the years ended 31 December 2021,
2022 and 2023. The weighted average effective interest rate on bank borrowings as at 31 December 2021, 2022, and
2023 was 3.1%, 6.8% and 7.2% per annum, respectively. The Group’s bank borrowings carry interests at margins over
Hong Kong Interbank Offer Rate (“HIBOR”), London Interbank Offer Rate (“LIBOR”), the bank’s US$ best lending
rate or the bank’s HK$ best lending rate, as appropriate.
Bank borrowing with carrying amount of HK$8,600,000, HK$6,200,000 and HK$3,800,000 as at 31 December
2021, 2022, and 2023, respectively, is under the SME Loan Guarantee Scheme operated by HMC Insurance Limited
(“HKMCI”) and is secured by HKMCI and Mr. Tong’s personal guarantee.
Bank borrowings with carrying amount of HK$29,564,000, HK$34,387,000 and HK$30,858,000 as at 31
December 2021, 2022 and 2023, respectively, are secured by:
 Legal charge over a property owned by Mr. Tong’s company (not in the Group);
 Life insurance policy entered into by a subsidiary of the Group as detailed in note 19; and
 Unlimited guarantees from Mr. Tong’s company (not in the Group), UBOTIC, Mr. Tong, Mr. Tang Ming
and Mr. Tang Chak Leung.
As represented by the directors of the Company, based on the bank facilities letter signed with the bank, the
legal charge over a property owned by Mr. Tong’s company, the unlimited guarantees provided by a subsidiary of the
Group, UBOTIC, Mr. Tong, Mr. Tang Ming and Mr. Tang Chak Leung is expected to be released upon Listing.
APPENDIX I ACCOUNTANTS’ REPORT
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26. DEFERRED TAXATION
The following is the deferred tax (assets) liabilities recognised and the movements thereon:
Deferred tax assets
Deferred tax
liabilities
Tax losses
Right-of-use
assets/lease
liabilities Sub-total ECL provision Total
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
At 1 January 2021 – – – 123 123
Charged to profit or loss (note 11) – – – 14 14
At 31 December 2021 – – – 137 137
Credited to profit or loss (note 11) (1,042) – (1,042) – (1,042)
Exchange adjustments 27 – 27 – 27
As 31 December 2022 (1,015) – (1,015) 137 (878)
Charged (credited) to profit or loss (note 11) 834 (1,016) (182) – (182)
Exchange adjustments 24 6 30 – 30
As 31 December 2023 (157) (1,010) (1,167) 137 (1,030)
As at 31 December 2022 and 2023, the Group has tax losses arising in the PRC of HK$4,168,000 and
HK$629,000, respectively, available for offset against future profits that will expire in next five years. A deferred tax
asset has been recognised of HK$1,015,000 and HK$157,000 as at 31 December 2022 and 2023, respectively, of such
losses.
27. SHARE CAPITAL AND (ACCUMULATED LOSSES) RETAINED PROFITS
The Company was incorporated in the Cayman Islands as an exempted company with limited liability on 7
February 2022, with an authorised share capital of HK$380,000 divided into 380,000,000 Shares of HK$0.001 each.
As mentioned in note 2, the Historical Financial Information has been prepared as if the Group structure after the
Reorganisation had been in existence throughout the Track Record Period.
Share capital and (accumulated losses) retained profits as at 31 December 2021 represent the share capital and
(accumulated losses) retained profits of the companies now comprising the Group. From the beginning of the Track
Record Period, the issued share capital of UBoT In. (HK) was 7,850,000 shares and the shareholdings of the ultimate
Controlling Shareholders of Mr. Tong and Busy Trade were 32.61% and 35.93%, respectively, and the other
shareholders of 31.46%. On 31 August 2020, UBoT Inc. (HK) further allotted and issued a total of 26,150,000 shares
(settled by cash of HK$6,538,000) to Mr. Tong of 13,250,000 shares (settled by cash of HK$3,313,000), Busy Trade of
11,459,800 (settled by cash of HK$2,865,000) and the other shareholders of 1,440,200 (settled by cash of
HK$360,000). After such shares allotment, the shareholdings of the ultimate Controlling Shareholders of Mr. Tong and
Busy Trade were 46.5% and 42%, respectively, and the other shareholders of 11.5%.
Share capital as at 31 December 2022 and 2023 represent the share capital of the Company.
APPENDIX I ACCOUNTANTS’ REPORT
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28. RETIREMENT BENEFIT PLAN
The Group operates a Mandatory Provident Fund Scheme (“MPF”) for all qualifying employees in Hong Kong.
The assets of the schemes are held separately from those of the Group, in funds under the control of trustees. The
Group contributes 5% of relevant payroll costs to the Scheme, which contribution is matched by employees, with each
employee’s qualifying salary capped at HK$1,500 per month to the MPF scheme.
The employees of the Group’s subsidiaries in the PRC are members of a state-managed retirement benefit scheme
operated by the government of the PRC. The subsidiaries are required to contribute fixed percentage of payroll costs to
the retirement benefit scheme to fund the benefits. The only obligation of the Group with respect to the retirement
benefit scheme is to make the specified contributions.
During the Track Record Period, the Group’s subsidiaries in the PRC failed to promptly make full contributions
to the social insurance plans and the housing provident fund for their employees employed by the PRC subsidiaries.
Pursuant to the , the PRC subsidiaries may be ordered to make up for the shortfall in
contribution within a specified time period and be subject to a daily fine amounting to 0.05% of the outstanding
contributions from the date on which payment is overdue. If the outstanding contribution is not made within the
specified time period, the Group may be imposed a fine ranging from one to three times of the amount of shortfall in
contribution. Pursuant to the Regulation on the Administration of Housing Provident Fund, the Group’s PRC
subsidiaries may be ordered to make up the outstanding contribution within a specified time period, and if the Group’s
PRC subsidiaries fail to do so, the housing provident fund administrative center may apply for a court order for
enforcement of such contribution.
At 31 December 2021, the Group had made aggregate provisions of HK$2,464,000, respectively in respect of the
estimated shortfall in social insurance plans and housing provident fund contributions.
The directors of the Company have, taking into account the facts that (i) full provision of shortfalls had been
made; and (ii) based on the Group’s PRC legal advisor’s consultation with relevant PRC social insurance administrative
authorities, they would not impose any punishment on the Group in respect of the underpayment, considered that it is
not probable that the Group will be fined or penalised and therefore no provision for fines or penalties has been made,
and that the provision of shortfall made as at each reporting date and during the Track Record Period is adequate.
The total cost charged to profit or loss of HK$5,662,000, HK$6,408,000 and HK$6,804,000 represents
contributions payable to these schemes by the Group in respect of the year ended 31 December 2021, 2022 and 2023,
respectively.
29. CAPITAL RISK MANAGEMENT
The Group manages its capital to ensure that it will be able to continue as a going concern while maximising the
return to shareholders through the optimisation of the debt and equity balance. The Group’s overall strategy remains
unchanged throughout the Track Record Period.
The capital structure of the Group consists of net debts, which includes bank overdrafts, lease liabilities and
bank borrowings as disclosed in notes 21, 24 and 25 respectively, net of bank balances and cash and time deposits and
equity attributable to owners of the Group, comprising share capital and reserve. The Group is not subject to any
externally imposed capital requirement.
The management of the Group reviews the capital structure on a regular basis. As a part of this review, the
management considers the cost of capital and the risks associated with each class of capital. Based on recommendations
of the management, the Group will balance its overall capital structure through continuity of funding of cash flows
from operating activities, the payment of dividends, new share issues, or issues of new debt.
APPENDIX I ACCOUNTANTS’ REPORT
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30. FINANCIAL INSTRUMENTS
Categories of financial instruments
At 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Financial assets at amortised cost 63,566 56,739 44,786
Financial assets at fair value through profit or
loss 12,968 13,335 13,748
Financial liabilities at amortised cost 126,403 105,510 100,352
Lease liabilities 34,215 28,012 22,412
Financial risk management objectives and policy
The Group’s financial instruments include financial assets at fair value through profit or loss, trade and
other receivables and deposits, amount due from a director/a related company, bank balances, time deposits, trade
and other payables, bank overdrafts and bank borrowings. Details of these financial instruments are disclosed in
respective notes. The risks associated with these financial instruments include market risk (currency risk and
interest rate risk), credit risk and liquidity risk. The policies on how to mitigate these risks are set out below.
The management manages and monitors these exposures to ensure appropriate measures are implemented on a
timely and effective manner.
Market risk
Currency risk
Majority of the Group’s revenue is denominated in US$ and RMB. However, the Group has certain trade
and other receivables, trade and other payables, bank balances, bank overdrafts and bank borrowings that are
denominated in foreign currencies relative to functional currencies of the respective group entities. As a result,
the Group is exposed to fluctuations in foreign exchange rates.
The Group currently does not have a foreign exchange hedging policy. However, the management of the
Group monitors foreign exchange exposure and will consider hedging significant foreign exchange exposure
should the need arise.
The carrying amounts of the Group’s monetary assets and liabilities that are denominated in currencies
other than the functional currency of the relevant group entities at the end of the reporting period are as follows:
Assets Liabilities
As at 31 December As at 31 December
2021 2022 2023 2021 2022 2023
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
SGD – 66 – 417 58 138
RMB 7,166 5,219 137 241 239 480
Euro (“EUR”) – – – 13 3 4
New Taiwan Dollar (“NTD”) 37 32 – 8 – 34
Malaysian Ringgit (“MYR”) 81 56 5 4 45 51
HK$ 11,488 2,033 6,829 24,530 35,639 28,751
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 514 ---
Sensitivity analysis
The Group’s foreign currency risk is mainly concentrated on the fluctuation of RMB and HK$ against
functional currencies of the respective group entities.
Since HK$ is pegged to US$, the Group does not expect any significant movements in US$/HK$ exchange
rate.
The following table details the Group’s sensitivity to a 5% decrease in the functional currency of the
relevant group entities against the relevant foreign currencies. The following sensitivity analysis includes only
outstanding monetary items denominated in foreign currencies and adjusts their translation at the year end for a
5% change in foreign currency exchange rates, which are the sensitivity rates used when reporting foreign
currency risk internally to key management personnel and represents management’s assessment of the reasonably
possible change in currencies exchange rates. A positive (negative) number below indicates an increase
(decrease) to profit before taxation when the currency below strengthens 5% against the functional currency of
the relevant group entities. For a 5% weakening of these currencies against the functional currency of the
relevant group entities, there would be an equal and opposite impact on the profit before taxation.
As at 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
(Loss) gain in relation to:
RMB 346 249 17
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates. Management has assessed there is minimal exposure of the interest
rate risk on the variable rate of interest incurred on the bank borrowings, bank overdrafts and bank balances.
The Group currently does not have an interest rate hedging policy. However, the management monitors
interest rate risk exposure and will consider interest rate hedging should the need arise.
A fundamental reform of major interest rate benchmarks is being undertaken globally, including the
replacement of some interbank offered rates (“IBORs”) with alternative nearly risk-free rates. Details of the
impacts on the Group’s risk management strategy arising from the interest rate benchmark reform and the
progress towards implementation of alternative benchmark interest rates are set out under “interest rate
benchmark reform” in this note.
Sensitivity analysis
The sensitivity analyses below have been determined based on the exposure to interest rates at the end of
the reporting period. The analysis is prepared assuming the bank borrowings outstanding at the end of the
reporting period were outstanding for the whole year. A 100 basis point increase or decrease in variable-rate bank
borrowings are used when reporting interest rate risk internally to key management personnel and represents
management’s assessment of the reasonably possible change in interest rates.
Bank balances are excluded from sensitivity analysis as the management considers that the exposure of
cash flow interest rate risk arising from variable-rate bank balances is insignificant.
If interest rates had been 100 basis points higher/lower and all other variables were held constant, the
Group’s profit before taxation would decrease/increase by HK$569,000, HK$577,000 and HK$481,000 for the
year ended 31 December 2021, 2022 and 2023, respectively.
APPENDIX I ACCOUNTANTS’ REPORT
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Other price risk
The Group is exposed to equity price risk through its investment in a life insurance contract for Mr. Tong
measured at FVTPL.
Sensitivity analysis
As at 31 December 2021, 2022 and 2023, if cash surrender value as defined in the life insurance contract
had been 5% higher/lower, the impact on the Group’s profit before taxation would increase/decrease by
HK$648,000, HK$667,000 and HK$687,000, respectively.
Credit risk
The Group’s credit risk is primarily attributable to trade and other receivables and deposits, amount due
from a director/a related company, time deposits and bank balances.
At the end of each reporting period, the Group’s maximum exposure to credit risk which will cause a
financial loss to the Group due to failure to discharge an obligation by the counterparties is arising from the
carrying amount of the respective recognised financial assets as stated in the consolidated statements of financial
position.
In order to minimise the credit risk, the Group has policies in place for determination of credit limits,
credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue
debts. Before acceptance any new customers, the Group carries out research on the credit risk of the new
customer and assesses the potential customers’ credit quality and defines credit limits by customer. Limits
attributed to customers are reviewed at the end of each reporting period or when necessary. In this regard, the
management of the Group considers that the Group’s credit risk is significantly reduced.
The Group does not hold any collateral or other credit enhancements to cover its credit risks associated
with its financial assets.
The Group’s internal credit risk grading assessment comprises the following categories:
Internal
credit rating Description Trade receivables
Other financial
assets
A The counterparties have a low risk of
default based on good historical
repayment records and are mainly
multinational companies or listed
companies
Lifetime ECL – not
credit-impaired
12m ECL
B The counterparties have a medium
risk of default based on good
historical repayment records and
are mainly unlisted entities
Lifetime ECL – not
credit-impaired
12m ECL
C There have been significant increases
in credit risk since initial
recognition and the counterparties
are mainly multinational companies
or listed companies
Lifetime ECL – not
credit-impaired
Lifetime ECL – not
credit-impaired
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 516 ---
Internal
credit rating Description Trade receivables
Other financial
assets
D There have been significant increases
in credit risk since initial
recognition and the counterparties
are mainly unlisted entities
Lifetime ECL – not
credit-impaired
Lifetime ECL – not
credit-impaired
E There is evidence indicating the asset
is credit-impaired
Lifetime ECL –
credit-impaired
Lifetime ECL –
credit-impaired
F There is evidence indicating that the
debtor is in severe financial
difficulty and the Group has no
realistic prospect of recovery
Amount is written off Amount is written off
Trade receivables arising from contracts with customers
The Group applies simplified approach and always recognises lifetime ECL for trade receivables and
contract assets.
The lifetime ECL on trade receivables, except for credit-impaired debtors which are assessed individually,
are assessed on a collective basis through grouping of debtors with reference to the past due condition. Estimated
loss rates are estimated based on historical observed default rates of the debtors and are adjusted for
forward-looking information that is available without undue cost or effort. The grouping is regularly reviewed by
management to ensure relevant information about specific debtors is updated.
As at 31 December 2021, 2022 and 2023, the Group has concentration of credit risk as 31%, 25% and 21%
respectively, of the total trade receivables was due from the Group’s largest customer. The Group’s concentration
of credit risk on the top five largest customers in each year accounted for 66%, 56% and 57% of the total trade
receivables as at 31 December 2021, 2022, and 2023, respectively.
Other receivables and deposits
The management of the Group conducts periodic individual assessment on the recoverability of other
receivables and deposits based on historical settlement records, past experience, and also available reasonable
and supportive forward-looking information. The management of the Group believe that there is no material
credit risk inherent in the Group’s outstanding balance of other receivables and deposits. As at 1 January 2021,
31 December 2021, 2022 and 2023, the Group assessed that the ECL for other receivables and deposits was
insignificant.
Amounts due from a director and related company
The Group had concentration of credit risk on amount due from a director and amount due from related
company as at 1 January 2021, 31 December 2021, 2022 and 2023. In order to minimise the credit risk, the
management of the Group had reviewed the recoverable amount of the amounts due from the director and related
company regularly at the end of each reporting period to ensure that adequate impairment losses are made for
irrecoverable amounts. In this regard, the management of the Group considered that the Group’s credit risk was
significantly reduced. In the opinion of the management of the Group, the risk of default by the counterparties is
low and the ECL on the balances is insignificant.
APPENDIX I ACCOUNTANTS’ REPORT
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--- page 517 ---
Bank balances/time deposits
The credit risk for bank balances is limited because the counterparties are banks with high credit ratings
assigned by international credit-rating agencies. There has been no history of default in relation to these banks.
The Group performs impairment assessment on the short-term bank deposits and bank balances under 12m ECL
model. The management of the Group considers the risk of default is low based on the average loss rate by
reference to credit ratings assigned by international credit-rating agencies. As at 1 January 2021, 31 December
2021, 2022 and 2023, the Group assessed that the ECL for bank balances were insignificant.
As part of the Group’s credit risk management, the Group uses debtors’ aging to assess the impairment for
its customers because these customers share common risk characteristics that are representative of the customers’
abilities to pay all amounts due in accordance with the contractual terms. The following table provides
information about the exposure to credit risk for trade receivables which are assessed on a collective basis by
using provision matrix within lifetime ECL (not credit-impaired).
Gross carrying amount
31 December
2021 2022 2023
Average
loss rate
Trade
receivables
Average
loss rate
Trade
receivables
Average
loss rate
Trade
receivables
HK$’000 HK$’000 HK$’000
Current (not past due) 1.92% 33,855 2.63% 33,586 1.78% 24,344
1–30 days past due 1.92% 5,980 2.63% 7,203 1.78% 7,080
31–90 days past due 3.86% 1,634 5.62% 1,142 4.26% 1,598
More than 90 days past due 6.99% 28 7.33% 344 8.28% 378
2.00% 41,497 2.75% 42,275 1.97% 33,400
The following table shows the movements in lifetime ECL (not credit-impaired) recognised for trade
receivables under the simplified approach.
Lifetime ECL
(not
credit-impaired)
HK$’000
As at 1 January 2021 747
Impairment losses recognised 76
Exchange realignment 8
As at 31 December 2021 831
Impairment losses recognised 354
Exchange realignment (23)
As at 31 December 2022 1,162
Reversal of impairment losses recognised (note) (493)
Exchange realignment (11)
As at 31 December 2023 658
APPENDIX I ACCOUNTANTS’ REPORT
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Note: The reversal of impairment loss for 2023 was mainly due to the decrease of gross carrying amount
of trade receivables, which is a result of settlement of outstanding trade receivables as at 31
December 2022 during the 2023 and the decrease in outstanding trade receivables at 31 December
2023.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulties in meeting its financial obligations as
and when they fall due. In the management of the liquidity risk, the Group monitors and maintains a level of
cash and cash equivalents deemed adequate by the management to finance the Group’s operations and mitigate
the effects of fluctuations in cash flows.
The following table details the remaining contractual maturity of the Group for its non-derivative financial
liabilities. The table has been drawn up based on the undiscounted cash flows (including interest payments
computed using contractual rates or, if floating, based on the relevant market rates as at the reporting date) of
financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both
interest and principal cash flows, where applicable.
As at 31 December 2021
Weighted
average
interest rate
On demand
or less than
1 month
Within 3
months
3t o6
months
6t o1 2
months 1 to 5 years Over 5 years
Total
undiscounted
cash flow
Carrying
amount
% HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Trade and other
payables Nil 56,356 9,138 4,049 – – – 69,543 69,543
Bank borrowings 3.1 53,599 ––––– 53,599 53,599
Bank overdrafts 6.0 3,261 ––––– 3,261 3,261
113,216 9,138 4,049 – – – 126,403 126,403
Lease liabilities 4.7 3,624 1,504 2,292 3,947 21,822 5,216 38,405 34,215
As at 31 December 2022
Weighted
average
interest rate
On demand
or less than
1 month
Within 3
months
3t o6
months
6t o1 2
months 1 to 5 years Over 5 years
Total
undiscounted
cash flow
Carrying
amount
% HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Trade and other
payables Nil 33,203 14,627 –––– 47,830 47,830
Bank borrowings 6.8 57,680 ––––– 57,680 57,680
90,883 14,627 –––– 105,510 105,510
Lease liabilities 4.5 806 1,494 2,164 3,599 22,502 371 30,936 28,012
APPENDIX I ACCOUNTANTS’ REPORT
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As at 31 December 2023
Weighted
average
interest rate
On demand
or less than
1 month
Within 3
months
3t o6
months
6t o1 2
months 1 to 5 years Over 5 years
Total
undiscounted
cash flow
Carrying
amount
% HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
Trade and other
payables Nil 42,632 6,724 –––– 49,356 49,356
Bank borrowings 7.2% 48,064 ––––– 48,064 48,064
Bank overdrafts 6.9% 2,932 ––––– 2,932 2,932
93,628 6,724 –––– 100,352 100,352
Lease liabilities 4.8% 1,557 1,323 1,984 3,707 15,848 – 24,419 22,412
Bank borrowings with a repayment on demand clause are included in the “on demand or less than 1
month” time band in the above maturity analysis. As at 31 December 2021, 2022 and 2023, the aggregate
carrying amounts of these bank borrowings amounted to HK$53,599,000, HK$57,680,000 and HK$48,064,000,
respectively. Taking into account the Group’s financial position, the management does not believe that it is
probable that the banks will exercise their discretionary rights to demand immediate repayment. The management
believes that such bank loans will be repaid 1 to over 5 years after the end of the reporting period in accordance
with the scheduled repayment dates set out in the loan agreements, details of which are set out in the table
below:
Maturity Analysis – Bank loans with a repayment on demand clause
based on scheduled repayments
Less than
1 year 1–2 years 2–5 years Over 5 years
Total
undiscounted
cash outflows
Carrying
amount
HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000
31 December 2021 41,527 3,704 5,140 4,224 54,595 53,599
31 December 2022 49,684 3,265 6,866 – 59,815 57,680
31 December 2023 42,431 2,089 4,913 – 49,433 48,064
Interest rate benchmark reform
As listed in note 25, several of the Group’s LIBOR/HIBOR bank borrowings may be subject to the interest
rate benchmark reform. The Group is closely monitoring the market and managing the transition to new
benchmark interest rates, including announcements made by the relevant IBOR regulators.
LIBOR
The Financial Conduct Authority has confirmed all LIBOR settings will either cease to be provided by any
administrator or no longer be representative:
 immediately after 31 December 2021, in the case of all sterling, euro, Swiss franc and Japanese yen
settings, and the 1-week and 2-month US dollar settings; and
 immediately after 31 December 2023, in the case of the remaining US dollar settings.
APPENDIX I ACCOUNTANTS’ REPORT
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HIBOR
While the Hong Kong Dollar Overnight Index Average (“HONIA”) has been identified as an alternative to
HIBOR, there is no plan to discontinue HIBOR. The multi-rate approach has been adopted in Hong Kong,
whereby HIBOR and HONIA will co-exist.
(i) Risks arising from the interest rate benchmark reform
The following are the key risks for the Group arising from the transition:
Interest rate related risks
For contracts which have not been transitioned to the relevant alternative benchmark rates and
without detailed fallback clauses, if the bilateral negotiations with the Group’s counterparties are not
successfully concluded before the cessation of LIBOR, there are significant uncertainties with regard to the
interest rate that would apply. This gives rise to additional interest rate risk that was not anticipated when
the contracts were entered into.
There are fundamental differences between IBORs and the various alternative benchmark rates.
IBORs are forward looking term rates published for a period (e.g. 3 months) at the beginning of that
period and include an inter-bank credit spread, whereas alternative benchmark rates are typically risk-free
overnight rates published at the end of the overnight period with no embedded credit spread. These
differences will result in additional uncertainty regarding floating rate interest payments.
Liquidity risk
The additional uncertainty on various alternative rates which are typically published on overnight
basis will require additional liquidity management. The Group’s liquidity risk management policy has been
updated to ensure sufficient liquid resources to accommodate unexpected increases in overnight rates.
Litigation risk
If no agreement is reached to implement the interest rate benchmark reform on contracts which have
not been transitioned to the relevant alternative benchmark rates (e.g. arising from differing interpretation
of existing fallback terms), there is a risk of prolonged disputes with counterparties which could give rise
to additional legal and other costs. The Group is working closely with all counterparties to avoid this from
occurring.
Interest rate basis risk
Interest rate basis risk may arise if a non-derivative instrument and the derivative instrument held to
manage the interest risk on the non-derivative instrument transition to alternative benchmark rates at
different times. This risk may also arise where back-to-back derivatives transition at different times. The
Group will monitor this risk against its risk management policy which has been updated to allow for
temporary mismatches of up to 12 months and transact additional basis interest rate swaps if required.
Fair value measurements
The Group’s financial assets at fair value through profit or loss of HK$12,968,000, HK$13,335,000 and
HK$13,748,000 is measured at fair value as at 31 December 2021, 2022 and 2023, respectively. It is classified as
Level 3 under the fair value hierarchy and the fair value is determined based on the cash surrender value in
accordance with the life insurance contract which is not an observable input. Management estimates the fair
value based on the latest policy quarterly statement of the life insurance contract provided by the bank. The
unobservable input is the cash surrender value quoted by the bank according to the life insurance contract. When
the cash surrender value is higher, the fair value of the life insurance contract will be higher. The sensitivity
analyses have been determined based on the cash surrender value of the life insurance contract. If the cash
surrender value has been 5% higher/lower, the Group’s profit before taxation would increase/decrease by
HK$648,000, HK$667,000 and HK$687,000 for the year ended 31 December 2021, 2022 and 2023, respectively.
APPENDIX I ACCOUNTANTS’ REPORT
– I-60 –


--- page 521 ---
The reconciliation of the fair value measurement is shown below:
Financial assets
at fair value
through
profit of loss
HK$’000
At 1 January 2021 12,478
Fair value adjustment 416
Exchange realignment 74
At 31 December 2021 12,968
Fair value adjustment 349
Exchange realignment 18
At 31 December 2022 13,335
Fair value adjustment 411
Exchange realignment 2
At 31 December 2023 13,748
Except as disclosed above, the management of the Group considers that the carrying amounts of the
financial assets and financial liabilities of the Group recorded at amortised cost in the Historical Financial
Information at the end of each reporting period approximate their fair values. Such fair values have been
determined in accordance with generally accepted pricing models based on discounted cash flow analysis.
31. RELATED PARTY TRANSACTIONS
The directors of the Company are of the opinion that all the related party transactions have been transacted under
terms as negotiated with the related parties.
(a) Transactions with related companies
Related parties Relationships
Nature of balances/
transactions
Y ear ended 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
UBOTIC MEMS A company controlled
by Mr. Tong
Purchase of MEMS and
sensor packaging
5,482* 272* –
୷̹ϓ͞ໄุ
ʮ̡
A company which Mr. Tang Chak
Man (one of the member of the
Tang Family) has 30% interest
with significant influence on it
Repayment of lease
liabilities
239 1,646 1,794
* The amount represented the related parties transaction with UBOTIC MEMS before the Group has
acquired it from Mr. Tong. UBOTIC MEMS has been consolidated into the Group’s Historical
Financial Information since acquisition in April 2022. Details of the acquisition has been disclosed
in note 35.
APPENDIX I ACCOUNTANTS’ REPORT
– I-61 –


--- page 522 ---
(b) Significant balances with related parties
The significant balances with related parties have been disclosed in notes 18, 20 and 22.
(c) Guarantees provided by related parties
Details of the guarantees provided by related parties for the Group’s bank borrowings have been disclosed
in note 25 and is expected to be released upon Listing.
The Controlling Shareholders have undertaken to indemnify the Group against any additional tax payment
requested by the IRD on UBoT Inc. (HK) in relation to the Offshore Profit Claim, that exceeds the income tax
provision provided by the Group for the years of assessment from 2017/18 (i.e. for the year ended 31 December
2017) to 2022/2023 (i.e. for the year ended 31 December 2022) and for year ended 31 December 2023 which has
been included in the income tax provision under current liabilities as at 31 December 2023. Details of tax
provision for UBoT Inc. (HK) has been disclosed in note 5. Besides, the Controlling Shareholders have also
undertaken to indemnify any liability which might be incurred by the Group as a direct or indirect result of or in
consequence of any claim relating to the amount of any and all taxation (other than Offshore Profit Claim as
stated above) the falling on the Group resulting from or by reference to any income, profits, gains, transactions,
events, matters or things earned, accrued, received, entered into or occurring or deemed to occur up to the date
before the initial listing of shares of the Company on the GEM of the Stock Exchange.
Mr. Tong has undertaken to indemnify the Group: (1) against any difference in full, should the relevant
authorities request the PRC Subsidiaries to pay the historical outstanding social insurance and housing provident
funds contributions or any late charges or penalties more than the additional provisions made in relation to the
shortfall in social insurance plans and housing provident fund contributions as stated in note 28; and (2) any
liability which might be incurred by the Group as a direct or indirect result of or in consequence of any claim
relating to the amount of any and all taxation (other than Offshore Profit Claim that Mr. Tong has undertaken to
indemnify as stated above) the falling on the Group resulting from or by reference to any income, profits, gains,
transactions, events, matters or things earned, accrued, received, entered into or occurring or deemed to occur up
to the date before the initial listing of shares of the Company on the GEM of the Stock Exchange.
(d) Sharing of electricity supply with related parties
During the year ended 31 December 2021, 2022, and 2023, the Group has paid the electricity bills and
charged back Dongguan Baihui of HK$55,000, HK$58,000 and HK$67,000 respectively, utilised by Dongguan
Baihui, as the electric power company only provided one electricity meter for the area where Dongguan Baihui’s
and the Group’s factories are located. No additional income or expenses incurred by the Group for this sharing of
electricity supply as the Group charged back Dongguan Baihui the electricity utilised at cost. Dongguan Baihui is
wholly-owned by Tang Family.
(e) Compensation of key management personnel
Key management personnel are defined as those persons having authority and responsibility for planning,
directing and controlling the activities of the Group and of the Company either directly or indirectly.
The directors considered the key management personnel of the Group are the directors. The remuneration
of members of key management personnel of the Group are disclosed in note 12.
APPENDIX I ACCOUNTANTS’ REPORT
– I-62 –


--- page 523 ---
32. PARTICULARS OF SUBSIDIARIES
Upon completion of the Reorganisation and as at the date of this report, the Company has equity interests in the
following subsidiaries:
Name of
subsidiaries
Place and date of
incorporation
Issued and
fully paid capital
Equity interest attributable to
the owner of the Group
Principal activities
As at 31 December
As at the
date of
this
report2021 2022 2023
Directly held:
Abundant Wealth
(note i)
BVI
26 November 2021
US$100 N/A 100% 100% 100% Investment holding
Sino Key (note i) BVI
17 November 2021
US$100 N/A 100% 100% 100% Investment holding
Indirectly held:
UBoT Inc. (HK)
(note ii)
Hong Kong
28 November 2005
HK$15,787,500 100% 100% 100% 100% Investment holding
and sales of
back-end
semiconductor
transport media
UBoT Incorporated Pte. Limited (note i) Singapore
18 January 2008
SG$1,000 100% 100% 100% 100% Technical and
customer service
support
ʮ̡
(note iii)
PRC
14 April 2010
Registered capital of
HK$8,500,000 and
fully paid capital of
HK$8,000,000
100% 100% 100% 100% Investment holding
and sales and
manufacturing of
back-end
semiconductor
transport media
ʮ̡ (note iii) PRC
25 December 2019
RMB7,000,000 100% 100% 100% 100% Processing of trays
UBOTIC (note ii) Hong Kong
11 August 2009
HK$100 100% 100% 100% 100% Sales of MEMS and
sensor packaging
UBOTIC Intellectual Property Company
Limited (“UBOTIC IP”) (note ii)
Hong Kong
1 December 2009
HK$100 N/A 100% 100% 100% Investment holding
UBOTIC MEMS
(defined in note 20)
(note iii)
PRC
2 August 2012
Registered capital of
HK$15,600,000 and
fully paid capital of
HK$4,810,000
N/A 100% 100% 100% Sales and
manufacturing of
MEMS and sensor
packaging
ʮ̡ (note iv) PRC
20 December 2023
Registered capital of
RMB500,000 and
no capital paid
N/A N/A 100% 100% Promotion of MEMS
and sensor
packaging
All subsidiaries now comprising the Group adopted 31 December as their financial year end date.
APPENDIX I ACCOUNTANTS’ REPORT
– I-63 –


--- page 524 ---
Notes:
(i) No statutory audited financial statements for these have been prepared since their respective dates of
incorporation as they are incorporated in a jurisdiction where there are no statutory audit requirements.
(ii) The statutory financial statements for these subsidiaries for the years ended 31 December 2021 and 2022
were audited by Moore CPA Limited (formerly known as Moore Stephens CPA Limited).
(iii) The statutory financial statements for the years ended 31 December 2021, 2022 and 2023 were audited by
ʮ̡.
(iv) No statutory audited financial statement have been prepared since its date of incorporation.
33. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
The table below details changes in the Group’s liabilities arising from financing activities, including both cash
and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash
flows will be, classified in the Group’s consolidated statements of cash flows as cash flows from financing activities.
Bank borrowings Lease liabilities Total
HK$’000 HK$’000 HK$’000
At 1 January 2021 49,989 30,041 80,030
Financing cash flows 1,624 (6,691) (5,067)
New leases entered/lease modified – 8,545 8,545
Finance costs recognised 1,805 1,404 3,209
Exchange adjustments 181 916 1,097
At 31 December 2021 53,599 34,215 87,814
Financing cash flows 1,443 (11,283) (9,840)
New leases entered/lease modified – 6,176 6,176
Finance costs recognised 2,748 1,348 4,096
Exchange adjustments (110) (2,444) (2,554)
At 31 December 2022 57,680 28,012 85,692
Financing cash flows (13,317) (7,163) (20,480)
New leases entered/lease modified – 1,274 1,274
Finance costs recognised 3,732 1,052 4,784
Exchange adjustments (31) (763) (794)
At 31 December 2023 48,064 22,412 70,476
34. CAPITAL COMMITMENTS
As at 31 December
2021 2022 2023
HK$’000 HK$’000 HK$’000
Capital expenditure in respect of the
acquisition of property, plant and equipment
contracted for but not provided in the
Historical Financial Information 178 1,572 2,836
APPENDIX I ACCOUNTANTS’ REPORT
– I-64 –


--- page 525 ---
35. ACQUISITION OF SUBSIDIARIES
On 22 April 2022, the Group acquired from Mr. Tong, 100% interest in UBOTIC IP and UBOTIC MEMS at a
cash consideration of HK$61,000 with reference to a valuation performed by an independent professional valuer. The
acquisition has been accounted for as acquisition of business using the acquisition method.
Assets acquired and liabilities recognised at the date of acquisition
HK$’000
Property, plant and equipment 1,416
Inventories 233
Trade receivables from UBOTIC 4,784
Other receivables 422
Bank balances and cash 26
Trade and other payables (260)
Amount due to UBoT Inc. (HK) and its subsidiaries (1,750)
Amount due to Mr. Tong (4,810)
61
Impact of acquisition on the results of the Group
Included in the profit for the year ended 31 December 2022 is loss of HK$135,000 attributable to the
additional business generated by UBOTIC IP and UBOTIC MEMS.
Had the acquisition of UBOTIC IP and UBOTIC MEMS been completed on 1 January 2022, profit for the
year ended 31 December 2022 of the Group would have been HK$21,631,000. The pro forma information is for
illustrative purposes only and is not necessarily an indication of revenue and results of operations of the Group
that actually would have been achieved had the acquisition been completed on 1 January 2022, nor is it intended
to be a projection of future results.
36. EVENTS AFTER THE REPORTING PERIOD
The following events took place subsequent to the end of the Track Record Period:
At the Shareholders’ extraordinary general meeting held on 20 May 2024, resolutions was passed to approve the
matters set out in the paragraph headed “A. Further information about the Group – 3. Resolutions passed at the
Shareholders’ extraordinary general meeting held on 20 May 2024” in Appendix IV of the Prospectus. It was resolved,
among other things:
(i) the authorised share capital of the Company increased to HK$50,000,000 by the creation of an additional
49,620,000,000 shares of the Company;
(ii) the Company has conditionally adopted a share option scheme, the principal terms of which are set out in
the section headed “Statutory and general information – D. Share Option Scheme” in Appendix IV to the
Prospectus. There is no share option granted by the Company up to the date of this report; and
(iii) conditional (conditions are set out in the section headed “Structure and Conditions of the Share Offer” in
the Prospectus) upon the share premium account of the Company being credited as a result of the offer of
the Company’s shares, an amount of HK$374,988 which will then be standing to the credit of the share
premium account of the Company be capitalised and applied to pay up in full at par a total of 374,998,000
shares for allotment and issue to holders of the Company’s shares whose name appeared on the register of
members of the Company at the close of business on 20 May 2024.
APPENDIX I ACCOUNTANTS’ REPORT
– I-65 –


--- page 526 ---
As disclosed in note 13, subject to the Listing, UBoT Inc. (HK) has declared conditionally an interim dividend of
HK$0.33 per share of UBoT Inc. (HK) amounting in the aggregate of HK$11,220,000 on 31 March 2022, of which
HK$5,778,000 will be settled through offsetting the amount due from Mr. Tong before Listing. The dividends declared
to the other shareholders will be settled by cash (using the Group’s internally generated funds) before Listing. On 15
March 2024, UBoT Inc. (HK) conditionally declared an interim dividend of HK$0.24 per share of UBoT Inc. (HK)
amounting in the aggregate of HK$8,160,000 to its sole shareholder, namely Abundant Wealth. On 15 March 2024,
Abundant Wealth conditionally declared an interim dividend of HK$8,160 per share of Abundant Wealth amounting in
the aggregate of HK$8,160,000 to its sole shareholder, the Company. On 15 March 2024, the Company declared
conditionally an interim dividend of HK$4,080 per share amounting in the aggregate of HK$8,160,000 to its
shareholders. Part of the dividend payable to Sino Success, one of the ultimate Controlling Shareholders and wholly
owned company of Mr. Tong, will be settled by offsetting the amount due from Mr. Tong in the amount of
HK$540,000. All the other dividends declared to shall be payable to the shareholders of the Company will be settled by
cash (using the internally generated funds) before Listing.
37. SUBSEQUENT FINANCIAL STATEMENTS
No audited financial statements of the Company, any of its subsidiaries or the Group entities have been prepared
in respect of any period subsequent to 31 December 2023.
APPENDIX I ACCOUNTANTS’ REPORT
– I-66 –


--- page 527 ---
The information set out in this appendix does not form part of the accountants’ report on
the historical financial information of the Group for each of the three years ended 31 December
2023 (the “Accountants’ Report”) from Moore CP A Limited, Certified Public Accountants, Hong
Kong, the reporting accountants of the Company, as set out in Appendix I to this prospectus, and
is included in this prospectus for illustrative purpose only. The unaudited pro forma financial
information should be read in conjunction with the section headed “Financial information” in
this prospectus and the Accountants’ Report set forth in Appendix I to this prospectus.
(A) UNAUDITED PRO FORMA STATEMENT OF ADJUSTED CONSOLIDATED NET
TANGIBLE ASSETS
The following unaudited pro forma statement of adjusted consolidated net tangible assets of
the Group prepared in accordance with Rule 7.31 of the GEM Listing Rules is set out below to
illustrate the effect of the Share Offer on the audited consolidated net tangible assets of the
Group as at 31 December 2023 as if the Share Offer had taken place on that date.
The following unaudited pro forma statement of adjusted consolidated net tangible assets of
the Group has been prepared for illustrative purpose 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 31
December 2023 or at any future dates following the Share Offer.
Audited
consolidated
net tangible
assets of
the Group
as at
31 December
2023
Estimated
net proceeds
from the
Share Offer
Unaudited
pro forma
adjusted
consolidated
net tangible
assets of
the Group
as at
31 December
2023
Unaudited
pro forma
adjusted
consolidated
net tangible
assets of
the Group
as at
31 December
2023
per Share
HK$’000 HK$’000 HK$’000 HK$
(Note 1) (Note 2) (Note 3)
Based on Offer Price HK$0.50
per Offer Share 61,377 42,792 104,169 0.21
Based on Offer Price HK$0.60
per Offer Share 61,377 54,417 115,794 0.23
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-1 –


--- page 528 ---
Notes:
(1) The audited consolidated net tangible assets of the Group as at 31 December 2023 is extracted from the
Accountants’ Report set forth in Appendix I to this prospectus without any adjustments.
(2) The estimated net proceeds from the Share Offer are based on 125,000,000 Offer Shares at indicative Offer
Price range of lower limit and upper limit of HK$0.50 to HK$0.60 per Offer Share, respectively after
deduction of the estimated underwriting fee and other related expenses payable by us in connection with
the Listing (excluding the listing expenses charged to profit or loss during the Track Record Period of
totalling HK$17,253,000) and does not take into account (i) any Shares which may be allotted and issued
upon the exercise of any options that may be granted under the Share Option Scheme, (ii) any Shares
which may be issued pursuant to any exercise of the Offer Size Adjustment Option or (iii) any Shares
which may be allotted and issued or repurchased by the Company pursuant to the general mandate for the
allotment and issue or repurchase of Shares referred to Appendix IV to this prospectus.
(3) The unaudited pro forma adjusted consolidated net tangible assets of the Group per Share is calculated
based on 500,000,000 Shares in issue immediately following the completion of the Share Offer and the
Capitalisation Issue assumed to be on 31 December 2023 without taking into account (i) any Shares which
may be allotted and issued upon the exercise of any options that may be granted under the Share Option
Scheme, (ii) any Shares which may be issued pursuant to any exercise of the Offer Size Adjustment Option
or (iii) any Shares which may be allotted and issued or repurchased by the Company pursuant to the
general mandate for the allotment and issue or repurchase of Shares referred to Appendix IV to this
prospectus.
(4) The unaudited pro forma adjusted consolidated net tangible assets attributable to owners of the Group have
not taken into account the interim dividends of (1) HK$11,220,000 declared conditionally by UBoT Inc.
(HK) on 31 March 2022 and (2) HK$8,160,000 declared conditionally by the Company on 15 March 2024.
Both dividends would become unconditional upon Listing. Had these conditional interim dividends been
taken into account, the unaudited pro forma adjusted consolidated net tangible assets attributable to owners
of the Group as at 31 December 2023 would be decreased by HK$19,380,000, and the unaudited pro forma
adjusted consolidated net tangible assets attributable to owners of the Group per Share would be HK$0.17
per Share (based on an Offer Price of HK$0.50 per Offer Share) or HK$0.19 per Share (based on an Offer
Price of HK$0.60 per Offer Share).
(5) No adjustment has been made to the unaudited pro forma adjusted consolidated net tangible assets of the
Group as at 31 December 2023 to reflect any trading result or other transactions of the Group entered into
subsequent to 31 December 2023.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-2 –


--- page 529 ---
The following is the text of the independent reporting accountants’ assurance report
received from Moore CP A Limited, Certified Public Accountants, Hong Kong, the reporting
accountants of the Company, in respect of the Group’ s unaudited pro forma financial information
prepared for the purpose of incorporation in this prospectus.INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE
COMPILATION OF UNAUDITED PRO FORMA FINANCIAL INFORMATION
To the Directors of UBoT Holding Limited
We have completed our assurance engagement to report on the compilation of unaudited
pro forma financial information of UBoT Holding Limited (the “Company”) and its subsidiaries
(hereinafter collectively referred to as the “Group”) by the directors of the Company (the
“Directors”) for illustrative purposes only. The unaudited pro forma financial information
consists of the unaudited pro forma statement of adjusted consolidated net tangible assets as at
31 December 2023 and related notes as set out on pages II-1 and II-2 of Appendix II to the
prospectus issued by the Company dated 24 May 2024 (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 and II-2 of Appendix II to the Prospectus.
The unaudited pro forma financial information has been compiled by the Directors to
illustrate the impact of the listing of the shares of the Company on GEM of The Stock Exchange
of Hong Kong Limited by way of Hong Kong public offering and placing (the “Share Offer”) on
the Group’s financial position as at 31 December 2023 as if the Share Offer had taken place at
31 December 2023. As part of this process, information about the Group’s financial position has
been extracted by the Directors from the Group’s historical financial information as at 31
December 2023, on which an accountants’ report set out in Appendix I to the Prospectus has
been published.
Directors’ Responsibilities for the Unaudited Pro Forma Financial Information
The Directors are responsible for compiling the unaudited pro forma financial information
in accordance with paragraph 7.31 of the Rules Governing the Listing of Securities on GEM of
The Stock Exchange of Hong Kong Limited (the “GEM 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 (the “HKICPA”).
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-3 –


--- page 530 ---
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 behavior.
The firm applies Hong Kong Standard on Quality Management 1, 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 Accountants’ Responsibilities
Our responsibility is to express an opinion, as required by paragraph 7.31(7) of the GEM
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 accountants plan and perform procedures to obtain reasonable assurance about
whether the Directors have compiled the unaudited pro forma financial information in
accordance with paragraph 7.31 of the GEM Rules and with reference to AG 7 issued by the
HKICPA.
For purposes of this engagement, we are not responsible for updating or reissuing any
reports or opinions on any historical financial information used in compiling the unaudited pro
forma financial information, nor have we, in the course of this engagement, performed an audit
or review of the financial information used in compiling the unaudited pro forma financial
information.
The purpose of unaudited pro forma financial information included in an investment
circular is solely to illustrate the impact of a significant event or transaction on unadjusted
financial information of the Group as if the event had occurred or the transaction had been
undertaken at an earlier date selected for purposes of the illustration. Accordingly, we do not
provide any assurance that the actual outcome of the Share Offer at 31 December 2023 would
have been as presented.
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-4 –


--- page 531 ---
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.
The procedures selected depend on the reporting accountants’ judgment, having regard to
the reporting accountants’ understanding of the nature of the Group, the event or transaction in
respect of which the unaudited pro forma financial information has been compiled, and other
relevant engagement circumstances.
The engagement also involves evaluating the overall presentation of the unaudited pro
forma financial information.
We believe that the evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Opinion
In our opinion:
(a) the unaudited pro forma financial information has been properly compiled 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 7.31(1) of the GEM Rules.
Moore CPA Limited
Certified Public Accountants
Registered Public Interest Entity Auditors
Hong Kong
24 May 2024
APPENDIX II UNAUDITED PRO FORMA FINANCIAL INFORMATION
– II-5 –


--- page 532 ---
Set out below is a summary of certain provisions of the Memorandum and Articles of
Association of the Company and of certain aspects of Cayman company law.
The Company was incorporated in the Cayman Islands as an exempted company with
limited liability on 7 February 2022 under the Companies Act, Cap. 22 of the Cayman Islands
(the “Companies Act ”). The Company’s constitutional documents consist of its Memorandum of
Association (the “ Memorandum”) and its Articles of Association (the “ Articles”).
1. MEMORANDUM OF ASSOCIATION
(a) The Memorandum states, inter alia, that the liability of members of the Company is
limited to the amount, if any, for the time being unpaid on the shares respectively held
by them and that the objects for which the Company is established are unrestricted
(including acting as an investment company), and that the Company shall have and be
capable of exercising all the functions of a natural person of full capacity irrespective
of any question of corporate benefit, as provided in section 27(2) of the Companies
Act and in view of the fact that the Company is an exempted company that the
Company 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 20 May 2024 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 the
APPENDIX III SUMMARY OF THE CONSTITUTION OF THE COMPANY
AND THE CAYMAN ISLANDS COMPANY LA W
– III-1 –


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provisions of the Articles relating to general meetings will mutatis mutandis apply, but
so that the necessary quorum (including at an adjourned meeting) shall be two persons
holding or representing by proxy not less than one-third in nominal value of the issued
shares of that class. 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 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 rules and regulations of the Stock Exchange 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 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 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 installments. If the sum payable in respect of any call or
instalment is not paid on or before the day appointed for payment thereof, the person
or persons from whom the sum is due shall pay interest on the same at such rate not
exceeding twenty per cent. (20%) per annum as the board may agree to accept from
the day appointed for the payment thereof to the time of actual payment, but the board
may waive payment of such interest wholly or in part. The board may, if it thinks fit,
receive from any member willing to advance the same, either in money or money’s
worth, all or any part of the monies uncalled and unpaid or installments payable upon
any shares held by him, and upon all or any of the monies so advanced the Company
may pay interest at such rate (if any) as the board may decide.
If a member fails to pay any call on the day appointed for payment thereof, the
board may serve not less than fourteen (14) clear days’ notice on him requiring
payment of so much of the call as is unpaid, together with any 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 rules of the Stock Exchange and without prejudice to any special rights
or restrictions for the time being attached to any shares or any class of shares, all
unissued shares in the Company are at the disposal of the board, which may offer,
allot, grant options over or otherwise dispose of them to such persons, at such times,
for such consideration and on such terms and conditions as it in its absolute discretion
thinks fit, but so that no shares shall be issued at a discount to their nominal value.
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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
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
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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 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 installments is treated for the foregoing purposes as paid up on the share. A
member entitled to more than one vote need not use all his votes or cast all the votes
he uses in the same way.
At any general meeting a resolution put to the vote of the meeting is to be
decided by way of a poll save that the chairman of the meeting may in good faith,
allow a resolution which relates purely to a procedural or administrative matter to be
voted on by a show of hands in which case every member present in person (or being
a corporation, is present by a duly authorized representative), or by proxy(ies) shall
have one vote provided that where more than one proxy is appointed by a member
which is a clearing house (or its nominee(s)), each such proxy shall have one vote on
a show of hands. 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.
Where the Company has any knowledge that any member is, under the rules of
the Stock Exchange, required to abstain from voting on any particular resolution of
the Company or restricted to voting only for or only against any particular resolution
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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 for each
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
rules of the Stock Exchange.
Extraordinary general meetings may be convened on the requisition of one or
more members holding, at the date of deposit of the requisition, not less than
one-tenth of the paid up capital of the Company having the right of voting at general
meetings, on a one vote per share basis. Such requisition shall be made in writing to
the board or the secretary for the purpose of requiring an extraordinary general
meeting to be called by the board for the transaction of any business or resolution
specified in such requisition. Such meeting shall be held within 2 months after the
deposit of such requisition. If within 21 days of such deposit, the board fails to
proceed to convene such meeting, the requisitionist(s) himself/herself (themselves)
may do so in the same manner, and all reasonable expenses incurred by the
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 the time
and place of the meeting and particulars of resolutions to be considered at the meeting
and, in the case of special business, the general nature of that business.
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.
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Any notice to be given to or by any person pursuant to the Articles may be
served on or delivered to any member of the Company personally, by post to such
member’s registered address or by advertisement in newspapers in accordance with the
requirements of the Stock Exchange. Subject to compliance with Cayman Islands law
and the rules of the Stock Exchange, notice may also be served or delivered by the
Company to any member by electronic means.
All business that is transacted at an extraordinary general meeting and at an
annual general meeting is deemed special, save that in the case of an annual general
meeting, each of the following business is deemed an ordinary business:
(aa) the declaration and sanctioning of dividends;
(bb) the consideration and adoption of the accounts and balance sheet and the
reports of the directors and the auditors;
(cc) the election of directors in place of those retiring;
(dd) the appointment of auditors and other officers; and
(ee) the fixing of the remuneration of the directors and of the auditors.
(v) Quorum for meetings and separate class meetings
No business shall be transacted at any general meeting unless a quorum is
present when the meeting proceeds to business, but the absence of a quorum shall not
preclude the appointment of a chairman.
The quorum for a general meeting shall be two members present in person (or, in
the case of a member being a corporation, by its duly authorised representative) or by
proxy or, for quorum purposes only, two persons appointed by the clearing house as
authorized representative or proxy, or, for quorum purposes only, two persons
appointed by the clearing house as authorized representative or proxy, and entitled to
vote. In respect of a separate class meeting (including an adjourned meeting)
convened to sanction 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
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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.
(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 meeting and
at the same time as the notice of annual general meeting be sent to every person entitled to
receive notices of general meetings of the Company under the provisions of the Articles;
however, subject to compliance with all applicable laws, including the rules of the Stock
Exchange, the Company may send to such persons summarised financial statements derived
from the Company’s annual accounts and the directors’ 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
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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 general meeting or in such manner as the members may by ordinary
resolution determine.
The financial statements of the Company shall be audited by the auditor in accordance
with generally accepted auditing standards which may 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.
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The Company may also upon the recommendation of the board by an ordinary
resolution resolve in respect of any one particular dividend of the Company that it may be
satisfied wholly in the form of an allotment of shares credited as fully paid up without
offering any right to members to elect to receive such dividend in cash in lieu of such
allotment.
Any dividend, interest or other sum payable in cash to the holder of shares may be
paid by cheque or warrant sent through the post addressed to the holder at his registered
address, or in the case of joint holders, addressed to the holder whose name stands first in
the register of the Company in respect of the shares 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.
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(i) Rights of minorities in relation to fraud or oppression
There are no provisions in the Articles relating to rights of minority shareholders in
relation to fraud or oppression. However, certain remedies are available to members of the
Company under Cayman Islands law, as summarised in paragraph 3(f) of this Appendix.
(j) Procedures on liquidation
Unless otherwise provided by the Companies Act, a resolution that the Company be
wound up by the court or be wound up voluntarily shall be a special resolution.
Subject to any special rights, privileges or restrictions as to the distribution of
available surplus assets on liquidation for the time being attached to any class or classes of
shares:
(i) if the Company is wound up and the assets available for distribution amongst the
members of the Company shall be more than sufficient to repay the whole of the
capital paid up at the commencement of the winding up, the excess shall be
distributed pari passu amongst such members in proportion to the amount paid
up on the shares held by them respectively; and
(ii) if the Company is wound up and the assets available for distribution amongst the
members as such shall be insufficient to repay the whole of the paid-up capital,
such assets shall be distributed so that, as nearly as may be, the losses shall be
borne by the members in proportion to the capital paid up, or which ought to
have been paid up, at the commencement of the winding up on the shares held by
them respectively.
If the Company is wound up (whether the liquidation is voluntary or by the court) the
liquidator may, with the authority of a special resolution and any other sanction required by
the Companies Act divide among the members in 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
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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.
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.
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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.
(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
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shares at any given time, whether for the purposes of the company’s articles of association
or the Companies Act.
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
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doing or continuing an act complained of by the shareholder petitioner or to do an act
which the shareholder petitioner has complained it has omitted to do, (c) an order
authorising civil proceedings to be brought in the name and on behalf of the company by
the 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.
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(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 February
2022.
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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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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(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. 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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(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).
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(u) Economic Substance Requirements
Pursuant to the International Tax Cooperation (Economic Substance) Act of the
Cayman Islands (“ ES Act”) that came into force on 1 January 2019, a “relevant entity” is
required to satisfy the economic substance test set out in the ES Act. A “relevant entity”
includes an exempted company incorporated in the Cayman Islands as is the Company;
however, it does not include an entity that is tax resident outside the Cayman Islands.
Accordingly, for so long as the Company is a tax resident outside the Cayman Islands,
including in Hong Kong, it is not required to satisfy the economic substance test set out in
the ES Act.
4. GENERAL
Conyers Dill & Pearman, the Company’s special legal counsel on Cayman Islands law, have
sent to the Company a letter of advice summarising certain aspects of Cayman Islands company
law. This letter, together with a copy of the Companies Act, is available for inspection as
referred to in the paragraph headed “Documents available on display” in Appendix V 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 III SUMMARY OF THE CONSTITUTION OF THE COMPANY
AND THE CAYMAN ISLANDS COMPANY LA W
– III-27 –


--- page 559 ---
A. FURTHER INFORMATION ABOUT OUR GROUP
1. Incorporation
Our Company was incorporated in the Cayman Islands as an exempted company with
limited liability on 7 February 2022 under the Companies Act. Our Company’s registered
office is at the office of Conyers Trust Company (Cayman) Limited at Cricket Square,
Hutchins Drive, PO Box 2681, Grand Cayman KY1- 1111, Cayman Islands. Our Company
has established a principal place of business in Hong Kong at Unit 8, 35/F., Cable TV
Tower, 9 Hoi Shing Road, Tsuen Wan, New Territories, Hong Kong, and was registered as a
non-Hong Kong company in Hong Kong under Part 16 of the Companies Ordinance on 22
March 2022. Mr. Tong, an executive Director and our chief executive officer and chairman
of our Board has been appointed as the authorised representative of our Company for the
acceptance of service of process in Hong Kong.
As our Company was incorporated in the Cayman Islands, its operation is subject to
the laws of the Cayman Islands and its constitutional documents comprising the
Memorandum and the Articles of Association. A summary of certain provisions of its
constitution and relevant aspects of the Cayman Islands company law is set out in
Appendix III to this prospectus.
2. Changes in share capital of our Company
The authorised share capital of our Company as at the date of its incorporation was
HK$380,000 divided into 380,000,000 Shares of HK$0.001 each. The following alterations
in the share capital of our Company have taken place since the date of its incorporation:
(a) on 7 February 2022, one (1) Share was allotted and issued, credited as fully paid
at par, to the initial subscriber, which was transferred for cash at nominal
consideration to Sino Success on the same date;
(b) on 20 April 2022, UBoT Inc. (HK) transferred all its shares in UBOTIC to Sino
Key in consideration of our Company allotting and issuing 514 new Shares, 420
new Shares, 20 new Shares, 15 new Shares, 15 new Shares and 15 new Shares,
all credited as fully paid, to each of Sino Success, Busy Trade, Mr. Chan, Ms.
Wong, Mr. Shek and Mr. Tam, respectively at the direction of UBoT Inc. (HK);
(c) on 20 April 2022, each of Mr. Tong, Busy Trade, Mr. Chan, Ms. Wong, Mr. Shek
and Mr. Tam transferred all his/her/its shares in UBoT Inc. (HK) to Abundant
Wealth, in consideration of our Company allotting and issuing 515 new Shares,
420 new Shares, 20 new Shares, 15 new Shares, 15 new Shares and 15 new
Shares, all credited as fully paid, to each of Sino Success (at the direction of Mr.
Tong), Busy Trade, Mr. Chan, Ms. Wong, Mr. Shek and Mr. Tam, respectively;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 1–


--- page 560 ---
(d) pursuant to the resolutions passed at the Shareholders’ extraordinary general
meeting held on 20 May 2024, our Company increased its authorised share
capital from HK$380,000 divided into 380,000,000 Shares to HK$50,000,000
divided into 50,000,000,000 Shares by the creation of an additional
49,620,000,000 Shares with immediate effect; and
(e) immediately following completion of the Share Offer and the Capitalisation Issue
(without taking into account any Shares which may be allotted and issued by our
Company pursuant to the exercise of the Offer Size Adjustment Option and the
exercise of any options which may be granted under the Share Option Scheme),
the issued share capital will be HK$500,000 divided into 500,000,000 Shares, all
fully paid or credited as fully paid and 49,500,000,000 Shares will remain
unissued. Other than the allotment and issue of Shares pursuant to the exercise of
the Offer Size Adjustment Option and the exercise of any options which may be
granted under the Share Option Scheme, there is no present intention to issue any
of the authorised but unissued share capital of our Company and, without the
prior approval of our Shareholders in its general meeting, no issue of Shares will
be made which would effectively alter the control of our Company.
Save as aforesaid and as mentioned in the sections headed “Share Capital” and
“History, Development and Reorganisation – Reorganisation” in this prospectus, there has
been no other alteration in the share capital of our Company since the date of its
incorporation.
3. Resolutions passed at the Shareholders’ extraordinary general meeting held on 20
May 2024
Pursuant to the resolutions passed at the Shareholders’ extraordinary general meeting
held on 20 May 2024, among other matters:
(a) our Company conditionally approved and adopted, with effect from the Listing
Date, the Memorandum and the Articles of Association;
(b) the authorised share capital of our Company was increased from HK$380,000
divided into 380,000,000 Shares to HK$50,000,000 divided into 50,000,000,000
Shares by the creation of an additional 49,620,000,000 Shares with immediate
effect; and
(c) conditional on the same conditions as stated in the section headed “Structure and
Conditions of the Share Offer – Conditions of the Share Offer” in this
prospectus:
(i) the Share Offer and the Offer Size Adjustment Option were approved and
our Directors were authorised to allot and issue the Offer Shares subject to
the terms and conditions stated in this prospectus;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 2–


--- page 561 ---
(ii) the rules of the Share Option Scheme, the principal terms of which are set
out in the paragraph headed “D. Share Option Scheme” in this appendix,
were approved and adopted and our Directors were authorised to implement
the same, grant options to subscribe for Shares thereunder and to allot, issue
and deal with Shares pursuant thereto and to take all such steps as they
consider necessary or desirable to implement the Share Option Scheme
including without limitation: (1) administering the Share Option Scheme;
(2) modifying and/or amending the Share Option Scheme from time to time
provided that such modifications and/or amendments are effected in
accordance with the provisions of the Share Option Scheme relating to
modifications and/or amendments and the requirements of the GEM Listing
Rules; (3) granting options under the Share Option Scheme and allotting
and issuing from time to time any Shares pursuant to the exercise of the
options that may be granted under the Share Option Scheme with an
aggregate nominal value not exceeding 10% of the total number of Shares in
issue as at the Listing Date; and (4) making application at the appropriate
time or times to the Stock Exchange for the listing of, and permission to
deal in, any Shares or any part thereof that may thereafter from time to time
be allotted and issued pursuant to the exercise of the options granted under
the Share Option Scheme;
(iii) conditional on the share premium account of our Company being credited as
a result of the Share Offer, an amount of HK$374,998 which will then be
standing to the credit of the share premium account of our Company be
capitalised and applied to pay up in full at par a total of 374,998,000 Shares
for allotment and issue to holders of Shares whose names appear on the
register of members of our Company at the close of business on 20 May
2024 (or as they may direct) in proportion (as nearly as possible without
involving fractions) to their respective then existing shareholdings in our
Company, and our Directors were authorised to give effect to the
Capitalisation Issue and such distribution and the Shares to be allotted and
issued shall, save for the entitlements to the Capitalisation Issue, rank pari
passu in all respects with all the then existing Shares;
(iv) 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 arrangements providing for allotment of Shares in lieu of
the whole or in part of any dividend on Shares in accordance with the
Articles of Association, pursuant to the exercise of the Offer Size
Adjustment Option and the exercise of any options which may be granted
under the Share Option Scheme) unissued Shares which, in aggregate, shall
not exceed 20% of the total number of Shares in issue immediately
following completion of the Share Offer and the Capitalisation Issue
(without taking into account any Shares which may be allotted and issued
by our Company pursuant to the exercise of the Offer Size Adjustment
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 3–


--- page 562 ---
Option and the exercise of any options which may be granted under the
Share Option Scheme) until the conclusion of the next annual general
meeting of our Company, or the date by which the next annual general
meeting of our Company is required by the Articles of Association or any
applicable law to be held, or the passing of an ordinary resolution by our
Shareholders in general meeting revoking or varying the authority given to
our Directors, whichever is the earliest;
(v) a general unconditional mandate was given to our Directors authorising
them to exercise all powers of our Company to repurchase Shares which, in
aggregate, shall not exceed 10% of the total number of Shares in issue
immediately following completion of the Share Offer and the Capitalisation
Issue (without taking into account any Shares which may be allotted and
issued by our Company pursuant to the exercise of the Offer Size
Adjustment Option and the exercise of any options which may be granted
under the Share Option Scheme) until the conclusion of the next annual
general meeting of our Company, or the date by which the next annual
general meeting of our Company is required by the Articles of Association
or any applicable law to be held, or the passing of an ordinary resolution by
our Shareholders in general meeting revoking or varying the authority given
to our Directors, whichever is the earliest; and
(vi) conditional on the passing of the resolutions referred to in sub-paragraphs
(iv) and (v) above, the general unconditional mandate mentioned in
sub-paragraph (iv) above was extended by the addition of the total number
of Shares which may be allotted, issued or dealt with by our Directors
pursuant to such general mandate of an amount representing the total
number of Shares repurchased by our Company pursuant to the mandate to
repurchase Shares referred to in sub-paragraph (v) above.
4. Reorganisation
The companies comprising our Group underwent the Reorganisation, pursuant to
which our Company became the holding company of our Group. The Reorganisation
involved the following major steps:
(a) on 6 December 2021, Mr. Tong and Mr. Tam respectively transferred 80% and
20% equity interest in UBOTIC MEMS to UBOTIC IP, at the cash consideration
of HK$4,810,000 and nil, respectively. Upon completion of the share transfer,
UBOTIC MEMS became a direct wholly-owned subsidiary of UBOTIC IP;
(b) on 7 February 2022, our Company was incorporated in the Cayman Islands as an
exempted company with limited liability, with an authorised share capital of
HK$380,000 divided into 380,000,000 Shares of HK$0.001 each, of which one
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 4–


--- page 563 ---
(1) Share was allotted and issued, credited as fully paid at par, to the initial
subscriber, which was transferred for cash at nominal consideration to Sino
Success on the same date;
(c) on 26 November 2021, Abundant Wealth was incorporated in the BVI with
limited liability, with an authorised share capital of 50,000 shares of a single
class, of which one (1) share, credited as fully paid, representing the entire
issued share capital in Abundant Wealth, was allotted and issued to our Company
on 8 March 2022;
(d) on 17 November 2021, Sino Key was incorporated in the BVI with limited
liability, with an authorised share capital of 50,000 shares of a single class, of
which one (1) share, credited as fully paid, representing the entire issued share
capital in Sino Key, was allotted and issued to our Company on 8 March 2022;
(e) on 31 March 2022, Mr. Tong transferred all his shares in UBOTIC IP,
representing its entire issued share capital to UBOTIC for the consideration of
HK$61,000, which was determined with reference to the net asset value of
UBOTIC IP;
(f) on 20 April 2022, UBoT Inc. (HK) transferred all its shares in UBOTIC to Sino
Key in consideration of our Company, at the request of Sino Key, allotting and
issuing 514 new Shares, 420 new Shares, 20 new Shares, 15 new Shares, 15 new
Shares and 15 new Shares, all credited as fully paid, to each of Sino Success,
Busy Trade, Mr. Chan, Ms. Wong, Mr. Shek and Mr. Tam, respectively at the
direction of UBoT Inc. (HK). Meanwhile, Sino Key allotted and issued 99 new
shares in it to our Company in light of our Company allotting and issuing new
Shares as consideration for the acquisition of the entire issued share capital of
UBOTIC. Upon completion of the above share transfers, UBOTIC became an
indirect wholly-owned subsidiary of our Company;
(g) on 20 April 2022, each of Mr. Tong, Busy Trade, Mr. Chan, Ms. Wong, Mr. Shek
and Mr. Tam transferred all his/her/its shares in UBoT Inc. (HK) to Abundant
Wealth in consideration of our Company allotting and issuing 515 new Shares,
420 new Shares, 20 new Shares, 15 new Shares, 15 new Shares and 15 new
Shares all credited as fully paid, to each of Sino Success (at the direction of Mr.
Tong), Busy Trade, Mr. Chan, Ms. Wong, Mr. Shek and Mr. Tam respectively.
Meanwhile, Abundant Wealth allotted and issued 99 new shares in it to our
Company in light of our Company allotting and issuing new Shares as
consideration for the acquisition of the entire issued share capital of UBoT Inc.
(HK). Upon completion of the above share transfer, UBoT Inc. (HK) became an
indirect wholly-owned subsidiary of our Company; and
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 5–


--- page 564 ---
(h) on 20 December 2023, UBoT Shanghai was established in the PRC, as a wholly
foreign-owned enterprise with limited liability. UBoT Shanghai has a registered
capital of RMB500,000, which is wholly-owned by UBoT Inc. (HK). Hence,
UBoT Shanghai is an indirectly wholly-owned subsidiary of our Company.
5. Changes in share capital of subsidiaries of our Company
Our subsidiaries are set out under the Accountants’ Report set out in Appendix I to
this prospectus. Save for the subsidiaries mentioned in Appendix I to this prospectus, our
Company has no other subsidiaries.
Save as disclosed in the paragraph headed “4. Reorganisation” above and in the
section headed “History, Development and Reorganisation” in this prospectus, there has
been no other alteration in the share capital of any of the subsidiaries of our Company
within the two years immediately preceding the date of this prospectus.
6. Repurchase by our Company of its own securities
This paragraph includes information relating to the repurchase by our Company of its
Shares, including information required by the Stock Exchange to be included in this
prospectus concerning such repurchase.
(a) Relevant legal and regulatory requirements
The GEM Listing Rules permit our Shareholders to grant our Directors a general
mandate to repurchase the Shares that are listed on GEM.
(b) Shareholders’ approval
All proposed repurchases of Shares (which must be fully paid up) must be
approved in advance by an ordinary resolution of our Shareholders in a general
meeting, either by way of general mandate or by specific approval of a particular
transaction.
The Repurchase Mandate was granted to our Directors by the Shareholders
pursuant to the resolutions passed at the Shareholders’ extraordinary general meeting
held on 20 May 2024 authorising them to exercise all powers of our Company to
repurchase Shares which, in aggregate, shall not exceed 10% of the total number of
Shares in issue immediately following completion of the Share Offer and the
Capitalisation Issue (without taking into account any Shares which may be allotted
and issued by our Company pursuant to the exercise of the Offer Size Adjustment
Option and the exercise of any options which may be granted under the Share Option
Scheme), until the conclusion of the next annual general meeting of our Company, or
the date by which the next annual general meeting of our Company is required by the
Articles of Association or any applicable law to be held, or the passing of an ordinary
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 6–


--- page 565 ---
resolution by our Shareholders in general meeting revoking or varying the authority
given to our Directors, whichever is the earliest.
(c) Source of funds
Repurchases must be funded out of funds legally available for the purpose in
accordance with the Memorandum and the Articles of Association, the GEM Listing
Rules, the applicable laws and regulations of Hong Kong and the Cayman Islands and
any other laws and regulations applicable to our Company. A listed company may not
repurchase its own securities on GEM for a consideration other than cash or for
settlement otherwise than in accordance with the GEM Listing Rules. Subject to the
foregoing, any repurchases by our Company may be made out of the profits or share
premium of our Company or out of the proceeds of a fresh issue of Shares made for
the purpose of the repurchase. Any premium payable on a redemption or purchase
over the par value of the Shares to be repurchased must be provided for out of the
profits of our Company or from sums standing to the credit of the share premium
account of our Company. Subject to the provisions of the Companies Act, any
repurchases of Shares may also be paid out of the share capital of our Company.
(d) Trading restrictions
Our Company may repurchase up to 10% of the total number of Shares in issue
immediately following completion of the Share Offer and the Capitalisation Issue
(without taking into account any Shares which may be allotted and issued by our
Company pursuant to the exercise of the Offer Size Adjustment Option and the
exercise of any options which may be granted under the Share Option Scheme). Our
Company may not issue or announce a proposed new issue of Shares for a period of
30 days immediately following a repurchase of Shares without the prior approval of
the Stock Exchange. Our Company is also prohibited from repurchasing its Shares on
GEM if the repurchase would result in the number of listed Shares which are in the
hands of the public falling below the minimum percentage required by the Stock
Exchange. In addition, our Company is prohibited from repurchasing its Shares on
GEM if the purchase price is higher by 5% or more than the average closing price for
the five consecutive preceding trading days on which the Shares were traded on GEM.
The broker appointed by our Company to effect a repurchase of Shares is required to
disclose to the Stock Exchange any information with respect to a share repurchase as
the Stock Exchange may require.
(e) Status of repurchased Shares
All repurchased Shares (whether on GEM or otherwise) will be cancelled and the
certificates for those Shares must be cancelled and destroyed. Under the Companies
Act, a company’s shares repurchased may 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. If repurchased shares are cancelled, the amount of the company’s issued
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 7–


--- page 566 ---
share capital shall be reduced by the number of shares repurchased accordingly
although the authorised share capital of the company will not be reduced.
(f) Suspension of repurchase
Repurchases of Shares are prohibited after a price-sensitive development has
occurred or has been the subject of a decision until such time as the price-sensitive
information has been made publicly available. In particular, during the period of one
month immediately preceding the earlier of (aa) the date of the Board meeting (as
such date is first notified to the Stock Exchange in accordance with the GEM Listing
Rules) for the approval of the results of our Company for any year, half-year or
quarter-year period or any other interim period (whether or not reported under the
GEM Listing Rules); and (bb) the deadline for our Company to announce its results
for any year, half-year or quarter-year period under the GEM Listing Rules or any
other interim period (whether or not required under the GEM Listing Rules), our
Company may not repurchase its securities on GEM unless the circumstances are
exceptional. In addition, the Stock Exchange reserves the right to prohibit repurchases
of Shares on GEM if our Company has breached the GEM Listing Rules.
(g) Reporting requirements
Certain information relating to repurchase of securities on GEM or otherwise
must be reported to the Stock Exchange no later than 30 minutes before the earlier of
the commencement of the morning trading session or any pre-opening session on the
following Business Day. In addition, our Company’s annual report and accounts are
required to disclose details regarding repurchases of Shares made during the financial
year under review, including the number of Shares repurchased each month (whether
on GEM or otherwise) and the purchase price per Share or the highest and lowest
prices paid for all such repurchases, where relevant, and the aggregate prices paid.
The Directors’ report is also required to contain reference to the repurchases made
during the year and the Directors’ reasons for making such repurchases.
(h) Core connected persons
According to the GEM Listing Rules, a company is prohibited from knowingly
repurchasing securities on GEM from a “core connected person”, that is, a Director,
chief executive or Substantial Shareholder of the company or any of its subsidiaries or
any of their close associates and a core connected person shall not knowingly sell
his/her/its securities to the company on GEM.
(i) Reasons for repurchases
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 Shares in the market. Such repurchases may,
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 8–


--- page 567 ---
depending on market conditions and funding arrangements at the time, lead to an
enhancement of the net asset value of our Company and/or earnings per Share and will
only be made when our Directors believe that such repurchases will benefit our
Company and our Shareholders.
(j) Funding of repurchases
In repurchasing Shares, our Company may only apply funds legally available for
such purpose in accordance with the Memorandum and the Articles of Association, the
GEM Listing Rules, the applicable laws and regulations of Hong Kong and the
Cayman Islands and any other laws and regulations applicable to the Company.
On the basis of the current financial position of our Group as disclosed in this
prospectus and taking into account the current working capital position of our Group,
our Directors consider that, if the Repurchase Mandate were to be exercised in full, it
might have a material adverse effect on the working capital and/or the gearing
position of our Group as compared with the position disclosed in this prospectus. Our
Directors do not propose to exercise the Repurchase Mandate to such an extent as
would, in the circumstances, have a material adverse effect on the working capital
requirements of our Group or the gearing levels which, in the opinion of our
Directors, are from time to time appropriate for our Group.
(k) General
The exercise in full of the Repurchase Mandate, on the basis of 500,000,000
Shares in issue immediately after completion of the Share Offer and the Capitalisation
Issue (without taking into account any Shares which may be allotted and issued by our
Company pursuant to the exercise of the Offer Size Adjustment Option and the
exercise of any options which may be granted under the Share Option Scheme), would
result in up to 50,000,000 Shares being repurchased by our Company during the
period in which the Repurchase Mandate remains in force.
None of our Directors nor, to the best of their knowledge having made all
reasonable enquiries, any of their associates currently intends to sell any Shares to our
Company or its subsidiaries.
Our Directors have undertaken to the Stock Exchange that, so far as the same
may be applicable, they will exercise the Repurchase Mandate in accordance with the
Memorandum and the Articles of Association, the GEM Listing Rules and the
applicable laws and regulations of Hong Kong and the Cayman Islands and any other
laws and regulations applicable to our Company.
If, as a result of a repurchase of Shares, a Shareholder’s proportionate interest in
the voting rights of our Company increased, such increase will be treated as an
acquisition for the purpose of the Takeovers Code. Accordingly, a Shareholder or a
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 9–


--- page 568 ---
group of Shareholders acting in concert could obtain or consolidate control of our
Company and become obliged to make a mandatory offer in accordance with rule 26
of the Takeovers Code. Save as aforesaid, our Directors are not presently aware of any
consequences which would arise under the Takeovers Code as a consequence of any
repurchases pursuant to the Repurchase Mandate immediately after the Listing.
No core connected person has notified our Company that he/she/it has a present
intention to sell Shares to our Company, 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 material contracts (not being contracts in the ordinary course of
business) have been entered into by members of our Group within the two years
immediately preceding the date of this prospectus, and are or may be material:
(a) the Deed of Indemnity;
(b) the Deed of Non-competition; and
(c) the Public Offer Underwriting Agreement.
2. Intellectual property rights
(a) Trade marks
As at the Latest Practicable Date, our Group had registered the following trade
marks in Hong Kong:
Trade mark
Trade mark
number
Name of
owner Class(es)
Registration
date Expiry Date
304479508 UBoT Inc.
(HK)
16 3 April 2018 2 April 2028
305866228 UBOTIC 9, 40, 42 24 January
2022
23 January
2032
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-10 –


--- page 569 ---
As at the Latest Practicable Date, our Group had registered the following
trademarks in the PRC:
Trademark
Trademark
number
Name of
owner Class(es)
Registration
date Expiry Date
5275356 UBoT Inc.
(HK)
17 21 July 2009 20 July 2029
28159438 UBoT
Enterprise
42 28 January
2019
27 January
2029
28150617 UBoT
Enterprise
35 21 November
2018
20 November
2028
28143849 UBoT
Enterprise
17 7 November
2019
6 November
2029
62002949 UBOTIC
MEMS
35 14 July 2022 13 July 2032
61994550 UBOTIC
MEMS
42 14 July 2022 13 July 2032
As at the Latest Practicable Date, our Group had registered the following trade
mark in Taiwan:
Trade mark
Trade mark
number
Name of
owner Class(es)
Registration
date Expiry Date
01239201 UBoT Inc.
(HK)
17 1 December
2006
30 November
2026
(b) Patents
As at the Latest Practicable Date, our Group had registered the following patent
in Hong Kong which is still valid and subsisting:
Patent title Patent number Name of owner
Registration
date Expiry Date
Sensor package and
method of
manufacture
HK1263205 UBOTIC 6 May 2019 17 April
2038
APPENDIX IV STATUTORY AND GENERAL INFORMATION
–I V - 1 1–


--- page 570 ---
As at the Latest Practicable Date, our Group had registered the following patents
in the USA which are still valid and subsisting:
Patent title Patent number Name of owner
Registration
date Expiry Date
Semiconductor
package for MEMS
device and method
of manufacturing
same
US 8809974B2 UBOTIC IP 19 August
2014
26 February
2030
Cavity package with
pre-molded cavity
lead frame
US 9257370B2 UBOTIC 9 February
2016
30 July
2034
Cavity package with
pre-molded cavity
lead frame
US 9536812B2 UBOTIC 3 January
2017
12 January
2036
Mass flow sensor
module and method
of manufacture
US 10458826B2 UBOTIC 20 October
2019
25 August
2037
Sensor housing US D757538S UBOTIC 31 May
2016
17 February
2035
Cavity package with
die attach pad
US 9601413B2 UBOTIC 21 May
2017
11 April
2034
Cavity package with
die attach pad
US 9887149B2 UBOTIC 6 February
2018
31 January
2037
Sensor package and
method of
manufacture
US 9991194B1 UBOTIC 5 June 2018 18 April
2037
Cavity package with
pre-molded
substrate
US 9659855B2 UBOTIC 23 May
2017
27 August
2034
Cavity package with
pre-molded
substrate
US 10014187B2 UBOTIC 3 July 2018 21 April
2037
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-12 –


--- page 571 ---
Patent title Patent number Name of owner
Registration
date Expiry Date
High power and high
frequency plastic
pre-molded cavity
package
US 9865528B2 UBOTIC 21 July
2009
11 December
2035
Carrier substrate,
package, and
method of
manufacture
US 10777457B2 UBOTIC 1 December
2006
3 October
2037
As at the Latest Practicable Date, our Group had registered the following patents
in the PRC which are still valid and subsisting:
Patent title Patent number Name of owner
Registration
date Expiry Date
Cavity Package with
die attach pad
ZL 201410145748.0 UBOTIC 11 April
2014
11 April
2034
Sensor package and
method of
manufacture
ZL 201810350489.3 UBOTIC 18 April
2018
18 April
2038
As at the Latest Practicable Date, our Group had applied for registration of the
following patents in a number of jurisdictions:
Patent title Application number Name of applicant
Application
date Jurisdiction
Faraday cage plastic
cavity package
with pre-molded
cavity lead frame
17827943 UBOTIC 30 May
2022
The USA
Faraday cage plastic
cavity package
with pre-molded
cavity lead frame
EP22176372.5 UBOTIC 31 May
2022
Europe
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-13 –


--- page 572 ---
Patent title Application number Name of applicant
Application
date Jurisdiction
Faraday cage plastic
cavity package
with pre-molded
cavity lead frame
202210613089.3 UBOTIC 31 May
2022
The PRC
(c) Domain names
As at the Latest Practicable Date, our Group had registered the following domain
names:
Domain name Name of owner Registration date Expiry date
ubotinc.com.cn UBoT Enterprise 10 November
2021
10 November
2027
ubotinc.cn UBoT Enterprise 20 October 2011 20 October 2027
ubotic.cn UBOTIC MEMS 12 November
2009
12 November
2027
ubotic.com.cn UBOTIC MEMS 12 November
2009
12 November
2027
ubot.hk UBoT Inc. (HK) 7 September 2010 7 September
2024
(Note)
ubot.com.hk UBoT Inc. (HK) 15 December 2005 16 December
2024 (Note)
ubotic.com UBoT Inc. (HK) 30 July 2009 30 July 2032
ubotic.hk UBoT Inc. (HK) 11 March 2011 11 March 2025
ubotinc.com UBoT Inc. (HK) 27 February 2018 26 February 2032
ubotholding.com UBoT Inc. (HK) 27 September
2022
27 September
2032
Note: Such domain names will be renewed by our Group before the expiry dates and there exists no
legal impediment for our Group to obtain the relevant renewal.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-14 –


--- page 573 ---
C. FURTHER INFORMATION ABOUT DIRECTORS, MANAGEMENT, STAFF AND
EXPERTS
1. Interests and short positions of Directors and the chief executive of our Company
in the Shares, underlying Shares or debentures of our Company and its associated
corporations
So far as is known to our Directors, immediately following completion of the Share
Offer and the Capitalisation Issue (without taking into account any Shares which may be
allotted and issued by our Company pursuant to the exercise of the Offer Size Adjustment
Option and 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 or debentures of our Company and its associated
corporations (within the meaning of the SFO) which will have to be notified to our
Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO
(including interests and short positions in which they are taken or deemed to have under
such provisions of the SFO) or which will be required pursuant to section 352 of the SFO
to be entered in the register referred to therein, or which will be required to notify to our
Company and the Stock Exchange pursuant to Rules 5.46 to 5.67 of the GEM Listing
Rules, will be as follows:
Long position in the Shares
Name of Director
Capacity/Nature
of interest
Number of
Shares held
Percentage of
issued share
capital
Mr. Tong Interest in controlled
corporation
(Notes1&2 )
193,125,000 38.625%
Concert party interest 157,500,000 31.5%
Mr. Chan Beneficial owner 7,500,000 1.5%
Mr. Shek Beneficial owner 5,625,000 1.125%
Mr. Tam Beneficial owner 5,625,000 1.125%
Notes:
1. These Shares are held by Sino Success. The issued share capital of Sino Success is legally and
beneficially wholly-owned by Mr. Tong. Mr. Tong is deemed to be interested in the Shares in which
Sino Success is interested in under Part XV of the SFO.
2. Pursuant to the concert party deed dated 15 September 2023, entered into among Sino Success, Mr.
Tong, Busy Trade, Mr. Tang, Mr. CL Tang, Mr. CM Tang and Ms. Tang, Mr. Tong is deemed to be
interested in 157,500,000 Shares held by Busy Trade under Part XV of the SFO.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-15 –


--- page 574 ---
2. Interests and/or short positions of Substantial Shareholders in the Shares or
underlying Shares of our Company and its associated corporations
So far as is known to our Directors, immediately following completion of the Share
Offer and the Capitalisation Issue (without taking into account any Shares which may be
allotted and issued by our Company pursuant to the exercise of the Offer Size Adjustment
Option and the exercise of any options which may be granted under the Share Option
Scheme), the following persons (not being a Director or chief executive of our Company)
will have an interest or a short position in the Shares or underlying Shares of our Company
and its associated corporations which would fall to be disclosed to our Company under the
provisions of Divisions 2 and 3 of Part XV of the SFO, or who will be, directly or
indirectly, interested in 10% or more of the nominal value of any class of share capital
carrying rights to vote in all circumstances at general meetings of our Company or any
other members of our Group:
Long position in the Shares
Name Capacity/Nature of interest
Number of
Shares held
Percentage of
issued share
capital
Sino Success Beneficial owner
(Notes1&3 )
193,125,000 38.625%
Concert party interest 157,500,000 31.5%
Busy Trade Beneficial owner
(Notes2&3 )
157,500,000 31.5%
Concert party interest 193,125,000 38.625%
Mr. Tang Interest in controlled
corporation (Notes2&3 )
157,500,000 31.5%
Concert party interest 193,125,000 38.625%
Mr. CL Tang Concert party interest
(Note 3)
350,625,000 70.125%
Mr. CM Tang Concert party interest
(Note 3)
350,625,000 70.125%
Ms. Tang Concert party interest
(Note 3)
350,625,000 70.125%
Ms. Wong Mei
Yee
Interest of spouse (Note 4) 350,625,000 70.125%
Ms. Wong Ching
Wa
Interest of spouse (Note 5) 350,625,000 70.125%
Ms. Wong Bik
Kwan
Interest of spouse (Note 6) 350,625,000 70.125%
Mr. Cheng To
Yin
Interest of spouse (Note 7) 350,625,000 70.125%
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-16 –


--- page 575 ---
Notes:
1. The entire issued share capital of Sino Success is legally and beneficially owned by Mr. Tong. Mr.
Tong is deemed to be interested in the Shares held by Sino Success under Part XV of the SFO.
2. The issued share capital of Busy Trade is legally and beneficially owned as to 70.2% by Mr. Tang,
12.4% by Mr. CL Tang, 12.4% by Mr. CM Tang and 5% by Ms. Tang. Mr. Tang is deemed to be
interested in the Shares held by Busy Trade under Part XV of the SFO.
3. Pursuant to the concert party deed dated 15 September 2023, entered into among Sino Success, Mr.
Tong, Busy Trade, Mr. Tang, Mr. CL Tang, Mr. CM Tang and Ms. Tang, (a) each of Sino Success
and Mr. Tong is deemed to be interested in 157,500,000 Shares held by Busy Trade, (b) each of
Busy Trade and Mr. Tang is deemed to be interested in 193,125,000 Shares held by Sino Success, (c)
each of Mr. CL Tang, Mr. CM Tang and Ms. Tang is deemed to be interested in 193,125,000 Shares
held by Sino Success and 157,500,000 Shares held by Busy Trade under Part XV of the SFO.
4. Ms. Wong Mei Yee is the spouse of Mr. Tang and she is deemed to be interested in 350,625,000
Shares that Mr. Tang is interested in or deemed to be interested in under Part XV of the SFO.
5. Ms. Wong Ching Wa is the spouse of Mr. CL Tang and she is deemed to be interested in
350,625,000 Shares that Mr. CL Tang is interested in or deemed to be interested in under Part XV of
the SFO.
6. Ms. Wong Bik Kwan is the spouse of Mr. CM Tang and she is deemed to be interested in
350,625,000 Shares that Mr. CM Tang is interested in or deemed to be interested in under Part XV
of the SFO.
7. Mr. Cheng To Yin is the spouse of Ms. Tang and he is deemed to be interested in 350,625,000
Shares that Ms. Tang is interested in or deemed to be interested in under Part XV of the SFO.
3. Particulars of service agreements
Each of our executive Directors has entered into a service agreement with our
Company for an initial term of three years commencing from the Listing Date, which will
continue thereafter until terminated by not less than three months’ notice in writing served
by either party on the other. Each of our executive Directors is entitled to their respective
basic salary set out in the paragraph headed “C. Further information about Directors,
management, staff and experts – 4. Directors’ emoluments” under this appendix (subject to
an annual increment which will be made at the discretion of our Directors).
Each of our non-executive Director and independent non-executive Directors has
entered into a letter of appointment with our Company. The terms and conditions of each of
such letters of appointment are similar in all material respects. Each of our non-executive
Director and independent non-executive Directors is appointed with an initial term of three
years commencing from the Listing Date subject to termination under certain circumstances
as stipulated in the relevant letters of appointment.
Save as aforesaid, none of our Directors has or is proposed to have a service
agreement or letter of appointment with our Company or any of our subsidiaries (other than
contracts expiring or determinable by the employer within one year without the payment of
compensation (other than statutory compensation)).
The remuneration of Directors is determined by our Company with reference to the
duties and level of responsibilities of each Director, the remuneration policy of our
Company and the prevailing market conditions.
The appointments of our executive Directors, non-executive Directors and independent
non-executive Directors are subject to the provisions of retirement by rotation of directors
under the Articles of Association.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-17 –


--- page 576 ---
4. Directors’ emoluments
(i) For the three years ended 31 December 2023, the aggregate emoluments paid and
benefits in kind granted by our Group to our Directors were approximately
HK$7.1 million, HK$6.1 million and HK$6.2 million, respectively.
(ii) Under the arrangements currently in force, the aggregate emoluments (including
fees, salaries, contributions to pension schemes and other allowances and benefits
in kind) payable by our Group to our Directors for the year ending 31 December
2024 is expected to be not more than HK$6.8 million.
(iii) None of our Directors or any past directors of any member of our Group has
been paid any sum of money during the Track Record Period, (1) as an
inducement to join or upon joining our Company or (2) for loss of office as a
director of any member of our Group or of any other office in connection with
the management of the affairs of any member of our Group.
(iv) There has been no arrangement under which a Director has waived or agreed to
waive any emoluments during the Track Record Period.
(v) Under the arrangements currently proposed, conditional upon the Listing, the
basic annual emoluments (excluding payment pursuant to any discretionary
benefits or bonus or other fringe benefits) payable by our Group to each of our
Directors will be as follows:
HK$
Executive Directors
Mr. Tong HK$2,690,000
Mr. Chan HK$899,000
Mr. Shek HK$1,361,000
Mr. Tam HK$1,036,000
Non-executive Director
Mr. Wong Tsz Lun HK$180,000
Independent non-executive Directors
Mr. Chan Oi Fat HK$180,000
Ms. Ma Jay Suk Lin HK$180,000
Mr. Wong Lok Man HK$180,000
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-18 –


--- page 577 ---
(vi) Each of our executive Directors, non-executive Director and independent
non-executive Directors is entitled to reimbursement of all necessary and
reasonable out-of-pocket expenses properly incurred in relation to all business
and affairs carried out by our Group from time to time or in discharge of his/her
duties to our Group under his/her service agreement or letter of appointment.
5. Agency fees or commissions received
Save as disclosed in the section headed “Underwriting – Underwriting Arrangement
and Expenses – Commissions and expenses” in this prospectus, within the two years
immediately preceding the date of this prospectus, no commissions, discounts, brokerages
or other special terms have been granted in connection with the issue or sale of any share
or loan capital of our Company or any of its subsidiaries.
6. Related party transactions
Save for the transactions conducted in connection with the Reorganisation, and as
disclosed in the section headed “Connected Transactions” in this prospectus and in note 31
to the Accountants’ Report set out in Appendix I to this prospectus, our Group has not
engaged in any other material related party transactions during the Track Record Period.
7. Disclaimers
Save as disclosed in this prospectus:
(i) without taking into account any Shares which may be allotted and issued by our
Company pursuant to the exercise of the Offer Size Adjustment Option and the
exercise of any options which may be granted under the Share Option Scheme,
our Directors are not aware of any person who immediately following completion
of the Share Offer and the Capitalisation Issue will have an interest or short
position in the Shares and underlying Shares which would fall to be disclosed to
our Company under the provisions of Divisions 2 and 3 of Part XV of the SFO or
who is, either directly or indirectly, interested in 10% or more of the nominal
value of any class of share capital carrying rights to vote in all circumstances at
general meetings of our Company or any other member of our Group;
(ii) none of our Directors has for the purpose of Divisions 7 and 8 of Part XV of the
SFO or the GEM Listing Rules, nor is any of them taken to or deemed to have
under Divisions 7 and 8 of Part XV of the SFO, any interests and short positions
in the Shares, underlying Shares, and debentures of our Company or any
associated corporations (within the meaning of the SFO) or any interests which
will have to be entered in the register to be kept by our Company pursuant to
section 352 of the SFO or which will be required to be notified to our Company
and the Stock Exchange pursuant to Rules 5.46 to 5.67 of the GEM Listing
Rules, once the Shares are listed on GEM;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-19 –


--- page 578 ---
(iii) none of our Directors or the experts named in the paragraph headed “E. Other
information – 6. Qualifications of experts” in this appendix has been interested in
the promotion of, or has any direct or indirect interest in any assets acquired or
disposed of by or leased to, any member of our Group within the two years
immediately preceding the date of this prospectus, or which are proposed to be
acquired or disposed of by or leased to any member of our Group, nor will any
Director apply for the Offer Shares either in his/her own name or in the name of
a nominee;
(iv) none of our Directors 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; and
(v) none of the experts named in the paragraph headed “E. Other information – 6.
Qualifications of experts” in this appendix has any shareholding in any company
in our Group or the right (whether legally enforceable or not) to subscribe for or
to nominate persons to subscribe for securities in any company in our Group.
D. SHARE OPTION SCHEME
1. Summary of the terms of the Share Option Scheme
(i) Purpose of the Share Option Scheme
The purpose of the Share Option Scheme is to provide an incentive or a reward
to eligible persons for their contribution to our Group and/or to enable our Group to
recruit and retain high-calibre employees and attract human resources that are valuable
to our Group.
(ii) Who may join
Subject to the provisions in the Share Option Scheme, the Board shall be entitled
at any time within the period of ten (10) years after the date of adoption of the Share
Option Scheme to make an offer to any of the following classes of persons (“ Eligible
Participant(s) ”):
(1) any director(s) (including executive, non-executive and independent
non-executive directors) and employee(s) (whether full-time or part-time) of
our Group (including persons who are granted Shares or the Options under
the Scheme as inducement to enter into employment contracts with the
Company or the Subsidiaries) (“ Employee Participant(s) ”);
(2) any director(s) and employee(s) of the holding companies, fellow
subsidiaries or associated companies of our Company (“ Related Entity
Participant(s) ”);
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-20 –


--- page 579 ---
(3) any person (whether a natural person, a corporate entity or otherwise) who
provides services to our Group on a continuing or recurring basis in its
ordinary and usual course of business which are in the interests of the
long-term growth of our Group, including independent contractor, consultant
and/or advisors for research and development, product commercialization,
marketing, innovation upgrading, strategic/commercial planning on
corporate image and investor relations in investment environment of our
Company but excluding any placing agents or financial advisers providing
advisory services for fundraising, mergers or acquisitions, and auditors or
valuers (“Service Provider(s) ”).
The Board may consider various factors to determine the basis of eligibility of
the potential Eligible Participant, including but not limited to the performance, length
of engagement and contribution to our Group.
(iii) Maximum number of Shares
(1) The total number of Shares in respect of which options may be granted
under the Share Option Scheme and any other schemes of our Company
shall not exceed 10% of the total number of Shares in issue as at the Listing
Date (“Scheme Mandate Limit ”) (inclusive of (1) Shares representing 1.5
per cent. of the total number of Shares in issue, being the maximum number
of options which may be granted to Service Providers under the Share
Option Scheme (the “ Service Provider Sublimit ”); and (2) if applicable,
Shares to be issued and allotted under any share award scheme of our
Company) unless our Company obtains the approval of our Shareholders in
general meeting for renewing the Scheme Mandate Limit provided that
options lapsed in accordance with the terms of the Share Option Scheme or
any other schemes of our Company will not be counted for the purpose of
calculating the Scheme Mandate Limit and/or the Service Provider Sublimit
(as the case may be).
(2) Our Company may seek approval of our Shareholders in general meeting to
renew the Scheme Mandate Limit such that the total number of Shares in
respect of which options may be granted under the Share Option Scheme
and any other schemes of our Company (as adopted from time to time),
shall not exceed 10% (“ Renewal Limit”) of the total number of Shares in
issue as at the date of the approval of our Shareholders on the renewal of
the Scheme Mandate Limit, provided that options previously granted under
the Share Option Scheme or any other share option schemes of our
Company (including options outstanding, cancelled, lapsed in accordance
with the terms of the Share Option Scheme or any other schemes of our
Company or exercised options) will not be counted for the purpose of
calculating the Renewal Limit.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-21 –


--- page 580 ---
For the purpose of seeking the approval of our Shareholders for the
Renewal Limit, a circular containing the information and the disclaimer as
required under the GEM Listing Rules must be sent to our Shareholders.
In the event that our Company seeks approval of our Shareholders in
general meeting to renew the Scheme Mandate Limit within 3-year period
after the adoption date of the Share Option Scheme (or the date of
Shareholders’ approval for the last renewal), any Controlling Shareholders
(or Directors and the chief executive of our Company if there is no
Controlling Shareholder) and their associates must abstain from voting in
favour of the relevant resolution at the general meeting.
(3) Our Company may seek separate approval of our Shareholders in general
meeting for granting options beyond the Scheme Mandate Limit provided
that the proposed grantee(s) of such option(s) must be specifically identified
by our Company before such approval is sought. For the purpose of seeking
the approval of our Shareholders, our Company must send a circular to our
Shareholders containing the name of the specified proposed grantees of such
options, the number and terms of the options to be granted to each specified
Eligible Participant, the purpose of granting such options to the proposed
grantees with an explanation as to how the terms of options serve such
purpose and the information and the disclaimer as required under the GEM
Listing Rules. In respect of any options to be granted, the date of the Board
meeting for proposing such grant should be taken as the date of grant for
the purpose of calculating the Subscription Price.
(iv) Maximum entitlement of each Eligible Participant
No option shall be granted to any Eligible Participant if any further grant of
options would result in the Shares issued and to be issued upon exercise of all options
granted and to be granted to such person (including exercised, cancelled and
outstanding options but excluding any options lapsed in accordance with the Share
Option Scheme) in the 12-month period up to and including the date of grant of the
options exceeding 1% of the total number of Shares in issue, unless:
(1) such further grant has been duly approved, in the manner prescribed by the
relevant provisions of Chapter 23 of the GEM Listing Rules, by separate
approval of our Shareholders in general meeting at which the Eligible
Participant and his/her/its associates and all core connected persons of our
Company shall abstain from voting in favour of the resolution;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-22 –


--- page 581 ---
(2) a circular regarding the further grant has been despatched to our
Shareholders in a manner complying with, and containing the information
specified in, the relevant provisions of Chapter 23 of the GEM Listing
Rules (including the identity of the Eligible Participant, the number and
terms of the options to be granted and options previously granted to such
Eligible Participant in the 12-month period, the purpose of granting the
options and an explanation as to how the terms of the options serve such
purpose); and
(3) the number and terms (including the exercise price) of such option are fixed
before the general meeting of our Company at which the same are approved.
(v) Grant of options to connected persons
(1) The grant of options to a Director, chief executive or Substantial
Shareholder of our Company or any of his/her/its respective associates
(including discretionary trust in which any connected persons are
beneficiary) requires the approval of all our independent non-executive
Directors (excluding any independent non-executive Director who is a
prospective grantee of the option) and shall comply with the relevant
provisions of Chapter 23 of the GEM Listing Rules.
(2) Where an option is to be granted to a Substantial Shareholder or an
independent non-executive Director (or any of his/her/its respective
associates), and such grant will result in the Shares issued and to be issued
in respect of all options granted (excluding any options lapsed in
accordance with the Share Option Scheme) to such person in the 12-month
period up to and including the date of such grant exceeding 0.1% of the
total number of Shares in issue at the relevant time of grant, such grant
shall not be valid unless:
I. a circular containing the details of the grant has been despatched to
our Shareholders in a manner complying with, and containing the
matters specified in, the relevant provisions of Chapter 23 of the GEM
Listing Rules, including, in particular, (i) details of the number and
terms of the options to be granted to such Eligible Participant, which
must be fixed before the Shareholders’ meeting and the date of the
Board meeting for proposing such further grant is to be taken as the
date of grant for the purposes of calculating the exercise price, (ii)
from the views of the independent non-executive Directors (excluding
any independent non-executive Director who is the prospective grantee
of the option) as to whether the terms of the grant are fair and
reasonable and whether such grant is in the interests of the Company
and our shareholders as a whole, and their recommendation to the
independent Shareholders as to voting, (iii) information relating to any
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-23 –


--- page 582 ---
Directors who are trustees of the scheme or have a direct or indirect
interest in the trustees; and (iv) information required under the GEM
Listing Rules or by the Stock Exchange; and
II. the grant has been approved by our Shareholders in general meeting
(taken on a poll) at which such Eligible Participant and his/her/its
connected persons shall abstain from voting in favour of the grant
(unless such connected person’s intention to vote against the proposed
grant of option has been stated in the relevant circular).
(vi) Time of acceptance and exercise of an option
An offer of grant of an option may be accepted by an Eligible Participant within
the date as specified in the offer letter issued by our Company, being a date not later
than 21 Business Days from the date upon which it is made, by which the Eligible
Participant must accept the offer or be deemed to have declined it, provided that such
date shall not be more than ten (10) years after the date of adoption of the Share
Option Scheme. The vesting period for an option shall normally not be less than 12
months, except when such option is granted to the Employee Participant(s) where (1)
the Employee Participant’s employment is terminated due to death, disability or any
out of control event; (2) the options are granted in batches during a year for
administrative and compliance reasons; (3) the options are granted under a mixed
vesting schedule which vest evenly over a 12-month period; (4) the options are
granted based on performance-based vesting conditions instead of time-based vesting
criteria; and (5) any other circumstances render it fair, reasonable and appropriate to
do so.
A consideration of HK$1.00 is payable on acceptance of the offer of grant of an
option. Such consideration shall in no circumstances be refundable nor be deemed to
be part of the exercise price. An option may be exercised in whole or in part by the
grantee (or his/her personal representative(s)) at any time before the expiry of the
period to be determined and notified by the Board to the grantee which in any event
shall not be longer than ten (10) years commencing on the date of the offer letter and
expiring on the last day of such ten (10)-year period subject to the provisions for early
termination as contained in the Share Option Scheme.
(vii) Performance targets
Unless otherwise determined by the Board and specified in the offer letter, there
is no general performance target that has to be achieved before the exercise of any
option.
(viii) Exercise price for Shares
The exercise price of a Share in respect of any particular option granted under
the Share Option Scheme shall be a price determined by the Board in its absolute
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-24 –


--- page 583 ---
discretion and notified to an Eligible Participant, and shall be at least the higher of:
(1) the closing price of the Shares as stated in the Stock Exchange’s daily quotations
sheet on the Offer Date (as defined below), (2) the average closing price of the Shares
as stated in the Stock Exchange’s daily quotation sheets for the five Business Days
immediately preceding the Offer Date, and (3) the nominal value of a Share on the
Offer Date.
Where an option is to be granted to an Eligible Participant, the date of the Board
meeting at which the grant was proposed shall be taken to be the date of the offer of
such option, which must be a Business Day (“ Offer Date”). For the purpose of
calculating the exercise price, where an option is to be granted fewer than five
Business Days after the Listing of the Shares on GEM, the Offer Price shall be used
as the closing price for any Business Day falling within the period before the Listing.
(ix) Ranking of Shares
The Shares to be allotted and issued upon the exercise of an option shall be
subject to the Memorandum and the Articles of Association for the time being in force
and shall rank pari passu in all respects with the fully-paid Shares in issue of our
Company as at the date of allotment and issue (the “ Exercise Date”), and will entitle
the holders to participate in all dividends or other distributions paid or made on or
after the Exercise Date other than any dividend or other distribution previously
declared or recommended or resolved to be paid or made if the record date therefor
shall be before the Exercise Date.
(x) Restrictions on the time of grant of options
No option shall be granted after a development of or a matter constituting inside
information has come to our Company’s knowledge until (and including the trading
day on which) such inside information has been announced pursuant to the
requirements of the GEM Listing Rules and the SFO. In particular, during the period
commencing one (1) month immediately preceding the earlier of:
(1) the date of the meeting of the Board (as such date is first notified to the
Stock Exchange in accordance with the GEM Listing Rules) for the
approval of our Company’s results for any year, half-year, quarterly or any
other interim period (whether or not required under the GEM Listing
Rules); and
(2) the deadline for our Company to publish an announcement of the results for
any year or half-year, quarterly or any other interim period (whether or not
required under the GEM Listing Rules),
and ending on the date of the results announcement, no option shall be granted.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-25 –


--- page 584 ---
(xi) Period of the Share Option Scheme
Subject to any prior termination by our Company in a general meeting or by the
Board, the Share Option Scheme shall be valid and effective for a period of ten (10)
years commencing on the date of adoption of the Share Option Scheme (the “ Option
Period”), after which period no further option shall be granted but in respect of all
options which remain exercisable at the end of such period, the provisions of the
Share Option Scheme shall remain in full force and effect.
(xii) Rights on cessation of employment
Where the grantee of an outstanding option ceases to be an employee of our
Group for any reason other than his/her death, including the termination of his/her
employment or engagement on one or more of the grounds specified in (xxii)(e), the
option granted to such grantee shall lapse on the date of cessation (to the extent not
already exercised) and shall not be exercisable unless the Board otherwise determines
to grant an extension (to the extent which has become exercisable and not already
exercised) and subject to any other terms and conditions decided at the absolute
discretion of the Board. For the avoidance of doubt, such period of extension (if any)
shall be granted within and in any event ended before the expiration of the period of
one (1) month following the date of his/her cessation to be an Eligible Participant.
(xiii) Rights on death
Where the grantee of an outstanding option dies before exercising the option in
full or at all, and none of the events specified in (xxii)(e) which would be a ground
for termination of his/her employment or engagement arises, the option may be
exercised in full or in part up to the entitlement of such grantee as at the date of death
(to the extent which has become exercisable and not already exercised) by his/her
personal representative(s) within 12 months following the date of his/her death or such
longer period as the Board may at its absolute discretion determine from the date of
death.
(xiv) Rights on general offer
In the event of a general or partial offer (whether by way of take-over offer,
share repurchase offer, other than by way of scheme of arrangement or otherwise in
like manner) being made to all the holders of Shares, or all such holders other than
the offeror and/or any person controlled by the offeror and/or any person acting in
association or concert with the offeror, and if such offer becomes or is declared
unconditional prior to the expiry of the relevant Option Period, a grantee (or his/her
personal representative(s)) shall be entitled to exercise the option in full (to the extent
which has become exercisable on the date of the notice of the offer and not already
exercised) at any time within one (1) month after the date on which the offer becomes
or is declared unconditional.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-26 –


--- page 585 ---
(xv) Rights on winding-up
In the event that a notice is given by our Company to our Shareholders 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 day as or soon after it despatches such notice to each Shareholder, give
notice thereof to all grantees and thereupon, each grantee (or his/her personal
representative(s)) shall, subject to the provisions of all applicable laws, be entitled to
exercise all or any of the options (to the extent which has become exercisable and not
already exercised) at any time not later than two (2) 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 aggregate exercise
price for the Shares 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
and issue the relevant Shares to the grantee credited as fully paid and register the
grantee as holder of such Shares, which shall rank pari passu with all other Shares in
issue on the date prior to the passing of the resolution to wind-up our Company to
participate in the distribution of assets of the company available in liquidation.
(xvi) Rights on scheme of arrangement
In the event of a general or partial offer by way of scheme of arrangement is
made to all the holders of Shares and has been approved by the necessary number of
holders of Shares at the requisite meetings, the grantee (or his/her personal
representative(s)) may thereafter (but only until such time as shall be notified by our
Company, after which it shall lapse) exercise the option (to the extent which has
become exercisable and not already exercised) to its full extent or to the extent
specified in the grantee’s notice to our Company.
(xvii) Rights on compromise or arrangement between our Company and our creditors
In the event of a compromise or arrangement between our Company and our
Shareholders and/or creditors is proposed for the purposes of or in connection with a
scheme for the reconstruction or amalgamation of our Company, our Company shall
give notice thereof to all grantees on the same day as it gives notice of the meeting to
our Shareholders or creditors to consider such a compromise or arrangement, and
thereupon each grantee (or his/her personal representative(s)) may by notice in writing
to our Company accompanied by the remittance of the exercise price in respect of the
relevant option (such notice to be received by our Company not later than two
Business Days before the proposed meeting) exercise any of his/her/its options (to the
extent which has become exercisable and not already exercised) whether in full or in
part, but the exercise of an option as aforesaid shall be conditional upon such
compromise or arrangement being sanctioned by the court of competent jurisdiction
and becoming effective. Our Company shall as soon as possible and in any event no
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-27 –


--- page 586 ---
later than the Business Day immediately prior to the date of the proposed meeting
referred to above, allot and issue such number of Shares to the grantee which may fall
to be issued on such exercise credited as fully paid and register the grantee as holder
of such Shares. Upon such compromise or arrangement becoming effective, all options
shall lapse except insofar as previously exercised under the Share Option Scheme. Our
Company may require the grantee (or his/her personal representative(s)) to transfer or
otherwise deal with the Shares issued as a result of the exercise of options in these
circumstances so as to place the grantee in the same position as nearly as would have
been the case had such Shares been subject to such compromise or arrangement.
(xviii) 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 issue, rights issue,
consolidation or subdivision of our Shares, or reduction of the share capital of our
Company (other than an issue of Shares as consideration in respect of a transaction to
which our Company is a party), our Company shall make corresponding alterations (if
any) to:
(1) the numbers and/or nominal amount of Shares subject to the options already
granted so far as they remain exercisable; and/or
(2) the exercise price,
or any combination thereof, provided that:
(aa) any such alterations shall give a grantee the same proportion of the issued
share capital of our Company, rounded to the nearest whole share, as that to
which he/she/it was previously entitled;
(bb) no such alterations shall be made the effect of which would be to enable
any Share to be issued at less than its nominal value; and
(cc) any such alterations shall be confirmed by an independent financial adviser
or the auditors in writing to the Directors, to be in their opinion fair and
reasonable, as satisfying the requirements of provisions referred to in
sub-paragraphs (aa) and (bb) above.
(xix) Cancellation of options
The Board may, with the consent of the relevant grantee, at any time at its
absolute discretion cancel any option granted but not exercised. Where our Company
cancels options and makes new grant to the same option holder, such new grants may
only be made under the Share Option Scheme with available Scheme Mandate Limit
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-28 –


--- page 587 ---
and Service Provider Sublimit (to the extent not yet granted and excluding the
cancelled options) approved by our Shareholders.
The Board may at any time at its absolute discretion cancel, recover or withhold
any options granted to any grantees in the event of (a) the grantees’ serious
misconduct; (b) a material misstatement in our Company’s financial statements; or (c)
any other circumstances as the Board considers to be reasonable, fair and appropriate
to cancel, recover or withhold such options.
(xx) Termination of the Share Option Scheme
Our Company by resolution in general meeting or the Board may at any time
terminate the operation of the Share Option Scheme and in such event no further
option will be offered but in all other respects the provisions of the Share Option
Scheme shall remain in full force and effect. Options granted prior to such termination
and not then exercised or in respect of which Shares are not yet issued to the grantees
shall continue to be valid and exercisable subject to and in accordance with the Share
Option Scheme and the GEM Listing Rules.
(xxi) Rights are personal to grantee
An option shall be personal to the grantee and shall not be assignable nor
transferable, and no grantee shall in any way sell, transfer, charge, mortgage,
encumber, assign or create any interest (whether legal or beneficial) in favour of any
third party over or in relation to any option or enter into any agreement to do so,
unless a waiver is granted by the Stock Exchange for any option to be transferred to a
vehicle (such as a trust or a private company) for the benefit of the Grantee and any
family members of such Grantee that would continue to meet the purpose of this
Scheme and comply with other requirements of the GEM Listing Rules. Any breach of
the foregoing by the grantee shall entitle our Company to cancel any option or part
thereof granted to such grantee (to the extent not already exercised) without incurring
any liability on the part of our Company.
(xxii) Lapse of option
An option shall lapse automatically and not be exercisable (to the extent not
already exercised) on the earliest of:
(a) the expiry of the Option Period (subject to the provision referred to in
sub-paragraphs (xi) and (xx));
(b) the expiry of the periods referred to in sub-paragraphs (xii), (xiii) or (xvii),
where applicable;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-29 –


--- page 588 ---
(c) subject to the court of competent jurisdiction not making an order
prohibiting the offeror from acquiring the remaining Shares in the offer, the
expiry of the period referred to in sub-paragraph (xiv);
(d) subject to the scheme of arrangement becoming effective, the expiry of the
period referred to in sub-paragraph (xvi);
(e) the date on which the grantee ceases to be an Eligible Participant by reason
of the termination of his/her/its employment or engagement on the grounds
that he/she/it has been guilty of misconduct, or has been in breach of a
material term of the relevant employment contract or engagement contract,
or appears either to be unable to pay or have no reasonable prospect to be
able to pay debts, or has committed any act of bankruptcy, or has become
insolvent, or has been served a petition for bankruptcy or winding-up, or
has made any arrangements or composition with his/her/its creditors
generally, or has been convicted of any criminal offence or (if so
determined by the Board) on any other ground on which an employer or a
sourcing party would be entitled to terminate his/her/its employment or
engagement at common law or pursuant to any applicable laws or under the
grantee’s service contract or supply contract with our Company;
(f) the date of the commencement of the winding-up of our Company referred
to in subparagraph (xv);
(g) the date on which the grantee commits a breach of sub-paragraph (xxi); or
(h) the date on which the option is cancelled by the Board as set out in
sub-paragraph (xix).
(xxiii) Alterations to the Share Option Scheme
(1) The Share Option Scheme may be altered in any respect to the extent
allowed by the GEM Listing Rules by resolution of the Board except that
the following alterations must be approved by our Shareholders in general
meeting:
(aa) any alterations to the terms and conditions of the Share Option Scheme
which are of a material nature; or
(bb) any alterations relating to matters contained in Rule 23.03 of the GEM
Listing Rules to the advantage of the grantees of the options or the
Eligible Participants (whereby such grantee and his/her/its associates
shall abstain from voting in the general meeting).
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-30 –


--- page 589 ---
(2) Any change to the terms of granted options must be approved by the Board,
the remuneration committee of the Company, the independent non-executive
Directors and/or the Shareholders (as the case may be) if the initial grant of
such options was approved by the Board, the remuneration committee of the
Company, the independent non-executive Directors and/or the Shareholders
(as the case may be), except where such amendment or alteration takes
effect automatically under the existing terms of the Share Option Scheme or
is required by the GEM Listing Rules or any guidelines issued by the Stock
Exchange from time to time.
(3) Any change to the authority of the Directors to alter the terms of the Share
Option Scheme must be approved by the Shareholders at general meeting.
(4) Our Company must provide to all grantees all details relating to changes in
the terms of the Share Option Scheme during the life of the Share Option
Scheme immediately upon such changes taking effect.
(xxiv) Conditions
The Share Option Scheme is conditional on:
(a) the Listing Committee granting approval for the listing of, and permission
to deal in, the Shares in issue, the Shares to be issued pursuant to the Share
Offer and the Capitalisation Issue, and any Shares which may be allotted
and issued pursuant to the exercise of the Offer Size Adjustment Option and
the exercise of any options which may be granted under the Share Option
Scheme;
(b) 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; and
(c) the commencement of dealings in the Shares on GEM.
2. Present status of the Share Option Scheme
(i) Approval and adoption of the rules of the Share Option Scheme
The rules of the Share Option Scheme were approved and adopted by the
Shareholders on 20 May 2024.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-31 –


--- page 590 ---
(ii) Approval of the Stock Exchange required
The Share Option Scheme is conditional, among other matters, on the Stock
Exchange granting the listing of, and permission to deal in, the Shares to be issued
pursuant to the exercise of any options which may be granted under the Share Option
Scheme, which shall not exceed 10% of the total number of Shares in issue as at the
Listing Date.
(iii) Application for listing
Application has been made to the Stock Exchange for the listing of, and
permission to deal in, the Shares to be issued pursuant to the exercise of any options
which may be granted under the Share Option Scheme. The total number of Shares in
respect of which options may be granted under the Share Option Scheme and any
other share option schemes of our Company shall not exceed 10% of the total number
of Shares in issue as at the Listing Date (assuming the Offer Size Adjustment Option
is not exercised) unless our Company obtains the approval of our Shareholders in
general meeting for renewing the said 10% limit under the Share Option Scheme
provided that options lapsed in accordance with the terms of the Share Option Scheme
or any other share option schemes of our Company will not be counted for the purpose
of calculating the 10% limit mentioned above.
(iv) Grant of options
As at the Latest Practicable Date, no options have been granted or agreed to be
granted under the Share Option Scheme.
(v) V alue of options
Our Directors consider it inappropriate to disclose the value of options which
may be granted under the Share Option Scheme as if they had been granted as at the
Latest Practicable Date. Any such valuation will have to be made on the basis of
certain option pricing model or other methodology, which depends on various
assumptions including the exercise price, the exercise period, interest rate, expected
volatility and other variables. As no options have been granted, certain variables are
not available for calculating the value of options. Our Directors believe that any
calculation of the value of options as at the Latest Practicable Date based on a number
of speculative assumptions would not be meaningful and would be misleading to
investors.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-32 –


--- page 591 ---
E. OTHER INFORMATION
1. Tax and other indemnities
Our Controlling Shareholders have entered into the Deed of Indemnity with and in
favour of our Company (for ourselves and as trustee for and on behalf of our subsidiaries)
(being the material contract (a) referred to in the paragraph headed “B. Further information
about the business of our Group – 1. Summary of material contracts” in this appendix) to
provide indemnities in respect of, among other matters, any liability which might be
incurred by any member of our Group as a direct or indirect result of or in consequence of
any claim relating to the amount of any and all taxation falling on any member of our
Group resulting from or by reference to any income, profits, gains, transactions, events,
matters or things earned, accrued, received, entered into or occurring or deemed to occur
up to the date on which the dealing of the Shares on GEM has taken effect.
Our Directors have been advised that no material liability for estate duty would be
likely to fall upon any member of our Group.
2. Litigation
Save as disclosed in this prospectus, as at the Latest Practicable Date, neither our
Company nor any of our subsidiaries was engaged in any litigation or arbitration of
material importance, and no litigation or claim of material importance was known to our
Directors to be pending or threatened against our Company or any of our subsidiaries.
3. Sole Sponsor
The Sole Sponsor has made an application on behalf of our Company to the Listing
Division for the listing of, and permission to deal in, the Shares in issue and to be issued as
mentioned in this prospectus, including any Shares which may fall to be allotted and issued
pursuant to the exercise of the Offer Size Adjustment Option and the exercise of any
options which may be granted under the Share Option Scheme, on GEM.
The Sole Sponsor satisfies the independence criteria applicable to sponsors under
Rule 6A.07 of the GEM Listing Rules. The Sole Sponsor is entitled to the sponsor’s fee in
the amount of HK$5,000,000.
4. Preliminary expenses
The preliminary expenses of our Company are approximately HK$44,000 and are
payable by our Company.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-33 –


--- page 592 ---
5. Promoter
(a) Our Company has no promoter for the purpose of the GEM Listing Rules.
(b) Save as disclosed herein, within the two years immediately preceding the date of
this prospectus, no amount or benefit has been paid or given to any promoter in
connection with the Share Offer or the related transactions described in this
prospectus.
6. Qualifications of experts
The qualifications of the experts who have given opinions and/or whose names are
included in this prospectus are as follows:
Name Qualifications
Yue Xiu Capital Limited Licensed corporation holding a licence to
carry out Type 6 (advising on
corporate finance) regulated activity
under the SFO
Moore CPA Limited (Formerly,
Moore Stephens CP A Limited)
Certified Public Accountants and
Registered Public Interest Entity
Auditors
King & Wood Mallesons Legal advisers to our Company as to
PRC law
Conyers Dill & Pearman Cayman Islands attorneys-at-law
Altum Law Corporation Legal advisers to our Company as to
Singapore law
Frost & Sullivan Limited Independent industry consultant
SHINEWING Tax and Business Advisory
Limited
Tax consultant
Mr. Lawrence Man Barrister-at-law in Hong Kong
7. Consents of experts
Each of the experts named in the paragraph headed “E. Other information – 6.
Qualifications of experts” in this appendix has given and has not withdrawn its respective
written consent to the issue of this prospectus with copies of its reports and/or letters
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-34 –


--- page 593 ---
and/or opinions and/or the references to its name included herein in the form and context in
which they are respectively included.
None of the experts named in the paragraph headed “E. Other information – 6.
Qualifications of experts” in this appendix has any shareholding interests 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.
8. Binding effect
This prospectus shall have the effect, if an application is made in pursuance of it, of
rendering all persons concerned bound by all of the provisions (other than the penal
provisions) of sections 44A and 44B of the Companies (Winding Up and Miscellaneous
Provisions) Ordinance so far as applicable.
9. Share registrar
Our Company’s principal register of members will be maintained in the Cayman
Islands by our Principal Share Registrar, Conyers Trust Company (Cayman) Limited, and a
register of members will be maintained in Hong Kong by our Hong Kong Branch Share
Registrar, Boardroom Share Registrars (HK) Limited. Unless our Directors otherwise agree,
all transfers and other documents of title of the Shares must be lodged for registration with
and registered by our share registrar in Hong Kong and may not be lodged in the Cayman
Islands.
10. Bilingual prospectus
The English language and Chinese language versions of this prospectus are being
published separately in reliance upon the exemption provided by section 4 of the
Companies (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 of this prospectus, the English
language version shall prevail.
11. Miscellaneous
Save as disclosed in this prospectus:
(a) within the two years immediately preceding the date of this prospectus:
(i) no share or loan capital of our Company or of any of our subsidiaries has
been issued, agreed to be issued or is proposed to be issued fully or partly
paid either for cash or for a consideration other than cash;
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-35 –


--- page 594 ---
(ii) no commissions, discounts, brokerages or other special terms have been
granted in connection with the issue or sale of any capital of our Company
or any of our 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 or debentures in our Company; and
(iv) no founder, management or deferred shares or any debentures in our
Company or any of our subsidiaries have been issued or agreed to be issued;
(b) no share, warrant or loan capital of our Company or any of our subsidiaries is
under option or is agreed conditionally or unconditionally to be put under option;
(c) 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;
(d) all necessary arrangements have been made enabling the Shares to be admitted
into CCASS;
(e) our Company has no outstanding convertible debt securities;
(f) our Directors confirm that none of them shall be required to hold any Shares by
way of qualification and none of them has any interest in the promotion of our
Company;
(g) our Directors confirm that there has been no material adverse change in the
financial or trading position or prospects of our Group since 31 December 2023
(being the date to which the latest audited consolidated financial statements of
our Group were made up);
(h) 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;
(i) there are no arrangements in existence under which future dividends are to be or
agreed to be waived; and
(j) there is no restriction affecting the remittance of profits or repatriation of capital
into Hong Kong and from outside Hong Kong.
APPENDIX IV STATUTORY AND GENERAL INFORMATION
– IV-36 –


--- page 595 ---
DOCUMENTS DELIVERED TO THE REGISTRAR OF COMPANIES IN HONG KONG
The documents attached to the copy of this prospectus and delivered to the Registrar of
Companies in Hong Kong for registration were:
(a) 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 IV to this prospectus; and
(b) the written consents referred to in the paragraph headed “E. Other information – 7.
Consents of experts” in Appendix IV to this prospectus.
DOCUMENTS A V AILABLE ON DISPLAY
The following documents will be on display on the websites of the Stock Exchange at
www.hkexnews.hk and our Company at www.ubot.com.hk during a period of 14 days from the
date of this prospectus:
(a) the Memorandum and the Articles of Association;
(b) the Accountants’ Report of our Group prepared by Moore CPA Limited, the text of
which is set out in Appendix I to this prospectus;
(c) the consolidated audited financial statements of our Group for the Track Record
Period;
(d) the report on unaudited pro forma financial information of our Group prepared by
Moore CPA Limited, the text of which is set out in Appendix II to this prospectus;
(e) the letter of advice prepared by Conyers Dill & Pearman summarising certain aspects
of Cayman Islands company law referred to in Appendix III to this prospectus;
(f) the Companies Act;
(g) the PRC legal opinions issued by King & Wood Mallesons, the legal advisers to our
Company as to PRC laws, in respect of our Group’s general matters and property
interests in the PRC;
(h) the rules of the Share Option Scheme;
(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 IV
to this prospectus;
APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR
OF COMPANIES AND A V AILABLE ON DISPLAY
–V - 1–


--- page 596 ---
(j) the written consents referred to in the paragraph headed “E. Other information – 7.
Consents of experts” in Appendix IV to this prospectus;
(k) the service agreements and letters of appointment referred to in the paragraph headed
“C. Further information about Directors, management, staff and experts – 3.
Particulars of service agreements” in Appendix IV to this prospectus;
(l) the industry report prepared by Frost & Sullivan Limited referred to in the section
headed “Industry overview” in this prospectus;
(m) the tax due diligence report prepared by SHINEWING Tax and Business Advisory
Limited, the tax consultant to our Group, in respect of the Group’s tax position in
Hong Kong and the PRC;
(n) the opinion prepared by Mr. Lawrence Man, barrister-at-law, Hong Kong legal counsel
to our Group, in respect of the tax matters of the Group’s subsidiaries in Hong Kong;
and
(o) the opinion prepared by Altum Law Corporation, legal advisers to our Company as to
Singapore law, in respect of the tax position of the Group’s subsidiary in Singapore.
APPENDIX V DOCUMENTS DELIVERED TO THE REGISTRAR
OF COMPANIES AND A V AILABLE ON DISPLAY
–V - 2–


--- page 597 ---
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